White House Encourages Competition Compliance for Shipping Companies

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Federal Trade Commission Building, Washington, D.C. (Victoria Pickering / CC BY-NC-ND 2.0)

Published Sep 22, 2021 4:48 PM by Marjorie Holmes, Oliver Beiersdorf and Louisa Martac of law firm Reed Smith

President Joe Biden has issued Executive Order 14036, “Promoting Competition in the American Economy” (“the EO”), which was signed on 9 July 2021. The EO has the goal to promote competition within the U.S. economy to lower prices for families, increase wages for workers, promote innovation and foster economic growth.

The EO puts forward 72 initiatives for multiple federal agencies. While it does not establish new requirements, it is a call to action for federal agencies to establish policies in order to address the harmful trends associated with corporate consolidation, decreased competition and the ultimate harm they cause to America’s consumers, workers, farmers and small businesses.

Joe Biden is attempting to enforce competition compliance more vigorously than his predecessor. As illustrated by the EO, ship owners, carriers and airlines need to ensure that their competition compliance programmes are up to date.

Some shipping companies do not have compliance programmes in place as they are advisory, rather than compulsory. As can be seen in the EO, rather than make it compulsory, Biden’s administration directs the Department of Transportation to consider issuing clear rules and encourages both the Surface Transportation Board and the Federal Maritime Commission to establish certain rules in relation to the shipping industry, air travel and rail travel.

At the EU level, there is no discount on fines for a shipping company having a compliance programme in place. However, the U.S. and UK do give a discount. If a shipping company does have a competition programme in place, it significantly reduces the chances of being held criminally liable for the wrong-doing of an employee. Therefore, if an employee does not receive the necessary training, it could cause the shipping company to have criminal liability in some jurisdictions, such as the UK.

In the current climate, more countries worldwide are implementing competition regimes. In 1990, there were 30 jurisdictions with competition laws in place. However, there are now currently 200 jurisdictions with competition laws in place. It is apparent that the world is getting more interested in competition compliance.

The EO shows that the U.S. is encouraging competition compliance. Shipping companies are continuing to face difficulties, such as lack of containers and lack of facilities to discharge cargo. During the COVID-19 pandemic, heavy port congestion has resulted in less capacity on the market. This not only stopped the usual flow of imports and exports that the shipping world was used to, but also saw empty containers lying uncollected on docks. Another reason that shipping companies are facing difficulties is the lack of workforce due to COVID-19. Lack of workforce put together with lack of containers and lack of facilities to discharge cargo has caused port congestions worldwide.

The capacity on the market being reduced is not within the control of shipping lines. Given the EO, carriers would do well to ensure that they have compliance in place.

Marjorie C. Holmes is a partner at Reed Smith, and she focuses on competition law in several sectors, including aviation, marine, insurance, construction, energy, life sciences and finance. Marjorie has represented companies in a number of important investigations by the European Commission and the UK Competition Authorities. She also acts as legal adviser to several trade associations and has significant merger control experience including dealing with phase 2 clearances.

Oliver Beiersdorf is the co-head of Reed Smith's global Aviation and Aerospace group. His practice focuses on aviation, marine, commercial and product liability litigation. Oliver represents foreign and domestic airlines, product manufacturers and distributors, ship owners and operators, automobile manufacturers and other corporate clients in federal and state courts throughout the United States.

Louisa Martac is a Trainee Solicitor at Reed Smith's London offices.

Federal Trade Commission Building, Washington, D.C. (Victoria Pickering / CC BY-NC-ND 2.0)

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.