FMC to Continue Monitoring OCEAN Alliance for Anticompetitive Behavior

MIAMI -- The Federal Maritime Commission will continue to monitor the effects of the recently created OCEAN Alliance, and still has the authority to block the alliance should it decide the new alliance has too much power over the shipping market, FMC Commissioner Daniel Maffei said at the Florida Customs Brokers & Freight Forwarders Conference of the Americas on Nov. 14. Though sometimes interpreted as affirmatively approving alliances, FMC actually decides only whether to block an alliance, he said. That requires FMC to demonstrate in court that an alliance has an excess of market power, but FMC retains the ability to bring such a case at any time, Maffei said.

Despite the commission’s ongoing ability to block the OCEAN Alliance, which includes COSCO Shipping, CMA CGM, Evergreen Marine, and Orient Overseas Container Line Limited, Maffei thinks the alliance “was put together in a balanced way,” he said (see 1610240016). FMC has to consider the costs and benefits of each alliance, weighing the increase in market power against the alliance’s benefits for a global shipping industry currently beset by overcapacity and financial woes. Carriers don’t feel like they can operate without alliances, Maffei said, adding that the recent merger of container operations by Japanese carriers was likely urged by the Japanese government in response to financial concerns following Hanjin’s insolvency (see 1611040029).

The FMC needs to hear from shippers if they are being hurt by the agreement, Maffei said. “That way we can start gathering data” and consider whether the alliance merits a block, he said. The commission will “work hard” to monitor any changes to the agreement, including the addition of new carriers, Maffei said. The Justice Department had urged the FMC to block the OCEAN Alliance over anti-trust concerns (see 1611080022).

Moving forward under the upcoming Trump administration, Maffei said he expects “slightly less pressure” on carrier alliances as Republicans assume control of the FMC. Also, the FMC could become less strict about how it views deviations from Shipping Act agreements. Otherwise, not much else will change, he said. The FMC is required to have at least two members each that are Democratic or Republican, said Maffei, a Democrat. Currently split three to two, one Democratic commissioner will likely depart and be replaced by a Republican. The new administration will also choose whether to select a different commissioner to fill the role of chairman, currently held by Mario Cordero. But in general, FMC was “born out of a deregulatory environment,” so it won’t change much if the new administration pursues deregulation, Maffei said. In general, disputes at the commission are substantive, not political, he said.