[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
PIER PRESSURE: REGULATION AND COMPETITION
IN MARITIME SHIPPING
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,
REGULATORY REFORM, AND ANTITRUST
COMMITTEE ON THE JUDICIARY
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
TUESDAY, MARCH 17, 2026
__________
Serial No. 119-59
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: http://judiciary.house.gov
__________
U.S. GOVERMENT PUBLISHING OFFICE
63-145 WASHINGTON : 2026
=======================================================================
COMMITTEE ON THE JUDICIARY
JIM JORDAN, Ohio, Chair
DARRELL ISSA, California JAMIE RASKIN, Maryland, Ranking
ANDY BIGGS, Arizona Member
TOM McCLINTOCK, California JERROLD NADLER, New York
THOMAS P. TIFFANY, Wisconsin ZOE LOFGREN, California
THOMAS MASSIE, Kentucky STEVE COHEN, Tennessee
CHIP ROY, Texas HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT FITZGERALD, Wisconsin Georgia
BEN CLINE, Virginia ERIC SWALWELL, California
LANCE GOODEN, Texas TED LIEU, California
JEFFERSON VAN DREW, New Jersey PRAMILA JAYAPAL, Washington
TROY E. NEHLS, Texas J. LUIS CORREA, California
BARRY MOORE, Alabama MARY GAY SCANLON, Pennsylvania
KEVIN KILEY, California JOE NEGUSE, Colorado
HARRIET M. HAGEMAN, Wyoming LUCY McBATH, Georgia
LAUREL M. LEE, Florida DEBORAH K. ROSS, North Carolina
WESLEY HUNT, Texas BECCA BALINT, Vermont
RUSSELL FRY, South Carolina JESUS G. ``CHUY'' GARCIA, Illinois
GLENN GROTHMAN, Wisconsin SYDNEY KAMLAGER-DOVE, California
BRAD KNOTT, North Carolina JARED MOSKOWITZ, Florida
MARK HARRIS, North Carolina DANIEL S. GOLDMAN, New York
ROBERT F. ONDER, Jr., Missouri JASMINE CROCKETT, Texas
DEREK SCHMIDT, Kansas
BRANDON GILL, Texas
MICHAEL BAUMGARTNER, Washington
------
SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,
REGULATORY REFORM, AND ANTITRUST
SCOTT FITZGERALD, Wisconsin, Chair
DARRELL ISSA, California JERROLD NADLER, New York, Ranking
BEN CLINE, Virginia Member
LANCE GOODEN, Texas J. LUIS CORREA, California
HARRIET HAGEMAN, Wyoming BECCA BALINT, Vermont
MARK HARRIS, North Carolina JESUS G. ``CHUY'' GARCIA, Illinois
DEREK SCHMIDT, Kansas ZOE LOFGREN, California
MICHAEL BAUMGARTNER, Washington HENRY C. ``HANK'' JOHNSON, Jr.,
Georgia
CHRISTOPHER HIXON, Majority Staff Director
ARTHUR EWENCZYK, Minority Staff Director
C O N T E N T S
----------
Tuesday, March 17, 2026
OPENING STATEMENTS
Page
The Honorable Scott Fitzgerald, Chair of the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust from the
State of Wisconsin............................................. 1
The Honorable Jerrold Nadler, Ranking Member of the Subcommittee
on the Administrative State, Regulatory Reform, and Antitrust
from the State of New York..................................... 3
The Honorable Jamie Raskin, Ranking Member of the Committee on
the Judiciary from the State of Maryland....................... 5
WITNESSES
Erika M. Douglas, Associate Professor of Law, Temple University
Oral Testimony................................................. 8
Prepared Testimony............................................. 11
Tony Rice, Senior Director, Trade Policy, National Milk Producers
Federation
Oral Testimony................................................. 26
Prepared Testimony............................................. 28
Richard Sicotte, Professor of Economics, University of Vermont
Oral Testimony................................................. 38
Prepared Testimony............................................. 40
Diana Moss, Vice President, Director, Competition Policy,
Progressive Policy Institute
Oral Testimony................................................. 42
Prepared Testimony............................................. 44
LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING
All materials submitted for the record by the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust are
listed below................................................... 65
Materials submitted by the Honorable Becca Balint, a Member of
the Subcommittee on the Administrative State, Regulatory
Reform, and Antitrust from the State of Vermont, for the record
An article entitled, ``NY Fed report says Americans pay for
almost all of Trump's tariffs,'' Feb. 12, 2026, Reuters
An article entitled, ``One-Third of Americans Cut Back to
Cover Healthcare Expenses,'' Mar. 12, 2026, Gallup
An article entitled, ``Oil Rises, Bringing Gains to 40% Since
the Start of the War,'' Mar. 12, 2026, The New York Times
APPENDIX
Materials submitted by the Honorable Scott Fitzgerald, Chair of
the Subcommittee on the Administrative State, Regulatory
Reform, and Antitrust from the State of Wisconsin, and the
Honorable Jerrold Nadler, Ranking Member of the Subcommittee on
the Administrative State, Regulatory Reform, and Antitrust from
the State of New York, for the record
A document entitled, ``Ocean Freight Shipper Bill of
Rights,'' Mar. 2025, The National Industrial
Transportation League
A statement from The National Industrial Transportation
League, Mar. 25, 2026
QUESTIONS AND RESPONSES FOR THE RECORD
Questions and response for Tony Rice, Senior Director, Trade
Policy, National Milk Producers Federation, submitted by the
Honorable Ben Cline, a Member of the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust from the
State of Virginia, for the record
PIER PRESSURE: REGULATION AND COMPETITION IN MARITIME SHIPPING
----------
Tuesday, March 17, 2026
House of Representatives
Subcommittee on the Administrative State,
Regulatory Reform, and Antitrust
Committee on the Judiciary
Washington, DC
The Subcommittee met, pursuant to notice, at 10 a.m., in
Room 2141, Rayburn House Office Building, the Hon. Scott
Fitzgerald [Chair of the Subcommittee] presiding.
Members present: Representatives Issa, Gooden, Harris,
Nadler, Raskin, Balint, Lofgren, and Johnson.
Mr. Fitzgerald. [Presiding.] The Subcommittee will come to
order. Without objection, the Chair is authorized to declare a
recess at any time.
We welcome everyone to today's hearing. Happy St. Patrick's
Day.
This hearing on regulation and competition in the maritime
shipping industry is a Subcommittee hearing we have wanted to
tackle for some time.
I will now recognize myself for an opening statement.
Today, we are here to examine the statutory antitrust
exemption granted under the 1916 Shipping Act and its impact on
competition and consumers. Since the earliest day of maritime
shipping, ocean carriers have entered into cooperative
agreements to coordinate freight capacity and global shipping
routes. This was to ensure space abroad; a vessel didn't go
unused, and ships would not be arriving at the same ports at
the same time.
Recognizing that these cooperative agreements, known as
``conferences,'' could act to restrict or eliminate competition
between rival shippers, Congress began studying the issue. What
Congress concluded was that, while there were certainly
anticompetitive aspects of these conferences, the benefits seem
to outweigh any potential harm.
In the words of a 1914 Alexander report, quote,
To terminate the existing agreements would bring about two
results. The steamship lines would either engage in rate wars,
or to eliminate a costly struggle, they would consolidate
through common ownership.
Congress' compromise came in the Shipping Act of 1916. As
part of that compromise, ocean carriers could enter into
collective agreements, so long as those agreements were filed
with and overseen by a Federal regulator, which today is known
as the Federal Maritime Commission, or the FMC.
The industry today, however, looks very different from the
one Congress confronted in 1916. In 1998, the top 20 ocean
carriers controlled approximately 50 percent of the world's
container slot capacity. By 2018, that number had almost
doubled to nearly 90 percent. Today, three global shipping
alliances together control nearly all transatlantic and
transpacific trade.
The intent behind the Shipping Act was also to advance the
interests of American shippers. As one scholar had put it,
``Both the original statute and the 1961 amendments are
designed to protect and foster a strong American flag merchant
marine.'' In other words, Congress wanted to protect American
interests against discrimination by foreign shippers.
Yet, today, the largest ocean shipping companies are all
foreign-owned and controlled. In the list of the top 20
container shipping companies by market cap, there is not a
single U.S. company.
The United States depends on foreign flag vessels for 97
percent of its maritime trade. COSCO Shipping, one of the
largest container shipping companies by market share, is owned
and controlled by the Chinese Communist Party. That presents
its own national security risks, which the House Committee on
Homeland Security and the China Select Committee have been
investigating.
This concentration and coordination can exacerbate supply
chain disruptions that would otherwise be more resilient when
competition is robust. For example, during the COVID pandemic,
freight rates for a container increased from $1,300 to as much
as $11,000.
When geopolitical crises have struck, such as the Russia-
Ukraine conflict, or more recently, the ongoing air strikes
against the Iranian regime, ocean carriers have leveraged their
monopoly power to charge detention and demurrage fees,
surcharges, and other fees that should, instead, be charged by
marine terminal operators.
