Background

To address the “historically large shipping price increases” that U.S. companies and consumers have endured over the last two years, the Biden administration has announced a new enforcement initiative and is calling on Congress to reform shipping laws.

In July 2021 the Federal Maritime Commission and the Department of Justice signed a memorandum of understanding to enhance their cooperation in the enforcement of antitrust and competition laws, including the Shipping Act, including by facilitating information exchange between and among attorneys, economists, and technical experts. To increase that cooperation and further promote competition in the ocean freight transportation system, the two agencies announced Feb. 28 that the DOJ will provide the FMC with the support of attorneys and economists from its Antitrust Division for enforcement of violations of the Shipping Act and related laws while the FMC will provide the Antitrust Division with support and maritime industry expertise for Sherman Act and Clayton Act enforcement actions.

“Competition in the maritime industry is integral to lowering prices, improving quality of service, and strengthening supply chain resilience,” said Attorney General Merrick Garland. “Lawbreakers should know that the Justice Department will provide the Federal Maritime Commission all necessary litigation support as it pursues its mission of promoting competition in ocean shipping.” (The DOJ also recently announced a related initiative to prosecute companies (including those in the shipping industry) colluding to overcharge customers under the guise of supply chain disruptions.)

In a related action, President Biden is calling on Congress to “pass robust reforms to the ocean shipping industry, including reforms that address the current antitrust immunity for ocean shipping alliances.” A White House fact sheet pointed out that three global alliances now control 80 percent of global container ship capacity and that through this market power they “have been dramatically increasing shipping costs through rate increases and fees,” engaging in practices harmful to U.S. businesses such as canceling or changing bookings and refusing export shipments, and pursuing actions that “directly contribute to port congestion.” The fact sheet blamed Congress for this situation, asserting that over many years it has expanded carriers’ antitrust immunity while weakening their obligations to “publicly disclose prices and fees and treat businesses and their customers fairly.”

Sandler, Travis & Rosenberg is continuing a campaign to advocate with federal regulators and lawmakers on solutions to the supply chain crisis. For more information on this campaign and how to participate, please contact Ned Steiner at (202) 730-4970 or via email.

Copyright © 2022 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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