▶ 0:11:10Subcommittee will come to order. Without objection, the chair is authorized to declare recess at any time. We welcome everyone to today's hearing. Happy St. Patrick's Day. This hearing on regulation and competition in the maritime shipping is a subcommittee hearing we wanted to tackle for some time. I'll now recognize myself for an opening statement.
▶ 0:11:34Today, we are here to examine the statutory antitrust exemption granted under the 1916 Shipping Act and its impact on competition and consumers. Since the earliest day of maritime shipping, ocean carriers have entered into cooperative agreements to coordinate freight capacity and global shipping routes.
▶ 0:11:56This was to ensure space aboard a vessel didn't go unused and ships would not be arriving at the same ports at the same Recognizing that these cooperative agreements, known as conferences, could act to restrict or eliminate competition between rival shippers, Congress began studying the issue.
▶ 0:12:17What Congress concluded was that while there were certainly anti-competitive aspects of these conferences, the benefits seemed to outweigh any potential harm. In the words of the 1914 Alexander report, quote, "To terminate the existing agreements would bring about two results.
▶ 0:12:37The steamship lines would either engage in rate wars or to eliminate a costly struggle, they would consolidate through common ownership." Congress's compromise came in the Shipping Act of 1916. As part of that compromise, ocean carriers could enter into collective agreements so long as those agreements were filed with and overseen by a federal regulator, which today is known as the Federal Maritime Commission or the FMC.
▶ 0:13:06The industry today, however, looks very different from the one Congress confronted in 1916. And in 1998, the top 20 ocean carriers controlled approximately 50% of the world's container slot capacity.
▶ 0:13:23By 2018, that number had almost doubled to nearly 90% and today three global shipping alliances together control nearly all transatlantic and trans-pacific trade. The intent behind the Shipping Act was also to advance the interests of American shippers.
▶ 0:13:46As one scholar had put it, both the original statute and the 1961 amendments are designed to protect and foster a strong American flag merchant marine. In other words, Congress wanted to protect American interests against discrimination by foreign shippers. Yet today, the largest ocean shipping companies are all foreign-owned and
▶ 0:14:12In the list of the top 20 container shipping companies by market cap, there is not a single US company. The United States depends on foreign-flagged vessels for 97% of its maritime trade. COSCO Shipping, one of the largest container shipping companies by market share, is owned and controlled by the Chinese Communist Party.
▶ 0:14:38That presents its own national security risks, which the House Committee on Homeland Security and the China Select Committee have been investigating. This concentration and coordination can exacerbate supply chain disruptions that would otherwise be more resilient when competition is robust. For example, during the COVID pandemic, freight rates for a container increased from $1,300 to as much as $11,000.
▶ 0:15:07When geopolitical crisis have struck, such as the Russia-Ukraine conflict or more recently the ongoing airstrikes against the Iranian regime, ocean carriers have leveraged their monopoly power to charge detention and demurrage fees, surcharges, and other fees that should instead be charged by marine terminal operators.
▶ 0:15:32What would otherwise be unreasonable business practices in a competitive environment, it appears to be routine under these anti-competitive alliances. The result of the Shipping Act, as we've seen, uh may have unfortunately been precisely what Congress was hoping to avoid, concentration of foreign shipping companies to the to to the detriment of American businesses and consumers.
▶ 0:15:58When Congress granted the antitrust exemption, it tasked the Federal Maritime Commission with subjecting these ocean carrier agreements to antitrust scrutiny. However, as one of our witnesses will explain today, the FMC has never once brought a case against the powerful ocean shipping carriers that dominate shipping markets.
▶ 0:16:19Despite having the statutory authority to seek a judicial judiciary remedy or monetary penalties, the FMC has never taken an enforcement action to challenge an agreement. Some will call this under enforcement. I it could be called a dereliction. Over the years, the FMC has maintained the position that competition was vigorous among ocean carriers and their three major shipping alliances.
▶ 0:16:45Even after the COVID pandemic in which United States faced some of its greatest supply chain challenges, the FMC reported to Congress that competition among ocean common carriers, among the three major alliances, and among the members in each of these alliances is But that argument is in tension with the position taken by Congress and the DOJ in recent years.
▶ 0:17:13When Congress passed the Ocean Shipping Reform Act of 2022, it did so to alleviate concerns amongst businesses that ocean carrying alliances were quote able to wield excessive power to prevent Yet despite Congress giving the FMC more authority to police the carriers and the terms of their agreements, it appears the agency is still sitting on its The DOJ meanwhile has long maintained the position that antitrust exemption
▶ 0:17:43for ocean shipping is no longer justified and has repeatedly submitted comments to the FMC expressing antitrust concerns over ocean carrier alliances. In 2016, for example, the DOJ submitted comments urging the FMC to oppose the proposed ocean alliance agreement.
▶ 0:18:02In their comments, the DOJ stated that the agreement contemplates extensive cooperation amongst members and will grant the parties the ability to broadly coordinate service between routes including the unfettered exchange of competitively sensitive information. Additionally, the DOJ stated the increase in concentration in the trans-Pacific shipping market is
▶ 0:18:27Excuse me. Likely to enhance market power under the antitrust laws. Despite this warning, the FMC authorized the ocean alliance in 2016 and has continued to extend the agreement most recently until March 2032.
▶ 0:18:42An economy based on vigorous competition and protected by the antitrust laws does the best job of promoting consumer welfare and a [snorts] vibrant growing Statutory antitrust exemptions are antithetical to those principles.
▶ 0:18:59As the bipartisan antitrust modernization commission stated statutory exemptions from the antitrust laws undermine rather than upgrade the competitiveness and efficiency of the US When Congress grants immunity from antitrust scrutiny, we must do so selectively and with consumers in mind.
▶ 0:19:19And when compelling evidence suggests consumers no longer benefit from an antitrust exemption, it is appropriate for Congress to reexamine whether [snorts] it is still in the public interest to allow otherwise anti-competitive behavior to continue That is why we're here today to better understand the history of the Shipping Act and whether, after nearly 100 years, it is still in the consumer's best We will also hear today whether other government regulations, such as environmental regulations
▶ 0:19:50in international shipping, or restrictions in domestic maritime shipping, like the Jones Act, are negatively impacting shipping prices and harming consumers. I look forward to from our witnesses and and hearing what they have to say today. Thank you. I now recognize the ranking member, Mr. Nadler, for an opening statement.
▶ 0:20:13Thank you. That has not defined goals and no end in With gas prices skyrocketing and with an affordability crisis that is draining Americans' pocketbooks and is only getting worse, a hearing to examine maritime shipping rules does not exactly meet the moment. The affordability crisis touches nearly every aspect of our lives.
▶ 0:20:41Staple grocery costs have risen more than 3% over the last year, causing many Americans to struggle just to put food on the table. Rent and mortgage payments are stretching families' budgets, with many young people priced out of the housing market altogether.
▶ 0:20:58Utilities are up an average of 12% from last year, and health insurance premiums have gone through the roof, especially after Republicans let critical subsidies And on top of all this, gas prices have right risen sharply since Trump attacked Iran and are climbing higher by the day. It is no wonder that consumer confidence is the lowest it it has been since 2014.
▶ 0:21:24Americans are feeling the freeze, but Republicans have done nothing to ease their pain and many of their policies are only making it worse. The increased cost faced by consumers have been fueled in large part by the global trade war launched by President Trump last year, which has taken aim at friends and enemies alike.
▶ 0:21:44Instead of taking a targeted and thoughtful approach to trade that would protect American industries, workers, and consumers, Trump has taken a scattershot approach, imposing steep tariffs across the board that are driving up prices for American consumers and businesses while doing very little to bring investment to our By one estimate, American consumers have paid more than $230 billion in tariff costs since the Trump administration began.
▶ 0:22:14That's more than $1,700 per family. And even though the Supreme Court has struck down some of the tariffs, significant others remain and the refunds mandated by the courts will go to businesses, not consumers.
▶ 0:22:28At the same time, President Trump has taken this country to war with Iran without making the case to the American public or seeking congressional Iran has now retaliated by shutting down the Strait of Hormuz of Hormuz through which 1/5 of the world's oil supply travels. A response that comes as a surprise to no one except Donald Trump.