What would otherwise be unreasonable business practices in
a competitive environment; it appears to be routine under these
anticompetitive alliances. The result of the Shipping Act, as
we have seen, may have, unfortunately, been precisely what
Congress was hoping to avoid--concentration of foreign shipping
companies, to the detriment of American businesses and
consumers.
When Congress granted the antitrust exemption, it tasked
the Federal Maritime Commission with subjecting these ocean
carrier agreements to antitrust scrutiny. However, as one of
our witnesses will explain today, the FMC has never once
brought a case against the powerful ocean shipping carriers
that dominate shipping markets. Despite having the statutory
authority to seek a judiciary remedy or monetary penalties, the
FMC has never taken an enforcement action to challenge an
agreement. Some will call this ``underenforcement.'' It could
be called a dereliction.
Over the years, the FMC has maintained the position that
competition was vigorous among ocean carriers and their three
major shipping alliances. Even after the COVID pandemic, in
which the United States faced some of its greatest supply chain
challenges, the FMC reported to Congress that, ``Competition
among ocean common carriers, among the three major alliances,
and among the members in each of these alliances is vigorous.''
That argument is in tension with the position taken by
Congress and the DOJ in recent years. When Congress passed the
Ocean Shipping Reform Act of 2022, it did so to alleviate
concerns among businesses that ocean-carrying alliances were,
quote, ``able to wield excessive power to prevent
competition.'' Yet, despite Congress giving the FMC more
authority to police the carriers in the terms of their
agreements, it appears the agency is still sitting on its
hands.
The DOJ, meanwhile, has long maintained the position that
antitrust exemption for ocean shipping is no longer justified,
and has repeatedly submitted comments to the FMC expressing
antitrust concerns over ocean carrier alliances.
In 2016, for example, the DOJ submitted comments urging the
FMC to oppose the proposed Ocean Alliance Agreement. In their
comments, the DOJ stated that the agreement ``contemplates
extensive cooperation among members and would grant the parties
the ability to broadly coordinate service between routes,
including the unfettered exchange of competitively sensitive
information.''
Additionally, the DOJ stated, ``The increase in
concentration in the transpacific shipping market is presumed
likely to enhance market power under the antitrust laws.''
Despite this warning, the FMC authorized the Ocean Alliance in
2016, and has continued to extend the agreement, most recently,
until March 2032.
An economy based on vigorous competition protected by the
antitrust laws does the best job of promoting consumer welfare
and a vibrant, growing economy. Statutory antitrust exemptions
are antithetical to those principles.
As the bipartisan Antitrust Modernization Commission
stated,``Statutory exemptions from the antitrust laws
undermine, rather than upgrade, the competitiveness and
efficiency of the U.S. economy.''
When Congress grants immunity from antitrust scrutiny, we
must do so selectively and with consumers in mind. When
compelling evidence suggests consumers no longer benefit from
an antitrust exemption, it is appropriate for Congress to
reexamine whether it is still in the public interest to allow
otherwise anticompetitive behavior to continue unchecked.
That is why we are here today, to better understand the
history of the Shipping Act and whether, after nearly 100
years, it is still in the consumers' best interests.
We will also hear today whether other government
regulations, such as environmental regulations in international
shipping, or restrictions in domestic maritime shipping, like
the Jones Act, are negatively impacting shipping prices and
harming consumers.
I look forward to hearing from our witnesses and hearing
what they have to say today. Thank you.
I now recognize the Ranking Member, Mr. Nadler, for an
opening statement.
Mr. Nadler. Thank you, Mr. Chair. Mr. Chair, in this
senseless war, there is no defined goals and no end in sight.
With gas prices skyrocketing and with an affordability crisis
that is draining Americans' pocketbooks, and is only getting
worse, a hearing to examine maritime shipping rules does not
exactly meet the moment.
The affordability crisis touches nearly every aspect of our
lives. Staple grocery costs have risen more than three percent
over the last year--causing many Americans to struggle just to
put food on the table. The rent and mortgage payments are
stretching families' budgets, with many young people priced out
of the housing market altogether. Utilities are up an average
of 12 percent from last year, and health insurance premiums
have gone through the roof, especially after Republicans let
critical subsidies expire. On top of all this, gas prices have
risen sharply since Trump attacked Iran, and are climbing
higher by the day.
It is no wonder that consumer confidence is the lowest it
has been since 2014. Americans are feeling the freeze, but
Republicans have done nothing to ease their pain and many of
their policies are only making it worse.
The increased costs faced by consumers have been fueled in
large part by the global trade war launched by President Trump
last year, which has taken aim at friends and enemies alike.
Instead of taking a targeted and thoughtful approach to trade
that would protect American industries, workers, and consumers,
Trump has taken a scattershot approach--imposing steep tariffs
across the board that are driving up prices for American
consumers and businesses, while doing very little to bring
investment to our shores.
By one estimate, American consumers have paid more than
$230 billion in tariff costs since the Trump Administration
began. That's more than $1,700 per family. Even though the
Supreme Court has struck down some of the tariffs, significant
others remain, and the refunds mandated by the courts will go
to businesses, not consumers.
At the same time, President Trump has taken this country to
war with Iran--without making the case to the American public
or seeking congressional authorization. Iran has now retaliated
by shutting down the Strait of Hormuz, through which one-fifth
of the world's oil supply travels--a response that comes as a
surprise to no one, except Donald Trump. As a result, the price
of oil is already over $100 a barrel and gas prices are
skyrocketing.
Rigorous enforcement of the antitrust laws could be a
powerful tool in the effort to address the affordability
crisis, but instead, this administration has corrupted the
antitrust process--rewarding their political allies, punishing
their perceived enemies, and firing the career professionals
and other officials who have refused to cater to industry
lobbyists or to carry out a toothless enforcement scheme.
The ask of the senior leadership in the DOJ's Antitrust
Division appears to have cleared the path for one of the most
egregious examples of lax enforcement--the government's
sweetheart deal with Live Nation-Ticketmaster. The monopolistic
power of this company has been known ever since Live Nation and
Ticketmaster first proposed merging in 2009. At the time, I
urged my colleagues--I joined my colleagues in warning about
the impact it would have on consumers. Although the merger was
approved, I am sad to say that our concerns turned out to be
well-founded.
The millions of Americans have felt the effects of Live
Nation-Ticketmaster's anticompetitive practices. When they
bought a ticket to a concert, performed in a local production,
or worked at an auditorium, they saw how the company drove up
ticket prices, limited tour dates, or prevented other companies
from entering the market.
Given this awful record, I sought reexamination of the
merger by the antitrust enforcers in 2021. Thankfully, in 2024,
the Biden Administration and 40 State Attorneys General sued
Live Nation-Ticketmaster for monopolizing markets across the
live entertainment industry.
At the time, I said, quote,
Since its merger in 2010, Live Nation-Ticketmaster has engaged
in boldly anticompetitive practices at the expense of
consumers, entertainers, venues, and vendors. Instead of
cooperating with the terms of its consent decree with the
Department of Justice, the company has only grown more brazen
in its tactics to corner the primary and secondary ticket
markets.
Despite having a slam-dunk case, days into trial, the Trump
Administration suddenly settled the case for practically
nothing--leaving venues, performers, and consumers out in the
cold. The case was settled so abruptly that the judge even
admonished the government and Live Nation-Ticketmaster for
their quote, ``absolute disrespect for the court, the jury, and
the entire process.''
This case is not only the most recent, but also one of the
most damning examples of how corrupt the Republican-controlled
DOJ is. As one former antitrust official noted, ``You really
couldn't send a clearer message that antitrust is dead at the
Federal level than settling this particular case.''
Thankfully, most of the State Attorneys General involved in
the case dejected the settlement and vowed to continue the
litigation. The Trump Administration, on the other hand,
appears content to allow consumers to pay more for less.
Such a sorry state of affairs cries out for congressional
oversight, but the Republican majority has been silent, while
the Trump Administration guts the antitrust enforcement
agencies that should be protecting consumers, not companies.
Mr. Chair, market consolidation, unpredictable tariffs, and
the war in Iran are all driving prices up, but this hearing is
designed to address none of these pressing issues. By all
means, we should examine the maritime shipping industry at some
point, but the affordability crisis is urgent right now, and it
is growing worse. That is where our attention should lie today.
I yield back.
Mr. Fitzgerald. The gentleman yields back. We are waiting
for Chair Jordan. I will now recognize the Ranking Member of
the Full Committee, Mr. Raskin, for his opening statement.
Mr. Raskin. Mr. Chair, thank you very much. Thanks to the
witnesses for joining us today.
A majority of Americans feel like they're getting priced
out of Donald Trump's new gilded age in America. A third of
Americans, around 82 million people, are skipping meals or
basic healthcare to pay for utilities. Prices for food staples
like eggs, sugar, and meat jumped up in 2025 and are climbing
every day.
Whether you rent or own, housing is becoming more
unaffordable for the working middle class, while Donald Trump
bulldozes the White House and throws ``Great Gatsby parties''
at Mar-a-Lago for his billionaire Cabinet and the fellow stars
of the Epstein files.
Forget owning a house, when three-quarters of Americans say
that buying a new car is out of reach. If you have got a car,
driving it is becoming ludicrously expensive, as gas prices
have shot up 25 percent just in the last few weeks--with
Trump's ``war of choice'' in the Middle East. Gas prices are
soaring every day, as the theocrats of Iran retaliate by
shutting down the shipment of oil through the Strait of Hormuz,
and Donald Trump spends $2 billion a day on this war that we
never declared and didn't even debate--putting it on America's
imaginary credit card and driving up our deficit and our
national debt.
President Trump's impulsively stupid policies and the
invertebrate response of Republicans in Congress have made life
even more expensive and difficult for our people. Republicans
refuse to address the healthcare crisis, and instead, chose to
cut Medicaid and the tax credits that help make healthcare
affordable and accessible to millions of people.
Meantime, monopolies and corporate giants rule in Trump's
economy. The MAGA-controlled agencies have waved through giant
mergers in the real estate market, which means that you pay
more for a home and have fewer options for buying one. They
also settled slam-dunk rent price-fixing cases, where major
landlords across America conspire to set the rent that you pay
for your home, ensuring that they will get richer while you
spend more on rental housing.
Just last week, the DOJ OKed an obviously corrupt
settlement of the Live Nation-Ticketmaster suit, which may
appease MAGA's big business campaign funders, but will do
nothing to lower the exorbitant prices that people pay to see
live entertainment. The government originally accused Live
Nation-Ticketmaster, a multibillion-dollar live-event business,
of stifling competition, coercing artists and venues into using
its services, and driving up ticket prices for millions of
fans, while pocketing bloated profits. Under the Trump
Administration, this years-long case has been quietly settled
with no changes for the millions of American consumers,
artists, venues, and competitors that this business injured and
overcharged.
President Trump promised that foreign countries, not
Americans, would pay for his giant and illegal tariffs, and he
promised that those tariffs would create jobs. Both promises
turned out to be empty. President Trump's tariffs, which he
applied unilaterally, haphazardly, and unevenly, of course,
unconstitutionally--failed to create new jobs, and instead,
effectively, taxed every American more than $2,500. A study by
the Fed shows that 90 percent of these costs were paid by
American companies and American consumers, not by China or any
other foreign country.
The resulting brutal affordability squeeze has landed most
heavily on people who also lost critical social services, like
SNAP food stamp benefits, children's health insurance, Medicaid
and Medicare, and funding for rural hospitals--when House
Republicans passed their One Big Ugly Class Warfare Bill.
Our government actually has the agency tools needed to
address the Trump affordability crisis, but Trump has either
totally dismantled them or corrupted them. He has broken the
agencies that protect us against fraud, scams, and financial
conspiracies.
He has fired any antitrust official who has disagreed with
his policy of giving political allies a green light to swallow
up their competitors. Last month, he abruptly dismissed
Assistant Attorney General Gail Slater, who was often the only
dissenting voice, as lobbyists in backrooms and White House
insiders pushed mergers that are terrible for consumers and
driving us toward an economy run by oligarchs.
The Majority has conducted zero oversight of these
antitrust corruption debacles--leaving it to the Democrats to
invite as a witness Gail Slater's Deputy, Roger Alford, who was
fired for raising concerns about rank pay-to-play corruption
and self-dealing in the GOP-controlled antitrust agencies.
Alford implored us in this room to conduct oversight of the
Antitrust Division before it is too late for America. A two-
term Trump official, thus, begged us to do our jobs to protect
the American people, but it has fallen on deaf ears among our
colleagues.
President Trump's policies and Republican inaction mean
that today Americans cannot afford daily life, but Trump and
the billionaire class are getting richer every day. Just four
tech billionaires--Elon Musk, Mark Zuckerberg, Jeff Bezos, and
Jensen Huang--all whom donated to Trump's inauguration, they
made $288 billion in less than one year. By contrast, the
American people paid $2,500, on average, last year for higher
prices, thanks just to the tariffs alone.
The President has said that the affordability crisis is,
quote, ``a hoax, a con job, a scam,'' but his illegal tariffs
were the hoax. His claim to support release of the Epstein
files is the con job, and his illegal unilateral war in Iran,
which is costing us more than a billion dollars a day, and 13
American lives already, and more than a thousand Iranian lives,
including children, is the scam.
The real fraud is President Trump's personal net worth
going up $1.4 billion in his first year of his second term, and
his son-in-law Jarad Kushner raking in $2 billion from the
Saudis and more than $1.5 billion from Qatar, while exercising
a lot more decision over the decision to go to war than any of
the Members in this room did combined.
What are we here today to discuss? An esoteric antitrust
exemption about shipping. Now, in normal times, I might
appreciate an examination of this or any other antitrust
exemption, but these aren't normal times and this Majority
isn't even prepared to reform the exemption in any event--
something I would certainly be open to discussing.
The millions of Americans literally cannot afford now to
get medicine or pay for housing or for groceries in Trump's
economy. We must do everything we can to try to help the people
now with the tools that are actually at our disposal. Instead,
our Republican colleagues have called us here to discuss a
niche antitrust exemption unlikely to change anytime soon.
The ship of State is taking on water rapidly every day and
starting to sink, but our colleagues want to have a debate
about diversionary things. Count me out.
Thank you, Mr. Chair. I yield back.
Mr. Fitzgerald. The gentleman yields back.
I would just make the comment that, as a namesake of Scott
Fitzgerald, I thought it was a cheap shot that you brought up
the ``Great Gatsby-style parties.''
[Laughter.]
Mr. Raskin. I meant it only as the highest form of
flattery. Right?
Mr. Fitzgerald. Thank you. The gentleman yields back.
Without objection, all other opening statements will be
included in the record. We will now introduce today's
witnesses.
Professor Erika M. Douglas. Ms. Douglas is an Associate
Professor of Law at Temple University's Beasley School of Law.
Her scholarship focuses on antitrust, data privacy, and
intellectual property law. Professor Douglas previously worked
in private practice, where she focused on antitrust and
technology-related matters.
Mr. Tony Rice. Mr. Rice is senior director of trade policy
at the National Milk Producers Federation, an association of
dairy producers and cooperatives. Mr. Rice focuses on matters
relating to U.S. dairy exports.
Professor Richard Sicotte. Mr. Sicotte is an Assistant
Professor in the Department of Economics at the University of
Vermont. Professor Sicotte, his work focuses on economic
history, industrial organization, political economy, and
international economics.
Ms. Diana Moss. Ms. Moss is a Vice President and the
Director of Competition Policy at the Progressive Policy
Institute. Her work focuses on antitrust enforcement and sector
regulation.
We welcome our witnesses and thank them for appearing
today. We will begin by swearing you in. Would you please rise
and raise your right hand?
Do you swear or affirm under penalty of perjury that the
testimony you are about to give is true and correct, to be the
best of your knowledge, information, and belief, so help you
God?
Let the record reflect that the witnesses have answered in
the affirmative. You can take your seat, please.
Please know that your written testimony will be entered
into the record in its entirety. Accordingly, we ask that you
summarize your testimony in five minutes.
Professor Douglas, you may begin.
STATEMENT OF ERIKA M. DOUGLAS
Ms. Douglas. Thank you, Chair Fitzgerald, Ranking Member
Nadler, and the distinguished Members of the Subcommittee.
My name is Erika Douglas. I'm an Associate Professor of Law
at Temple University in Philadelphia. I've been dedicated to
antitrust law for over 15 years--first, in private practice,
then at major law firms, and now, as a professor and leader at
organizations like the ABA.
My research examines how antitrust interacts with
regulation. Ordinarily, antitrust law applies across the
economy to prevent anticompetitive agreements among rivals.
That is not the case in international ocean shipping. Antitrust
law is blocked by Section 4307 of the Consolidated Shipping
Act. This section shields certain agreements among rivals that
are filed with the Federal Maritime Commission. This ocean
shipping exemption is one of the oldest in antitrust law. It's
not clear that it was ever justified, and it certainly is not
today.
Congress created this exemption based on the mistaken view
that ocean shipping had special economics; that free
competition would cause the industry to fall apart from
overcapacity and rate wars. We've known for decades that this
is not true.
From the 1990s onward, ocean shipping has been increasingly
deregulated. It has not led to industry collapse. Antitrust
courts have long rejected the concept of ruinous competition.
This German act rightly assumes that competition benefits the
consumers that we're concerned about here today. Antitrust
should coexist with ocean shipping regulation, just as it does
with regulation in other industries, like airlines,
telecommunications, and securities.
The second reason for this exemption was to even the
playing field for American carriers in international shipping
competition. This rationale also no longer makes sense. There
are no major American carriers left. The European Union has
repealed its own shipping exemption. Today, the U.S. exemption
serves only to shield foreign carriers from our antitrust
laws--at the expense of American shippers and consumers.
