The Federal Maritime Commission assessed civil penalties totaling $22.67 million against MSC Mediterranean Shipping Company. The enforcement proceeding concluded with findings of three types of Shipping Act violations.
The Commission’s Bureau of Enforcement, Investigations, and Compliance investigated and prosecuted the matter through its Offices of Investigation and Enforcement. BEIC alleged MSC violated the Shipping Act over several years.
Merchant Clause Violations
The first violation occurred during 2018-2020. MSC billed customs agents as “notify parties” for demurrage and detention charges through the “merchant clause” in its bills of lading. The customs agents were not involved in moving the cargo.
The Commission affirmed the Administrative Law Judge’s initial decision. MSC’s use of its merchant clause violated 46 U.S.C. § 41102(c). The assessed civil penalties for these violations totaled $65,000.
Tariff Publication Failures
BEIC alleged MSC violated 46 U.S.C. § 40501 from 2021-2023. The company failed to include in its published tariff a statement of fees for non-operating reefers.
The Commission affirmed the ALJ’s finding that MSC violated the statute from 2021 to early 2023. However, the Commission modified the initial decision. It found knowing and willful violations started only from March 2022, when MSC stated to the Commission it would modify its tariff.
The assessed civil penalties for those violations totaled $9,460,000.
Non-Operating Reefer Overcharges
BEIC alleged MSC violated 46 U.S.C. § 41102(c) by overcharging customers demurrage and detention fees for use of its non-operating reefers.
The Commission reversed the ALJ’s determination. The ALJ found MSC’s NOR “billing system” mistake did not violate the statute. The Commission disagreed.
The factual record indicated overcharging happened in about 23% of all NOR bills during the entire year of 2021. The Commission concluded MSC’s billing was not merely a mistake. It constituted an unreasonable practice within the meaning of section 41102(c).
The Commission assessed a penalty of $5,000 per violation. The total penalty for this conduct reached $13,145,000.
Penalties Go to U.S. Treasury
The penalties assessed against MSC totaled $22.67 million. The FMC does not receive any revenue when assessing civil penalties. Civil penalties are paid directly to the General Fund of the U.S. Treasury.
