Shipping Act does not Protect Blatant Anticompetitive Conspiracy

Monday, June 20, 2005
The U.S. Court of Appeals for the Fourth Circuit ruled that the immunity provisions of the Shipping Act of 1984 do not prevent conviction under the Sherman Act for a blatant anticompetitive conspiracy. When defendants were underbid in the first round of a government shipping program, they arranged with foreign shippers to freeze out the under-bidder and secure higher prices for parties to the arrangement. When the arrangement, which involved overseas shipment of household goods belonging to U.S. military personnel, was discovered, defendants argued that they were exempt from the Sherman Act based on the Shipping Act of 1984. The Shipping Act provides exemptions for, among other things: (a) activities concerning foreign inland segments of through transportation; (b) agreements entered into with a reasonable basis to conclude that they are exempt from filing with the FMC; and (c) immunity for the period before a determination is made that results in denial of immunity. The court held that the exemption from application of the Sherman Act must be narrowly construed. It further held that: (a) where the activity concerned the entire through shipment, the “foreign inland segment” exemption provides no relief; (b) where the agreement is blatantly anticompetitive, there was no reasonable basis to conclude that it might be exempt; and (c) only activities that would have been immune prior to a determination are covered by the latter provision. United States v. Gosselin World Wide Moving, N.V., No. 04-4752 (4th Cir., June 14, 2005).

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