Thursday, March 23, 2017

Big Container Shipping Lines Questioned by Antitrust Investigators Over Yet Another Freight Cartel

FBI Raid Meeting of the Box Club
Shipping News Feature
US – WORLDWIDE – According to reports, investigators from the Antitrust Division of the US Justice Department have subpoenaed several top executives from some of the world's container shipping lines in relation to a price–fixing probe, in violation of antitrust regulations, not exactly a new accusation for some of companies involved. The FBI raided a meeting of the International Council of Containership Operators, also known as the Box Club, in San Francisco, California, on March 15. Reportedly, Maersk Line, OOCL, Evergreen, and Hapag–Lloyd have confirmed that representatives from their companies received orders to testify.

Whilst there is no confirmation as to the reason why the Box Club members received subpoenas, it is thought to relate to the recent spate of consolidation and collaboration in the container shipping industry with alliances becoming larger and larger. Last year, then Acting Assistant Attorney General of the Antitrust Division of the US Department of Justice, Renata Hesse urged the Federal Maritime Commission (FMC) to look more closely in the alliances over concerns that the companies involved have previously plead guilty to cartel activities and that such large alliances such as 2M, Ocean, and the THE Alliance will constrain trade.

If the raid does concern alliance issues, then it comes just before the box freight industry sees the implementation of both the Ocean Alliance and the THE Alliance, and the inclusion of HMM in 2M, all of which will begin on April 1, 2017. All these new partnerships however have been careful to obtain legitimacy from regulatory authorities around the globe including North America.

The Box Club is made up of one representative from each carrier member who is usually the chief executive officer, managing director or other person at the highest management level of the carrier. Membership consists of some of the largest shipping companies, though its numbers must presumably have dwindled given recent mergers and bankruptcies. As of November 2016, the International Council of Containership Operators consists of a who’s who of top groups, AP Moller-Maersk, CMA CGM, China COSCO Shipping, Crowley Maritime, Evergreen Marine, Hamburg-Süd, Hapag-Lloyd and Hapag-Lloyd USA, HMM, K Line, MSC, MOL, NYK, OOCL, Pacific International Lines, United Arab Shipping Company, Wan Hai Lines, Yang Ming, and Zim Integrated Shipping Services.

Of those companies, Maersk (and Hambug- Süd following its merger), MSC, and HMM form the 2M+HMM co-operation. Hapag-Lloyd, UASC, K Line, MOL, NYK, and Yang Ming, form the THE Alliance whilst CMA CGM, China Cosco Shipping, Evergreen Marine, and OOCL make up the Ocean Alliance.