Opinion ID: 295297
Heading Depth: 2
Heading Rank: 1

Heading: Shipping Conferences and Their Self-Regulation

Text: 3 Shipping conferences are made up of ocean carriers sailing under the flags of many nations. Only a minority of the lines in shipping conferences serving the foreign trade of the United States fly the American flag. Conferences were first formed about 100 years ago in order to eliminate destructive competition between ocean carriers arising out of overtonnage. In order to provide stability, the conference agreements normally contained provisions fixing rates, sailings, and practices over routes in which members' ships were engaged. 4 4 The Shipping Act of 1916 was enacted in response to abuses which had become evident in the conference systems affecting the foreign trade of the United States. It eliminated the most dangerous predatory weapons in the hands of the conferences, and expressly granted antitrust immunity to the conferences in their rate-fixing and adoption of uniform practices, provided that the conferences submitted their agreements to the appropriate United States regulatory body for approval. 5 5 Despite their obvious anticompetitive effect, conferences were not eliminated from the foreign trade of the United States, because they were viewed as necessary to American shippers and because of supposed advantages to this nation's trade. Conferences were thought to produce 'greater regularity and frequency of service, stability and uniformity of rates, economy in the cost of service, better distribution of sailings, maintenance of American and European rates to foreign markets on a parity, and equal treatment of shippers through elimination of secret agreements and underhanded methods of discrimination.' 6 6 Since a conference's effectiveness, and ultimately its very existence, is dependent upon the extent to which its members live up to the conference agreement and refrain from such violations as granting shippers secret rebates, it is of vital importance that conferences regulate their own members and police their own agreements. 7 The Shipping Act of 1916 recognized the need for self-regulation of international shipping through the means of shipping conferences, and most of the conference agreements approved under the Shipping Act up to 1961 contained such provisions. However, in that year Congress, concerned by the laxity of the conferences in policing their own memberships, amended Section 15 of the Shipping Act to require the appropriate regulatory body (then the Federal Maritime Board) to disapprove any conference agreement not including 'effective provisions for policing the obligations under it,' and further directed the F.M.B. to disapprove any conference agreement if it should find inadequate policing in fact despite any language in the agreement. 8 7 The self-policing provisions of shipping conferences came to the attention of this court in 1967 in States. In that case, we followed the lead of the Supreme Court in Silver v. New York Stock Exchange, 9 where the Court in relation to stock exchanges, which like shipping conferences are given limited statutory immunity from the antitrust laws, said: 'Congress in effecting a scheme of self-regulation designed to assure fair dealing cannot be thought to have sanctioned and protected self-regulative activity when carried out in a fundamentally unfair manner.' 10 Consequently, we found that conference agreements falling within the scope of the Shipping Act must provide a fair self-regulatory process. 8 But it was not essential, we said, that to be 'fair' to an accused line, a conference had to accord it all the due process requirements that have evolved in our criminal law. We recognized the elusiveness of the concept of fairness and noted its dependence 'upon the particular institutional setting involved.' 11 Because of the economic power wielded by shipping conferences we did hold them to a higher standard of procedural formality than that required for voluntary non-economic organizations. This standard, we found, requires that the 'self-regulatory process must provide specific, realistic guarantees against arbitrary and injurious action.' 12 9