▶ 0:22:51As a result, the price of oil is already over $100 a barrel and gas prices are Rigorous enforcement of the antitrust laws could be a powerful tool in the effort to address the affordability But instead, this administration has corrupted the antitrust process.
▶ 0:23:10Rewarding their political allies, punishing their perceived enemies, and firing the career professionals and other officials who have refused to cater to industry lobbyists or to carry out a toothless enforcement scheme. The actions of the senior leadership in the DOJ's antitrust division appears to have cleared the path for one of the most egregious examples of lax enforcement. The government's sweetheart deal with Live Nation Ticketmaster.
▶ 0:23:36The monopolistic power of this company has been known ever since Live Nation and Ticketmaster first proposed merging in 2009. At the time, I urged my colleague I joined my colleagues in warning about the impact it would have on consumers. Although the merger was approved, I'm sad to say that our concerns turned out to be well-founded. Millions of Americans have felt the effects of Live Nation of Live Nation Ticketmaster's anti-competitive practices.
▶ 0:24:05When they bought a ticket to a concert, performed in a local production, or worked at an auditorium, they saw how the company drove up ticket prices, limited tour dates, or prevented other companies from entering the market. Given this awful record, I sought re-examination of the merger by the antitrust enforcer enforcers in 2021.
▶ 0:24:27Thanks Thankfully, in 2024, the Biden administration and 40 state attorneys general sued Live Nation Ticketmaster for monopolizing markets across the live entertainment industry. At the time, I said, quote, "Since its merger in 2010, Live Nation Ticketmaster has engaged in boldly anti-competitive practices at the expense of consumers, entertainers, venues, and vendors.
▶ 0:24:53Instead of cooperating with With terms of its consent decree with the Department of Justice, the company has only grown grown more brazen in its tactics to corner the primary and secondary ticket markets. Unquote. But despite but despite having a slam dunk case, days into trial the Trump administration suddenly settled the case for practically nothing, leaving venues, performers, and consumers out in the cold.
▶ 0:25:20The case was settled so abruptly that the judge even admonished the government and Live Nation Ticketmaster for their quote, "Absolute disrespect for the court, the jury, and the and the entire process." Close quote. This case is not only the most recent, but also one of the most damning examples of how corrupt the Republican-controlled DOJ is.
▶ 0:25:42As one former antitrust official noted, "You really couldn't send a clearer message that antitrust is dead at the federal level than settling this particular case." Thankfully, most of the state attorneys general involved in the case rejected the settlement the settlement and vowed to continue the litigation. The Trump administration, on the other hand, appears content to allow consumers to pay more for less.
▶ 0:26:06Such a sorry state of affairs cries out for congressional oversight, but the Republican majority has been silent while the Trump administration guts the antitrust enforcement agencies that should be protecting consumers, not Mr. Chairman, market consolidation, unpredictable tariffs, and the war in Iran are all driving prices up, but this hearing is designed to address none of these pressing issues.
▶ 0:26:32By all means, we should examine the maritime shipping industry at some point, but the affordability crisis is urgent right now, and it's growing worse. That is where our attention should lie today. I yield back.
▶ 0:26:46Gentleman yields back. We are waiting for Chairman Jordan, but I will uh so I will now recognize Ranking Member of the full committee, Mr. Raskin, for his opening statement.
▶ 0:26:56Mr. Chairman, thank you very much, and thanks to the witnesses for joining us Uh a majority of Americans feel like they're getting priced out of Donald Trump's new Gilded Age in America. A third of Americans, around 82 million people, are skipping meals or basic health care in order to pay for utilities. Prices for food staples like egg, sugar, and meat jumped up in 2025 and are climbing every day.
▶ 0:27:23Whether you rent or own, housing is becoming more unaffordable for the working middle class, while Donald Trump bulldozes the White House and throws Great Gatsby parties at Mar-a-Lago for his billionaire cabinet and the fellow stars of the Epstein files. Forget owning a house when three-quarters of Americans say that buying a new car is out of reach.
▶ 0:27:46If you've got a car, driving it is becoming ludicrously expensive as gas prices have shot up 25% uh just in the last few weeks with Trump's war of choice in the Middle East. Gas prices are soaring every day as the theocrats of Iran retaliate by shutting down the shipment of oil through the Strait of Hormuz, and Donald Trump spends $2 million a day on this war that we never declared and didn't even debate, putting it on America's imaginary credit card
▶ 0:28:16and driving up our deficit and our national debt. President Trump's impulsively stupid policies and the invertebrate response of Republicans in Congress have made life even more expensive and difficult for our people. Republicans refused to address the health care crisis and instead chose to cut Medicaid and the tax credits that help make health care affordable and accessible to millions of people. Meantime, monopolies and corporate giants rule in Trump's economy.
▶ 0:28:45MAGA-controlled agencies have waved through giant mergers in the real estate market, which means that you pay more for a home and have fewer options for buying one. They also settled slam dunk rent price fixing cases where major landlords across America conspired to set the rent that you pay for your home, ensuring that they will get richer while you spend more on rental housing.
▶ 0:29:09Just last week, the DOJ okayed an obviously corrupt settlement of the Live Nation tick Ticketmaster suit, which may appease mega's big business campaign funders, but will do nothing to lower the exorbitant prices that people pay to see live entertainment. The government originally accused Live Nation Ticketmaster, a multi-billion dollar live event business, of stifling competition, coercing artists and venues into using its services, and driving up ticket prices for millions of fans while pocketing bloated profits.
▶ 0:29:39But under the Trump administration, this years-long case has been quietly settled with no changes for the millions of American consumers, artists, venues, and competitors that this business injured and overcharged. President Trump promised that foreign countries, not Americans, would pay for his giant and illegal tariffs, and he promised that they those tariffs would create jobs. Both promises turned out to be empty.
▶ 0:30:05President Trump's tariffs, which he applied unilaterally, haphazardly, and unevenly, and of course unconstitutionally, failed to create new jobs and instead effectively taxed every American more than $2,500. A study by the Fed shows that 90% of these costs were paid by American companies and American consumers, not by China or any other foreign country.
▶ 0:30:28The resulting brutal affordability squeeze has landed most heavily on people who also lost critical social services like SNAP food stamp stamp benefits, children's health insurance, Medicaid, and Medicare, and funding for rural hospitals when House Republicans passed their one big ugly class warfare bill. Our government actually has the agency tools needed to address the Trump affordability crisis, but Trump has either totally dismantled them or corrupted them.
▶ 0:30:59He's broken the agencies that protect us against frauds, scams, and financial conspiracies. He's fired any antitrust official who's disagreed with his policy of giving political allies a green light to swallow up their competitors. Last month, he abruptly dismissed Assistant Attorney General Gil Slater, who was often the only dissenting voice as lobbyists in back rooms and White House insiders pushed mergers that are terrible for consumers and driving us towards an economy run by oligarchs.
▶ 0:31:29The majority has conducted zero oversight of these antitrust corruption debacles, leaving it to the Democrats to invite as a witness Gil Slater's deputy, Roger Alford, who was fired for raising concerns about rank pay-to-play corruption and self-dealing in the GOP-controlled antitrust agencies. Alford implored us in this room to conduct oversight of the Antitrust Division before it's too late for America.
▶ 0:31:58A two-term Trump official thus begged us to do our jobs to protect the American people, but it has fallen on deaf ears among our colleagues. President Trump's policies and Republican inaction mean that today Americans cannot afford daily life, but Trump and the billionaire class are getting richer every day.
▶ 0:32:16Just four tech billionaires, Elon Musk, Mark Zuckerberg, Jeff Bezos, and Jensen Huang, all of whom donated to Trump's inauguration, they made $288 billion in less than 1 year. By contrast, the American people paid $2,500 on average last year for higher prices thanks just to the tariffs alone.
▶ 0:32:39The president has said that the affordability crisis is quote a hoax, a con job, a scam, but his illegal tariffs were the hoax. His claim to support release of the Epstein files is the con job, and his illegal unilateral war in Iran, which is costing us more than a billion dollars a day and 13 American lives already and more than a thousand Iranian lives, including children, is the scam.
