[Federal Register Volume 68, Number 108 (Thursday, June 5, 2003)]
[Notices]
[Pages 33696-33697]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14219]


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FEDERAL MARITIME COMMISSION


Fact Finding Investigation No. 25--Practices of Transpacific 
Stabilization Agreement Members Covering the 2002-2003 Service Contract 
Season; Amended Order of Investigation

May 30, 2003.
    The Federal Maritime Commission (``Commission'') instituted this 
nonadjudicatory fact finding proceeding on August 23, 2002, to 
investigate allegations that the ocean common carrier members of the 
Transpacific Stabilization Agreement (``TSA'') had engaged in practices 
in the inbound Far East-United States trade during the 2002-2003 
service contract season that were potentially in violation of various 
provisions of the Shipping Act of 1984, 46 U.S.C. app. 1701 et seq 
(``1984 Act''). Commissioner Joseph E. Brennan was appointed as 
Investigative Officer and was authorized to conduct public and non-
public hearings, administer oaths and utilize compulsory process, 
including orders pursuant to section 15 of the 1984 Act in order to 
obtain relevant information. Hearings were held in Long Beach and San 
Francisco, CA, Seattle, WA, and Washington, DC, where testimony and 
documents were received under oath. Commissioner Brennan conducted the 
investigation and submitted a confidential Report and Recommendations 
to the Commission on April 10, 2003.
    Allegations that the members of TSA were engaged, individually and 
jointly, in conduct prohibited by the 1984 Act were raised in a joint 
petition filed by the National Customs Brokers and Forwarders 
Association of America, Inc. (``NCBFAA'') and the International 
Association of NVOCCS (``IANVOCC'') on May 10, 2002. Specifically, the 
petitioners alleged that TSA members had entered into an agreement to 
complete service contract negotiations with proprietary shippers before 
beginning negotiations with non-vessel-operating common carriers 
(``NVOCCs''). Petitioners further alleged that TSA members 
discriminated against NVOCCs by subjecting NVOCC contracts to general 
rate increases (``GRIs'') and a peak season surcharge (``PSS''), but 
not including similar provisions in contracts with proprietary 
shippers.
    Following receipt of the joint petition, the Commission directed 
the staff to obtain and assess additional information regarding TSA 
member practices during the 2002-2003 contracting season. Due to the 
seriousness of the allegations, comments received thereon, and the 
decision of TSA members to institute a second GRI with the knowledge 
that certain shippers would be exempt from the increase due to the 
terms of their contracts with TSA, the Commission ordered this fact 
finding investigation to gather additional facts and data on the 
following issues, among others:

    1. Refusals to deal with NVOCCs until the substantial completion 
of negotiations with proprietary shippers;
    2. The discriminatory application in NVOCC service contracts of 
GRIs and/or a PSS, while waiving or otherwise not requiring similar 
application in proprietary shipper service contracts;
    3. The extent and degree to which the rate increases and service 
contract policies, practices, and guidelines of TSA have been, and 
remain, voluntary and non-binding upon its respective members;
    4. The extent and degree to which TSA and its members have 
maintained and transmitted to the Commission full, complete, and 
accurate minutes of all meetings required to be filed with the 
Commission; and
    5. The development and utilization of open-ended provisions that 
permit the unilateral implementation of GRIs and/or a PSS by TSA 
members in their service contracts with NVOCCs, without genuine 
further negotiation, while waiving or not requiring similar 
provisions in their service contracts with proprietary shippers.

    The Commission has now determined to continue to pursue certain of 
these issues, together with related issues developed during this fact 
finding investigation, through further investigation and possible 
actions under sections 5, 6, 8, 10, 11, 12 and 15 of the 1984 Act, as 
appropriate. The Commission has further determined to extend the period 
under review to include the 2003-2004 service contract season and, in 
particular, the impact of any 2003 general rate increase and peak 
season surcharge on proprietary shippers and NVOCCs. To facilitate such 
investigation, the Commission is continuing this fact finding 
proceeding to assist in developing the most current evidence of the 
activities of TSA and its members in the eastbound transpacific trades, 
as related to the following issues, among others:

