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FMC Blocks Anti-Competitive Aspects of San Pedro Ports Concession Requirements

October 29, 2008

NR 08-16

CONTACT: KAREN V. GREGORY (202) 523-5725; e-mail: secretary@fmc.gov

The Federal Maritime Commission ("FMC" or "Commission") today determined by 2-1 vote that implementation of certain portions of the Clean Truck Programs ("CTP") by the Ports of Los Angeles and Long Beach under FMC Agreement No. 201170, are likely, by a reduction in competition, to produce an unreasonable increase in transportation cost or unreasonable reduction in service. The Commission, therefore, authorized staff to file a complaint with the U.S. District Court for the District of Columbia pursuant to section 6(h) of the Shipping Act of 1984, to enjoin aspects of Agreement No. 201170, including concession requirements that mandate exclusive use of employee-drivers. Commissioner Joseph E. Brennan dissented from this determination.

In authorizing this action, the Commission appreciates the potential environmental and public health goals of the Ports' CTP, and recognizes that some transportation cost increases may be necessary to generate clean air and public health benefits. However, the Commission concluded that the reduction in competition resulting from certain agreement-related activities will result in substantial transportation cost increases, beyond what is necessary to generate the public benefits asserted by the Ports. The Commission believes that surgical removal of substantially anti-competitive elements of the Agreement, such as the employee mandate, will permit the Ports to implement on schedule, those elements of the CTP that produce clean air and improve public health.

The Shipping Act directs the Federal Maritime Commission to evaluate the potential anti-competitive impacts of all agreements. The Ports of Los Angeles and Long Beach are marine terminal operators under the Shipping Act, and are permitted to collectively develop and implement their CTP pursuant to an agreement on file with the FMC. Subject to the Commission's jurisdiction and ongoing oversight, parties to agreements receive immunity from the U.S. anti-trust laws. This oversight ensures that activities of the Agreement parties do not result in unreasonable increases in transportation cost or reductions in service, or otherwise give rise to unreasonable practices under the Shipping Act.

Commission staff worked with Agreement filing parties to collect and analyze information to understand how the CTP would work and to minimize Commission intervention. The Commission requested additional information both informally and formally from the Agreement parties to assist the Commission in making its determination.

Commissioners Creel and Dye commented that the Federal Maritime Commission must ensure that our foreign trades operate free from substantially anticompetitive activities. The shipping public should be afforded the full benefit of the protections of the Shipping Act of 1984.

Press Contact: Karen V. Gregory (202) 523-5725; e-mail: secretary@fmc.gov