▶ 0:33:03The real fraud is [clears throat] President Trump's personal net worth going up 1.4 billion dollars in his first year of his second term, and his son-in-law Jared Kushner raking in 2 billion dollars from the Saudis and more than 1.5 billion from Qatar while exercising a lot more decision over the decision to go to war than any of the members in this room did combined. And so, what are we here today to discuss? An esoteric antitrust exemption about shipping.
▶ 0:33:32Now, in normal times, I might appreciate uh an examination of this or any other antitrust exemption, but these aren't normal times, and this majority isn't even prepared to reform the exemption in any event, something I would certainly be open to discussing. But millions of Americans literally cannot afford now to get medicine or pay for housing or for groceries in Trump's economy. We must do everything we can to try to help the people now with the stool tools that are actually at our disposal.
▶ 0:34:00Instead, our Republican colleagues have called us here to discuss a niche a niche antitrust exemption unlikely to change anytime soon. The ship of state is taking on water rapidly every day and starting to sink, but our colleagues want to have a debate about diversionary things. Count me out. Thank you, Mr. Chair. I yield back.
▶ 0:34:21Gentleman yields back. I'll just make the comment I think as a namesake of Scott Fitzgerald, I thought it was a cheap shot that you brought up The Great Gatsby style parties today.
▶ 0:34:30I said I I I meant it only as the highest form of flattery.
▶ 0:34:34And the gentleman yields back. Uh without objection, all other opening statements will be included in the record. We'll now introduce today's Professor Erika M. Douglas. Ms. Douglas is an associate professor of law at Temple University's Beasley School of Law. Her scholarship focuses on antitrust, data privacy, and intellectual property law. Professor Douglas previously worked in private practice where she focused on antitrust and technology-related matters.
▶ 0:35:05Mr. Tony Rice. Mr. Rice is senior director of trade policy at the National Milk Producers Federation, an association of dairy producers and cooperatives. Mr. Rice focuses on matters relating to US dairy exports. Professor Richard Schmalensee. Mr. Schmalensee is an assistant professor in the Department of Economics at the University of Vermont.
▶ 0:35:27Professor Schmalensee work His work focuses on economic history, industrial organization, political economy, and international economics. Ms. Diana Moss. Ms. Moss is a vice president and the director of competition policy at the Progressive Policy Institute. Her work focuses on antitrust enforcement and sector regulation. We welcome our witnesses and thank them for appearing today. We will begin by swearing you in.
▶ 0:35:55Would you please rise and raise your right Do you swear or affirm under penalty of perjury that the testimony you are about to give is true and correct to be the best of your knowledge, information, and belief, so help you God? Let the record reflect that the witnesses have answered in the affirmative.
▶ 0:36:19You can take your seat, Please note that your written testimony will be entered into the record in its entirety. Accordingly, we ask that you summarize your testimony in 5 minutes. Professor Douglas, you may begin.
▶ 0:36:35Thank you, Chairman Fitzgerald, Ranking Member Nadler, and distinguished members of the subcommittee. My name is Erika Douglas. I'm an associate professor of law at Temple University in Philadelphia. I've been dedicated to antitrust law for over 15 years, first in private practice, then at major law firms, and now as a professor and leader at organizations like the ABA. My research examines how antitrust interacts with regulation.
▶ 0:37:01Ordinarily, antitrust law applies across the economy to prevent anticompetitive agreements among rivals. That is not the case in international ocean shipping. Antitrust law is blocked by section 4307 of the Consolidated Shipping Act. This section shields certain agreements among rivals that are filed with the Federal Maritime Commission. This ocean shipping exemption is one of the oldest in antitrust law.
▶ 0:37:29It's not clear that it was ever justified, and it certainly is not Congress created this exemption based on the mistaken view that ocean shipping had special that free competition would cause the industry to fall apart from overcapacity and rate wars. But we've known for decades that this is not true. From the 1990s onward, ocean shipping has been increasingly deregulated. It has not led to industry collapse.
▶ 0:37:58Antitrust courts have long rejected the concept of ruinous competition. The Sherman Act rightly assumes that competition benefits the consumers that we're concerned about here today. Antitrust should coexist with ocean shipping regulation, just as it does with regulation in other industries like airlines, telecommunications, and The second reason for this exemption was to even the playing field for American carriers in international shipping
▶ 0:38:28This rationale also no longer makes There are no major American carriers left. The European Union has repealed its own shipping exemption. Today, the US exemption serves only to shield foreign carriers from our antitrust laws at the expense of American shippers and consumers. It's important to understand that in place of the usual antitrust laws, ocean shipping has a partial substitute that is not being used.
▶ 0:38:58The FMC holds the exclusive statutory power to challenge ocean carrier agreements that result in an unreasonable reduction in service or increase in cost. My research shows that the FMC has never brought such a case despite holding this power for over 40 years.
▶ 0:39:17This record suggests that the FMC tolerates greater competitive risk than would antitrust law, although the agency's analysis often lacks This legal landscape is concerning to me as an antitrust scholar because the ocean shipping industry bears at least three classic hallmarks of antitrust First, it's highly concentrated.
▶ 0:39:42The industry is dominated by three major alliances, which account for up to 95% of ocean shipping. As recently as 2011, this figure was only 30%. Concentration increases the risk of antitrust violations by making collusion Second, ocean shipping has an unusual web of agreements among competitors. The FMC has over 360 agreements on file.
▶ 0:40:11The big three alliance agreements allow rivals to to jointly on the volume of cargo they ship and when vessels will be The first circuit recently confirmed that a similar agreement between airlines violated section one of the Sherman Act. Finally, there's recent collusion in this industry. Where antitrust jurisdiction remains, the DOJ has been vigilant in bringing criminal charges.
▶ 0:40:39Carriers have colluded in the shipment of vehicles and farm equipment and price fixed in food and medicine to ship to Puerto Rico. These cartels harm any American consumer who buys goods that travel by ship. These factors create a perfect storm for anti-competitive conduct. If there's consensus around one issue in antitrust law, it's that these sorts of exemptions are rarely justified.
▶ 0:41:05I would encourage you to consider the repeal of the arcane ocean shipping exemption to free antitrust law to protect American shippers, ports, and consumers from these risks. Thank you.
▶ 0:41:19Thank you, Professor Douglas. Mr. Rice, you may begin.
▶ 0:41:23Chairman Fitzgerald, ranking member Nadler, and members of the subcommittee, thank you for the opportunity to testify before you today on the maritime supply chain challenges faced by the US dairy industry. Having spent 18 or so years milking cows on my Pennsylvania dairy farm that my family runs today, this is a true honor.
▶ 0:41:40My name is Tony Rice and I serve as the senior director of trade policy for the US Dairy Export Council and the National Milk Producers Federation where I lead supply chain policy development for both America's dairy farmers and the communities they support depend on reliable access to global markets with roughly 17% of production reaching international customers last year in the form of cheese, whey proteins, or other dairy ingredients.
▶ 0:42:06As most dairy products are perishable, maintaining product integrity throughout the global supply chain is critical. Shipping disruptions risk compromising product quality and eroding the confidence that overseas customers place in US dairy products. While North America is our most important market, a growing volume of our exports is reaching overseas customers via ocean-going vessels.
▶ 0:42:29With the US flagged ocean-going fleet representing only 2.3% of global shipping capacity, US dairy exporters are almost wholly dependent upon foreign entities to transport their Today, less than a dozen shipping companies dominate the industry and most operate within just three large carrier alliances. While these alliances can create operational efficiencies for carriers, this also means that exporters have fewer options when selecting shipping services and less leverage when negotiating service terms.
▶ 0:42:59To counter this trend, we support efforts to strategically invest in the domestic maritime sector, including enhancing capacity for American shipbuilding to strengthen the resilience of our supply chains by offering exporters more options.
▶ 0:43:13Simultaneously, Congress should consider permitting reform to expedite new shipyard capacity and investments in mariner workforce education and Conversely, US dairy exporters are very concerned that foreign ocean carriers are likely to pass through costs associated with proposed port fees on foreign flagged, owned, or operated In a normal supply environment, additional incentives fees would incentivize dairy exporters to select US flag carriers instead.
