Container Pool Practices of the Trans-Atlantic Agreement and its Members; Order of Investigation and Hearing

FEDERAL MARITIME COMMISSION

[Docket No. 94-30]

Container Pool Practices of the Trans-Atlantic Agreement and its

Members; Order of Investigation and Hearing

The Trans-Atlantic Agreement (``TAA'' or ``Agreement''), FMC

Agreement No. 202-011375, first became effective August 31, 1992,

pursuant to the Shipping Act of 1984 (``1984 Act''), 46 U.S.C. app.

1701 et seq. Sixteen ocean common carriers, identified in Appendix A

hereto, currently are members of the Agreement.\1\

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\1\On October 24, 1994, additional modifications of the basic

agreement were permitted by the Federal Maritime Commission

(``Commission'') to take effect under the 1984 Act, among which

amendments was a change of the agreement's name to the Trans-

Atlantic Conference Agreement. While officially renamed to clarify

its designation as a conference, the carrier members continue to

refer to the Agreement as TAA.

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By Order issued July 27, 1994, the Commission instituted Fact

Finding Investigation No. 21, entitled Activities of the Trans-Atlantic

Agreement and Its Members. Among issues to be examined in the course of

the Fact Finding Investigation were, inter alia, whether the carrier

members of the TAA had violated sections 10 (b)(1), (b)(4), and (b)(12)

of the 1984 Act.\2\ The Fact Finding Order further provides that the

designated Investigative Officers are not precluded from developing

facts related to any other possible violations of the 1984 Act that may

be uncovered in the course of the proceeding. In commencing the above

nonadjudicatory investigation, the Commission's objective was to

determine whether sufficient evidence exists to warrant formal

adjudicatory, assessment or injunctive proceedings for alleged

violations of the 1984 Act by the TAA or its carrier members.

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\2\Section 10(b) of the 1984 Act, 46 U.S.C. app. 1709, states

that no common carrier may:

(1) charge, demand, collect, or receive greater, less, or

different compensation for the transportation of property or for any

service in connection therewith than the rates and charges that are

shown in its tariffs or service contracts;

* * * * *

(4) allow any person to obtain transportation for property at

less than the rates or charges established by the carrier in its

tariff or service contract by means of false billing, false

classification, false weighing, false measurement, or by any other

unjust or unfair device or means;

* * * * *

(12) subject any particular person, locality, or description of

traffic to an unreasonable refusal to deal or any undue or

unreasonable prejudice or disadvantage in any respect whatsoever; *

* *

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Through responses to subpenas issued by the Investigative Officers,

testimony in fact finding hearings and through other means, it now

appears to the Commission that carrier members of the TAA have engaged

in certain practices relating to the provision of chassis and container

equipment to shippers at U.S. West Coast and interior locations other

than the carrier's designated container yard (``CY'') or terminal

facility at the port.\3\ It further appears that these practices may

have encompassed the positioning by the carrier of an inventory of

container equipment and chassis either at facilities operated by the

shippers (so-called ``shippers' pools'') or at facilities operated by

third parties such as trucking companies (``neutral container pools''

or ``equipment depots''). It is believed that the ocean common carriers

have absorbed all or a portion of the inland costs of positioning empty

equipment at these facilities on behalf of the shipper, for loading and

subsequent use in the transportation of commodities in the TAA trades.

The carriers also may have absorbed related costs of maintaining and

controlling such equipment for the benefit of certain shippers,

including benefits or concessions as to personnel, advance allocations

of equipment, and extended freetime arrangements. It does not appear

that these individual facilities or benefits are identified or held out

generally to the shipping public through the tariffs of the TAA or its

member carriers.

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\3\Among the export commodities believed to be affected by this

practice are dried fruits and nuts, cotton and cotton linters,

agricultural commodities including vegetables and rice, and

shipments of wines and spirits. Other commodities and U.S. locations

also may be involved.

