FMC clarifies why it rejected Tripartite Agreement

Written by Nick Blenkey
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Acting FMC Chairman Michael Khouri

MAY 8, 2017 — The Federal Maritime Commission (FMC) has issued an update on its May 2, 2017 announcement that had voted to reject “on jurisdictional grounds the ‘Tripartite Agreement’ (FMC Agreement No. 012475)” (see earlier story).

Following review by the Office of General Counsel and the Bureau of Trade Analysis and including a sequence of additional questions by staff and agreement party responses, the Commission determined that the “parties to the Tripartite Agreement were ultimately establishing a merged, new business entity and that action is among the type of agreements excluded [by express provision of the Shipping Act] from FMC review.”

“Subsequent to that May 2nd FMC Newsroom release,” says the latest FMC release, “there have been numerous reports and articles in the press that said the FMC held that the Tripartite Agreement would have violated federal antitrust laws including gun jumping provisions and premature combining of the agreement parties’ business operations. These reports are factually incorrect.”

Acting Chairman Michael Khouri said, “It is unfortunate that such misinformation is circulating in the trade press about the Commission’s deliberations in this matter suggesting that the FMC considered whether the authority sought by parties would violate antitrust laws administered by other competition agencies. To our knowledge, these corporations came to the Commission in good faith with the single purpose of trying to comply with all U.S. laws.”

He continued, “The Commission made only one finding – that the Tripartite Agreement falls outside the jurisdiction of the Shipping Act of 1984. The Commission made no determination of any kind regarding the agreement parties’ commercial activities regarding their compliance with the general antitrust laws that are administered by other federal agencies.

“The Shipping Act expressly excludes acquisition agreements from the Act’s coverage. The cases that address the Commission’s authority to review these types of agreements have noted that Congress gave the Commission the power to review cooperative agreements that produce efficiencies, in order to prevent consolidation. This proposed Agreement is not the type of arrangement in which the parties would surrender control over a particular matter for the duration of the agreement but maintain their separate identity and original independence in the same line of business in all other respects. Thus, the Commission has determined that the creation of the joint venture, including the pre-consolidation cooperation intended to facilitate and permit its creation, falls outside the Commission’s jurisdiction.”

Khouri concluded “I hope that this clears up any prior misunderstanding of the Commission’s decision.”

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