▶ 0:43:40Unfortunately, US dairy exporters have little choice than to contract with a foreign carrier and likely assume responsibility for any penalty fees, putting them at a competitive disadvantage to other global suppliers. We urge the US government to carefully evaluate the effects of these penalties on US agricultural exporters. The pandemic exposed structural imbalances in international shipping networks as shippers faced extremely limited container availability, high port congestion, and unpredictable vessel schedules.
▶ 0:44:10In 2021 alone, our industry lost over 1 and 1/2 billion dollars due to missed sales opportunities, reduced product values, and sharply higher costs associated with unreliable shipping services. Thankfully, the worst of these issues have abated, but some underlying problems remain. The persistent issue of unreliable ocean carrier schedules and limited accountability is an ongoing source of frustration.
▶ 0:44:33While the delays are due to a number of factors, including weather and port congestion, a shrinking number of carrier options exacerbates the situation, with exporters rarely receiving sufficient information about why a booking was rolled or delayed. Ocean carriers also maintain control of containers and set limits on the availability and use of chassis, which adds cost and constrains trucking, drayage, and scheduling options for export shippers.
▶ 0:44:59We commend the FMC for launching an investigation in January into whether the ocean carriers have been unreasonably restricting truckers and shippers from their choice of chassis provider. Continued FMC oversight is critical to provide a fairer market for US exporters. Dairy farmers milk their cows 365 days a For a producer in Wisconsin, these supply chain challenges are not abstract policy concerns.
▶ 0:45:22When export shipments are delayed, canceled, or become expensive to move, the disruptions ripple back through the supply chain and ultimately affect farm income. To assure competitiveness now, we urge the FMC to maintain strong oversight over foreign ocean carriers and alliances, and to enforce the law with respect to reasonable service and ensure adequate transparency, particularly regarding schedule changes and equipment availability.
▶ 0:45:48And to enable more options, we support efforts to restore an American American maritime As Congress deliberates these important issues, we encourage a focus on how the ocean carrier market is meeting the needs of US exporters. Since foreign-owned ocean carriers receive antitrust exemptions, it is only reasonable that they treat US exporters fairly. I appreciate the opportunity to provide comments on these important issues and I look forward to your questions. Thank you.
▶ 0:46:15Thank you, Mr. Rice. Professor Sekkat, you may begin.
▶ 0:46:20Thank you. Chairman Fitzgerald, ranking member Nadler, and members of the subcommittee, thank you for inviting me to testify today on regulation and competition in open ocean shipping. I'm professor of economics at the University of Vermont. Areas of specialization, excuse me, [clears throat] in industrial organization and economic history.
▶ 0:46:41Drawing on my experience researching the shipping industry and its regulation, my goal is to bring an economic perspective to the matters before the committee The Shipping Act of 1916 authorized the predecessor of the Federal Maritime Commission to approve cartel conference agreements in ocean shipping. And those agreements so approved would be immune from the antitrust laws. Conference agreements fixed rates, coordinated capacity, and sometimes the firms pooled revenues.
▶ 0:47:10Subsequent amendments to the Shipping Act effectively prohibited rate fixing, but still permit firms to cooperate intensively in matters of capacity and Shipping agreements must be submitted to the Federal Maritime Commission, which, quoting its 2024 report, analyzes these agreements for potential anticompetitive The FMC reported that at the end of fiscal year 2024, there were 360 agreements, 50 of which were subject to
▶ 0:47:40staff monitoring. From the perspective of US foreign commerce, one could argue that the most important kinds of agreements are the space charter agreements, vessel sharing agreements, and shipping The first, the space charter agreements, are when one firm rents space on another firm's ships.
▶ 0:48:01Vessel sharing agreements are between two or more firms that use space on one another's vessels and they coordinate Alliances are described by the FMC as large VSAs, which are nearly global in These agreements provide the backdrop for the adoption of very large capacity container ships, frequently more than 10,000 20-ft units on a ship, sometimes twice that amount.
▶ 0:48:29The trend in the industry is toward ever larger ships.
▶ 0:48:34According to the FMC, fiscal year 2024, nearly 90% of US transatlantic and transpacific waterborne commerce was carried by members of these three shipping alliances. There has been some realignment among these firms over the past 18 months, so that MSC, a former alliance member, is no longer in alliance and another firm joined with in a new alliance that was approved. These are challenging economic questions.
▶ 0:49:03There are challenging economic questions surrounding these agreements and their effects. First, if agreements jointly fix capacity, then they can exercise market power, even though they do not explicitly collude on rates. Second, such close cooperation and information sharing can facilitate collusion, tacit or otherwise.
▶ 0:49:23Yet, a commonly shared view among the industry in particular is that alliances and vessel sharing agreements enable firms to achieve economies of scale, enjoy cost savings that might be passed on, at least in part, to consumers. Measuring the efficiency gains that might exist and quantifying the potential market power or exercise of market power are really within the expertise of industrial organization economists.
▶ 0:49:51In the context of other industries, these same issues are analyzed by economists at the Department of Justice and the Federal Trade Commission, whether in the context of mergers, cartels, or vertical restraints. There is very little in the public record that sheds light on the kinds of analysis being conducted by FMC staff on these agreements. I don't really understand what kind of economic analysis they're engaged in. We know that they're monitoring, we don't know what that entails.
▶ 0:50:23I think that uh the other witnesses have already spoken to some of the uh for example, Professor Douglas spoke uh about the FMC's uh lack of enforcement of of the antitrust. They have yet to uh block or enjoin any carrier agreement. Um they acknowledge competitive concerns, but there's unclear what's actually being done about them.
▶ 0:50:45Uh reasonable reform in my view would be that the review of inter-firm agreements in ocean shipping be carried out by professionals at the DOJ or FTC, and that they are able to access essential data that the FM that only the FMC has access to, uh so that they can carry out that kind of analysis. I look forward to your questions.
▶ 0:51:10Mr. Scott, thank you so much. Dr. Moss, you may begin.
▶ 0:51:16Thank you, Chair Fitzgerald, Ranking Member Nadler, and members of the subcommittee. It's an honor to be here today. PPI advocates for pragmatic competition policies that champion the economic prospects and outlook for working Americans. Any conversation about the importance of the US antitrust laws or exemptions to those laws would be incomplete without considering the broader role of competition and antitrust enforcement as a major tool for protecting consumers.
▶ 0:51:46Consumers are the backbone of the US economy. Almost 70% of spending in the economy in the first quarter of 2024 was attributable to personal consumption expenditures. Sensible competition policy and strong antitrust enforcement are major tools for protecting those consumers from the exercise of market power that drives up prices, lowers quality, stifles innovation, and limits choice and market access.
▶ 0:52:13The US antitrust laws protect consumers by ensuring that they are not harmed by anti-competitive mergers and business practices that squeeze out smaller rivals, and fixing prices or dividing up markets. The importance of those laws is widely acknowledged by both Democrats and Republicans.
▶ 0:52:32The bipartisan Antitrust Modernization Commission established by Congress in 2002 explained that the laws stand as a bulwark to protect free market competition and prohibit anti-competitive restraints that harm consumer welfare. In legislating antitrust exemptions, Congress has weighed the harm to competition and consumers against the benefits of achieving broader economic, social, or regulatory goals.
▶ 0:52:58But the evidence on the benefits of immunities and exemptions is increasingly negative because most of the markets that are immunized from liability under the antitrust laws are now highly concentrated. For example, the top four container shippers control 60% of the global market, but the three big alliances or conferences control up to 90% of the global market. In airlines, domestic mergers have similarly increased the global control of immunized international alliances.
▶ 0:53:27At these levels of concentration, anti-competitive consolidation and conduct would be considered presumptively illegal under the antitrust laws. The benefits of exemptions accrue to few powerful companies, but their costs affect a wide swath of consumers. 60% of the world's commodities pass through global shipping lanes, and transportation costs more generally highly impact the final prices of consumer commodities shipped into the United States.
▶ 0:53:57Suffice it to say that Congress has the power to revisit antitrust exemptions, especially for the Shipping Act, to roll them back, to narrow them, or to make sure that they sunset rapidly. Let me finish with two other other developments that much like antitrust exemptions raise concerns that antitrust enforcement can't or isn't doing enough for consumers.
