{"id":650,"date":"2022-09-01T21:03:40","date_gmt":"2022-09-02T04:03:40","guid":{"rendered":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/?p=650"},"modified":"2022-09-01T21:04:12","modified_gmt":"2022-09-02T04:04:12","slug":"u-s-extraterritorial-antitrust-law-prevents-further-concentration-of-global-shipping","status":"publish","type":"post","link":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/u-s-extraterritorial-antitrust-law-prevents-further-concentration-of-global-shipping\/","title":{"rendered":"U.S. Extraterritorial Antitrust Law Prevents Further Concentration of Global Shipping"},"content":{"rendered":"\t\t
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By Yuki Taylor<\/strong><\/em>
Law Student Editor<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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A.P. M\u00f8ller-M\u00e6rsk, better known as Maersk, is a publicly traded Danish logistics and freight transportation firm with one of the largest container shipping lines in the world.\u00a0 On August 25, 2022, Maersk announced that it had abandoned a planned transaction to sell its wholly-owned subsidiaries, Maersk Container Industry A\/S and Maersk Container Industry Qingdao Ltd. (collectively, MCI), manufacturer of reefer (refrigerated) containers, to China International Marine Containers (CIMC).\u00a0 Maersk decided in tandem with CIMC to terminate the signed stock purchase agreement for the divestment of the reefer container business dated September 27, 2021, due to significant regulatory challenges<\/a> preventing the closing of the transaction.\u00a0<\/p>

On the same day, the Antitrust Division of the U.S. Department of Justice (DoJ) released a statement<\/a> regarding the termination of the transaction between the two non-U.S. business entities as follows:<\/p>

CIMC\u2019s acquisition of MCI threatened to harm this critical aspect of our economy leading to higher prices, lower quality, and less resiliency in global supply chains.\u00a0 It would have cemented CIMC\u2019s dominant position in an already consolidated industry and eliminated MCI as an innovative, independent competitor.\u00a0 The deal also would have substantially increased the risk of coordination among the remaining suppliers in the marketplace, most of whom would have been aligned through common ownership and related alliances.<\/p>

Under U.S. antitrust law, the DoJ may challenge a sufficiently large merger of business firms or acquisition of business assets that risks harming competition in the United States under the Hart-Scott-Rodino Act (HSR), despite the foreign nationalities of the parties or the location of the assets outside of the United States.\u00a0 The HSR Act provides that any contemplated merger or acquisition meeting the monetary thresholds for assets in the United States, or for sales on the U.S. market, must be notified to the DoJ and Federal Trade Commission (FTC).<\/p>

In this case, the value of the planned transaction, CIMC\u2019s total assets as of December 31, 2021, MCI\u2019s revenue for 2021, were US$ 987.3 million<\/a>, approximately US$ 24.3 billion<\/a>, and US$ 690 million<\/a>, respectively, all of which were well above the HSR thresholds<\/a> for premerger notification.\u00a0 Although the HSR Act exempts transactions between firms with no significant sales to or assets in the United States, both companies far exceeded the exemption.\u00a0 Maersk is currently the world\u2019 second-largest container shipp<\/a>ing line, and CIMC is the largest container manufacturer<\/a>. \u00a0<\/p>

The planned transaction would have combined two of the world\u2019s four suppliers of insulated container boxes and refrigerated shipping containers, resulting in consolidated control over 90% of the global cold supply chain by the Chinese government.\u00a0 According to its latest annual report, as of December 31, 2021, CIMC is effectively controlled by the Chinese government<\/a> via state-owned or state-controlled entities holding 54.23% in the company in aggregate.\u00a0 Nevertheless, without the planned sales of MCI, China\u2019s \u201cBig 3<\/a>\u201d consisting of CIMC, Dong Fang International Containers, CXIC Group, together control more than 80% of global container production.\u00a0 As in the DoJ\u2019s statement, the industry is \u201calready consolidated.\u201d<\/p>

During the supply chain congestion aggravated by the prolonged global pandemic, logistics companies worldwide are reporting record profits.\u00a0 Maersk recorded a 55.5% increase<\/a> in its revenue for 2021 to US$ 61.8 billion, \u201cmainly driven by higher freight rates in ocean, volume increases and acquisitions in logistics & services and higher global demand and increased storage income in terminals.\u201d\u00a0 CIMC as well reported a 73.9% increase<\/a> in its revenue in 2021 to US$ 25.8 billion.\u00a0<\/p>

Maersk\u2019s exceptional profits have continued into 2022, as the Danish conglomerate again announced record results with a 52.1% revenue increase in its quarterly report on August 3, in the midst of \u201cexceptional conditions with persisting landside congestion particularly in the United States and Europe<\/a>.\u201d\u00a0 CIMC also recorded another substantial increase of 23.2%<\/a> in revenue for the first quarter of 2022.<\/p>

Behind record corporate earnings driven by prolonged pandemic supply congestion and shortage, consumers worldwide continue to face rising retail prices.\u00a0 Although the HSR Act\u2019s extraterritorial effect has blocked this specific merger, it alone cannot prevent the Chinese government\u2019s increasing control over international shipping and other fields of global business.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

By Yuki TaylorLaw Student Editor A.P. M\u00f8ller-M\u00e6rsk, better known as Maersk, is a publicly traded Danish logistics and freight transportation firm with one of the largest container shipping lines in the world.\u00a0 On August 25, 2022, Maersk announced that it had abandoned a planned transaction to sell its wholly-owned subsidiaries, Maersk Container Industry A\/S and […]<\/p>\n","protected":false},"author":106,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1,128,11],"tags":[132,130,131,129,133],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/posts\/650"}],"collection":[{"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/users\/106"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/comments?post=650"}],"version-history":[{"count":4,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/posts\/650\/revisions"}],"predecessor-version":[{"id":654,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/posts\/650\/revisions\/654"}],"wp:attachment":[{"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/media?parent=650"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/categories?post=650"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/tags?post=650"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}