It's important to understand that, in place of the usual
antitrust laws, ocean shipping has a partial substitute that is
not being used. The FMC holds the exclusive statutory power to
challenge ocean carrier agreements that result in an
unreasonable reduction in service or increase in cost.
My research shows that the FMC has never brought such a
case, despite holding this power for over 40 years. This record
suggests that the FMC tolerates greater competitive risk than
would antitrust law, although the agency's analysis often lacks
transparency.
This legal landscape is concerning to me as an antitrust
scholar because the ocean shipping industry bears at least
three classic hallmarks of antitrust risk.
First, it's highly concentrated. The industry is dominated
by three major alliances which account for up to 95 percent of
ocean shipping. As recently as 2011, this figure was only 30
percent. Concentration increases the risk of antitrust
violations by making collusions easier.
Second, ocean shipping has an unusual web of agreements
among competitors. The FMC has over 360 agreements on file. The
big three alliance agreements allow rivals to decide jointly on
the volume of cargo they ship and when vessels are deployed.
The First Circuit recently confirmed that a similar agreement
between airlines violated Section 1 of the Sherman Act.
Finally, there's recent collusion in this industry. Where
antitrust jurisdiction remains, the DOJ has been vigilant in
bringing criminal charges. Carriers have colluded in the
shipment of vehicles and farm equipment, and price-fixed in
food and medicine shipped to Puerto Rico. These cartels harm
any American consumer who buys goods that travel by ship. These
factors create a perfect storm for anticompetitive conduct. If
there's consensus around one issue in antitrust trust, it's
that these sorts of exemptions are rarely justified.
I would encourage you to consider the repeal of the arcane
ocean shipping exemption to free antitrust law to protect
American shippers, ports, and consumers from these risks.
Thank you.
[The prepared statement of Ms. Douglas follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Fitzgerald. Thank you, Professor Douglas. Mr. Rice, you
may begin.
STATEMENT OF TONY RICE
Mr. Rice. Chair Fitzgerald, Ranking Member Nadler, and the
Members of the Subcommittee, thank you for the opportunity to
testify before you today on the maritime supply chain
challenges faced by the U.S. dairy industry. Having spent 18 or
so years milking cows on my Pennsylvania dairy farm that my
family runs today, this is a true honor.
My name is Tony Rice, and I serve as the Senior Director of
Trade Policy for the U.S. Dairy Export Council and the National
Milk Producers Federation, where I lead supply chain policy
development for both organizations.
America's dairy farmers and the communities they support
depend on reliable access to global markets--with roughly 17
percent of production reaching international customers last
year in the form of cheese, whey proteins, or other dairy
ingredients.
As most dairy products are perishable, maintaining product
integrity throughout the global supply chain is critical.
Shipping disruptions risk compromising product quality and
eroding the confidence that overseas customers play in U.S.
dairy products.
While North America is our most important market, a growing
volume of our exports is reaching overseas customers via
oceangoing vessels. With the U.S.-flagged oceangoing fleet
representing only 2.3 percent of global shipping capacity, U.S.
dairy exporters are almost wholly dependent on foreign entities
to transport their products.
Today, less than a dozen shipping companies dominate the
industry, and most operate within just three large carrier
alliances. While these alliances can create operational
efficiencies for carriers, this also means that exporters have
fewer options when selecting shipping services and less
leverage when negotiating service terms.
To counter this trend, we support efforts to strategically
invest in the domestic maritime sector, including enhancing
capacity for American shipbuilding to strengthen the resilience
of our supply chains by offering exporters more options.
Simultaneously, Congress should consider permitting reform
to expedite new shipyard capacity and investments in mariner
workforce education and training.
Conversely, U.S. dairy exporters are very concerned that
foreign ocean carriers are likely to pass through costs
associated with proposed port fees on foreign-flagged, owned,
or operated ships. In a normal supply environment, additional
fees would incentivize dairy exporters to select U.S.-flagged
carriers instead. Unfortunately, U.S. dairy exporters have
little choice than to contract with a foreign carrier and
likely assume responsibility for any penalty fees--putting them
at a competitive disadvantage to other global suppliers. We
urge the U.S. Government to carefully evaluate the effects of
these penalties on U.S. agricultural exporters.
The pandemic exposed structural imbalances in international
shipping networks, that shippers face extremely limited
container availability, high-port congestion, and unpredictable
vessel schedules. In 2021 alone, our industry lost over $1.5
billion due to missed sales opportunities, reduced product
values, and sharply higher costs associated with unreliable
shipping services.
Frankly, the worst of these issues have abated, but some
underlying problems remain. The persistent issue of unreliable
ocean carrier schedules and limited accountability is an
ongoing source of frustration. While the delays are due to a
number of factors, including weather and port congestion, a
shrinking number of carrier options exacerbates the situation--
with exporters rarely receiving sufficient information about
why a booking was rolled or delayed.
Ocean carriers also maintain control of containers and set
limits on the availability and use of chassis which adds costs
and constrains trucking, drayage, and scheduling options for
export shippers.
We commend the FMC for launching an investigation in
January into whether the ocean carriers have been unreasonably
restricting truckers and shippers from their choice of chassis
providers. Continued FMC oversight is critical to provide a
fairer market for U.S. exporters.
Dairy farmers milk their cows 365 days a year. For a
producer in Wisconsin, these supply chain challenges are not
abstract policy concerns. When export shipments are delayed,
canceled, or become expensive to move, the disruptions ripple
back through the supply chain and, ultimately, affect farm
income.
To ensure competitiveness now, we urge the FMC to maintain
strong oversight over foreign ocean carriers and alliances, and
to enforce the law with respect to reasonable service, and
ensure adequate transparency, particularly regarding schedule
changes and equipment availability. To enable more options, we
support efforts to restore an American maritime industry.
As Congress deliberates these important issues, we
encourage focus on how the ocean carrier market is meeting the
needs of U.S. exporters. Since foreign-owned ocean carriers
receive antitrust exemptions, it is only reasonable that they
treat U.S. exporters fairly.
I appreciate the opportunity to provide comments on these
important issues, and I look forward to your questions. Thank
you.
[The prepared statement of Mr. Rice follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Fitzgerald. Thank you, Mr. Rice. Professor Sicotte, you
may begin.
STATEMENT OF RICHARD SICOTTE
Mr. Sicotte. Thank you. Chair Fitzgerald, Ranking Member
Nadler, and the Members of the Subcommittee, thank you for
inviting me to testify today on regulation and competition in
ocean shipping.
I'm a Professor of Economics at the University of Vermont,
areas of specialization in industrial organization and economic
history. Drawing on my experience researching the shipping
industry and its regulation, my goal is to bring an economic
perspective to the matters before the Committee today.
The Shipping Act of 1916 authorized the predecessor of the
Federal Maritime Commission to approve cartel conference
agreements in ocean shipping, and those agreements so approved
would be immune from the antitrust laws--conference agreements,
fixed rates, coordinated capacity, and sometimes the firms
pooled revenues. Subsequent amendments to the Shipping Act,
effectively, prohibited rate-fixing, but still permit firms to
cooperate intensively in matters of capacity and operations.
Shipping agreements must be submitted to the Federal
Maritime Commission, which, quoting to its 2024 report,
``analyzes these agreements for potential anticompetitive
effects.'' The FMC reported that, at the end of Fiscal Year
2024, there were 360 agreements, 50 of which were subject to
staff monitoring.
From the perspective of U.S. foreign commerce, one could
argue that the most important kinds of agreements are the space
charter agreements, vessel-sharing agreements, and shipping
alliances. First, the space charter agreements, are when one
firm rents space on another firm's ships. Vessel-sharing
agreements are between two or more firms that use space on one
another's vessels and they coordinate capacity. Alliances are
described by the FMC as ``large VSAs'' which are nearly global
in scope.
These agreements provides the backdrop for the adoption of
very large capacity container ships, frequently more than
10,000 20-foot equivalent units on a ship, sometimes twice that
amount. The trend in the industry is toward ever-larger ships.
According to the FMC, Fiscal Year 2024, nearly 90 percent
of U.S. transatlantic and transpacific water-borne commerce was
carried by members of these three shipping alliances. There has
been some realignment among these firms over the past 18
months, so that MSC, a former alliance member, is no longer in
alliance, and another firm joined in a new alliance that was
approved.
These are challenging economic questions--there are
challenging economic questions surrounding these agreements and
their effects.
First, if agreements jointly fix capacity, then they can
exercise market power, even though they do not explicitly
collude on rates.
Second, such close cooperation and information-sharing can
facilitate collusion, tacit or otherwise. A commonly shared
view among the industry, in particular, is that alliances and
vessel-sharing agreements enable firms to achieve economies of
scale and enjoy cost savings that might be passed on, at least
in part, to consumers.
Measuring the efficiency gains that might exist and
quantifying the potential market power or exercise of market
power are really within the expertise of industrial
organization economists. In the context of other industries,
these same issues are analyzed by economists at the Department
of Justice and the Federal Trade Commission, whether in the
context of mergers, cartels, or vertical restraints.
