Testifies before Antitrust Modernization Commission

In testimony before the Antitrust Modernization Commission on Oct. 19, National Customs Brokers and Forwarders Association of America, Inc. (NCBFAA) Transportation Counsel Edward D. Greenberg said that steamship line immunity under the Shipping Act is an ‘anachronism’ and ‘n the Association’s view, such extraordinary protection is no longer appropriate or necessary.’

The Antitrust Modernization Commission is a 12-member bipartisan commission created by Congress to examine whether a need exists to modernize United States antitrust law. The Commission is required to solicit the views of interested parties and to issue a report and recommendations to Congress and the President by April 2007.

In his testimony, Mr. Greenberg said, ‘if [antitrust immunity] is to continue, several statutory changes need to be made so the FMC [Federal Maritime Commission] can more fairly and efficiently administer its expertise to monitor the shipping industry and ensure that inappropriate, collective market-distorting behavior does not occur or is quickly terminated.’

The Ocean Shipping Reform Act of 1998 (OSRA), significantly increased foreign ownership of steamship lines, and the European Union action to repeal the exemption under its regulations have worked to dilute or eliminate the original justifications for this immunity.

‘In short, the NCBFAA believes that the concept of antitrust immunity is an anachronism in the ocean shipping industry, given the changes in the industry and regulatory structure since the enactment of OSRA,’ Mr. Greenberg says. ‘Hence, it is appropriate for changes to be made if such immunity is to continue in existence.’

In his testimony, Mr. Greenberg sets forth four conditions for continuation.

1. That any continuation of this relief from the operation of the antitrust laws should be conditioned upon a requirement that applicants bear the burden of demonstrating why the immunity is necessary and how the public interest would benefit.

2. Immunity from the antitrust laws should only apply to carriers and practices that are expressly and specifically covered by an approved Agreement.

3. The FMC must clearly have more personnel, a larger budget and the tools necessary to be proactive and actually monitor whether parties operating pursuant to approved agreements are engaging in market-distorting behavior.

4. Private parties should not be legally stopped from challenging the propriety of any approved agreement simply because the FMC may not have the manpower or budget to do so.

To buttress the NCBFAA case for amending this process, Mr. Greenberg noted that the immunized carriers had abused their favored status a couple of years ago and collectively engaged in anticompetitive practices against NVOCCs in their service contracting practices. It was only after the NCBFAA brought the situation to the attention of the FMC, which conducted an investigation that resulted in the collection of a substantial $1.35 million penalty from the carriers that those activities were brought under control.