The Gemini Cooperation Agreement went into effect on September 9, 2024, by operation of law. The Gemini Agreement is a vessel sharing agreement between two of the largest ocean carriers, Maersk and Hapag Lloyd. During the evaluation process, the Federal Maritime Commission (FMC) requested public input on the impact of the cooperation agreement and sought additional information from the parties through a Request for Additional Information. After analyzing the projected impacts of the Gemini Agreement, the Commission did not decide to seek an injunction from the U.S. District Court prohibiting the cooperation agreement from going into effect. We will, however, continue to closely monitor the competitive impacts of the agreement.
We also note that the Commission does not have the authority to enjoin an agreement sua sponte. Allowing the Gemini Cooperation Agreement to become effective, by operation of law, does not reflect our position regarding the potential competitive impacts of the cooperation agreement or whether it should be challenged at a later date. It reflects our frustration with procedural constraints surrounding the Commission’s ability to obtain and analyze information necessary to make our assessment and then to obtain an injunction prior to the statutorily provided window available to the Commission. After a new agreement is filed, the total time afforded to the Commission to obtain extensive economic data, assess the competitive impact of an agreement, and then seek an injunction from the District Court is ninety days, which includes the extended period of review under a Request for Additional Information. After this period, the Commission may still seek injunctive relief even if the agreement is in effect.
H.R. 2710, introduced by Representative Garamendi, would provide the Commission with the authority to determine whether an agreement is likely, by a reduction in competition, to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service under 46 U.S.C. 41307. Specifically, H.R. 2710 would authorize the FMC to directly enjoin the operation of an agreement if the FMC determines it violates the law and would allow third-party intervention in such proceedings. This legislation aimed to strengthen the FMC’s ability to enforce competition in the ocean shipping industry. We are both on record initially supporting this legislative change, and we still believe it makes sense today.
Carl W. Bentzel and Max Vekich are Commissioners with the U.S. Federal Maritime Commission. The thoughts and comments expressed here are their own and do not necessarily represent the position of the Commission.