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US FMC rejects NYK, MOL and K Line container line merger

US FMC rejects NYK, MOL and K Line container line merger
The US Federal Maritime Commission (FMC) has rejected the merger by NYK, K Line and Mitsui OSK Lines of their container shipping operations saying it does not have jurisdiction to approve it.

The three Japanese shipowners had filed a tripartite agreement with the US shipping regulatory body to approve the forming of a joint container service.

“The Shipping Act does not provide the Federal Maritime Commission with authority to review and approve mergers. After careful consideration, the Commission determined that parties to the Tripartite Agreement were ultimately establishing a merged, new business entity and that action is among the type of agreements excluded from FMC review.

As an agreement creating a new merged business entity approval would be required from the US Department of Justice.

The tripartite agreement would have allowed the three lines to share information from 8 May ahead of the proposed new entity – a joint venture container line – being formed next year.

The tripartite agreement was rejected unanimously by the commissioners.

"The Shipping Act does not provide the Federal Maritime Commission with authority to review and approve mergers.In order to receive the benefits of a merger, one needs to first merge. The Commission has continuing regulatory oversight over agreements between established ocean common carriers and marine terminal operators," commented commissioner William Doyle.

'The proposed joint service agreement presented by the Japanese carriers seeks authority far beyond the bounds of any joint venture currently on file with the Federal Maritime Commission. Here, the Tripartite parties are seeking a geographic scope between the United States and all ports and points worldwide," he added.

NYK, MOL and K Line plan to merge their container shipping operations, in a move dubbed J3, from 2018, and are already cooperating as members of THE Alliance along with Hapag-Lloyd, UASC and Yang Ming, which started operations on 1 April this year.

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