Brief for Respondent — Federal Maritime Comm'n v. Seatrain Lines, Inc.
Supreme Court brief1973
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TABLE OF CONTENTS
Page
SCE se ee |
EE gn pa eine ial cae 2
I Sooo ee 2
SSR Stee ee ee 2
EE a6 05 0s +0 0% MM a oon ok cs :
Background of the Agreement in Suit ........... 3
3 4 Proceedings Before the Federal Maritime
Se are te eee 4
@. Proceedings in the Court of Appeals ............ 6
WMARY OF ARGUMENT ..................... ae
IGUME! hake hohe scsidiss.\.. 9
THE COURT OF APPEALS CORRECTLY
CONSTRUED SECTION 15 OF THE SHIP-
PING ACT, 1916, AS AUTHORIZING ANTI-
| TRUST IMMUNITY ONLY TO ONGOING
| ARRANGEMENTS AMENABLE TO COM.-
SU SUPERVISION .................... 9
_THE “PLAIN MEANING” OF SECTION 15
“DOES NOT MAKE ASSET ACQUISITIONS
_OR MERGERS SUBJECT TO THE COMMIS-
& SION'S JURISDICTION .................... 11
. A. Congress has elsewhere used the language
a the Commission relies on in a manner
contrary to the Commission’s understand-
SERN ee 12
Er 3B The Commission’s discovery of the “plain
= meaning” of Section 15 of the Shipping
Act, 1916, is very recent and merits no
a IEP SS Ceara Sng ee 16
(ii)
C. Acceptance of the Commission’s construc-
tion of Section 15 would repeal the
antitrust laws by implication ........
D. Volkswagenwerk v. F.M.C. does not
compel acceptance of the Commission’s
understanding of the reach of Section 15 .
Ill. THE LEGISLATIVE HISTORY OF SEC-
TION 15 CONFIRMS THAT IT WAS
DIRECTED AT REGULARIZING ON-
GOING ANTICOMPETITIVE AGREE-
MENTS IN THE SHIPPING INDUSTRY
AND NOT IMMUNIZING ASSET ACQUISI-
TIONS OR CONSOLIDATIONS ........
IV. NEITHER POST ENACTMENT LEGISLA-
TIVE ACTIONS NOR POLICY CONSID-
ERATIONS SUPPORT THE COMMISSION’S
PIE iso Boa 56 ips ete wis tas
poh obs 8 | Pyrenean ie a oie Sora te ie
AUTHORITIES
Cases:
Acquisition of Marquette by TWA, 2 C.A.B. 1 (1940)
Agreement for Consolidation or Merger Between
American Mail Line, Ltd., American President
Lines Ltd., and Pacific Far East Line, Inc., 11
EEE ink A on hn 8 Wid wkd 68 Oho whe
Agreement No. 8555 between Isbrandtsen Steamship,
Inc., Isbrandtsen Co., Inc., and American Export
Lines, Inc., 7 FBLC. 125(1962). ...........
Agreements 8745 and 8745-1, Purchase of Vessels
“Alicia” and “Dorothy”, 7 F.M.C. 199(1962) ..
(iti)
Agreement No. 9810—Prudential Lines and Grace
Line, 11 Pike & Fischer Ship. Reg. Rep. 284
Agreement No. 9827 Between United States Lines,
Inc. and Sea-Land Service, In¢. et al., 11 Pike &
Fischer Ship. Reg. ne 17
Agreement No. 9827 Between United States Lines,
Inc., and Sea-Land Service, Inc., et. al., F.M.C.
Doc. Nos. 69-56 and 70-51, decided February 12,
Se: biog toes deny J Oe ee ana 5, 32
Agreement No. 9905, 11 Pike & Fischer Ship. Reg.
mae IOPOCF MC. 1970) ........5............. 17
Alaska Industrial Board v. Chugach Assn., 356 US.
320(1958) ....... VSPA EU eeGecasc. . 33
Alleged Rebate of Mitsui S.S. Co., 7 F.M.C. 248
eT ee bs aces ees. 17
Armement Deppe, S.A. v. United States, 339 F.2d
794 (Sth Cir. 1968), certiorari denied, 393 USS.
ithe Aas? Se SES es a ae 17
ATC Agency Resolution Investigation, 29 C.A.B. 258
NRA Ra SEE Cie ha ia aa 13
aang le EO EO eS NEE Sek 21
California v. Federal Power Commission, 369 U.S.
CESAR Sree ain en ake miata as 9, 11, 31, 33
Camation Co. v. Pacific Westbound Conference, 383
ee Aa emia 18, 21, 22, 23, 26
City of Portland, Oregon v. F.M.C., 433 F.2d 502
BNI eee 17
Denver & R.G.W. R.R. Co. v. United States, 387 U.S.
GL. s iy ais GUase Ts gc uk oo ks, 19
feral Maritime Board v. Isbrandtsen Co., 356 US.
Det ee OPA RS hOB ee bere ew bk Bobs Sy
(iv)
Federal Maritime Commission v. Svenska. Amerika
Linien, 390 U.S, 238 (1968) ......-- eee eeee 18, 32
Great Northern R. Co. v. United States, 315 U.S. 262
CPOE Siang s 0c Es we we HA Gepsi0'd a Bee reece. 16
Holy Trinity Church v. United States, 143 U.S. 457
CRIED ie RE we on bi Hewes wwe we eee e sco ee. 32
Hughes Tool Co. v. Trans World Air Lines, Inc.,
US. , 34 L. Ed. 24 577(1972) .. 22. eee eee eee 19
Matson Navigation Company v. F.M.C., 405 F.2d 796
CPUUN TUE occ ets pencdeserastecnceee 6, 17, 20
McManus v. C.A.B., 286 F.2d 414 (D.C. Cir. 1961),
certiorari denied, 366 U.S.928 .........eeeeeeeees 13
Moore-McCormack Lines, Inc. v. United States, 413
Te” ERC oe 4
New York and Porto Rico SS Co.—Waterman SS
Corp. Agreement, 2 U.S.M.C. 453 (1940) ............ 16
Pacific Far East Line, Inc. v. United States, 394 F.2d
TE os cece eee eee cw ec scene 4
Pan American World Airways v. United States, 371
eS ec es 12, 14, 15, 19
Rainwater v. United States, 356 U.S. 540(1958) ......... 31
Rockbridge v. Lincoln, 449 F.2d 567 (9th Cir. 1971) ...... 15
Schroegmann Bros. v. Calvert Corp., 341 U.S. 384
CSO EE ins os ea eee bes pak gm Gee ve eae 22
Sea-Land Service, Inc. v. Connor, 418 F.2d 1142
(SO 626 |) es iri ee oe 3
Seatrain Lines, