Antitrust Issues In The Ocean Shipping Industry

Ocean shipping common carriers in the foreign trades are generally
exempt from the U.S. antitrust laws, except as to mergers and
acquisitions, and are regulated by the Federal Maritime Commission
(FMC) under the Shipping Act. Common carriers outside the foreign
trades are subject to limited regulation by the Surface Transportation
Board (STB), and, like non-common carriers in all trades, are fully
subject to the antitrust laws. A comprehensive analysis of the antitrust
exemptions and regulation applicable to ocean shipping will be provided
throughout this chapter.
The chapter is structured in six parts. Part A offers an overview of
the ocean shipping industry. Part B focuses on the history of the industry
regulation from the Shipping Act, 1916, through the separation of the
treatment of carriers in the foreign trades in the Shipping Act of 1984, as
amended by the Ocean Shipping Reform Act of 1998, and the
preservation of some regulation of certain domestic carriers by the STB
in the ICC Termination Act of 1995. Part C analyzes the scope of the
exemptions and immunities. Part D addresses mergers and acquisitions.
Part E addresses criminal enforcement. Part F gives a brief overview of
international competition regimes.
A. Introduction to the Ocean Shipping Industry
Regulation of ocean shipping, including the applicability of the
antitrust laws to carriers, varies depending on the type of carriage
involved and the geographic range in which the carriage is undertaken.
Analysis of the applicable regulatory requirements thus depends in the
first instance on identifying each of these.
Types of Carriage
Maritime shipping is divided broadly into two types of carriage: liner
and bulk. Liner shipping is characterized by regularly scheduled service
between advertised ports. Bulk shipping, by contrast, involves carriage of
228 Transportation Antitrust Handbook
homogeneous unpacked goods for individual shippers, and bulk goods
are almost always carried on “tramp” vessels; that is, vessels that operate
on irregular and non-scheduled routes.1 The bulk sector is itself
subdivided further into the dry bulk sector (including carriage of grain,
ore, and coal) and the liquid bulk sector (including carriage of oil and
petroleum products, liquid natural gas, and chemicals). A useful analogy
is that liner services are like city or interstate bus lines, while bulk
services are like trips in a private car service.
Liner cargo services generally are provided by vessels carrying large
numbers of modular containers that are transported to and from the
origin and destination ports by truck or rail.2 Carriage of larger items
such as automobiles can be undertaken on roll-on/roll-off (ro-ro) vessels.
Bulk vessels, by contrast, generally have large holds designed to carry
homogenous liquid or dry cargoes, and often carry a single cargo for a
single shipper.
The distinction between liner and bulk carriers is important for
regulatory purposes because liner carriage is generally common carriage,
while bulk carriage usually is not. The shipping regulatory regimes that
traditionally have included exemptions from the antitrust laws have
applied only to common carriage.3 In the United States, common carriage
in the foreign trades is regulated under the Shipping Act of 1984 (the
Shipping Act or the 1984 Act), as amended by the Ocean Shipping
Reform Act of 1998 (OSRA),4 which applies to “ocean common
carriers,” and to certain entities that deal with them. It defines a common
carrier as an entity that “holds itself out to the general public to provide
transportation by water of passengers or cargo between the United States
and a foreign country for compensation,” assumes responsibility for all
1. The U.S. Bureau of Labor Statistics distinguishes the two as follows:
“Ocean liner vessels operate by definition via regular schedules. They
differ from tramp and tanker ocean shipping services in that these latter
vessels operate irregular schedules determined by negotiation between
shipper and ship owner and generally carry bulk goods and liquid
commodities, respectively.” Measuring Price Change for Inbound Ocean
Liner Freight in the U.S., Import/Export Price Indexes, BUREAU OF
LABOR STATISTICS, available at
2. See Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89
(2010) (generally describing containerized movements under intermodal
through bills of lading).
3. See, e.g., Stolt-Nielsen, S.A. v. United States, 442 F.3d 177 (3d Cir.
2006) (discussing prosecution of tanker operators for bid rigging and
customer allocation).
Antitrust Issues in the Ocean Shipping Industry 229
of the transportation, and uses for all or part of the transportation a vessel
operating between a U.S. port and foreign port.5 The Shipping Act
expressly does not apply, however, to transportation by “ferry boat,
ocean tramp, or chemical parcel-tanker.”6
As with other modes of transportation, the key to common carrier
status is that the carrier holds itself out to provide service to the public
generally.7 Using the bus/taxi analogy, a bus holds itself out to carry any
passengers who present themselves along the appointed route and pay the
fare, while a taxi is generally engaged by a single party for a single trip
on an unscheduled route. Other relevant factors include the variety and
type of cargo carried and the number of shippers whose cargo is carried
on the voyage.8 Bulk carriers usually do not operate as common carriers,
but are considered as such if they carry cargo for multiple parties on a
5. Id. § 40102(6).
6. Id.; see United States v. Stephen Bros. Line, 384 F.2d 118, 124 n.16 (5th
Cir. 1967) (“A tramp is a carrier transporting on any one voyage cargo
supplied by a single shipper only under a single charter party or contract
of affreightment. The best example of such a carrier is the tanker.”)
(internal quotations and citations omitted). As discussed more fully in the
next part, the Shipping Act applies only to common carriers in the U.S.
foreign trades. Carriers in the domestic and offshore trades are regulated
under separate statutes that are far less extensive than the Shipping Act
and do not provide an exemption from the antitrust laws.
7. See, e.g., Rose Int’l v. Overseas Moving Network Int’l, 29 S.R.R. 119,
162 (F.M.C. 2001) (“The most essential factor is whether the carrier
holds itself out to accept cargo from whoever offers to the extent of its
ability to carry, and the other relevant factors include the variety and type
of cargo carried, number of shippers, type of solicitation utilized,
regularity of service and port coverage, responsibility of the carrier
towards the cargo, issuance of bills of lading or other standardized
contracts of carriage, and the method of establishing and charging rates.”)
FMC cases were reported in an official reporter titled Federal Maritime
Commission Reports (F.M.C.) until 1987, when publication of those
reports was discontinued. The agency’s cases, along with other agency
issuances, continued to be reported in Pike and Fischer’s Shipping
Regulation Reporter (S.R.R.) until that service was discontinued after
2009. Agency issuances are now available in slip opinion form on the
agency’s website at
default1.aspx and are also collected in a Westlaw database. The agency
and many practitioners continue to cite to the FMC and SRR reports
where cases are available in that form, and that convention is followed
8. Rose International, 29 S.R.R. at 162.

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