The Federal Maritime Commission (FMC) is rejecting on jurisdictional grounds the “Tripartite Agreement” an agreement between Kawasaki Kisen Kaisha (K Line), Nippon Yusen Kaisha (NYK) and Mitsui O.S.K. Lines (MOL) to form a joint container shipping service.
The Shipping Act does not provide the Federal Maritime Commission with authority to review and approve mergers. The Commission found the parties were creating a merged, new business entity, which the FMC cannot review. The U.S. Justice Department (DOJ) would be responsible for approving the deal.
The Tripartite Agreement was filed at the Commission on March 24, 2017, by the three lines. The agreement would have entered into effect May 8, 2017, allowing the companies to establish the joint-venture company by July 1, 2017, and begin operations April 1, 2018. The FMC ruling does not affect an eventual DOJ decision on the matter.
The FMC is responsible for regulating the Nation’s international ocean transportation for the benefit of exporters, importers, and the American consumer. The Commission’s mission is to foster a fair, efficient, and reliable international ocean transportation system while protecting the public from unfair and deceptive practices.
Although the FMC approved both the Ocean Alliance and subsequently THE Alliance, the rejection of jurisdiction over the Japanese lines’ merger may be an attempt to clarify that line.
The three Asian carriers would together control a far smaller market share (7.2%) than any alliance and five other allied-carriers, so they could still receive antitrust approval despite previous DOJ concerns.