There is very little in the public record that sheds light
on the kinds of analysis being conducted by FMC staff on these
agreements. I don't really understand what kind of economic
analysis they're engaged in. We know that they're monitoring;
we don't know what that entails.
I think that the other witnesses have already spoken to
some of the--for example, Professor Douglas spoke about the
FMC's lack of enforcement of antitrust. They have yet to block
or enjoin any carrier agreement. They acknowledge competitive
concerns, but it's unclear what's actually being done about
them.
Reasonable reform, in my view, would be that the review of
interfirm agreements in ocean shipping be carried out by
professionals at the DOJ or FTC, and that they are able to
access essential data that only the FMC has access to, so that
they can carry out that kind of analysis.
I look forward to your questions.
[The prepared statement of Mr. Sicotte follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Fitzgerald. Mr. Sicotte, thank you so much. Dr. Moss,
you may begin.
STATEMENT OF DIANA MOSS
Ms. Moss. Thank you. Chair Fitzgerald, Ranking Member
Nadler, and the Members of the Subcommittee, it's an honor to
be here today.
PPI advocates for pragmatic competition policies that
champion the economic prospects and outlook for working
Americans. Any conversation about the importance of the U.S.
antitrust laws or exemptions to those laws would be incomplete
without considering the broader role or competition in
antitrust enforcement as a major tool for protecting consumers.
Consumers are the backbone of the U.S. economy. Almost 70
percent of spending in the economy in the first quarter of 2024
was attributable to personal consumption expenditures. Sensible
competition policy and strong antitrust enforcement are major
tools for protecting those consumers from the exercise of
market power that drives up prices, lowers quality, stifling
innovation, and limits choice and market access.
The U.S. antitrust laws protect consumers by ensuring that
they are not harmed by anticompetitive mergers, and business
practices that squeeze out smaller rivals, and fixing prices or
dividing up markets. The importance of those laws is widely
acknowledged by both Democrats and Republicans.
The bipartisan Antitrust Modernization Commission
established by Congress in 2002 explained that, ``The rule of
laws stand as a bulwark to protect free market competition''
and ``prohibit anticompetitive restraints that harm consumer
welfare.''
In legislating antitrust exemptions, Congress has weighed
the harm to competition and consumers against the benefits of
achieving broader economic, social, or regulatory goals. The
evidence on the benefits of immunities and exemptions is
increasingly negative, because most of the markets that are
immunized from liability under the antitrust laws are now
highly concentrated. For example, the top four container
shippers control 60 percent of the global market, but the three
big alliances or conferences control up to 90 percent of the
global market.
In airlines, domestic mergers have, similarly, increased
the global control of immunized international alliances. At
these levels of concentration, anticompetitive consolidation
and conduct would be considered presumptively illegal under the
antitrust laws.
The benefits of exemptions accrue to a few powerful
companies, but their costs affect a wide swath of consumers.
Sixty percent of the world's commodities pass through global
shipping lanes, and transportation costs, more generally,
highly impact the final prices of consumer commodities shipped
into the United States.
Suffice it to say that Congress has the power to revisit
antitrust exemptions, especially for the Shipping Act--to roll
them back; to narrow them, or to make sure that they sunset
rapidly.
Let me finish with two other developments that, much like
antitrust exemptions, raise concerns that antitrust enforcement
can't or isn't doing enough for consumers.
First, a recent PPI report finds that, in food, healthcare,
housing, transportation, and insurance, merger enforcement has
historically been at levels that are far below the all-sector
average. This needs to change.
Second, more recently, premature settlements in antitrust
cases have become the norm. Fully litigated trials and strong
remedies, like injunctions and breakups for restoring
competition, would have served consumers far better in lowering
prices, but settlements we are seeing could even harm consumers
more, including in the Hewlett Packard-Juniper Networks merger;
the Live Nation-Ticket-master monopolization case, and the
RealPage anticompetitive price-fixing case.
Finally, the ability of U.S. companies to compete globally
is at risk. Aside from directly raising prices to consumers to
the tune of billions and billions of dollars over the last
year, IEEPA tariffs on imported commodities raise the costs of
U.S. companies, making their goods less competitive relative to
foreign alternatives. Retaliatory tariffs have decimated
certain sectors, like soybeans, by eliminating markets for
exports that U.S. farmers rely on for long-term income security
and stability.
The foregoing policies undermine competition and consumers.
Congress has the power to revoke outdated and harmful antitrust
exemptions and ensure that the DOJ and FTC uphold due process
and the rule of law; that competition remains healthy; that the
laws rein-in market power, and we keep the cost of living down
for millions of American workers and consumers.
I appreciate the opportunity to submit testimony for this
hearing, and I look forward to answering your questions.
[The prepared statement of Ms. Moss follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Fitzgerald. Thank you, Dr. Moss. We will now proceed
under the--minute rule with questions.
I want to recognize the gentleman from Texas for five
minutes.
Mr. Gooden. Thank you, Mr. Chair. Professor Douglas, it has
been pointed out that the FMC hasn't done a great job of
regulating anticompetitive practices. Would it benefit if we
consolidated more of those functions--enforcement functions
rather--into the DOJ or the FTC?
Ms. Douglas. If you repealed the exemption, the DOJ and FTC
would have those enforcement functions that the FMC is not
using.
Mr. Gooden. Do you have a position on that?
Ms. Douglas. Yes. That the repealed exemption is something
that a lot of people would support, and I definitely support.
If I can dig in a bit more to what you're asking, I'm not
necessarily saying that the FMC's power has to change, but the
additive power from the DOJ and FTC by repealing the exemption
would be beneficial here, because we're not seeing a lot of
enforcement.
Mr. Gooden. Are there current policies or regulatory
loopholes that the big three alliances are using or exploiting
that you're aware of?
Ms. Douglas. It's not a loophole, in that it's permitted
under the Shipping Act right now. Under 4307, antitrust law
does not apply to these big three shipping companies. In that
sense, it's a matter of the law permitting it right now because
of the exemption.
Mr. Gooden. Thank you. Mr. Rice, going back to the issue of
collusion, how do these issues affect every day American
households?
Mr. Rice. Sure. Thank you, Congressman, for the question.
As we've seen for our dairy producers and exporters, the
highly consolidated nature of the shipping industry creates
headaches for us, due to inefficiencies that arise. It's not
wholly the fault of carriers, as we see port congestion and
weather delays, but the shrinking number, as Mr. Sicotte has
pointed out, the shrinking number of available options just
limits the availability of carriers for our exporters and our
producers to move their product overseas.
Mr. Gooden. Mr. Sicotte, what changes to the current
regulatory framework would you propose, short of a full removal
of the antitrust exemption?
Mr. Sicotte. Short of a full removal, I would recommend
that the FMC be required to share its confidential service
contract data with the DOJ or FTC, and if the DOJ reviews an
agreement, which they should have the right to do, that those
objections have to be responded to publicly in a way that we
can understand what the FMC is doing. That would be a minimum.
Mr. Gooden. It also doesn't seem like they are lots of
American ship companies banging down our doors asking for this.
Mr. Sicotte. Well, there are, in terms of ocean shipping
carriers, zero, right? They were absorbed into foreign shipping
companies over the past 30 years, 40 years--30 or 40 years.
There used to be two very large ones, but that's true.
Mr. Gooden. I will close with you, Dr. Moss. My
constituents aren't banging down my door about this issue. I
suspect my colleagues on the Left would say the same thing. Do
you have anything you would add? It seems like everyone's
getting toward the same page here.
Ms. Moss. I do think consumers care significantly about
their cost of living.
Mr. Gooden. Sure, absolutely.
Ms. Moss. We know this to be a serious problem.
Consumers are smart enough to understand that their
commodities, especially the big-spend items in their budget, on
food and commodities, anything that goes into building or
construction, are really affected by immunities and exemptions.
They drive up the cost, and they drive up the final prices to
consumers.
I've talked to a lot of consumers all the time and they are
aware of these policies. When I say, ``Did you know that the
antitrust laws don't apply in this particular sector?'' they
get very angry.
Mr. Gooden. It sounds crazy, right? Yes.
Thank you. I appreciate you all. I yield back to the Chair
my time.
Mr. Fitzgerald. The gentleman yields back. We now
recognized Mr. Nadler from New York for five minutes.
Mr. Nadler. Thank you, Mr. Chair.
Professor Douglas, we have read countless stories about
reported corruption in the DOJ. This Subcommittee heard
testimony from the former second-in-command of the Antitrust
Division, Roger Alford, after he was fired for pushing back
against this corruption, about how mergers and settlements in
the Trump Administration increasingly involve backroom deals,
creating a pay-to-play system. What effect does this kind of
corruption of the rule of law have on the market, and what does
that mean for consumers?
Ms. Douglas. Thank you for this important question.
I am gravely concerned by reports of political influence
peddling in antitrust agencies. I work on the rule of law, and
I don't think it should ever be displaced by political
favoritism in antitrust law, or otherwise. I want to commend
the Subcommittee from hearing from Roger Alford and important
voices on this issue.
