TRANSPACIFIC CARRIERS FOUND GUILTY OF CONTRACT ABUSE, ESCAPE FMC FINES

TRANSPACIFIC CARRIERS FOUND GUILTY OF CONTRACT ABUSE, ESCAPE FMC FINES TRANSPACIFIC CARRIERS FOUND GUILTY OF CONTRACT ABUSE, ESCAPE FMC FINES
      The Federal Maritime Commission has found members of the suspended Asia-North America Eastbound Rate Agreement guilty of violating the 1984 Shipping Act when they opted out of service contracts in a capacity crunch during the 1998 peak shipping season.
      But the ANERA carriers have escaped millions of dollars in potential fines. The FMC decided to end the investigation instead of turning evidence over to an agency law judge to determine the penalties.
      The service contracts at issue in the case contained standard terminology that included a provision authorizing carriers to opt out of the service contracts under certain circumstances. Because of this, the carriers claim they were in full compliance with the terms of the contracts.
      ANERA no longer operates. And changes brought about by ocean shipping reform “lessen the likelihood” of future carrier abuses, the commission said.    The FMC also said that the time and expense involved in a penalty hearing “would not further the public interest.”
      An investigation conducted in late 1998 and early 1999 revealed that ANERA carriers, who are also members of the Transpacific Stabilization Agreement, charged primarily smaller shippers and non-vessel-operating common carriers higher rates than those stated in service contracts to move cargo in the eastbound Pacific trade.
      Smaller shippers complained they had to pay premiums ranging from $300 to $1,000 per container to obtain cargo space on ANERA carriers' ships.
      Sea-Land, now Maersk Sealand, had been cited as the prime offender, having opted out of at least 183 contracts of 221 contracts challenged by the FMC.
      The commission’s decision to refrain from going forward to the penalty phase of the proceeding drew criticism from Ed Greenberg, transportation counsel to the National Customers Brokers & Forwarders Association.
      “I’m disappointed,” Greenberg said. “To me, it indicates a lack of balance on the part of the FMC. They (the FMC) assess enormous fines against ocean transportation intermediaries for technical violations. But when the carriers collude to the detriment of OTIs, they get off with a slap on the wrist.”
      The commission's decision 'makes me wonder whether the FMC is up to being the policeman they say they can be,” Greenberg said.
      FMC commissioner Del Won, who conducted a number of hearings on the issue but later removed himself from the case, voiced concern over the fact that the FMC failed to take action against the ANERA carriers as a group.
      “It is my opinion that the Commission’s early decision to limit the scope of enforcement efforts to individual, rather than concerted, carrier activity fell short in addressing the more substantive issue raised in this proceeding — that being the possibility of discussion agreements engaging in market distorting behavior,” Won said.
      The ANERA members cited by the FMC were Sea-Land, Maersk, “K” Line, Hapag-Lloyd, APL Ltd., Mitsui and P&O Nedlloyd.