[Federal Register Volume 59, Number 229 (Wednesday, November 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29407]
[[Page Unknown]]
[Federal Register: November 30, 1994]
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FEDERAL MARITIME COMMISSION
[Docket No. 94-29]
Practices of the Trans-Atlantic Agreement and its Members With
Respect to Independent Action; Order of Investigation and Hearing
The Trans-Atlantic Agreement (``TAA'' or ``Agreement''), FMC
Agreement No. 202-011375, first became effective August 31, 1992,
pursuant to the Shipping Act of 1984 (``1984 Act''), 46 U.S.C. app.
1701 et seq. Sixteen ocean common carriers, identified in Appendix A
hereto, currently are members of the Agreement.\1\
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\1\On October 24, 1994, additional modifications of the basic
agreement were permitted by the Federal Maritime Commission
(``Commission'') to take effect under the 1984 Act, among which
amendments was a change of the agreement's name to the Trans-
Atlantic Conference Agreement. While officially renamed to clarify
its designation as a conference, the carrier members continue to
refer to the Agreement as TAA.
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By Order issued July 27, 1994, the Commission instituted Fact
Finding Investigation No. 21, entitled Activities of the Trans-Atlantic
Agreement and Its Members. In the Fact Finding Order, the Commission
directed the designated Investigative Officers to investigate, inter
alia, allegations that TAA or its members may have reached agreements
or taken other actions which discourage or suppress the right of
members to take independent action (``IA'') on rate or service items.
The Fact Finding Order also provides that the Investigative Officers
are not precluded from developing facts related to any possible
violations of the 1984 Act that may be uncovered in the course of the
proceeding. In commencing the above nonadjudicatory investigation, the
Commission's objective was to determine whether sufficient evidence
exists to warrant formal adjudicatory, assessment or injunctive
proceedings for alleged violations of the 1984 Act by the TAA or its
carrier members.
Through responses to subpenas issued by the Investigative Officers
and to an order issued by the Commission pursuant to section 15 of the
1984 Act, 46 U.S.C. app. 1714, through testimony in hearings held in
connection with the Fact Finding Investigation, and through other
means, it now appears to the Commission that carrier members of the TAA
engaged in practices which may have artificially constricted the
members' right of independent action. Testimony from numerous shipper
witnesses appearing in the hearing failed to identify any meaningful IA
rate activities taken by a TAA member, despite shipper requests. To the
contrary, shippers have testified that they had been informed by TAA
carrier representatives that independent action would not, or could not
be taken under TAA.
In addition to shipper testimony concerning the absence of IA,
documents have been obtained which indicate that TAA members may have
agreed to a procedure requiring that rate matters be tabled for
discussion at a conference meeting before filing an IA rate, and that
TAA members expected and demanded that other members adhere to this IA
procedure. Also, it appears that TAA members may have agreed to limit
their authority to take IAs to one or two designated high level
executives, and that TAA's Executive Director may have been authorized
by the members to cancel any tariff filing that he deemed not to be in
the best interests of TAA. Such strategies appear designed to inhibit
and curtail IA rather than facilitate its exercise.
It appears that these alleged agreements or other similar practices
designed to constrict IA may violate section 5(b)(8), 46 U.S.C. app.
1704(b)(8), which requires that every conference agreement must provide
that any conference member may take IA on any rate or service item
required to be filed in a tariff. Such agreements or practices also may
violate section 10(a) (2) or (3) of the 1984 Act,\2\ 46 U.S.C. app.
1709(a) (2) or (3). In addition, such practices may violate provisions
of the Commission's regulations designed to protect the integrity of
the right of independent action within conferences. In particular, 46
CFR 572.801 prohibits a conference from prescribing notice periods for
adopting, withdrawing, postponing, canceling or taking similar actions
on independent action matters; from requiring that notice of
independent action be given by the proposing member to the other
parties to the agreement; from requiring the proposing member to attend
a conference meeting, to submit any further information other than that
necessary to accomplish the filing of the independent tariff item, or
to comply with any other procedure for the purpose of explaining,
justifying, or compromising the proposed independent action; and from
failing to include an IA rate or service item in the conference tariff
effective no later than 10 days after receipt of an IA notice, 46 CFR
572.801(b)(2), (c), and (d).
