News: Biden's executive order prompts US federal agencies to cooperate on antitrust enforcement of the liner trade

News & Insights 20 July 2021

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By Executive Order, President Biden encouraged the Federal Maritime Commission to amongst other things to enforce the prohibition of unjust and unreasonable practices in the context of detention and demurrage pursuant to the Shipping Act

Cargo container ship

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By Executive Order, President Biden encouraged the Federal Maritime Commission to (i) vigorously enforce the prohibition of unjust and unreasonable practices in the context of detention and demurrage pursuant to the Shipping Act, (ii) request from the National Shipper Advisory Committee recommendations for improving detention and demurrage practices and enforcement of related Shipping Act prohibitions, and (iii) consider further rulemaking to improve detention and demurrage practices and enforcement of related Shipping Act prohibitions.  Sec. 5(o) of the Executive Order on Promoting Competition in the American Economy, 09 July 2021.

In response to the EO, the FMC and the Department of Justice, Antitrust Division entered into a memorandum of understanding on 12 July 2021 to share information related to, and cooperate in, the enforcement of antitrust and other laws related to the industry.  Inter alia, the two agencies will confer at least once annually to discuss and review law enforcement, regulatory, and other matters related to competitive conditions in the industry, and the agencies will share with each other information and materials relevant to the competitive conditions in the industry.

The White House's fact sheet makes clear that these actions have been taken in response to rapid consolidation among carriers in the maritime shipping industry.  "In 2000, the largest 10 shipping companies controlled 12% of the market.  Today, it is more than 80%, leaving domestic manufacturers who need to export goods at these large foreign companies’ mercy" and allowing powerful carriers in the liner trade to charge exporters high fees for detention and demurrage.

Demurrage and detention charges are within the FMC's purview to regulate under the Shipping Act.  In recent years, the Commission has reviewed the reasonableness of detention and demurrage regulations and the practices of ocean carriers and marine terminal operators issuing new guidance on the topic in 2020.

Link to EO: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/
Link to MOU: https://www.justice.gov/opa/press-release/file/1411101/download

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