That's all that I can say on it for right now. Thank you.
Mr. Nadler. Thank you.
Dr. Moss, can you answer the same question? What is the
impact on the market and consumers of this kind of pay-to-play
corruption? Is there anything that Professor Douglas missed?
Ms. Moss. Professor Douglas summed it up quite nicely. We
are in a troubling new era where antitrust enforcement has been
politicized and weaponized. There appear to be two channels.
One is to go directly to the White House with your deal to
grease the skids for antitrust review. The other channel is for
what appears to be political interference to swoop in and to
commandeer cases to create premature settlements that reward
companies, powerful companies, and harm consumers and workers
in the markets that are affected.
Antitrust is a key tool, as I've stated, for protecting
competition, consumers, workers, paychecks, and pocketbooks, if
you will. If it does not function, if we lose due process, and
if we sacrifice the rule of law, we are harming millions and
millions of American workers and consumers, and we are going to
decimate our economy in the process.
Mr. Nadler. Can you give us some examples?
Ms. Moss. Absolutely. Of course, the worst, which has
already been referenced, is the Live Nation-Ticketmaster deal.
A very surprised and angry judge, a very surprised and angry
set of 40 States plus D.C., who were locked out of a
settlement. The settlement does nothing--nothing--to reduce the
market power of Live Nation-Ticketmaster in ticketing, in
concert promotion, in exclusive contracts with venues.
The bad conduct will continue. We have a long history of
bad conduct and violation of past decrees by the company. This
will do nothing to lower the monopoly ticket fees to millions
of fans. It will steer everybody back to the Live Nation-
Ticketmaster platform for 20 more years of monopolistic
conduct.
The same thing with Hewlett Packard. Under Gail Slater, she
was prepared to--DOJ--go to court to enjoin that merger, which
would have created a duopoly and local area networks. Another
premature settlement, ineffective remedy, that will do nothing
to keep costs down for American businesses.
I could go on. I could go on, but those are two very
leading examples.
Mr. Nadler. Thank you.
Dr. Moss, this hearing has been called to examine
competition in the maritime shipping industry. Can you compare
the impact of reforms in this area to the impact of addressing
the cost of Trump's tariffs, the doubling of healthcare
premiums, or the recent surge in gas prices?
Ms. Moss. I would say the issue of immunities and
exemptions is very important. Any abstention or exception or
immunity from enforcing the antitrust laws and holding
companies liable under the antitrust laws does an enormous
disservice to competition, to our market economy, to our
consumers and workers.
In the broader scheme of things, we are probably talking
about a drop in the bucket relative to the over $400 billion of
additional costs that Americans have absorbed as a result of
tariffs within an incredibly compressed, short period of time.
We are really looking at a very macropicture in terms of
adverse impact of policies on consumers and a very, very micro,
surgical policy through repealing or rolling back the shipping
exemption. The two really do not compare. We need a more
holistic approach to how to protect our consumers and our
workers.
Mr. Nadler. Thank you, Dr. Moss. I yield back.
Mr. Fitzgerald. The gentleman yields back. We now recognize
the gentleman from North Carolina for five minutes.
Mr. Harris. Thank you, Mr. Chair. Thank you to all of you
on the panel for your presence and your expertise today.
Mr. Rice, as someone who represents a district where
agriculture is a prominent industry in North Carolina, I'm
always worried about ways in which this anticompetitive
behavior in the ocean shipping industry can harm producers, as
I know you have expressed as well. Can you take just a few
moments and explain the impact that the alliance system is
having on agricultural exporters?
Mr. Rice. Well, certainly, thank you, Congressman.
To give you a bit of an example, the worst of these supply
chain issues happened during the pandemic. As I mentioned
before, our exporters are wholly dependent on foreign ocean
carriers. While the Shipping Act prevents them from
unreasonably refusing to deal with us, it doesn't prevent them
from rolling a booking, moving it onto the next ship, not
giving transparency into why a shipping was rolled.
For example, one of our exporters had a container destined
for Asia. It was rolled so many times that the original ship
that it had been scheduled to sail on had went to Asia and came
back, and that's the one that picked up the container.
There's one piece of this that, yes, some of these
alliances, they do create some operational efficiencies, but at
the same time, Congress saw fit, when passing the Shipping Act,
that if these carriers are to receive antitrust exemptions,
they have to provide reasonable access for U.S. exporters and
ensure efficiency.
It's hard to reconcile when we saw 70 percent of some of
these carriers carrying--70 percent of the ship would be empty
containers, while our exports would be left on the dock during
the height of the pandemic. Now, those, thankfully, have abated
since then, but we do see these issues with transparency, and a
lack thereof, into why decisions are made; why sailings are
canceled or blanked. It creates a ton of logistical issues for
our industry who is exporting perishable products that need to
get to an end consumer in a timely fashion.
Mr. Harris. Thank you very much.
Mr. Rice, while we are there, in April 2025, the Trump
Administration released a Maritime Action Plan with a goal of
really restoring America's maritime dominance. The plan seeks
to really revitalize U.S. shipbuilding and rebuild the maritime
workforce. Can you give us your thoughts on how this plan would
help to address the problems that the American, particularly
American dairy exporters and other agricultural exporters, are
currently facing with the ocean shipping?
Mr. Rice. Certainly. Investment in the U.S. shipbuilding
industry, as I mentioned, is sorely overdue. For example,
Chinese shipbuilders build 230 times the number of ships per
year as the United States. It's very troublesome that we just
don't have an industry here in the United States to produce
these container ships that we need.
Yes, supporting investment in the shipbuilding capacity,
streamlining the permitting, and reforms at shipyards and
ports--there's a long backlog of maintenance and expansion
issues at the ports themselves that need to be addressed.
The one thing I mentioned in my remarks as well, in
developing a plan to fund these programs, we just think it
warrants careful consideration of any penalty fees that are put
on foreign ships to make sure that the people who are actually
paying it aren't American exporters.
Mr. Harris. Well, thank you.
Ms. Douglas, as you note in your testimony, the Federal
Maritime Commission, or FMC, rarely brings cases against the
ocean shipping carriers that dominate shipping markets, despite
having the legal authority to do so. Can you kind of help us
dive into that, of how lack of transparency over the FMC's
competitive analysis of ocean shipping agreements could be
contributing to the FMC's lack of challenges to ocean carrier
agreements?
I'll follow that up and give you the rest of my time. What
would be the possible effects of having the DOJ work with the
FMC to scrutinize ocean shipping agreements?
Ms. Douglas. Right. The lack of challenges seems to suggest
that there's either not analysis happening or analysis that's
happening that tolerates greater anticompetitive harm than
antitrust law.
What Professor Sicotte and I are both saying is it's not
clear how the FMC is coming to these conclusions. Because from
the outside perspective, it's a concentrated industry that,
we've heard from industry here, is dominated by a few
companies, and has had a number of cartels that have been
prosecuted where the exemption doesn't apply.
We would need to know how these agreements are being
implemented in fact. That's something that antitrust law can
get at. If DOJ could do an investigation, the rule of reason
looks carefully at these sorts of claims that maybe there's
some efficiencies here; maybe there isn't. There are a lot of
different provisions in these agreements, but as written, we
can't really tell what's going on.
Mr. Harris. All right. Thank you very much. Mr. Chair, I
yield back.
Mr. Fitzgerald. The gentleman yields back. I now recognize
the Ranking Member of the Full Committee, Mr. Raskin, for five
minutes.
Mr. Raskin. Thank you, Chair Fitzgerald.
Dr. Moss, President Trump promised to lower prices on day
one. What has actually happened since day one, and how are
American families faring?
Ms. Moss. Thank you for the question.
Nothing has happened. In fact, things have gone the other
way. The promise to lower prices on day one was really lip
service to a broader political strategy.
Consumers have been under assault for years by growing
concentration in really critical consumer-facing sectors.
Consumers spend 75 percent of their budgets on food,
transportation, housing, healthcare, and insurance. Those are
highly concentrated industries that needed direct attention and
support for very, very strong enforcement, which we have not
gotten under this current administration.
Consumers are really buckling under the burden of high
prices from excessive market power, from supply chain
instability, from inflation. That should be a No. 1 goal.
Consumers support the economy. They are the backbone of the
economy. Without them, we will not have a robust, functioning
economy.
Mr. Raskin. People instinctively understand the way that
corruption and insider political influence end up harming
consumers and driving up prices. I wonder, is it also the case
that, when we allow combinations to form and conglomerates to
take over the economy, that this increases corruption and it
increases political inequality and injuries to democracy.
Ms. Moss. Yes. The purpose of the antitrust laws, of
course, is to promote competition in the economy; to prevent
the concentration of market power. The antitrust laws really
address directly the economic effects of high concentration and
a lack of competition.
What you're getting at is a really important connection
between economic power and political power. There is a direct
link there. The importance of antitrust enforcement in
controlling economic power, excessive economic power, does link
directly into controlling excessive political power. Of course,
political power can lead down a number of different pathways.