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\2\Section 10(a) (2) and (3) provide that a carrier or
conference may not:
(2) operate under an agreement required to be filed under
section 5 of this Act that has not become effective under section 6,
or that has been rejected, disapproved or canceled; or
(3) operate under an agreement required to be filed under
section 5 of this Act except in accordance with the terms of the
agreement or any modifications made by the Commission to the
agreement.
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In commencing the Fact Finding Investigation, the Commission noted
that the right of independent action is a critical ingredient of the
compromise reflected in the 1984 Act between carrier and shipper
interests and has been guarded carefully by the Commission. In the
Conference Report accompanying the 1984 Act, H.R. Rep. No. 98-600, 98th
Cong., 2d Sess., 34 (1984), the conferees state their belief ``that
potential reductions in competition will be at least partially offset
by a member carrier's right of independent action and ability to enter
and leave the conference freely.'' It appears that TAA may have
suppressed that right and, thus, removed a competitive counterbalance
to the conference's ability and desire to increase rates.
The Commission recognizes that its action instituting this formal
adjudication necessarily precludes that opportunity to obtain
additional testimony on this subject from conference and carrier
witnesses in the context of the ongoing Fact Finding Investigation. The
Commission is taking action at this time because it believes that there
is sufficient evidence to warrant such action, and because of the
importance of this issue to effective Commission regulation of
conferences. The initiation of a formal adjudicatory proceeding will
provide the full measure of procedural due process accorded respondents
in adjudicatory matters generally.
Now therefore, it is ordered, That pursuant to sections 5, 10, 11,
and 13 of the 1984 Act, 46 U.S.C. app. 1704, 1709, 1710, and 1712, an
investigation is instituted to determine:
(1) Whether the TAA and its carrier members, jointly or severally,
violated section 5(b)(8) of the 1984 Act by not complying with the
mandatory independent action provision of that section of the 1984 Act
and, if found to be operating in violation of section 5(b)(8) of the
1984 Act, why the Agreement should not be disapproved, canceled or
modified by the Commission;
(2) Whether the TAA and its carrier members, joint or severally,
violated section 10(a)(2) of the 1984 Act by operating under an
agreement violative of the mandatory independent action provisions of
section 5(b)(8) of the Shipping Act of 1984, which agreement was never
filed with the Commission under section 5 and made effective under
section 6 of the 1984 Act and, if found to be operating in violation of
section 10(a)(2) of the 1984 Act, why the Agreement should not be
disapproved, canceled or modified by the Commission;
(3) Whether the TAA and its carrier members, jointly or severally,
violated section 10(a)(3) of the 1984 Act by operating under an
agreement required to be filed under section 5 in a manner which was
not in accordance with the terms of the agreement, by failing to comply
with the mandatory independent action provisions of section 5(b)(8) of
the Shipping Act of 1984 and, if found to be operating in violation of
section 10(a)(3) of the 1984 Act, why the Agreement should not be
disapproved, canceled or modified by the Commission;
(4) Whether the TAA and its carrier members, jointly or severally,
violated the provisions of 46 CFR 572.801 by operating under an
agreement violative of the mandatory independent action provisions
thereof and, if found to be operating in violation of said regulations
of the Commission, why the Agreement should not be disapproved,
canceled or modified by the Commission;
(5) Whether, in the event violations of sections 5(b)(8), 10(a)(2),
or 10(a)(3) of the 1984 Act are found, civil penalties should be
assessed and, if so, the amount of such penalties; and
(6) Whether, in the event violations are found, an appropriate
cease and desist order should be issued.