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In addition, a review of materials furnished in response to

subpenas by the Investigative Officers indicate that, in May 1994, the

carrier members agreed in a meeting of the TAA to permit such pools to

continue in existence through August 31, 1994, despite concerns and

complaints by some members that operation of the pools was untariffed

and unlawful. It appears that the membership agreed that such pools

would be limited to those already established, and further limited to

shippers of dried fruit and nuts for the balance of the 1993-1994

shipping season. These latter allegations raise the implication that

TAA member carriers, in addition to maintaining container pools or

equipment depots on an individual carrier basis, may have participated

in a TAA decision jointly to permit some carriers to operate container

pools in violation of the 1984 Act. To the extent that TAA's action was

further limited to certain shippers of dried fruit and nuts, other

shippers of similar commodities or shippers in locations physically

proximate to these so-called container pools may have been deprived of

equivalent concessions or benefits, or subjected to undue or

unreasonable prejudice or disadvantage in respect of such container

pools.\4\

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\4\It is unclear whether the TAA carriers individually limited

their container pool practices to shippers of specified commodities

as apparently was agreed for the period prior to August 31, 1994. It

is also unclear that the carriers terminated these alleged practices

by August 31, 1994.

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Now therefore, it is ordered, That pursuant to sections 10, 11, and

13 of the 1984 Act, 46 U.S.C. app. 1709, 1710, and 1712, an

investigation is instituted to determine:

(1) Whether the TAA or its carrier members, jointly or severally,

violated section 10 (b)(1) or (b)(4) of the 1984 Act by charging a

lesser or different compensation for transportation or services

involving the use of container pools than the rates or charges set

forth in its tariffs or service contracts, or allowed any person to

obtain such transportation or services at less than applicable charges

by an unjust or unfair device or means with respect to such container

pools;

(2) Whether the TAA or its carrier members, jointly or severally,

violated section 10 (b)(3) or (b)(11) of the 1984 Act by extending to

any person a privilege, concession, equipment or facility involving the

use of container pools except in accordance with its tariffs or service

contracts, or made or gave any undue or unreasonable preference or

advantage to any particular person or description of traffic with

respect to such container pools;

(3) Whether the TAA or its carrier members, jointly or severally,

violated section 10 (b)(3), (b)(6) or (b)(12) of the 1984 Act by

denying to any person a privilege, concession, equipment or facility

involving the use of container pools except in accordance with its

tariffs or service contracts, engaged in any unfair or unjustly

discriminatory practice in the matter of container pool facilities, or

subjected any particular person or description of traffic to any undue

or unreasonable disadvantage or prejudice with respect to such

container pools;

(4) Whether the TAA or its carrier members, jointly or severally,

violated section 10 (b)(1), (b)(3), (b)(4), (b)(6), (b)(11), or (b)(12)

of the 1984 Act by agreeing to permit the continuation by certain

carriers of the use of container pools through the period ending August

31, 1994;

(5) Whether the TAA or its carrier members, jointly or severally,

violated section 10 (b)(1), (b)(3), (b)(4), (b)(6), (b)(11), or (b)(12)

of the 1984 Act by agreeing to permit the continuation by certain

carriers of the use of container pools through the period ending August

31, 1994, which agreement limited such privileged, concessions or

facilities to shippers of dried fruits and nuts in California;

(6) Whether, in event violations of section 10 (b)(1), (b)(3),

(b)(4), (b)(6), (b)(11) or (b)(12) of the 1984 Act are found, civil

penalties should be assessed and, if so, the amount of such penalties;

(7) Whether, in the event violations of section 10 (b)(1), (b)(3)

or (b)(4) of the 1984 Act are found, the Commission should suspend any

common carrier's rights to use any or all tariffs of the TAA and, if

so, the period of such tariff suspension; and

(8) Whether, in the event violations are found, an appropriate

cease and desist order should be issued.