That's what we're seeing right now.
Mr. Raskin. You can get into a vicious cycle where economic
concentration increases political concentration of power, and
then, that further deepens the ability to manipulate the
economy for particular groups?
Ms. Moss. That is correct. I would just add a really
important point. These precedents are now being set for the
first time in the United States, this type of weaponization and
politicization of the antitrust process.
This administration will not be here forever. There will be
other administrations. The setting of those precedents as they
exist now can--it really spells a very, very dismal and
concerning future for our antitrust establishment and law
enforcement in the U.S.
Mr. Raskin. The shipping antitrust exemption which we are
discussing today has actually been studied and debated
extensively, and even reformed repeatedly, as recently as 2022.
Can you name some of the other anticompetitive policies and
problems today orchestrated by the Trump Administration that
are doing a lot more damage to American consumers than the
shipping exemption?
Ms. Moss. Sure. One thing that the Trump Administration
did, as part of its order to realign regulation, to eliminate
anticompetitive relation--anticompetitive regulations, was to
really gut the ability of the U.S. Department of Agriculture to
collect data, to do analysis that would have really supported
competition initiatives in our food supply chains.
We see independent cattle ranchers, for example, being
pushed out, priced out of the market by large, industrialized
players and the packer cartel.
The inability of USDA to collect data has completely
undercut the agency's important authority to police competition
and--
Mr. Raskin. Was the purpose of elimination of the data
collection function?
Ms. Moss. I believe the--eliminating the data collection
was designed, potentially, to undercut the ability of the
agency to function properly and support competition in our food
and--
Mr. Raskin. Is that happening in other agencies and
departments, too?
Ms. Moss. It absolutely is. In housing--I referenced the
Real-
Page settlement--we really needed a court decision on what
constitutes algorithmic price-fixing on a digital platform. We
didn't get that because that case was settled.
Mr. Raskin. Thank you. I yield back, Mr. Chair.
Mr. Fitzgerald. The gentleman yields back. I recognize
myself for five minutes.
Ms. Douglas, you list several examples in your testimony of
how the ocean carrier agreements could raise significant
anticompetitive risks. Can you talk about that a little bit
more?
Ms. Douglas. Yes. We understand what these agreements look
like as written. My written testimony talks about what they
might look like as implemented.
If carriers can't agree on scheduling, that means they
could also allocate different markets to each other. That's a
classic antitrust law violation.
It's also possible that there could be an exercise of
monopsony or buyer power against ports in the United States,
because these agreements allow these companies to collectively
negotiate, where previously they would have been individual
buyers.
Particularly, on the idea of scheduling, enabling market
allocation, we have a close parallel in the airline industry,
right? Another transportation industry where we have seen that
a scheduling agreement in U.S. v. American Airlines, which is a
2024 case, a scheduling agreement caused a decrease in
capacity. It caused the competitors who made that agreement to
decide to fly less planes.
What I'm saying is you would have to look at how these
agreements are being implemented in shipping to figure out if
that is also occurring here, if there's a capacity reduction
here, or if there's market division happening here.
The other big risk that I highlight in my written testimony
is that these companies are allowed to share extensively
competitively sensitive information. Normally, rivals don't
share with each other their future plans for the market. These
agreements allow alliances to engage in that sort of sharing.
It's not itself a violation, but it's a classic factor that in
antitrust law we look at to say that, if companies can talk
with each other about their competitive plans, that's likely to
reduce their rivalry in the market and lead to higher prices.
Thank you.
Mr. Fitzgerald. Let me just followup then. How should DOJ
view these agreements? What should they be looking for? What
would prompt them to take action on some of these agreements?
Ms. Douglas. Right. If the DOJ were to look at these
agreements under the rule of reason, they would be looking at
whether they unreasonably limit competition relative to a free
and fair open market without the agreements.
They would want to look at how these companies are
scheduling their services relative to how they might be
scheduled if the market was competitive, if it didn't have
those agreements in place. They might look, for example--and
this is purely something that's taken from the airline case--
are these companies sending as many ships as close in time as
they would if they didn't have this agreement? Are they sending
fewer ships or ships with less capacity? Is there this capacity
reduction or market allocation, which are, again, classic
violations of antitrust law under the Sherman Act? The DOJ
would have to look at how these agreements are being
implemented in practice to make that fact-specific evaluation.
Mr. Fitzgerald. Very good. Thank you.
Mr. Rice, so given that the top three alliances control
over 80 percent of the market, as you spoke about earlier, do
you think that provides ocean carriers with market power over
importing and exporting companies? Is this simply another fact
or a piece of data that doesn't necessarily have that effect?
Where do you think that falls?
Mr. Rice. Yes, thank you, Mr. Chair.
Yes, certainly the consolidation within the ocean carrier
industry does create challenges in the power that they amass.
For example, there might be a dairy exporter from Wisconsin
sending only three or four containers a month, and they have
little to no leverage in those negotiations with one of three
alliances. That component is concerning.
The other component is, to some of the other witnesses who
have testified about this, is the ability for these alliances
to coordinate on overcapacity now that there's new ships coming
online. Limiting capacity creates problems for exporters as
well in the number of options that we have to get the
containers to their end destination.
It's a number of factors, but the amassing, and it
continues to accumulate. This is not a static thing. These
alliances continue to consolidate and create additional market
power that our exporters have struggled to gain any leverage in
negotiations with.
Mr. Fitzgerald. Very good. My time has expired. We will go
to the gentlewoman from Vermont for five minutes.
Ms. Balint. Thank you, Mr. Chair.
Mr. Fitzgerald. Yup.
Ms. Balint. Competition brings down prices, right? When we
don't have real competition, then executives and investors get
to reap more profits, and everyone else gets sticker shock.
That is partly why this area of the law is so interesting to
me.
Because lack of competition in all industries impacts
people in their bottom line. Dr. Moss, you spoke to that really
directly. This includes maritime shipping.
Although this may be a small aspect of what is increasing
cost, it is important for us to look at this. It is why
antitrust law matters.
I know that antitrust law can seem dry; it can seem
complicated, and I get that. To your point, Dr. Moss, American
consumers understand that, when there are only a few big
players, regardless of the industry, they pay the price for
that. It is at the heart of what I think we are trying to do on
this Committee, is translate that for everybody.
Dr. Sicotte, I appreciate that we have a Catamount in the
room today from the University of Vermont. Nice to see you.
I would like to go to you first. Am I right that about 80-
90 percent of ocean shipping is actually controlled by just
three major shipping alliances?
Would you mind putting on your mic?
Mr. Sicotte. I apologize.
Ms. Balint. No, that's all right.
Mr. Sicotte. I'm not used to this.
Yes, that was the Fiscal Year 2024 figure in the FMC
report. There's one very large company that has subsequently
removed itself from the alliance, but the most--by any stretch,
you would call this quite a concentrated industry.
Ms. Balint. We talk about alliances. We will talk about
conferences. Again, I'm trying to translate it for people back
home. From where I sit, this looks a lot like cartels.
Tell me why these ocean shippers form these cartels. Why
does this advantage them?
Mr. Sicotte. Well, the advantage--there could be two
possible advantages from an economic perspective, right?
One is that it enables them to use very large container
ships that they wouldn't be able to fill on their own. That is
one--that's their logic for an efficiency defense.
Ms. Balint. OK.
Mr. Sicotte. OK? The other logic would be the market power,
the exercise of market power. To actually evaluate the merits
of those arguments is really--it needs to be done. That's what
is missing in that.
Ms. Balint. I agree with you, and I think we can't just
take their word for it around efficiency. We have to actually
kick the tires and see if this holds water.
I want to get to what you were talking about, market power.
Tell me what they can do collectively as a cartel that they
can't do separately.
Mr. Sicotte. Well, if it's a full cartel--now, they--
cartels--
Ms. Balint. I'm using that word. I understand you may not
be comfortable with that word.
Mr. Sicotte. Yes, because, technically, they're not
permitted to fix rates jointly, right? That would be one
stretch. If you can fix capacity jointly, you can, potentially,
have the same impact. OK?
Ms. Balint. Do you think it is fair to say that these
massive ships with mountains of containers that carry,
basically, everything that Americans see on their shelves, they
are owned by these three alliances/cartels. They are actually
impacting Americans directly every time that they go to the
store and take something off the shelf. Is that fair to say?
Mr. Sicotte. Yes, absolutely. Not only that, it's all the
American farmers. Much of what's traded are inputs as well and
intermediate goods. It hurts companies. It raises the costs of
doing business.
Ms. Balint. Yes. Actually, that is a great segue into
talking with you, Mr. Rice.
I'm a Vermonter. I understand the importance of the dairy
industry. I'm wondering, how does this directly--again, I'm
using the word ``collusion'' because that is what I think it
is. It is a cartel involved in collusion. How does this impact
American dairy farmers?
Mr. Rice. Well, thank you, Congresswoman. Vermont has some
great cheeses and other dairy products.