It is further ordered, That a public hearing be held in this
proceeding and that this matter be assigned for hearing before an
Administrative Law Judge of the Commission's Office of Administrative
Law Judges at a date and place to be hereafter determined by the
Administrative Law Judge in compliance with Rule 61 of the Commission's
Rules of Practice and Procedure, 46 CFR 502.61. The hearing shall
include oral testimony and cross-examination in the discretion of the
Presiding Administrative Law Judge only after consideration has been
given by the parties and the Presiding Administrative Law Judge to the
use of alternative forms of dispute resolution, and upon a proper
showing that there are genuine issues of material fact that cannot be
resolved on the basis of sworn statements, affidavits, depositions, or
other documents or that the nature of the matters in issue is such that
an oral hearing and cross-examination are necessary for the development
of an adequate record;
It is further ordered, That TAA (Agreement No. 202-011375) and its
carrier members specified in Appendix A are designated respondents in
this proceeding;
It is further ordered, That the Commission's Bureau of Hearing
Counsel is designated a party to this proceeding;
It is further ordered, That notice of this Order be published in
the Federal Register, and a copy be served on parties of record;
It is further ordered, That other persons having an interest in
participating in this proceeding may file petitions for leave to
intervene in accordance with Rule 72 of the Commission's Rules of
Practice and Procedure, 46 CFR 502.72;
It is further ordered, That all further notices, orders, and/or
decisions issued by or on behalf of the Commission in this proceeding,
including notice of the time and place of hearing or prehearing
conference, shall be served on parties of record;
It is further ordered, That all documents submitted by any party of
record in this proceeding shall be directed to the Secretary, Federal
Maritime Commission, Washington, DC 20573, in accordance with Rule 118
of the Commission's Rules of Practice and Procedure, 46 CFR 502.118,
and shall be served on parties of record;
It is further ordered, That in accordance with Rule 61 of the
Commission's Rules of Practice and Procedure, the initial decision of
the Administrative Law Judge shall be issued by August 23, 1995 and the
final decision of the Commission shall be issued by November 23, 1995.
Joseph C. Polking,
Secretary.
Appendix A
Trans-Atlantic Agreement, Meadows Office Complex, 201 Route 17
North, Rutherford, NJ 07070
Polish Ocean Lines, 1001 Durham Ave., South Plainfield, NJ 07080
Neptune Orient Lines Ltd., c/o Tricom Shipping Agency, 15 Exchange
Place, 7th Floor, Jersey City, NJ 07302
Mediterranean Shipping, Company S.A., 420 5th Avenue, 8th Floor, New
York, NY 10008-2702
DSR/Senator Joint Service, 50 Cragwood Rd., South Plainfield, NJ
07080
Sea-Land Service, Inc., 150 Allen Road, Liberty Corner, NJ 07938
P&O Containers Limited, One Meadowlands Plaza-12th Fl., E.
Rutherford, NJ 07073
Hapag-Lloyd AG, 399 Hoes Lane, Piscataway, NJ 08854
Orient Overseas Container Line, 4141 Hacienda Drive, Pleasanton, CA
90731
Atlantic Container Line AB, 50 Cragwood Road, South Plainfield, NJ
07080
A.P. Moller-Maersk Line, Giralda Farms, P.O. Box 880, Madison, NJ
07940-0880
Nedlloyd Lijnen BV, c/o Nedlloyd Lines (USA) Corp., 2100 RiverEdge
Pkwy, Ste. 300, Atlanta, GA 30328-4656
Nippon Yusen Kaisha, NYK Line, 300 Lighting Way, 5th Floor,
Secaucus, NJ 07094
Transportacion Maritima, Mexicana, S.A. de C.V., c/o Trans-America
S.S. Agency, 140 W. 6th Street, San Pedro, CA 90731
Tecomar S.A. de C.V., c/o Phoenician Int'l Shipping, 2350 N. Belt
East, Suite 720, Houston, TX 77032
Cho Yang Shipping Co. Ltd., 301 Route 17 North, 6th Floor,
Rutherford, NJ 07070
Hanjin Shipping Co., Ltd., 1521 Pier C Street, Long Beach, CA 90813
[FR Doc. 94-29407 Filed 11-29-94; 8:45 am]
BILLING CODE 6730-01-M