▶ 0:54:20First, a recent PPI report finds that in food, health care, housing, transportation, and insurance, merger enforcement has historically been at levels that far far below the all-sector average. This needs to change. Second, and more recently, premature settlements in antitrust cases have become the norm.
▶ 0:54:43Fully litigated trials and strong remedies like injunctions and breakups for restoring competition would have served consumers far better in lowering prices, but settlements we are seeing could even harm consumers more, including in the Hewlett-Packard Juniper Networks merger, the Live Nation Ticketmaster monopolization case, and the RealPage anti-competitive price-fixing case. Finally, the ability of US companies to compete globally is at risk.
▶ 0:55:12Aside from directly raising prices to consumers to the tune of billions and billions of dollars over the last year, i.e. tariffs on imported commodities raise the cost of US companies, making their goods less competitive relative to foreign Retaliatory tariffs have decimated certain sectors like soybeans by eliminating markets for exports that US farmers rely on for long-term income security and stability.
▶ 0:55:42The foregoing policies undermine competition and consumers. Congress has the power to revoke outdated and harmful antitrust exemptions and ensure that the DOJ and FTC uphold due process and the rule of law that competition remains healthy, that the laws reign in market power, and we keep the cost of living down for millions of American workers and consumers.
▶ 0:56:07I appreciate the opportunity to submit testimony for this hearing and I look forward to answering your questions.
▶ 0:56:13Thank you, Dr. Moss. We will now proceed under the 5-minute rule with questions. I want to recognize gentleman from Texas for 5 minutes.
▶ 0:56:20Thank you, Mr. Chairman. Uh Professor Douglas, it has been pointed out that the FMC hasn't done a great job of regulating anti-competitive practices. Would it benefit if we consolidated more of those functions, enforcement functions rather, um into the the DOJ or the FTC?
▶ 0:56:38So, I think that if you repealed the exemption, the DOJ and FTC would have those enforcement functions that the FMC is not using.
▶ 0:56:47Do you have a position on that?
▶ 0:56:49Yeah, I think that the repealed exemption is something that a lot of people would support and I definitely support. Um and so, I think maybe if I can dig in a bit more to what you're asking, I'm not necessarily saying that the FMC's power has to change, but I think that additive power from DOJ and FTC by repealing the exemption would be beneficial here um because we're not seeing a lot of enforcement.
▶ 0:57:10Are there current policies or regulatory loopholes that the big three alliances are using or exploiting that you're aware of?
▶ 0:57:18So, it's not a loophole in that it's permitted under the Shipping Act right now. So, with under 4307, antitrust law does not apply to these big three shipping companies. So, in that sense, I think it's it's a matter of of the law permitting it right now because of the exemption.
▶ 0:57:35Thank you. Um Mr. Rice, um coming back to the issue of collusion, how do these issues affect everyday American
▶ 0:57:43Sure. And thank you, Congressman, for the the question. And as we've seen for our dairy producers and exporters, the highly consolidated nature of the shipping industry creates headaches for uh due to inefficiencies that arise. Um it's not wholly uh the fault of carriers, as we see at port congestion and weather delays, but the shrinking number, as Mr.
▶ 0:58:04Sicat has pointed out, the shrinking number of available options just limits the availability of carriers for our exporters uh and our producers to move their product overseas.
▶ 0:58:16And Mr. Sicat, what changes to the current regulatory framework would you propose short of a full um removal of the antitrust exemption?
▶ 0:58:27Short of a full removal, I would recommend that uh uh um that the FMC be required to share its confidential service contract data with the DOJ and FT or FTC. And that they uh if the DOJ reviews an agreement, which they should have the right to do, that those uh objections have to be responded to publicly in a way that we can understand what the FMC is doing. That would be a
▶ 0:58:57And it also doesn't seem like there are lots of American ship companies banging down our doors asking for this.
▶ 0:59:03Well, there are there are uh in terms of o- ocean shipping carriers, zero, right? I mean, there are they uh were absorbed into foreign shipping companies over the past 30 years, 40 year 30 to 40 years. There used to be two very large ones. Uh but uh that's true.
▶ 0:59:22Um I'll close with you, Dr. Malsam, um my constituents aren't banging down my door about this issue. I suspect my colleagues on the left would say the same thing. Do you have anything you'd add? It seems like everyone's getting toward the same page here.
▶ 0:59:37I I do think consumers care significantly about their cost of We know this to be a serious problem. I think consumers are smart enough to understand that their commodities, especially the the big spend items in their budget on food and commodities, anything that goes into building or are really affected by immunities and exemptions. They drive up the cost and they drive up the final prices to consumers.
▶ 1:00:03And and I think I've talked to a a lot I talked to consumers all the time and they are aware of these policies. And when I say, you know, did you know that the antitrust laws don't apply in this particular sector, they get very angry.
▶ 1:00:15Sounds crazy, right? Yeah. Thank you. I appreciate you all. I'll yield back to the chairman my time.
▶ 1:00:21Gentleman yields back. We now recognize Mr. Nadler from New York 5 minutes.
▶ 1:00:25Thank you, Mr. Chairman. Professor we have read countless stories about reported corruption in the DOJ and this subcommittee heard testimony from the former second in command of the antitrust division, Roger Alford, after he was fired for pushing back against this corruption about how mergers and settlements in the Trump administration increasingly involved backroom deals creating a pay-to-play system.
▶ 1:00:51What effect does this kind of corruption of the rule of law have on the market and what does that mean for consumers?
▶ 1:00:59Thank you for this important question. So, I am gravely concerned by reports of political influence peddling in antitrust agencies. I work on the rule of law and I don't think it should ever be displaced by political favoritism in antitrust law or otherwise and I want to commend the subcommittee from hearing from Roger Alford and important voices on this issue. And I think that that's all that I can say on it for right now. Thank you.
▶ 1:01:27Thank you. Dr. Morse, can you answer the same question? What is the impact on the market and consumers of this kind of pay-to-play corruption? Is there anything that Professor Douglas
▶ 1:01:39I think Professor Douglas summed it up quite nicely. We are in a in a troubling new era where antitrust enforcement has been politicized and weaponized. There appear to be two channels. One is to go directly to the White House with your deal to grease the skids for antitrust review.
▶ 1:02:00The other channel is for what appears to be political interference to swoop in and to cases to uh create premature settlements that reward companies, powerful companies, and harm consumers and workers in the markets that are affected. Antitrust is is a key tool, as I've stated, for protecting competition, consumers, and workers' paychecks and pocketbooks, if you will.
▶ 1:02:27If it does not function, if we lose due process, and if we sacrifice the rule of law, we are harming millions and millions of workers and consumers, and we are going to decimate our economy in the process.
▶ 1:02:41Can you give us some Of course, the worst, which has already been referenced, is the Live Nation Ticketmaster deal. A very surprised and angry judge, a very surprised and angry set of 40 states plus DC who were locked out of a This does The settlement does nothing, nothing, to reduce the market power of Live Nation Ticketmaster in ticketing, in concert promotion, in exclusive contracts with venues.
▶ 1:03:11The bad conduct will continue. We have a long history of bad conduct in violation of past decrees by the company. Uh this will do nothing to lower the monopoly ticket fees it will to to millions of fans and it will steer everybody back to the Live Nation Ticketmaster platform for 20 more years of monopolistic conduct. Same thing with Hewlett-Packard.
▶ 1:03:33Uh under Gail Slater she was prepared to DOJ she was prepared prepared to go to court to enjoin that merger um which would have created a duopoly in local area networks. Another premature settlement ineffective remedy that will do nothing to keep costs down for American businesses. I I could go on. I could go on but those are two very leading examples.
▶ 1:03:55Thank you, Dr. Moss. This hearing has been called to examine competition in the maritime shipping industry. Can you compare the impact of reforms in this area to the impact of addressing the cost of Trump's tariffs, the doubling of healthcare premiums, or the recent surge in gas prices?
▶ 1:04:12I I would say the issue of immunities and exemptions is very important. Uh any any uh abstention or exception or immunity from enforcing uh the antitrust laws and holding companies liable under the antitrust laws does an enormous disservice to competition, to our market economy, to our consumers and workers.
