US: Shipping lines surprised by regulator’s merger rejection

The US Federal Maritime Commission (FMC) has rejected the merger of the container businesses of K Line, MOL and NYK on “jurisdictional grounds.”

Following the rejection, the matter will be referred over to the US Department of Justice, which could delay or halt the proposed joint venture.

The FMC said in a statement that “the Shipping Act does not provide the FMC with authority to review and approve mergers. After careful consideration, the commission determined that parties to the ‘tripartite agreement’ (filed with the FMC on March 24) were ultimately establishing a merged, new business entity and that action is among the type of agreements excluded from the FMC review.”

Receiving approval of the agreement would have allowed the three Japanese shipping lines to begin sharing information and conduct joint negotiations from May 8, 2017, ahead of the formation of a joint-venture company in April of next year.

The FMC’s decision is unexpected as it is assumed that some soundings would have been made beforehand and it could be a major setback for the deal.

Full Content: Shipping Position

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