Ms. Balint. Thank you for noticing.
Mr. Rice. For cheeses, for example, perishability is a real
concern. When these carriers aren't beholden to the interests
of U.S. agriculture or dairy exporters, those products may not
reach customers in time, and then, you have shelf-life issue at
the East Coast.
Ms. Balint. Exactly. Absolutely. I see that I'm almost--
well, I am out of time.
If I could just say, if you will indulge me just for a
moment, Mr. Chair--I know that this is an issue that we can
come together on as Democrats and Republicans. It is one of the
reasons why I love being on this Subcommittee, where we can
actually do some bipartisan work. I hope that this is something
that we will dive into--not just on the shipping industry, but
all the industries in which Americans are getting screwed
because we are not actually holding their feet to the fire and
actually enforcing antitrust law.
Thank you. I yield back.
Mr. Fitzgerald. The gentlewoman yields back. Now, I will
recognize the gentleman from California for five minutes.
Mr. Issa. Thank you, Mr. Chair.
Ms. Douglas, as a researcher, how do prices paid by our
similar importers or exporters compare here to other countries
around the world?
Ms. Douglas. That's an excellent question that I would look
to my economics colleagues to answer when it comes to specifics
on price.
Mr. Issa. OK. Who has got the proof that somebody else gets
a better price than us? Is this a monopoly that screws the
whole world or is it just a monopoly that is screwing the
United States?
Yes, sir?
Mr. Sicotte. Well, that's such a great economics question.
That's precisely the information that we don't know the answer
to the question. Because that's actually a surprisingly
difficult thing to come up with; is to actually measure the
degree of market power that's being exercised.
There's a good reason to be suspicious, based on the
contours of the agreements, right, for sure. If they can't
actually--I've never seen someone using the data and actually
answering your question. I don't know the answer.
Mr. Issa. OK. Well, let's explore this direction. Because
we are asserting here today that there is a monopoly at work;
that it is Chinese-based, and that it is using its market
power.
Is it fair to say the Chinese don't just own ships, they
own the ports here and around the world, including, but not
limited to both sides of the Panama Canal?
Mr. Sicotte. It's my understanding that the port ownership
is that they--that COSCO was forced to divest partially.
Certainly, in terms of their agreements and their operations,
they're a very large player.
Mr. Issa. If they were transparent in some ways, they are
opaque in some of the transfer cost?
Mr. Sicotte. A lot of the data would be available to the
Federal Maritime Commission to investigate that, yes.
Mr. Issa. OK. Let's go the other way. Ms. Douglas, I'm
going back to you. I'm not going to quit until you give me an
answer to something--not that you are not trying to.
Is it fair to say that, if the group of companies
together--nine companies--with the kind of market power they
have--and some of them specifying more in one country versus
another--if you were looking at a merger and acquisition, you
would turn this one down?
Ms. Douglas. That's absolutely fair to say because the
market shares, as we've mentioned, would be at least above 60-
95 percent. For mergers, we typically look at a 30-percent-or-
above share. So, yes.
Mr. Issa. From a pure U.S. standpoint, we can agree that we
created a monopoly in 1916 and thereafter. We allowed it to
continue. Now, we have allowed this trust/monopoly--and
``trust'' is probably even a better word--to, in fact, be
opaque and to operate in a way that we really just don't know
whether they are gouging us or not? We don't know whether they
are getting a fair price? Even more importantly, if they
decided not to service us, we would have very little recourse
because we don't own enough ships to take care of ourselves.
All those are vulnerabilities based on the current trust, if
you will. Is that fair to say?
Ms. Douglas. That's fair to say. I just want to make sure
we're being clear that what we're talking about is agreements
among competitors. Regardless of whether there is monopoly
power, agreements can still be unlawful. That's what we're
seeing in this space, and that's why it should have antitrust
oversight.
Mr. Issa. Well, as someone in San Diego who watched former
CEO Smisek collude with the other airline companies to screw
San Diego out of its direct flight from DCA, it is not just
price. Sometimes it is service. We found ourselves with less
choice. We were not without power.
If we, essentially, set aside or partially set aside this
law in bipartisan legislation, then the dismantling or the
regulating or the holding accountable could begin. Is that fair
to say?
Ms. Douglas. Then the scrutiny from antitrust law would be
applied and would likely find that there's problems in this
industry, if this were repealed. We've seen around the edges
where DOJ retains its jurisdiction, where the exception doesn't
apply, there have been a number of cartel cases that have been
successfully provided.
Mr. Issa. OK. Last question in closing, is there a solution
less than setting aside the 1916 law that would effectively
require transparency before making the decision, but trigger an
invalidation of this law if they failed to meet that
requirement? Is that a possible solution to get the answers to
your questions before we decide how much to break up these
agreements? I'm just wondering if, from a legislative
standpoint, if we have a middle ground here that we could come
together on. Quickly.
Mr. Sicotte. I think so. If you amend the law to require,
or FMC to take into account DOJ's input more explicitly, that
could be a middle ground.
Mr. Issa. I thank you, Mr. Chair, and I appreciate the
extra time and I yield back.
Mr. Fitzgerald. The gentleman yields back. I would
recognize the gentleman from Georgia for five minutes.
Mr. Johnson. Thank you, Mr. Chair.
There is a well-known theory around here that nothing comes
before this Committee that has not been approved in advance by
Donald Trump, or directed by him to occur. Today, we are
talking about competition between ocean carriers on the high
seas, while here at home Americans are catching hell trying to
pay their bills.
He is wanting us to be talking about what is happening on
the high seas, but there are a lot of people at home watching
C-SPAN. I'm always surprised at how many people do.
There are people at home wondering, what is this MAGA
Republican Congress doing to address the fact that competition
between predatory Wall Street private equity and venture
capital firms are swallowing up the single-family home market?
They are crowding out homebuyers, controlling the market,
concentration in the market, driving up the cost of real estate
beyond what people can pay--while at the same time getting a
stranglehold on the apartment market and raising rents up at
will, using algorithms and other predatory processes to soak
the American people of their money.
Yes, the rent in America is too damn high. Yes, the price
of groceries in America is too damn high. The cost of gas in
America--and across the world now--is too damn high.
The cost of medical care is too damn high. We have got
venture capital and private equity firms swallowing up medical
practices and hospitals, getting a lock on the medical care
market, while at the same time insurance companies are doing
the same thing.
Costs continue to go up for Americans due to market
concentration into the hands of the super-wealthy billionaires
who were seated behind Trump at his inauguration--the same ones
who will be frolicking in the new White House ballroom that is
being built to replace the West Wing of the White House.
They are getting richer and richer, and Americans trying to
make an honest day's pay are paying more and more.
Can any of you witnesses think of one single thing that
MAGA Republicans have done in Congress to make life more
affordable for the American people? Can any of you cite one
thing that they have done? I'm with you; I can't, either.
Let me ask someone, are tariffs taxes? Dr. Moss, what do
you say?
Ms. Moss. The answer is the answer that we all know, and
even your average American consumer knows, that the tariffs are
taxes. They are paid by consumers. They raise the prices for
essential commodities, where Americans, workers and consumers
spend most of their money. That is just Economics 101. That is
the economic reality. It is also the political reality.
Those consumers vote. They are going to turn out in droves
because cost of living is such a top-of-mind issue for them. If
anything galvanizes consumers in the upcoming election cycles,
it will be that issue.
Mr. Johnson. Well, I tell you, it is $175 billion in taxes
due to tariffs that have been levied on the American people
over the last year by this Trump Administration--with the
complicity of Members of Congress here in control, MAGA
Republicans. Americans will, indeed, be looking at it in
November.
The high cost of housing, food, medical care, and energy is
what the American people are concerned about. This Committee
appears to be focused on competition between ocean carriers on
the high seas. I think that is a shame.
With that, I yield back.
Mr. Fitzgerald. The gentleman yields back.
Ms. Balint. Mr. Chair, I have a couple of UCs to enter into
the record.
Mr. Fitzgerald. The gentlewoman is recognized.
Ms. Balint. First, from Reuters, February 12, 2026, ``NY
Fed report says Americans pay for almost all of Trump's
tariffs.''
Second, Gallup, March 2026, ``One-Third of Americans Cut
Back to Cover Healthcare Expenses.''
Third, finally, from The New York Times, ``Oil Rises,
Bringing Gains to 40% Since the Start of the War.''
Mr. Fitzgerald. Without objection.
Ms. Balint. Thank you.
Mr. Fitzgerald. That concludes today's hearing. Thank you
to our witnesses for appearing before the Committee today.
Without objection, all Members will have five legislative
days to submit additional written questions for the witnesses
or additional materials for the record.
Without objection, the hearing is adjourned.
[Whereupon, at 11:33 a.m., the Subcommittee was adjourned.]
All materials submitted for the record by Members of the
Subcommittee on the Administrative State, Regulatory Reform,
and Antitrust can be found at: https://docs.house.gov/
Committee/
Calendar/ByEvent.aspx?EventID=119042.
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