▶ 1:04:32But in the broader scheme of things uh it we are probably talking about a drop in the bucket relative to the over $400 of additional costs that Americans have absorbed as a result of tariffs within an incredibly compressed short period of time.
▶ 1:04:49So, we are really looking at a very macro picture in terms of adverse impact of of policies on consumers and a very very micro surgical uh a policy repealing or rolling back the shipping exemption. Um the two really do not compare. We need a more holistic approach to how to protect our consumers and our workers.
▶ 1:05:13Thank you, Dr. Moss. I yield back.
▶ 1:05:16Gentleman yields back. Now, recognize gentleman from North Carolina for 5
▶ 1:05:20Thank you, Mr. Chairman, and thank you to all of you on the panel for your presence and your expertise today. Uh as Mr. Rice, as as someone who represents a district where agriculture is a prominent industry in North Carolina, I'm always worried about ways in which this anti-competitive behavior in the ocean shipping industry can harm producers as I know you have expressed as well. Can Can you take just a few moments and explain the impact that the alliance system is having on agricultural exporters?
▶ 1:05:51Well, uh certainly, and thank you, Congressman. Uh to give you a bit of an example, the worst of these supply chain issues happened during the pandemic. And as I mentioned before, our exporters are wholly dependent upon foreign and ocean carriers. And while the Shipping Act prevents them from unreasonably refusing to deal with us, it doesn't prevent them from rolling a booking, moving it on to the next ship, not giving transparency into a why a shipping was rolled. Uh for example, one of our exporters had a container destined for Asia.
▶ 1:06:20It was rolled so many times that the original ship that it had been scheduled to sa- sail on had went to Asia and came back, and that's the one that picked up the the container. Uh so, it There's There's one piece of this that yes, some of these alliances, they do create some operational efficiencies, but at the same time, Congress saw uh fit when when uh passing the Shipping Act that if these carriers are to receive antitrust exemptions, they have to provide reasonable access for US exporters and ensure efficiency.
▶ 1:06:51And it's hard to reconcile when we saw 70% of some of these carriers carrying uh 70% of the ship would be empty containers while our exports would be left on the dock during the height of the pandemic. Now, those thankfully have abated since then, uh but we do see these issues with transparency and a lack thereof into why decisions are made, why sailings are canceled or blanked, and it creates a ton of logistical issues for our industry who is exporting perishable products that need to get to an end consumer in a timely fashion.
▶ 1:07:21Thank you very much. And Mr. Rice, while we're there in in April of 2025, the Trump administration released a maritime action plan with a goal of really restoring America's maritime dominance. And the plan seeks to really revitalize US shipbuilding and rebuild the maritime workforce. Can you give us your thoughts on how this plan would help to address the problems that the American, particularly American dairy exporters and other agricultural exporters are currently facing with the ocean
▶ 1:07:53Certainly, investment in the US shipbuilding industry, as I mentioned, is sorely overdue. For example, Chinese shipbuilders build 230 times the number of ships per year as the United States. It's It's very troublesome that we just don't have an industry here in the United States to produce these container ships that we need. So, yes, supporting investment in those shipbuilding capacity, streamlining the permitting and reforms at shipyards and ports.
▶ 1:08:22There's a long backlog of maintenance and expansion issues at the ports themselves that need to be addressed. The one thing I mentioned in my remarks as well, in developing a plan and to fund these programs, we just think it warrants careful consideration of any penalty fees that are put on foreign ships to make sure that the people actually paying it aren't American exporters.
▶ 1:08:45Right. Well, thank you. Ms. Douglas, as you noted in your testimony, the Federal Maritime Commission or FMC rarely brings cases against ocean shipping carriers that dominate shipping markets despite having the legal authority to do so.
▶ 1:08:59Um, can you kind of help us dive into that of how lack of transparency over the FMC's competitive analysis of ocean shipping agreements could be contributing to the FMC's lack of challenges to ocean carrier agreements and I'll follow that up and give you the rest of my time. What would be the possible effects of having the DOJ work with the FMC to scrutinize ocean shipping agreements?
▶ 1:09:27Right. So, the lack of challenges seems to suggest that there's either not analysis happening or analysis that's happening that tolerates greater anti-competitive harm than antitrust law. So, I think that um what Professor Sakata and I are both saying is it's not clear how the FMC is coming to these conclusions because from the outside perspective, it's a concentrated industry that we've heard from industry here.
▶ 1:09:51It's dominated by a few companies and has had a number of cartels that have been prosecuted where the exemption doesn't apply. So, we would need to know how these agreements are being implemented in fact and that's something that antitrust law can get at. So, if DOJ could do an investigation, the rule of reason looks carefully at these sorts of claims that maybe there's some efficiencies here, maybe there isn't. There are a lot of different provisions in these agreements, but as written, we can't really tell what's going on.
▶ 1:10:21All right. Thank you very much. Mr. Chairman, I yield back.
▶ 1:10:24Gentleman yields back and I now recognize the ranking member of the full committee, Mr. Raskin for 5 minutes.
▶ 1:10:28Thank you, Chairman Fitzgerald. Um Dr. Moss, uh President Trump promised uh to lower prices on day one. What has actually happened since day one and how are American families faring?
▶ 1:10:44Thank you for the question. Um I I I think um nothing has happened. In fact, we uh things have gone the other way. Uh the promise to lower prices on day one was really lip service to a broader uh strategy. Consumers have been under assault for years by growing concentration in really critical consumer-facing sectors. Consumers spend 75% of their budgets on food, transportation, housing, health care, and insurance.
▶ 1:11:14Those are highly concentrated industries that needed direct attention and and support for very, very strong enforcement, which we have not gotten under this current So, consumers are really buckling under the burden of high prices from excessive market power, from supply chain instability, from inflation. That should be a number one goal. Consumers support the economy.
▶ 1:11:40They are the backbone of the economy, and without them, we will not have a robust, functioning economy.
▶ 1:11:51I think people instinctively understand the way that corruption and insider political influence end up harming consumers and driving up But, I wonder um is it also the case that when we allow combinations to form and conglomerates to take over the economy, that that increases corruption and it political
▶ 1:12:22inequality and injuries to
▶ 1:12:26Yes. The The purpose of the antitrust laws, of course, is to promote competition in the economy, to prevent the concentration of market power. The antitrust laws really address directly the economic effects of high concentration and a lack of competition. I I think what you're getting at is is a really important connection between economic power and political power. And there is a direct link there.
▶ 1:12:51And so the importance of antitrust enforcement in controlling economic power, excessive economic power, does link directly into controlling excessive political power. And of course political power can lead down a number of different pathways. Um that's what we're seeing right now.
▶ 1:13:08So we do you can get into a vicious cycle where economic concentration increases political concentration of power and then that further deepens uh the ability to manipulate the economy for particular groups.
▶ 1:13:22That is correct. And I would just add um a really important point. These precedents are now being set for the first time in the United States. Uh this type of weaponization and politicization of the antitrust process. Um this administration will not be here forever. There will be other administrations. And uh the setting of those precedents as they exist now can uh really spells uh a very, very dismal and concerning future for our antitrust establishment uh and law enforcement in the US.
▶ 1:13:52The uh shipping antitrust exemption which we're discussing today has actually been studied and debated uh and even reformed repeatedly um as recently as 2022. Can you name some of the other anti-competitive policies and problems today orchestrated by the Trump administration that are doing a lot more damage to American consumers than the uh the shipping exemption?
▶ 1:14:21Sure. So uh one thing that uh the Trump administration did as part of its uh order to uh realign regulation to eliminate anti-competitive relation anti-competitive regulations was to really gut the ability of the US Department of Agriculture to uh collect data, to um um uh to do analysis that would have really supported competition initiatives in our food supply chains.
▶ 1:14:46Uh we see independent cattle ranchers, for example, being pushed out, priced out of the market by large industrialized uh uh players and and the packer cartel. Um the inability of USDA to collect data um has completely uh undercut the agency's uh important uh authority to police competition in our food
▶ 1:15:08Is that Was that the purpose of elimination of the data collection
▶ 1:15:11Uh I I believe that eliminating the data collection uh was designed uh uh potentially to undercut the ability of the agency to function properly and support competition in our food and and
▶ 1:15:24happening in other agencies and departments, too?
