House subcommittee presses century-old Shipping Act exemption; witnesses urge repeal or stricter oversight

WASHINGTON — A House subcommittee hearing on regulation and competition in maritime shipping on St. Patrick’s Day focused on the antitrust exemption in the Shipping Act of 1916 and whether it still serves U.S. businesses and consumers.

Chairman Fitzgerald opened the hearing saying the panel would "examine the statutory antirust exemption granted under the 1916 shipping act and its impact on competition and consumers." He and the witnesses described a shipping industry that has become highly concentrated and coordinated through large alliances that, they said, limit options for U.S. shippers.

Professor Erica M. Douglas, an associate professor of law at Temple University’s Beasley School of Law, told the subcommittee that section 4307 of the Consolidated Shipping Act shields certain carrier agreements from antitrust law and argued Congress should consider repeal. "This ocean shipping exemption is one of the oldest in antitrust law. It's not clear that it was ever justified and it certainly is not today," she said, adding that the Federal Maritime Commission (FMC) "has never brought such a case" under its authority to challenge unreasonable agreements.

Witnesses and members pointed to concentration statistics and recent enforcement actions as evidence of risk. Professor Douglas and others noted that the top carriers’ share of world container slot capacity rose from about 50% in 1998 to nearly 90% by 2018, and that three global alliances now dominate transatlantic and trans-Pacific trade. Professor Richard Sakat of the University of Vermont told the committee that the FMC reported roughly 360 agreements on file, with about 50 subject to staff monitoring, and said there is little public record explaining how the agency analyzes potential competitive harms.

Tony Rice, senior director of trade policy at the National Milk Producers Federation and the U.S. Dairy Export Council, described operational and commercial consequences for exporters, saying the U.S.-flagged oceangoing fleet represents "only 2.3% of global shipping capacity," leaving U.S. exporters dependent on foreign carriers for perishables and other goods. Rice urged investments in U.S. shipbuilding and mariner training and cautioned that penalties or port fees could be passed through to American exporters.

Diana Moss, vice president and director of competition policy at the Progressive Policy Institute, framed the question in consumer terms, arguing that exemptions and weak enforcement raise prices. "Consumers are the backbone of the U.S. economy," she said, and cautioned that premature settlements and politicized enforcement have reduced remedies available to restore competition.

Committee members from both parties pressed witnesses on remedies. Some favored full repeal of the shipping exemption to restore DOJ and FTC antitrust authority; others sought narrower legislative changes that would require the FMC to share confidential service-contract data with DOJ and the FTC and to provide public explanations when it declines to act. Professor Sakat recommended at minimum mandatory data sharing so agencies with stronger antitrust enforcement capacity can perform the fact-specific economic analysis necessary to assess whether agreements limit capacity or allocate markets.

Witnesses pointed to pandemic-era disruptions and cartels prosecuted outside the exemption as evidence that anticompetitive conduct has real effects on supply chains and prices. Members repeatedly asked for more public analysis and transparency from the FMC; witnesses said the public record is currently insufficient to measure how the agency reaches its conclusions about competitive impacts.

The hearing concluded with no vote or formal action. Chairman Fitzgerald closed the session, told members they had five legislative days to submit additional questions for the record, and adjourned the subcommittee.