SETTLEMENT EXPLORED IN PACIFIC RATE CASE TESTIMONY IS CANCELED

SETTLEMENT EXPLORED IN PACIFIC RATE CASE TESTIMONY IS CANCELED

In a last-minute change of events, four ocean carriers were excused from testifying before the Federal Maritime Commission on alleged rate malpractices in the trade between North America and the Far East.

The commission announced Monday that "intense and delicate settlement discussions" were under way with the lines, which had been subpoenaed to testify in public hearings in Los Angeles this week. Further announcements could be made within two weeks, the commission said.The FMC on June 5 announced that subpoenas had been served on Kawasaki Kisen Kaisha Ltd. ("K" Line), Nippon Yusen Kaisha (NYK Line), Nippon Liner System Ltd. and Hyundai Merchant Marine Co.

The hearings are part of a continuing FMC effort to uncover rebating, or illegal discounting from published tariffs, and other rate malpractices that may distort the competitive balance in the trans-Pacific trades.

To date, Fact-Finding Investigation No. 18, as the FMC effort is known, has generated nearly $9 million in settlements from carriers, ocean freight consolidators and shippers.

The investigation has been under way for about two years. It has involved public hearings and private discussions between FMC officials and participants in the trans-Pacific trades.

Companies that agree to monetary settlements normally do so without admitting guilt.

As the latest round of hearings began Monday in Los Angeles, Peter J. King, the FMC investigative officer, issued a brief prepared statement indicating that private negotiations are under way with the four lines and possibly other carriers in the trans-Pacific.

"Intense and delicate settlement discussions are presently under way with a number of trans-Pacific ocean carriers. Under the circumstances, it would be improvident and counterproductive to receive carrier-specific testimony under outstanding subpoenas returnable at this session of Fact-Finding Investigation No. 18," the statement read.

Still scheduled to testify in Los Angeles, however, were two Taiwan-based consolidators, or non-vessel operating common carriers, and a U.S. money broker. Those witnesses had been scheduled to testify Monday, with the public hearings expected to end today.

As the probe continues, it is expected that most carriers operating between the United States and Asia will work toward a self-policing arrangement to prevent future malpractices.

A similar arrangement already is in place in the trans-Atlantic trades, and acting FMC Chairman James J. Carey has stated on several occasions he would like to see a self-policing group in the Pacific.