▶ 1:15:25It it absolutely is. Uh in housing, I referenced the Real Page settlement. Uh we really needed a court decision on what constitutes algorithmic price fixing on a digital platform. We didn't get that because that case was settled.
▶ 1:15:39Thank you. I yield back, Mr. Chairman.
▶ 1:15:41Gentleman yields back. Uh recognize myself for 5 minutes. Um Ms. Douglas, uh you list several examples in your testimony of how uh the ocean carrier can raise significant anti-competitive risks. Can you talk about that a little bit more?
▶ 1:16:01Yes. So, we understand what these agreements look like as written and my written testimony talks about what they might look like as implemented. So, if carriers can agree on scheduling, that means they could also allocate different markets to each other, and that's a classic antitrust law violation.
▶ 1:16:20Um it's also possible that there could be an exercise of monopsony or buyer power against ports in the United States because these agreements allow these companies to collectively negotiate, where previously they would have been individual buyers. Um and so, uh particularly on the idea of scheduling enabling market allocation, we have a close parallel in the airline industry, right?
▶ 1:16:46Another transportation industry, um where we have seen that a scheduling agreement in US versus American Airlines, which is a 2024 case, a scheduling agreement caused a decrease in capacity. It caused the competitors who made that agreement to decide to fly less planes. And so, what I'm saying is you would have to look at how these agreements are being implemented in shipping to figure out if that is also occurring here. If there's a capacity reduction here or if there's market division happening here.
▶ 1:17:17The other big risk that I highlight in my written testimony is that these companies are allowed to share extensive competitively sensitive information. Normally, rivals don't share with each other their future plans for the market. These agreements allow alliances to engage in that sort of sharing.
▶ 1:17:35It's not itself a violation, but it's a classic factor that in antitrust law we look at to say that if companies can talk with each other about their competitive plans, that's likely to reduce their rivalry in the market and lead to higher prices. Thank you.
▶ 1:17:49So, let me just follow up then. So, how should DOJ view these agreements? What should they be looking for and and what would uh prompt them to take action on some of these agreements?
▶ 1:18:01Right. So, if the DOJ were to look at these agreements under the rule of reason, they'd be looking at whether they unreasonably limit competition relative to a free and fair open market without the agreements. So, they'd want to look at how these companies are scheduling their services relative to how they might be scheduled if the market was competitive, if it didn't have those agreements in place.
▶ 1:18:23They might look, for example, and this is purely something that's taken from the airline case, are these companies sending as many ships as close in time as they would if they didn't have this agreement or are they sending fewer ships or ships with less capacity? So is there this capacity reduction or market allocation which are again sort of classic violations of antitrust law under the Sherman Act? And so DOJ would have to look at how these agreements are being implemented in practice to make that fact specific
▶ 1:18:55Very good. Thank you. Mr. Rice, so given that the top three alliances control over 80% of the market as you spoke about earlier, um do you think that provides kind of ocean carriers with market power over importing and exporting companies or is this simply kind of another fact or piece of data that doesn't necessarily have that effect? Where do you Where do you think that falls?
▶ 1:19:23Yeah, thank you Mr. Chairman and yes, certainly the consolidation within the ocean carrier industry does create challenges and the power that they amass. For example, there might be a dairy exporter from Wisconsin sending only three or four containers a month and they have little to no leverage in those negotiations with a one of three alliances. So that that component is concerning.
▶ 1:19:44The other component is to some of the other witnesses who have testified about this the ability for these alliances to coordinate on over capacity. Now that there's new ships coming online, limiting capacity creates problems for exporters as well and the number of options that we have to get the containers to their end destination. Um so [clears throat] it's a number of factors but the amassing and it continues to accumulate. This is not a thing.
▶ 1:20:14These These alliances continue to and create additional market power that our exporters have struggled grant get gaining any leverage in negotiations with.
▶ 1:20:26Very good. My time has expired. We'll go to the gentlewoman from Vermont.
▶ 1:20:32Thank you, Mr. Chair.
▶ 1:20:34Competition brings down prices, right? And and when we don't have real competition, then executives and investors get to reap more uh profits, and everyone else gets sticker shock. And that's partly why this area of the law is so interesting to me. Because lack of competition in all industries impacts people in their bottom line. And Dr. Moss, you spoke to that really directly. And this includes maritime shipping.
▶ 1:21:04So, although this may be a small aspect of what's increasing costs, it is important for us to look at this. And it's why antitrust law matters. And I know that antitrust law can seem dry, it can seem complicated, and I get that. But I think to your point, Dr. Moss, American consumers understand that when there is only a few big players, regardless of the industry, they pay the price for that.
▶ 1:21:30And so, it's at the heart of what I think we're trying to do on this committee is translate that for everybody. Uh Dr. Sikout, I appreciate that we have a Catamount in the room today from University of Vermont. Nice to see you. I would like to go to you first. Um am I right that about 80 to of ocean shipping is actually controlled by just three major shipping alliances? Would you mind putting on your mic?
▶ 1:21:57I apologize.
▶ 1:21:58That's all right.
▶ 1:21:59I'm used to this. Uh yes, that was the fiscal year 2024 uh figure in the FMC report. Uh there's one very large company that is subsequently removed itself from the alliance, but uh the most in by any stretch, you would call this a quite a concentrated
▶ 1:22:20And and so, we talk about alliances, we talk about conferences, but again, I'm trying to translate it for people back home. From where I sit, this looks a lot like cartels. Um so, tell me why these ocean uh shippers form these cartels. What Why does this advantage them?
▶ 1:22:42Well, the the advantage I mean, there's could be two possible advantages from an economic perspective, right? One is that that it enables them to use very large container ships that they wouldn't be able to fill on their own. That is one That's their logic for an efficiency defense.
▶ 1:23:02Okay? The But, the other logic would be the market power, the exercise of market to actually evaluate the merits of those arguments is really it needs to be done, and that's what that's what's missing, really.
▶ 1:23:19I agree with you, and I think we can't just uh take their word for it around efficiencies. We have to actually kick the tires and see if this holds water. And I want to get to um what you were talking about market power. Tell me what they can do collectively as a cartel that they can't do
▶ 1:23:37Well, in in a if it's a full cartel, now
▶ 1:23:43And I'm using that word. I understand you may not be comfortable with that
▶ 1:23:46Yeah, because technically they're not permitted to fix rates jointly, right? That that and and that would be one stretch, but if you can fix capacity jointly, you can potentially have the same impact.
▶ 1:24:03So, do you think it's fair to say that these massive ships with mountains of containers that carry basically everything that Americans see on their shelves, they they're owned by these three alliances, cartels. So, they are actually impacting Americans directly every time that they go to the store and and take something off the shelf. Is that Is that fair to
▶ 1:24:31Yeah, absolutely. And not only that, uh it's it's uh all the American firms. You know, much of what's traded are inputs as well and intermediate goods. So, it uh companies. It raises the costs of doing business for you.
▶ 1:24:48Yeah. And and actually, that's a great um segue into talking um with you, Mr. Rice. Um I'm a Vermonter. I understand the importance of uh the dairy industry. And I'm wondering um how does this directly this kind of again, I'm using the word collusion cuz that's what I think it is. I think it's a cartel involved in collusion. How does this impact American dairy farmers?
▶ 1:25:12Uh well, thank you, Congresswoman. And Vermont has some great cheeses and other dairy products.
▶ 1:25:16Thank you for noticing.
▶ 1:25:17Uh but uh it for for cheeses, for example, uh perishability is a real concern. And when these carriers aren't beholden to the interest of US agriculture or dairy exporters, those products may not reach end customers in time. And then you have a shelf life issue. It has to be disposed.
▶ 1:25:32Absolutely. And I see that I'm I'm on Well, I am out of time. If I could just say if you'll indulge me just for a moment, Mr. Chair. I know that this is an issue that we can come together on as Democrats and Republicans. It's one of the reasons why I love being on this subcommittee where we can actually do some bipartisan work.
