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FMC allows foreign ro-ro carriers to negotiate jointly for tug services

Jan 25, 2017 02:11 PM

Commissioner William Doyle, in opposition, says the amendment 'opens the door to anti-competitive behavior'

The following is the text of a news release from the Federal Maritime Commission (FMC):

(WASHINGTON) — Roll-on/roll-off vessels deployed in services covered by the WWL/EUKOR/ARC/Glovis Cooperative Working Agreement (FMC No. 012309-001) will be permitted to engage in joint negotiation for the procurement of tug services at all U.S. ports beginning Jan. 23, 2017.

The Federal Maritime Commission voted on Jan. 19 to allow the amendment to the existing agreement to come into force.

"The parties to the WWL/EUKOR/ARC/Glovis Cooperative Working Agreement sought very limited new authority in terms of joint procurement," said Mario Cordero, chairman of the Federal Maritime Commission. "Careful analysis of what was proposed yielded no concerns about potential anticompetitive behavior or adverse consequences to ports, or the American shipper. Ultimately, this amendment should increase efficiencies, benefiting our nation’s port gateways."

Parties to the agreement are Wallenius Wilhelmsen Logistics; EUKOR Car Carriers Inc.; Hyundai Glovis Co. Ltd.; and American Roll-on Roll-off Carrier LLC.

The following is the text of a letter from FMC Commissioner William P. Doyle:

(WASHINGTON) (Jan. 19) — Today, I voted to disapprove the roll-on/roll-off (ro-ro) WLL/Eukor/ARC/Glovis Cooperative Working Agreement amendment involving Wallenius Wilhelmsen Logistics AS (WWL), Eukor Car Carriers Inc. (Eukor), American Roll-on Roll-off Carrier LLC (ARC), and Hyundai Glovis Co. Ltd. (Glovis) (collectively parties).

This amendment filed with the Federal Maritime Commission seeks to broaden the authority of the parties to jointly solicit bids for contracts covering the provision of tug services, and allow the parties to negotiate and enter into joint contracts with respect to such services. The amendment will become effective on Jan. 23, 2017. The maritime business community operating in and around the American waterways — rivers, coasts, Great Lakes and harbors — raised objections to the joint contracting and procurement language. Tens of thousands of family wage jobs are supported by these service providers and the U.S. coastal and inland waterways fleet.

In comments received to the amendment, the American Waterways Operators states in part:

"… Foreign carriers should not be permitted to collectively negotiate rates with domestic maritime service providers, including tugboat operators. Such a provision would allow ocean carriers to gain an advantaged bargaining position because domestic entities have no counterbalancing ability to take collective action with immunity from the antitrust laws of the United States."

In a recent 3rd Circuit U.S. Court of Appeals decision dated Jan. 18, 2017, the court acknowledged, "Broadly, the Shipping Act establishes a uniform federal framework for regulating entities, such as ocean common carriers, and attempts to place U.S.-flag vessels on a level economic playing field with their foreign counterparts." In Re: Vehicle Carrier Services Antitrust Litigation, U.S. Court of Appeals for the 3rd Circuit, Nos. 15-3353, 15-3354 and 15-3355. Certainly, allowing foreign carriers to use their collective power to negotiate against individual U.S.-flag tugboat owners and operators does not create a level playing field for the tug vessels. It’s not a fair practice.

"The primary purpose of the Shipping Act … is to eliminate discriminatory treatment of shippers and carriers." Waterfront Comm’n of N.Y. Harbor v. Elizabeth-Newark Shipping Inc., 164 F.3d 177, 185 (3d Cir. 1998). The FMC's mission statement is: To foster a fair, efficient and reliable international ocean transportation system and to protect the public from unfair and deceptive practices. Indeed, the FMC's vision statement is: Fairness and efficiency in the U.S. maritime commerce.

Prior to this amendment, the parties were required to negotiate separately with individual tug services.

This amendment reaches beyond the scope of the Shipping Act of 1984. Under the Shipping Act, antitrust immunity is permissible to certain agreements among and between ocean common carriers and marine terminal operators. 46 U.S.C. 40101, 40301, 40307. U.S.-flag tug service providers are not ocean common carriers and they are not marine terminal operators.

Under this amendment we are now witnessing the use of the Shipping Act to actually undermine the U.S.-flag domestic fleet, in this case tugboat operators. I support the Shipping Act and recognize the important role of the commission in granting limited antitrust immunity to foster a fair, efficient and reliable international ocean transportation system. This amendment tilts the playing field for certain international carriers and opens the door to anti-competitive behavior resulting in adverse consequences for U.S.-flag maritime service providers, their mariners, and the domestic shipyard industry.

William P. Doyle is a commissioner with the U.S. Federal Maritime Commission, which among other things regulates liner companies, ocean transportation intermediaries and marine terminal operators. The thoughts and comments he expresses here are his own and should not be construed to represent the position of the commission or his fellow commissioners.

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