K-Line Settles Price Fixing Charges

By Mark Edward Nero

Attorneys representing a group of consumers and auto and truck and equipment dealerships in antitrust claims against more than a dozen international shipping firms have reached a settlement with Tokyo-based Kawasaki Kisen Kaisha Ltd., known as K-Line.

The settlement was announced during a July 23 hearing before Judge Esther Salas of the US District Court for the District of New Jersey in Newark.

The plaintiffs, which include the indirect purchasers of millions of vehicles transported to the United States, claim that K-Line and other maritime carriers have unlawfully conspired to rig bids, fix prices and overcharge for their services.

The lawsuit notes that the market for transporting new vehicles for sale in the US is almost $1 billion annually. Terms of the settlement have not been announced.

“We are delighted to announce the first major settlement in the vehicle carriers case with K-Line,” attorney Warren Burns of Burns Charest LLP, interim co-lead counsel for the end-payor plaintiffs, said July 23. “This is a very significant and substantial first step to assure that American consumers are compensated for the conspiracy to fix the price of international car-shipping services.”

Burns said his firms expects to make the dollar amount public “very soon” after the settlement approval is filed by federal authorities.

The other defendants include among others Nippon Yusen Kabushiki Kaisha (NYK Line) and Compania Sud Americana de Vapores (CSAV), both of which previously pled guilty to participating in the conspiracy that is still being investigated by the federal government.

Some maritime company defendants have sought to dismiss the claims by arguing that the 1984 Shipping Act, which regulates ocean shipping companies, preempts state antitrust laws that protect indirect purchasers against price-fixing.

Burns, however, countered with the argument that state antitrust laws complement the Shipping Act, and that Congress in no way intended to bar such state claims.

Hapag-Lloyd, CSAV Sign Merger Agreement

By Mark Edward Nero

German shipping company Hapag-Lloyd AG and Chilean shipper Compañía Sud Americana de Vapores (CSAV) have signed a binding contract to merge CSAV’s entire container business with Hapag-Lloyd, the two container moving businesses have confirmed.

The deal, which was announced April 16, is still subject to the necessary regulatory approvals.

Following the integration, the new Hapag-Lloyd is expected to rank among the four largest liner shipping companies in the world, with 200 vessels with total transport capacity of around one million 20-foot equivalent units, and an annual transport volume of 7.5 million TEU.

The company’s head office is expected to remain in Hamburg, Germany, but Hapag-Lloyd says it will also have a strong regional office in Chile for its Latin America business.

In return for contributing its container business, CSAV is expected to become a new Hapag-Lloyd core shareholder and will initially hold a 30 percent stake in the combined entity.

“I am delighted that we have succeeded in concluding this partnership through which our two companies are playing an active part in consolidating the liner shipping industry. This day is an important milestone in the history of Hapag-Lloyd,” Hapag-Lloyd Executive Board Chairman Michael Behrendt said upon signing the agreement.

CSAV CEO Oscar Hasbún said that by joining forces, the two companies are creating a “stronger, larger and more global company” with significant economies of scale and an improved competitive position.

“The combination with CSAV, Latin America’s leading container shipping line, considerably strengthens Hapag-Lloyd in this growth market and adds a strong position in the North-South traffic to the company’s global network and to its established strength in East-West traffics,” Hasbún said.

CSAV Fined for Illegal Agreements

By Mark Edward Nero

The Federal Maritime Commission on March 5 announced a compromise deal with vessel-operating common carrier CSAV regarding allegations that CSAV violated the Shipping Act by working with other ocean common carriers under unfiled agreements.

The allegations involved shipments of automobiles and other motorized vehicles on roll on/roll off (ro/ro) or specialized car carrier vessels in various US import and export trades. The shipping agreements had not been filed with the Commission or become effective under the Shipping Act, according to the FMC.

Commission staff says the practices persisted over a period of several years and involved numerous US trade lanes.

“The Shipping Act mandates that the Commission take responsible actions to protect the shipping public,” Maritime Commission Chair Mario Cordero said. “Carriers who fail to properly file with the Commission their agreements affecting carrier working relationships in the US trades are made liable for significant civil penalties, no matter the size of the trade or the market share of the carrier involved.”

CSAV (Compania Sud Americana de Vapores S.A.) is based in Chile. As a separate line of business, it operates ro/ro vessels in US inbound and outbound trades.

Under the agreement, the company wasn’t required to admit to violations of the Shipping Act, but agreed to pay a $625,000 civil penalty and to provide ongoing cooperation with other Commission investigations or enforcement actions with respect to its activities.