▶ 1:25:49And I hope that this is something that we will dive into not just on the shipping industry, but all the industries in which Americans are getting screwed because we're not actually holding their feet to the fire and actually enforcing antitrust law. Thank you. I yield back.
▶ 1:26:05Gentlewoman yields back. Now recognize gentleman from California for 5 minutes.
▶ 1:26:09Thank you, Mr. Chairman. Mr. Douglas, uh as a researcher, how do uh prices paid by our similar importers or exporters compare here to other countries around the world.
▶ 1:26:24It's an excellent question that I would look to my economics colleagues to answer when it comes to specifics on
▶ 1:26:30who's got the proof that somebody else gets a better price than us? I want Is there Is this a monopoly that screws the whole world or is it just a monopoly that's screwing the US? Yes, That's such a great economics question. Uh that's precisely the information that we don't we don't know the answer to the Because the the the that's actually a surprisingly difficult thing to come up with is to actually measure the degree of market power that's being exercised.
▶ 1:27:01There's a good reason to be suspicious based upon the contours of the agreements, right? For sure. But if they can't actually you know, I've never seen any someone using the data and actually answering your question, so I don't know the answer.
▶ 1:27:15Okay, well, let's let's explore this direction because we're we're asserting here today that there's a monopoly at at work, that it's Chinese-based, and that it is using its market power. Uh is it fair to say that Chinese don't just own ships? They own the ports here and around the world, including but not limited to both sides of the Panama
▶ 1:27:40Uh it's my understanding of the port ownership is that they were were or the Cosco was forced to divest partially, but certainly in terms of their agreements and their operations, they're a very large player.
▶ 1:27:53So, they're even if they were transparent in some ways, they're opaque in some of the transfer cost.
▶ 1:28:02A lot of the data would would be available to the Federal Maritime Commission to investigate that. Uh yes.
▶ 1:28:10Okay. So, let's go to the other way, And Ms. Douglas, I'm going back to you. I'm not going to quit till you give me an answer to something. Uh not that you're not trying to, but is it fair to say that if the group of companies together, nine companies with uh the kind of market power they have, and some of them specifying more in one country versus another, if you were looking at a merger and acquisition, you would turn this one down.
▶ 1:28:43That's absolutely fair to say because the market shares, as we've mentioned, would be at least above 60 up to 95% and for mergers, we typically look at a 30% or above share. So, yes.
▶ 1:28:54So, from a pure US standpoint, we can agree that we created a monopoly in 1960 and thereafter, we allowed it to continue, and now we've allowed this trust {slash} monopoly, and trust is probably even a better word, to in fact be opaque and uh to operate in a way that uh that we really just don't know whether they're gouging us or not.
▶ 1:29:22We don't know whether getting a fair price, and even more importantly, if they decided not to service us, we would have very little recourse cuz we don't own enough ships to take care of ourselves. All of those are vulnerabilities based on the current uh trust, if you will. Is that fair to say?
▶ 1:29:40I think that's fair to say, and I just want to make sure we're being clear that what we're talking about is agreements among competitors. So, regardless of whether there is monopoly power, agreements can still be unlawful, and that's what we're that's what we're seeing in this space, and that's why it should have antitrust oversight.
▶ 1:29:55Well, as someone in San Diego who watched former CEO Smisek collude with the other airline companies to screw San Diego out of his direct flight from DCA, uh it's not just price, sometimes it's Uh we we we found ourselves with less choice, but we were not without power.
▶ 1:30:15So, if we essentially set aside or partially set aside this law in bipartisan legislation, then the dismantling or the regulating or the holding accountable could begin. Is that fair to say?
▶ 1:30:31I think then the scrutiny from antitrust law would be applied and would likely find that there's problems in this industry if this were repealed. And we've seen around the edges where DOJ retains its jurisdiction, where the exception doesn't apply, there have been a number of cartel cases that have been successfully brought.
▶ 1:30:49Okay, last question in closing. Is there a solution less than setting aside the 1916 law that would require would effectively require transparency before making the decision, but trigger invalidating of this law if they fail to meet that requirement? Is that a possible solution to get the answers to your questions before we decide how much to break up these agreements?
▶ 1:31:20I'm just wondering if from a legislative standpoint if we have a middle ground here that we could come together on. Uh quickly. I think so. I think that you just you if you amend the law to require uh or uh FMC to take into account DOJ's uh input more explicitly, that could be a middle ground.
▶ 1:31:46I thank you, Mr. Chairman. I appreciate the extra time. I yield back. Uh I'd recognize the gentleman from Georgia for 5 minutes.
▶ 1:31:54Thank you, Mr. Chairman. Uh there's a well-known theory around here that nothing comes before this committee that has not been approved in advance by Donald Trump or directed by him to occur.
▶ 1:32:10And so today we're talking about competition between ocean carriers on the high seas uh while here at home Americans are catching hell trying to pay their bills. So, you know, he's wanting us to be talking about what's happening on the high seas, but I think there are a lot of people at home watching C-SPAN. I'm always surprised at how many people do.
▶ 1:32:37Uh but there are people at home wondering, "What is this MAGA Republican Congress doing the fact that competition between predatory Wall Street private equity and venture capital firms um are swallowing up the single-family home market.
▶ 1:33:03They're crowding out home buyers, controlling the market, concentration in the market, driving up the cost of real estate beyond what people can pay. While at the same time getting a stranglehold on the apartment market and raising rents up at will uh using algorithms and other predatory uh processes to soak
▶ 1:33:34the American people of their money. the rent in America is too damn high. And yes, the price of groceries in America is too damn high. And the cost of gas in America and across the the now is too damn high. The cost of medical care is too damn high.
▶ 1:34:02We've got venture capital and private equity firms swallowing up medical practices and getting a lock on the medical care uh market.
▶ 1:34:17While at the same time insurance companies doing the same thing, costs continue to go up for Americans due to market concentration into the hands of the super wealthy billionaires who were seated seated behind Trump at his inauguration.
▶ 1:34:38Same ones who will be frolicking in the uh new White House Ballroom that's being to replace the uh West Wing of the White They're getting richer and richer and Americans trying to make an honest day's pay are paying more and more.
▶ 1:35:07And so can any of you witnesses think of one single thing that MAGA Republicans have done in Congress to make life more affordable for uh the American people? Can any of you cite one thing that they have done? I'm with you. I can't either.
▶ 1:35:29Uh let me ask someone are tariffs Dr. Moss, what do you say?
▶ 1:35:40Uh I I think the answer is the answer that we all know and even your average American consumer knows that um the uh tariffs are taxes. They are paid by consumers. They raise the the prices for essential commodities where Americans workers and consumers spend most of their money. That is just economics 101. That is the economic reality. It is also the political reality. And those consumers vote.
▶ 1:36:10They're going to turn out in droves because cost of living is such a a top of mind issue for them. If anything galvanizes consumers in the upcoming election cycles, it will be that issue.
▶ 1:36:23Well, I'll tell you it's a $175 in taxes due to tariffs that have been levied on the American people over the last year by this Trump administration with the complicity of members of Congress here in control, mega Republicans. And Americans will indeed be looking at it in November.
▶ 1:36:46the high cost of housing, food, medical care, and energy is what the American people are concerned about. And this committee appears to be focused on competition between ocean carrier carrier carriers on the high seas. I think that's a shame. And with that, I yield back.
▶ 1:37:08Gentleman yields back.
▶ 1:37:10Mr. Chair, I have a couple UCs to enter into the
▶ 1:37:12Gentleman is recognized.
▶ 1:37:13Uh the first from Reuters, February 12th, 2026. New York Fed reports Americans pay almost all of Trump's tariffs. Uh Gallup, March of this year, 1/3 of Americans cut back to cover healthcare expenses. And finally from the New York Times, oil rises bringing gains to 40% since the start of the war.
▶ 1:37:34Without objection.
▶ 1:37:35Thank you.
▶ 1:37:36That concludes today's hearing. Thank you to our witnesses for appearing before the committee today. Without objection, all members will have five legislative days to submit additional written questions for the witnesses or additional materials for the record without objection the hearing is
▶ 1:37:52You're welcome.