It is further ordered, That a public hearing be held in this

proceeding and that this matter be assigned for hearing before an

Administrative Law Judge of the Commission's Office of Administrative

Law Judges at a date and place to be hereafter determined by the

Administrative Law Judge in compliance with Rule 61 of the Commission's

Rules of Practice and Procedure, 46 CFR 502.61. The hearing shall

include oral testimony and cross-examination in the discretion of the

Presiding Administrative Law Judge only after consideration has been

given by the parties and the Presiding Administrative Law Judge to the

use of alternative forms of dispute resolution, and upon a proper

showing that there are genuine issues of material fact that cannot be

resolved on the basis of sworn statements, affidavits, depositions, or

other documents or that the nature of the matters in issue is such that

an oral hearing and cross-examination are necessary for the development

of an adequate record;

It is further ordered, That TAA (Agreement No. 202-011375) and its

carrier members specified in Appendix A are designated respondents in

this proceeding;

It is further ordered, That the Commission's Bureau of Hearing

Counsel is designated a party to this proceeding;

It is further ordered, That notice of this Order be published in

the Federal Register, and a copy be served on parties of record;

It is further ordered, That other persons having an interest in

participating in this proceeding may file petitions for leave to

intervene in accordance with Rule 72 of the Commission's Rules of

Practice and Procedure, 46 CFR 502.72;

It is further ordered, That all further notices, orders, and/or

decisions issued by or on behalf of the Commission in this proceeding,

including notice of the time and place of hearing or prehearing

conference, shall be served on parties of record;

It is further ordered, That all documents submitted by any party of

record in this proceeding shall be directed to the Secretary, Federal

Maritime Commission, Washington, D.C. 20573, in accordance with Rule

118 of the Commission's Rules of Practice and Procedure, 46 CFR

502.118, and shall be served on parties of record;

It is further ordered, That in accordance with Rule 61 of the

Commission's Rules of Practice and Procedure, the initial decision of

the Administrative Law Judge shall be issued by August 23, 1995 and the

final decision of the Commission shall be issued by November 23, 1995.

Joseph C. Polking,

Secretary.

Appendix A

Trans-Atlantic Agreement, Meadows Office Complex, 201 Route 17

North, Rutherford, NJ 07070

Polish Ocean Lines, 1001 Durham Ave., South Plainfield, NJ 07080

Neptune Orient Lines Ltd., c/o Tricom Shipping Agency, 15 Exchange

Place, 7th Floor, Jersey City, NJ 07302

Mediterranean Shipping Company S.A., 420 5th Avenue, 8th Floor, New

York, NY 10008-2702

DSR/Senator Joint Service, 50 Cragwood Rd., South Plainfield, NJ

07080

Sea-Land Service, Inc., 150 Allen Road, Liberty Corner, NJ 07938

P&O Containers Limited, One Meadowlands Plaza-12th Fl., E.

Rutherford, NJ 07073

Hapag-Lloyd AG, 399 Hoes Lane, Piscataway, NJ 08854

Orient Overseas Container Line, 4141 Hacienda Drive, Pleasanton, CA

90731

Atlantic Container Line AB, 50 Cragwood Road, South Plainfield, NJ

07080

A.P. Moller-Maersk Line, Giralda Farms, P.O. Box 880, Madison, NJ

07940-0880

Nedlloyd Lijnen BV, c/o Nedlloyd Lines (USA) Corp., 2100 RiverEdge

Pkwy, Ste. 300, Atlanta, GA 30328-4656

Nippon Yusen Kaisha, NYK Line, 300 Lighting Way, 5th Floor,

Secaucus, NJ 07094

Transportacion Maritima, Mexicana, S.A. de C.V., c/o Trans-America

S.S. Agency, 140 W. 6th Street, San Pedro, CA 90731

Tecomar S.A. de C.V., c/o Phoenician Int'l Shipping, 2350 N. Belt

East, Suite 720, Houston, TX 77032

Cho Yang Shipping Co. Ltd., 301 Route 17 North, 6th Floor,

Rutherford, NJ 07070

Hanjin Shipping Co., Ltd., 1521 Pier C Street, Long Beach, CA 90813

[FR Doc. 94-29410 Filed 11-29-94; 8:45 am]

BILLING CODE 6730-01-M