Port Dispute Sparks Antitrust Probe

The California attorney general’s office Thursday opened a preliminary inquiry into allegations of price-fixing and other antitrust violations at a start-up trucking company and harbor-area union that are at the center of the labor struggle that has choked the flow of freight at Los Angeles’ twin ports for nearly two weeks.

“It’s hard to say whether there’s fire behind the smoke,” said Senior Assistant Atty. Gen. Tom Greene, chief of the state’s antitrust section. “It certainly warrants looking into.”

Greene said he decided to open the preliminary probe after receiving a letter from the American Trucking Assns., a national trade organization, which claimed that the trucking firm, Transport Maritime Assn., and the Communications Workers of America union have illegally collaborated in a scheme to increase shipping costs.

Greene called the letter “rhetorical,” but said his office would conduct a closer review and then decide whether to open a wider inquiry.

In Washington, a spokeswoman for the Justice Department said the antitrust division had received the letter and would review it.

Freight movement at the adjacent Los Angeles and Long Beach ports, which handle 25% of the nation’s cargo containers, slumped for days amid the labor spat in which thousands of truckers have stayed off the job.

Port officials said Thursday that traffic appears to have returned to at least 90% of its usual level, but union leaders disagreed, saying the ports are still operating at no more than 30% of their normal pace.

A lawyer for Transport Maritime Assn., which sparked the trucker uprising, denied that the company had collaborated with the union or broken the law.

“The allegations are 100% incorrect,” said the attorney, Robert Morris. “If [the ATA] had bothered to contact us, they would know the facts.”

Laura Reynolds, director of Local 9400 of the Communications Workers of America, said she welcomed the probe.

“If there is an investigation, hopefully they’ll be looking at the facts,” she said.

Reynolds said she hoped investigators would also look into violations of labor law by trucking company owners.

Before the Cerritos-based Transport Maritime Assn., led by Donald L. Allen, opened for business last week, the 6,500 independent drivers in the harbor area contracted out their services to trucking companies on a daily basis. They were paid on a per-delivery basis, and complained that heavy truck traffic and inefficient management at the port terminals prevented them from making enough deliveries a day to earn a living.

Attracted by Allen’s offer to pay them $25 an hour, plus benefits and insurance, and to buy or lease their trucks, thousands of drivers signed up with his firm, which carries the first union contract available to harbor truck drivers in years.

Allen had initially planned to act as a sort of rental agency, and to lease out a truck and driver to trucking companies at $69 an hour. Even as the pool of available drivers shrunk amid the turmoil last week, trucking companies insisted that they would not hire Allen’s employees because the rate would be more than double what they usually pay. Of the 4,200 truckers that Allen said have joined the company, only 40 have been dispatched to make a pickup. Last Saturday, those 40 were turned away from the terminal gates.

Morris, the lawyer for Allen’s firm, said he is preparing to file a lawsuit stemming from that incident.

The rest of the drivers have been staying off the job, waiting to be called.

The driver shortage sent shock waves through the port complex, and put steamship lines and corporations on alert nationwide. The two ports move 18,000 containers per year, shipping imported and exported goods from beer to electronics. To maintain the flow of freight, trucking companies recruited or relocated independent drivers from San Diego to San Francisco.

In the ATA’s letter, Daniel R. Barney, chief counsel for the Alexandria, Va.-based trade organization, which represents 34,000 truck firms nationwide, wrote: “The goal [of TMA and the union] apparently is to combine and consolidate the selling power of these approximately 6,500 independent contractors in order to extract far higher lease payments from the more than 200 motor carriers that haul cargo containers and truck-trailers to and from the ports.”

The letter alleges that the start-up firm and the union “have taken a very different and highly questionable path. If their collectivizing effort goes unchallenged, it will surely drive up freight transportation costs and introduce major disruptions and further inefficiencies at the ports of Los Angeles and Long Beach. This can only harm United States exports and imports and the Los Angeles area economy, with consumers throughout the country suffering the consequences in the form of higher prices.”