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FMC ends formal Transpacific Fact Finding Investigation and finds violations in Opt Out Proceeding

December 29, 1999

FEDERAL MARITIME COMMISSION

FMC ENDS FORMAL TRANSPACIFIC
FACT FINDING INVESTIGATION,
AND FINDS VIOLATIONS IN OPT OUT PROCEEDING

Washington, D.C. 20573

NR 99-15


FOR RELEASE: DECEMBER 29, 1999

CONTACT: BRYANT L. VANBRAKLE

SECRETARY (202) 523-5725

Federal Maritime Commission Chairman Harold J. Creel, Jr. announced today that the Commission has closed its non-adjudicatory fact finding investigation of carrier activities in the eastbound transpacific trade during the peak shipping season of 1998 and completed its proceeding against the "opt out" provision used in the 1998 Asia-North America Eastbound Rate Agreement ("ANERA") service contracts.

Fact Finding Investigation No. 23, Ocean Common Carrier Practices in the Transpacific Trades, and the Commission's enforcement actions, including those referred to the Commission's Bureau of Enforcement ("BOE") for further investigation, addressed some of the concerns that activities engaged in during the 1998 peak shipping season contravened carrier duties under the Shipping Act of 1984. The Fact Finding identified and investigated carrier behavior of concern to numerous shippers, who complained informally to the Commission, and brought public focus and attention to these activities. As a result, the most troublesome carrier behavior may have been abated, and similar future activities deterred. Suspension of all operations of ANERA and the Transpacific Westbound Rate Agreement, including rate-setting activities and the use of collective service contracts, and other changes in service contract practices brought about by OSRA, also lessen the likelihood of recurrence of such abuses, the Commission noted in its order winding up the Fact Finding Investigation. The Commission authorized BOE to continue to pursue enforcement action against ocean common carriers arising from activities or information which came to light during the Fact Finding proceeding. The Commission's actions are based, in part, on the degree of voluntary shipper participation in the agency's investigative and enforcement efforts.

The docketed proceeding, ANERA and Its Members - Opting Out of Service Contracts, Docket No. 99-05, which resulted from the fact finding investigation, was initiated in response to shipper complaints concerning carriers' allocation of vessel space and rate practices during the 1998 peak holiday shipping season. The opt out provision was found to have violated the Shipping Act of 1984, as it existed prior to passage of the Ocean Shipping Reform Act of 1998. Although the Commission found that the opt out practice resulted in contract terms which were impermissibly vague and ambiguous, it did not impose penalties on the now-suspended conference or the carriers for past use of the provision, noting that it is unlikely that the provision will recur in the future and that the delay and expense entailed in hearings on penalties would not further benefit the shipping public.

Copies of the Investigative Officer's Summary of Second Report and Recommendations in Fact Finding Investigation No. 23, the Commission's Order discontinuing that proceeding, and the Commission's Order in Docket No. 99-05, are all available on the FMC website at www.fmc.gov.