Acting Chairman Michael A. Khouri’s Statement on the Ro/Ro Carrier Agreement Vote

Ro/Ro Carriers – Limited Joint Procurement Authority

I voted to allow the amendment to the Ro/Ro carrier agreement (FMC No. 012309-001) to go into effect on January 23, 2017, without further intervention by the Commission based on the well-reasoned staff economic analysis that concluded that there were no substantive concerns with potential anticompetitive effects or behavior or adverse consequences to our Nation’s ports or American importers or exporters. My vote document also noted the following comment:

I approve the staff recommendation with an assumption that any joint request for proposal and any resulting tug contract for services would provide that (1) the rate and terms would be confidential as between the agreement members and the tug company, and that (2) the rate and terms would be applicable only to agreement members’ vessels operating within the parameters and trades of the filed agreement.

Two Commissioners joined my comment, making that provision a majority position.

As further commentary, I believe that a facially fair reading of the Shipping Act would hold that the referenced amendment to the Ro/Ro agreement would be governed first by Section 4, Agreements Within Scope of Act, 46 USC section 40301. Since the agreement is by or among two or more ocean common carriers, it must be filed with the Commission. Second; however, the amendment is further governed by Section 7(b)(1), 46 USC section 40307 (b)(1) that provides:

Exceptions. This Act does not extend antitrust immunity . . . to any [ocean common carrier] agreement with or among . . . common carriers by water not subject to this Act with respect to transportation within the United States.

The U.S. domestic tug companies hold themselves out to the public for water transportation service and assistance in the final few miles of the ocean common carriers’ voyage into the port berth. Therefore, they would fall within the general definition of a “common carrier by water not subject to the Act . . .”.

The end conclusion would be that, while the amendment to the Ro/Ro carrier agreement must be filed with the Commission for economic and legal review under the Shipping Act, any commercial activity pursuant to the amendment concerning U.S. coastal and harbor tugs would not receive antitrust immunity by virtue of the Shipping Act. By analogy, this is the same process and legal result that would obtain where a Joint Venture agreement between various defined companies in other industries would be required to pre-file a notice with the Federal Trade Commission / Department of Justice. After economic and legal review, those federal agencies could allow the agreement to go into effect; however, their decision to not take an enforcement action would not bestow any vestige of antitrust immunity.

Michael A. Khouri is the Acting Chairman of the U.S. Federal Maritime Commission. The thoughts and comments expressed here are his own and do not necessarily represent the position of the Commission.