The US Federal Maritime Commission (FMC) has unanimously rejected an agreement among the three biggest Japanese container carriers to form a joint container shipping service.
The Tripartite Agreement was filed by K Line, MOL and NYK on March 24 this year to seek authority for sharing information with each other in advance of starting operations as a new business entity in April 2018.
The new joint venture (JV) is expected to be officially established on July 1 this year.
The agreement was rejected on jurisdictional grounds as the commission determined that the three shipping companies were “ultimately establishing a merged, new business entity and that action is among the type of agreements excluded from FMC review”.
The Shipping Act does not authorise the commission to review and approve mergers.
If the FMC had not rejected it, the agreement would have gone into effect on May 8.
The Department of Justice (DoJ) is now reportedly expected to decide whether the merger should be allowed.
Federal Maritime Commissioner William Doyle said in a statement: “This decision by the FMC in no way precludes the Japanese carriers from merging their container trade business units into a single stand-alone company.
“Rather, the vote recognises that the FMC cannot approve certain actions that would allow the three Japanese companies to act as a merged entity prior to actually merging.”
Doyle added that in order to receive the benefits of a merger, companies need to first merge.
The three shipping companies announced last year plans to merge their container shipping businesses, as well as terminal operating businesses everywhere apart from Japan.
NYK Line will hold a 38% share in the new joint venture (JV), while MOL and K Line will own a 31% stake each.