PREDATORY PRICING IN THE DOMESTIC LINER TRADES: IT CAN HAPPEN

This paper discusses an example of predatory pricing in the ocean-liner, container trade between the Continental United States and Puerto Rico. The paper is based primarily on the Court record. The author was an expert witness for the plaintiff, American Caribe (AmCar). The author reviewed thousands of individual rate filings between 1982 and 1985, covering 21 commodities that accounted for 65% of AmCar's south-bound revenue, as well as other data such as financial and traffic data. Tentative conclusions based on such objective evidence were confirmed by internal documents and other subjective information. All the incumbents were large and well established. AmCar entered this market in late 1983, first sailing in March, 1984. It operated weekly out of Jacksonville with two tugs and three barges chartered from Gulf Fleet Marine Corporation, which also provided financial and administrative support. It put major emphasis on carrying reefer cargo. AmCar captured about 4% of the market. Before the end of November 1984, it was bankrupt. Included in the discussion are descriptions of the history of rates, barriers to entry, monopoly, collusion, predation, and, finally, policy implications of this experience.

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Filing Info

  • Accession Number: 00610182
  • Record Type: Publication
  • Report/Paper Numbers: HS-041 177
  • Files: TRIS
  • Created Date: Jun 30 1991 12:00AM