House Introduces Ocean Shipping Competition Enforcement Act

California Rep. Garamendi Introduced Bill April 24
A cargo ship docked at the LBCT container terminal at the Port of Long Beach
A cargo ship docked at the LBCT container terminal at the Port of Long Beach in California. (Lauren Justice/Bloomberg News)

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U.S. Rep. John Garamendi (D-Calif.) on April 24 introduced the Ocean Shipping Competition Enforcement Act, legislation he says will help the Federal Maritime Commission.

The bipartisan bill would allow the commission to block any agreements among ocean carriers and marine terminal operators determined to be unreasonably anticompetitive without first obtaining a federal court order.

In December, Federal Maritime Commissioners Max Vekich and Carl Bentzel requested that the U.S. House Committee on Transportation and Infrastructure, on which Garamendi serves, make this critical change in federal law.

“The ocean shipping industry was the last transportation sector deregulated by Congress in 1984. Because of that, today the industry is now dominated by nine foreign-flagged ocean liners that openly collude under three carrier alliances handling some 80% of cargo,” said Garamendi, a Democrat representing California’s eighth district, in a news release. “After reforming our nation’s ocean shipping laws for the first time in nearly a quarter century, Congress must ensure that the Federal Maritime Commission can do its job and fully enforce the law. Americans expect fair, competitive markets with good government, and that is exactly what our bipartisan bill would ensure.”

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Vekich commended Garamendi for taking the steps to strengthen the Federal Maritime Commission’s review of vessel operating common carriers and marine terminal operator agreements.

“This legislation will simplify the process by which the FMC reviews agreements among the largest foreign-owned entities in our supply chain,” Vekich said. “While agreements often have pro-competitive benefits, it is important for the FMC, as the watchdog agency, to once again have the ability to determine when such agreements go too far and result in an unreasonable reduction in competition which produces an unreasonable decrease in service or increase in cost. As the expert independent regulatory agency, the FMC is in the best position to make the initial determination.”

Current federal law requires the Federal Maritime Commission — which is an independent federal regulatory agency — to review proposed agreements between ocean carriers or marine terminal operators to ensure any such agreements are not unreasonably anticompetitive. However, the commission cannot block an anti-competitive deal without first obtaining a federal court order.

If the court fails to act in time, then the agreement takes effect and automatically allows ocean liners and marine terminals to collude. No other independent federal regulatory agency is required to obtain court orders to enforce similar antitrust regulations.

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