Trans-Atlantic Agreement

FEDERAL MARITIME COMMISSION

[Docket No. 94-29 et al.]

Trans-Atlantic Agreement

In the matter of; docket No. 94-29, practices of the Trans-

Atlantic Agreement and its members with respect to independent

action; docket No. 94-30, container pool practices of the Trans-

Atlantic Agreement and its members; fact finding investigation No.

21, activities of the Trans-Atlantic Agreement and its members,

order inviting amicus curiae filings.

On February 2, 1995, the Trans-Atlantic Conference Agreement

(``TACA'' or ``Conference'') and its member lines, the Commission's

Bureau of Hearing Counsel (``Hearing Counsel'') and the Investigative

Officers in Fact Finding Investigation No. 21 submitted a proposed

settlement of these proceedings. The settlement is now before the

Commission for review.

By this Order, the Commission is inviting any interested member of

the public to comment on the settlement. This is being done pursuant to

the Commission's amicus curiae procedure, 46 CFR 502.76, whereby the

Commission at its own initiative may solicit expressions of views on

matters of law or policy.

Under the terms of the settlement, the TACA lines would agree to

certain undertakings, including broad rate reductions; amendments to

the TACA agreement provisions on service contracts, independent action

(``IA'') and other matters; cancellation of other agreements; and

increased reporting to the Commission. These undertakings are described

in more detail below. In exchange, the Commission would terminate or

withdraw Dockets Nos. 94-29, 94-30, Fact Finding Investigation No. 21

and its outstanding subpoenas, and certain other orders issued under

section 15 of the Shipping Act of 1984 (``1984 Act''). TACA and its

members would not admit to any violations of law. In addition, the

settlement agreement would bar the Commission from commencing any new

actions or proceedings against the Conference or its members for

possible violations or actions in contravention of sections 5, 6, and

10 of the 1984 Act, Commission regulations, or Commission orders, if

such possible violations arose from activities or practices disclosed

to the Commission through one of the following sources: Fact Finding

Investigation No. 21; documents or depositions furnished by TACA in

Dockets Nos. 94-29 or 94-30; documents furnished pursuant to the

settlement agreement; minutes or conference documents provided by TACA

to the Commission; additional information requested by the Commission

pursuant to section 6(d) of the 1984 Act; and documents furnished by

TACA in response to the Commission's section 15 compulsory orders of

March 28 and July 17, 1994.

The settlement includes the following commitments from TACA and its

member lines: [[Page 8387]]

Rate Reductions: TACA would suspend all rate increases

implemented under its 1995 Business Plan. Specifically, within fifteen

(15) days after approval of the settlement by the Commission, TACA

would reduce its current tariff rates to those in effect on December

31, 1994. In addition, the Conference would offer to amend current

service contracts to undo 1995 rate increases and replace them with the

rates offered in 1994. The suspension of the 1995 increases would

remain in effect through December 31, 1995, for both tariff rates and

service contract rates. In a joint memorandum in support of the

settlement proposal, Hearing Counsel estimate that the value to the

shipping public of the rate reductions would be $60-70 million,

depending on such factors as cargo volumes and trade growth.

Service Contracts: (1) TACA agreement provisions would be

revised to provide that shippers may negotiate with the carrier of the

shippers' choice; however, the Conference Secretariat could elect to

participate in such negotiations. (2) NVOCC service contracts would be

amended to remove volume caps and geographic limits. (3) TACA would

offer to remove or revise certain restrictions in existing service

contracts, including 7-day booking notice requirements and requirements

that cargo must be owned by the shipper. (4) TACA may not adopt a

general policy of treating shippers who did not sign service contracts

in a prior period less favorably than those who did sign contracts.

IA: TACA agreement provisions would be revised as follows:

(1) When a TACA member communicates an IA rate to the Conference

Secretariat, the Secretariat would be required to publish the IA rate

immediately, rather than first notifying other members. (2) The lines

could not agree that they must discuss IA with other members. (3) Each

line would be free to designate who within its company is authorized to

take IA. (4) Quarterly IA reporting would be made to the Commission.

Withdrawal from Discussion Agreements: the TACA lines

would withdraw from membership in, or cancel, a number of rate

discussion and rate-setting agreements, including the Eurocorde

Discussion Agreement, FMC No. 202-010829, and the Gulfway Agreement,

FMC No. 203-011141, which authorize discussions about rates between

TACA lines and independent lines.

Furthermore, under the settlement, the TACA lines would also

eliminate much of their current broad space charter authority; instead,

long-term charter arrangements between Conference lines would be

covered by separate and discrete filed agreements. Also, all connecting

carrier agreements with NVOCCs would be cancelled, and applicable

tariffs and service contracts would set forth the terms by which

containers and equipment will be made available to shippers. Beginning

in September 1995, representatives of TACA and the Commission would

meet semi-annually to discuss TACA activities and plans.

As with the proposed rate reductions, the settlement agreement ties

the proposed changes to TACA to the date of any settlement approval by

the Commission.

As a matter of clarification, it should be noted that the

amendments to TACA called for by the settlement are in addition to

those which the Commission obtained from the Conference in October

1994, i.e.:

removal of the Conference's ``capacity regulation''

program, whereby the TACA lines had withheld part of their vessel

capacity from the shippers;

authorization allowing Conference carriers not

participating in a TACA service contract to unilaterally negotiate

different rates with the shippers during a 15-day window following

filing of the TACA contract;

reduction of the IA notice on rates from five to three

days;

reduction of the number of Conference carriers required to

approve a service contract from a ``majority-minus-two'' formula to

five favorable votes;

outright elimination of the 100 TEU or $100,000 minimum

volume or value requirement for service contracts; and

the deletion of provisions authorizing TACA carriers to

collectively negotiate with inland carriers concerning European inland

segments of through transportation, and to enter into agreements with

other parties.

The Commission believes that this solicitation of public comment

pursuant to the agency's amicus curiae procedure is warranted by the

general importance of the TACA investigations, which require us to

consider any settlement under broad public interest considerations as

well as by the usual settlement criteria such as cost savings and

effective law enforcement. For that reason and because the rate

reduction and other provisions of the settlement could have a direct

and immediate effect on the economic interests of shippers currently

doing business with TACA, the Commission wishes to allow an opportunity

for any interested person to express its opinion on the settlement

before we act upon it. The Commission has already received comments

opposing the settlement from the National Industrial Transportation

League, Container Freight International I/S and Danish Consolidation

Services, and favorable comments from the North American Shippers

Association, Inc., and the New York/New Jersey Foreign Freight

Forwarders and Brokers Association, Inc. These comments will be

considered as filed in response to this Order, and need not be refiled.

As a matter of fairness to all parties, the Commission wishes to

resolve the status of this proposed settlement as quickly as possible.

For that reason, comments from shippers and other interested persons

must be received by the Commission no later than February 21, 1995. The

Commission intends to meet on the settlement on February 24, 1995.

Therefore, it is ordered, That pursuant to Rule 76 of the

Commission's Rules of Practice and Procedure, 46 CFR 502.76, the

Commission hereby grants permission to any interested person to file

comments as amicus curiae on the proposed settlement of these

proceedings;

It is further ordered, That an original and fifteen copies of such

comments must be physically lodged with the Secretary of the Commission

on or before February 21, 1995.

By the Commission.

Joseph C. Polking,

Secretary.

[FR Doc. 95-3754 Filed 2-13-95; 8:45 am]

BILLING CODE 6730-01-M