Question
September 11, 2000
BY FAX(202-326-2624) and U.S. Mail
Mr. PatrickSharpe
PremergerNotification Office
Federal TradeCommission
600 Pennsylvania Avenue, N.W. , Room 323
Washington, D.C. 20580
Re: Shipping ActExemption
Dear Patrick:
I am writing tofollow up on the telephone conversation that I had with you on Friday, September 8, 2000
As we discussed,our client, an ocean carrier, and other ocean carriers ("theventurers") intend to form a joint venture ("JV") in the nearfuture. The JV will be structured as a U.S.corporation. The venturers will acquire and hold voting securities of the JV.The JV will operate an electronic trading portal for the container shippingindustry. Initially, the JV's services will include: scheduling requests,booking requests, booking confirmation and activity plans, equipment dispatch,shipping instructions, bill of lading verification, tracking and tracing,proactive event notification, and reports and statistics. The partiesanticipate ongoing discussions among themselves regarding the services listedhere and the operation of the JV.
I called todiscuss whether the Hart-Scott-Rodino Antitrust Improvement Act, as amended("the HSR Act"), applies here, because the formation of the JV willlikely satisfy the jurisdictional tests of 16 C.F.R. 801.40 and one ormore of the venturers may be making a reportable acquisition of JV votingsecurities.
The ShippingAct Exemption
Activities andagreements subject to the jurisdiction of the Federal Maritime Commission("FMC") pursuant to the Shipping Act are exempt from the federalantitrust laws. See 46 U.S.C. app. 1706. When a lawgranting such an exemption applies, the HSR Act does not apply, and noNotification and Report is required. 15 U.S.C. 18a(c)(5, 6)
Maritime counselfor our client has discussed the formation and operation of the JV with theFederal Maritime Commission ("FMC"). We understand the FMC believesthe .JV is subject to filing with the FMC. Although the Shipping Act on itsterms does not apply to the acquisition of voting securities, 46 U.S.C. app. 1703(c), we understand the FMC bases its jurisdiction on the factthat the JV will entail an ongoing cooperative arrangement by or among oceancommon carriers to "engage in exclusive, preferential or cooperativeworking arrangements among themselves . . ..." Such an agreement n. iswithin the scope of the. Shipping Act (See 46 U.S.C. app. 1703(a)(5) and46 C.F.R. 535.104(i)) and must be filed with the FMC. 46 U.S.C. app. 1704. Because agreements filed with the FMC are, as noted above, exemptfrom the antitrust laws, no HSR Notification and Report would be required.
Based on our telephonediscussion, I understand that you concur that no filing is required for theformation of the JV. Please advise me as soon as possible if you reach adifferent conclusion after reviewing this letter.