News
An enforcement proceeding involving Mediterranean Shipping Co. (MSC) recently concluded with the U.S. Federal Maritime Commission (FMC). The commission’s decision assessed a civil penalty of $22.67 million for three types of Shipping Act violations. The Commission’s Bureau of Enforcement, Investigations, and Compliance (BEIC), through its Offices of Investigation and Enforcement, investigated and prosecuted the matter.
BEIC’s investigation alleged that MSC had violated the Shipping Act over the course of several years. The first violation related to MSC’s billing of customs agents as notify parties for demurrage and detention (D&D) charges (late fees) through the merchant clause found in its bills of lading, even though such parties were not involved in moving the cargo. BEIC alleged that MSC violated 46 U.S.C. § 41102(c) by overcharging its customers demurrage and detention fees for use of its non-operating reefers (NORs). The FMC held that the factual record indicated that the overcharging happened in about 23% of all NOR bills during the entire year of 2021. Therefore, the commission concluded that MSC’s billing was not merely the result of a mistake but rather that it constituted an unreasonable practice within the meaning of section 41102(c). For this conduct the FMC assessed a penalty of $5,000 per violation, or a total of $13.145 million.
Additionally, BEIC’s investigation alleged that MSC violated 46 U.S.C. § 40501 by failing to include in its published tariff from 2021-2023 a statement of what such fees were for NORs. On this matter, the FMC affirmed the Administrative Law Judge (ALJ)’s finding that MSC violated 46 U.S.C. § 40501 from 2021 to early 2023, but modified the initial decision to reflect knowing and willful violations starting only from the point of MSC’s March 2022 statement to the Commission that it would modify its tariff. The assessed civil penalties for those violations totaled $9.46 million.
The FMC affirmed the initial decision of the ALJ that MSC’s use of its merchant clause violated 46 U.S.C. § 41102(c). The assessed civil penalties for these violations totaled $65,000.
