Legal Definitions - Federal Maritime Commission

The Federal Maritime Commission (FMC) is an independent agency of the U.S. government responsible for regulating the nation's ocean transportation system. Its primary role is to ensure that American international trade by sea operates fairly, competitively, and with appropriate financial safeguards.

Specifically, the FMC works to:

• Promote fair and open access for all countries to participate in U.S. international shipping.
• Prevent shipping companies from forming unauthorized monopolies or engaging in anti-competitive practices that could harm consumers or other businesses.
• Ensure that companies involved in ocean shipping maintain adequate financial responsibility to cover potential liabilities, such as cleaning up environmental damage from oil spills or compensating passengers for injuries.

Here are some examples of how the Federal Maritime Commission's work applies:

• Scenario 1: Preventing Unfair Trade Practices

  Imagine a new shipping company from a developing nation wants to begin transporting goods between its country and the United States. If existing, larger carriers at U.S. ports try to impose discriminatory fees or create artificial barriers to entry for this new competitor, the FMC would investigate. Its role is to ensure that U.S. international trade routes remain open to all countries on fair and equitable terms, preventing established players from unfairly blocking new entrants.

• Scenario 2: Guarding Against Monopolies

  Consider two of the largest container shipping lines that transport the majority of goods across the Pacific Ocean. If these companies announce a plan to merge, potentially giving them control over an overwhelming share of the market, the FMC would scrutinize the proposal. The agency would assess whether such a merger would create an unauthorized monopoly, reduce competition, or lead to higher prices and fewer choices for businesses shipping goods, and could intervene to block or modify the merger.

• Scenario 3: Ensuring Financial Responsibility

  A major cruise line operating out of a U.S. port is planning a new itinerary. Before it can carry passengers, the FMC requires the cruise line to demonstrate that it has sufficient financial backing, such as insurance or surety bonds. This ensures that in the event of an unforeseen incident, like a ship accident causing passenger injuries or an environmental mishap like an oil spill, the company has the financial means to compensate affected parties and cover cleanup costs, rather than leaving taxpayers or victims to bear the burden.