    1. The extent and degree to which TSA members may have violated 
section 10(b)(13) of the 1984 Act by disclosing confidential shipper 
information related to individual service contracts, including the 
identity of the shipper signatories.
    2. Whether and to what extent TSA members may have violated 
sections 10(a)(2) and/or 10(a)(3) of the 1984 Act by systematically 
removing tonnage from the transpacific trades, individually, or 
through carrier alliances, following detailed discussions and 
exchanges of information on capacity reduction within TSA.
    3. Whether and to what extent TSA's failure to file minutes of 
meetings of senior executives held in conjunction with Presidents, 
Owners, and Revenue Policy Committee meetings, as well as its 
failure to file full and complete minutes of other meetings, may 
have resulted in violations of the Commission's minute filing 
regulations at 46 CFR 535.706(a) and (b).
    4. Whether and to what extent TSA and/or its members have 
engaged in unjustly discriminatory practices in the matter of rates 
and charges with respect to NVOCCs as a class in violation of 
section 10(c)(7) of the 1984 Act.
    5. Whether and to what extent TSA and/or its members have unduly 
or unreasonably prejudiced or disadvantaged NVOCCs as a class in 
violation of section 10(c)(8) of the 1984 Act.
    6. Whether TSA and/or its members have engaged in practices 
which actively discourage members from taking independent rate 
actions, contrary to the Congressional policy, embodied in sections 
5(c)(1) and (3) of the 1984 Act and its legislative history, to 
foster individual, confidential service contracts to offset the 
anticompetitive impact of rate fixing agreements.
    7. Whether and to what extent, the TSA agreement and/or other 
related agreements to which TSA or its members are parties, have 
produced, or are likely to produce, by a reduction in competition, 
an unreasonable

[[Page 33697]]

decrease in transportation service or an unreasonable increase in 
transportation cost, as described in section 6(g) of the 1984 Act.

    In addition, the Commission is designating Vern W. Hill, Director, 
and George A. Quadrino, Attorney, Bureau of Enforcement, as the 
Investigative Officers for the continued phase of this proceeding. 
Mssrs. Hill and Quadrino will have all of the powers formerly delegated 
to Commissioner Brennan to pursue the issues set forth above.
    Interested persons are invited and encouraged to contact the 
Investigative Officers named herein, at (202) 523-5783 (Phone) or (202) 
523-5785 (Fax), should they wish to provide testimony or evidence, or 
to contribute in any other manner to the development of a complete 
factual record in this proceeding.
    Therefore, it is ordered, that pursuant to sections 5, 6, 8, 10, 
11, 12 and 15 of the Shipping Act of 1984, 46 U.S.C. app. 1704, 1705, 
1707, 1709, 1710, 1711 and 1714, and part 502, subpart R of Title 46 of 
the Code of Federal Regulations, 46 CFR 502.281, et seq., this 
nonadjudicatory investigation into practices of the ocean common 
carriers listed in Appendix A in the eastbound Transpacific trades is 
continued in order to develop the issues set forth above and to provide 
a basis for any subsequent regulatory, adjudicatory or injunctive 
action by the Commission;
    It is further ordered, that the Investigative Officers shall be 
Vern W. Hill, Esq., Director, and George A. Quadrino, Attorney, Bureau 
of Enforcement, of the Commission. The Investigative Officers shall be 
assisted by staff members as may be assigned by the Commission's 
Executive Director and shall have full authority to hold public or non-
public sessions, to resort to all compulsory process authorized by law 
(including the issuance of subpoenas ad testificandum and duces tecum), 
to administer oaths, to require reports, and to perform such other 
duties as may be necessary in accordance with the laws of the United 
States and the regulations of the Commission;
    It is further ordered, that the Investigative Officers shall issue 
a report of findings and recommendations no later than December 2, 
2003, and interim reports if it appears that more immediate Commission 
action is necessary, such reports to remain confidential unless and 
until the Commission provides otherwise;
    It is further ordered, That this proceeding shall be discontinued 
upon acceptance of the final report of findings and recommendations by 
the Commission, unless otherwise ordered by the Commission; and
    It is further ordered, That notice of this Order be published in 
the Federal Register.

    By the Commission.
Bryant L. VanBrakle,
Secretary.

Appendix A

    1. American President Lines (``APL'')
    2. A.P. Moller Maersk-Sealand
    3. CMA CGM, S.A.
    4. Cosco Container Lines Ltd.
    5. Evergreen Marine Corp.
    6. Hanjin Shipping Company, Ltd.
    7. Hapag-Lloyd Container Linie, GmbH
    8. Hyundai Merchant Marine Co., Ltd.
    9. Kawasaki Kisen Kaisha, LTD.
    10. Mitsui O.S.K. Lines, Ltd.
    11. Nippon Yusen Kaisha (``NYK'')
    12. Orient Overseas Container Line, Ltd.
    13. P&O Nedlloyd, B.V.
    14. P&O Nedlloyd, LTD.
    15. Yang Ming Marine Transport Corp.

[FR Doc. 03-14219 Filed 6-4-03; 8:45 am]
BILLING CODE 6730-01-P