Pending Legislation on Regulation of the Maritime Industry

B-198002: Published: Jun 1, 1983. Publicly Released: Jun 4, 1985.

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In response to a congressional request, GAO answered a number of questions concerning pending legislation on the regulation of the maritime industry. Since the issuance of a recent GAO report on this topic, two developments have occurred which could alter its findings and conclusions: (1) some U.S. flag carriers have placed orders with foreign shipyards, lessening the need to form consortia to finance the replacement of existing fleets; and (2) the enactment of the Export Trading Company Act facilitates the formation and operation of export trading companies and modifies the application of antitrust laws to certain export trade. In addition, the latest market information shows no significant change in the market position of the U.S. liner fleet. GAO does not believe that it is necessary to confer intermodal rate immunity on conferences for U.S. shippers to benefit from through-intermodal rates, and such immunity could have anticompetitive effects. Furthermore, it appears that agreements that wholly eliminate competition in a particular trade cannot be justified. GAO has no basis to disagree with the opinion of the Federal Maritime Commission that a 45-workday time limit for review of agreements would be more appropriate than the proposed 45-calendar-day time limit. Because shippers' councils could become strong cartels that potentially may engage in prohibited anticompetitive activities, GAO believes that there is a need to control their activities. This could be achieved through a certification procedure. If the commission's role in tariff filing and enforcement were to end, the cost of policing their rate agreements would be borne entirely by the shipping conferences. This cost would encourage procompetitive behavior by individual carriers. A proposed reduction in the limits of the reach of a loyalty contract and a provision which would permit carriers to take immediate independent action in establishing a tariff would also have a procompetitive effect. Finally, GAO listed the issues which it felt a proposed commission on the deregulation of international ocean shipping should address.

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