Guam AG monitoring APL’s federal lawsuit against Matson


Attorney General Leevin Camacho is following a lawsuit by APL against Matson in Washington, D.C.’s federal court to determine what action his office may take against Guam and the region’s most expensive shipper.

“I do note that we are monitoring the ongoing DC case and await its disposition,” Office of the Attorney General spokeswoman Carlina Charfauros told Kandit.

APL late last month sued Matson over allegations Matson “has waged a campaign of anticompetitive tactics to exclude APL from the markets for container cargo shipping services between the mainland United States and Guam so that Matson can achieve and maintain its containership monopoly.”

It is against both federal and local antitrust laws for a company to employ tactics designed to give that company a monopoly in its industry of operation.

According to the Antitrust Law of Guam, “A contract, combination, or conspiracy between two (2) or more persons in restraint of, or to monopolize, trade or commerce in a relevant market is unlawful. A contract, agreement, combination or conspiracy which controls or attempts to control the quantity, price or exchange of any article of manufacture, product of the soil or mind or any goods or services in restraint of trade is unlawful. Secretly paying or allowing rebates, refunds, commissions, or unearned discounts, whether in the form of money or otherwise, or secretly extending to certain business consumers special services or privilege, not extended to all business consumers purchasing upon like terms and conditions, to the injury of a competitor and where such payment or allowance tends to destroy competition, is unlawful. The establishment, maintenance or use of a monopoly, or an attempt or conspiracy to establish a monopoly, of trade or commerce in a relevant market by any person, for the purpose of excluding competition or controlling, fixing, or maintaining prices is unlawful.”

Matson three times has taken the U.S. Maritime Administration to court in Washington, D.C., suing U.S. MarAd to revoke the license it has issued to APL to operate in what is called the Guam trade. The Guam trade involves the shipping lanes that pick up and drop off cargo in Guam, the CNMI, Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands. It is a multimillion dollar shipping market, which Matson controlled as a monopoly from 2012, when Horizon shipping left Guam, to 2015, when APL entered the market.

During Matson’s monopoly, the company mercilessly increased the price of shipping to the Guam trade, leaving the average resident of this region too poor to purchase even food without public assistance.

According to the APL lawsuit in federal court, “APL’s increasing services with Guam presented a real and positive presence for U.S. shippers and island residents who had been victimized by Matson’s abusive power. APL’s growing presence also jeopardized Matson’s monopoly control and profits, particularly after APL enhanced its services to Guam. Reacting to APL’s effort to compete, Matson’s chief executive threatened APL with an “axe fight”, if it continued with its Guam services.”

The lawsuit continues, “Matson is delivering on that threat with a campaign of anticompetitive tactics that is shocking in its scope, audacity, and disregard for the law. These tactics began with Matson disparaging APL’s Guam services, and escalated to an array of anticompetitive actions by Matson to exclude APL from the U.S./Guam markets.”

Among Matson’s criminal actions, as alleged by APL, are a “scheme to force shippers into unlawful exclusive dealing and bundled pricing arrangements. In addition to Guam, Matson has been the dominant supplier of container cargo shipping services between the United States and Hawaii markets. Matson has exploited its Hawaii dominance to coerce shippers to both Hawaii and Guam into exclusive dealing and bundled pricing arrangements covering both markets. Because most shippers need services to both markets – and because most shippers to Guam also ship a much larger cargo volume to Hawaii – this scheme has been especially effective in economically forcing shippers to do business with Matson in the Guam markets and substantially foreclosing APL from competing in the markets.”

According to the local antitrust statute, if these allegations are true, they are violations of the Antitrust Law of Guam, and Matson would be liable to pay to any company it has allegedly harmed through these actions up to “threefold the damages sustained, and costs and reasonable attorney’s fees. If the court finds that there was a willful violation of this chapter, it may award treble damages.”
 
APL has brought its allegations against Matson in the U.S. District Court of Washington, D.C., for violation of the federal antitrust law, or the Sherman Act. No action, however, has been brought in either the local or federal court on Guam by either APL, or any aggrieved party. According to the local antitrust statute, any person can either bring Matson to court on these allegations, or the attorney general himself may lead an investigation for criminal violation of the law.
“An action for violation of this chapter shall may be brought in the Superior Court of Guam by any person or by the Attorney General in the name of the people of Guam, or, if the District Court of Guam has jurisdiction, it may be brought in the District Court of Guam,” §69.32 of the Antitrust Law of Guam states.
And according to the statute, any person who was part of the conspiracy to commit anticompetitive practices may be indicted by a Grand Jury and, if convicted in a criminal trial, will be guilty of a second-degree felony.

It is unclear whether Guam’s politicians, or its chamber of commerce leaders, were aware of the alleged Matson scheme; however local defenders of Matson have previously claimed the price of shipping was simply the price we pay for living in paradise.

“Matson also unlawfully conditioned or “tied” shipping services as part of its exclusionary scheme. As a condition to continue shipping on favorable terms in other markets where Matson is dominant, Matson, upon information and belief, requires that shippers purchase its container cargo shipping services in the U.S./Guam markets, or at least to refrain from shipping with APL. This further restricts the services available to shippers and amplifies the foreclosure of competition in the U.S./Guam markets.”

APL further alleges Matson threatened freight forwarders that if they ship through APL, Matson will lower its rates to the freight forwarders’s competitors. “Similarly, Matson threatened to impose disfavored rates and treatment on shippers to both Hawaii and Guam if they gave container cargo to APL in the U.S./Guam markets.” According to the lawsuit, Matson actually followed through on its “unlawful threats” to shippers.

“Matson’s anticompetitive conduct constitutes an attempt to achieve and to maintain its monopoly power in the markets for container cargo shipping services between the United States and Guam in violation of Section 2 of the Sherman Act,” the lawsuit alleges. “APL brings this suit to stop the anticompetitive conduct undertaken by Matson in violation of Section 2 of the Sherman Act and to recover substantial damages for injuries incurred as a result of such conduct.”


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