The US Federal Maritime Commission (“FMC” or “Commission”) issued a Notice of Inquiry on November 1, 2010 calling for information and comments about the effects on international liner shipping of the European Union’s (“EU”) repeal of the liner conference block exemption from competition laws which took effect in 2008. This is the first US examination of the European removal of the long-standing and unique antitrust immunity that had governed international transportation by sea for almost one hundred years.
The FMC is inviting responses from a broad range of industry participants, including shippers, vessel-operating common carriers, ocean transportation intermediaries, public port authorities, and marine terminal operators.
Responses are due on or before January 18, 2011.
A copy of the full FMC notice may be found here.
The EU Study
The FMC intends to use the information and comments to identify and evaluate impacts of the EU’s repeal on US trade, which will be incorporated into the Commission’s research for An Analysis of the EU Repeal of the Liner Conference Block Exemption (“EU Study”). According to the FMC, the EU Study would be used in part to determine whether any impact of the EU’s repeal on US trade warrants Commission action with respect to its existing regulations and oversight activities under the Shipping Act. In this respect, the Commission acknowledged earlier recommendations by a trade organization that, in light of the EU’s repeal of the liner conference block exemption, it would be appropriate for the United States government to undertake a review of the antitrust immunity granted under the Shipping Act.
Notice of Inquiry Questions and Subjects under Consideration
The Commission has provided specific Notice of Inquiry (“NOI”) questions-- several of which solicit information by specific trade lanes--intended to help inform the Commission of the diverse experiences and views of interested parties. These sets of questions cover various topics, such as:
- Impacts of operational agreements (e.g., vessel sharing agreement, alliances, consortia, etc.) on the availability or cost of liner shipping services;
- Problems associated with the differences between US and EU regulations;
- The impact of the EU’s repeal of the block exemption on liner services (including the level of freight rates and surcharges, rate volatility, the level of competition among ocean carriers);
- Service contracting practices or terms offered by ocean carriers, the availability of vessel capacity and container equipment, and the level or quality of liner services;
- Experiences with respect to Container Trade Statistics, Ltd. (North Europe/US trade), the Trans-Pacific Stabilization Agreement or the Westbound Trans-Pacific Stabilization Agreement (Far East/US trade); and
- Differences in Far East/US trade versus the Far East/Europe or North Europe/US trade that may be attributable to differences between US and European liner competition regulations.
If participating respondents believe that there is a topic related to the impact of the EU's repeal of the liner conference block exemption on US liner trades that is not adequately addressed in the NOI questions, they are encouraged to identify and address that topic in their comments. There is no requirement to answer all NOI questions, and participants are free to limit their responses to questions where they have direct experience or specific views. To encourage respondents to provide usefully detailed information, the FMC will provide confidential treatment to the extent allowed by law for those submissions, or parts of submissions, for which the parties request confidentiality.
The FMC’s NOI offers opportunities for prospective participants to provide the FMC with information and views on the impact of the EU’s repeal of the liner block exemption from antitrust laws on the liner shipping industry. The FMC intends to use the responses in developing the agency’s EU Study and assessing the need for revisiting its regulations and regulatory oversights under the Shipping Act.
This article was co-authored by John Cassels, a Director at Field Fisher Waterhouse LLP.