US antitrust officials call for careful scrutiny of shipping alliance
US antitrust officials on Monday called for “extreme caution” in reviewing a proposed alliance between major global shipping companies, as the industry attempts to retrench amid low rates and sluggish growth in global trade.
The US Department of Justice’s antitrust division said in a letter to the Federal Maritime Commission – a government agency that overseas maritime transportation – that the proposed deal “raises a number of significant competitive concerns” in the wake of the FMC’s recent approval of the rival Ocean Alliance.
The Alliance would see six shipping companies – Hanjin, Hapag-Lloyd, “K” Line, Mitsui OSK Lines, Nippon Yusen Kaisha and Yang Ming – enter a new strategic relationship regarding east-west trade lanes. Originally announced in May, the alliance would create “one of the leading networks in the container shipping industry,” accounting for about 18 per cent of global container fleet capacity and a total of 620 ships among its members, according to a press release from the group.
Taken together, the strategic tie-ups created with the Ocean Alliance and The Alliance would reduce from four to three the number of major shipping alliances controlling global maritime transportation, Justice Department officials wrote, increasing the possibility of collusion and concentration in an already vulnerable industry.
“Where, as here, an agreement contemplates extensive cooperation among members, extreme caution is warranted,” the letter stated, noting it had raised similar concerns about the Ocean Alliance, which received FMC approval in October.
If left unchallenged by the FMC, conduct covered in the agreement may be immune from enforcement under US antitrust laws, the letter said, urging the commission to seek additional information and thoroughly review the record in order to make sure the agreement was narrowly tailored.
If approved, The Alliance would last for five years and take effect in April 2017, pending approval from multiple regulatory bodies, according to the press release announcing the agreement.