Shipping lines in US Department of Justice inquiry


The FBI ‘raided’ a meeting of shipping executives on the March 15, 2017, in order to serve subpoenas on the senior managers of several container lines who were present. Reports vary, however it appears that certain American authorities are engaged in a new investigation of what they believe may be collusion over pricing in the container shipping market.

It is reported that the Lines concerned were Maersk, Hapag-Lloyd, OOCL and Evergreen. However, none of these companies appear to have made a public statement concerning the investigation.

The meeting was taking place in Los Angeles as part of the activities of the International Council of Containership Operators.

The subpoenas appear to relate to a request for documents to support an internal investigation within the American Justice Department as opposed to any immediate court proceedings.

An explanation for the action has not be provided by the American authorities, however speculation has drawn attention to the consolidation in the sector and its changing alliance structure. Some American civil servants have expressed concern about this, including figures in the American Department of Justice. It is possible that it is such concern that is motivating greater scrutiny of the container shipping sector. The American concern is not unique with mutterings emerging from China about the implications of take-over activity in the sector over the past year.

Container shipping is no stranger to conflicts with competition authorities over pricing. This is unsurprising due to the opacity of price formation combined with ship-owners preference for alliances with their competitors. Much of the shipping market is highly a-symmetrical in terms of the availability of information. Even large customers can have only a vague understanding of what they are paying and why. Of course there is the potential to remedy this through innovations such as digital market-places, however it is likely that many market participants- and not just shipping companies- would resist this. Whilst such market characteristics persist is should not be surprising that market regulators are often suspicious.

Source: Transport Intelligence, March 23, 2017

Author: Thomas Cullen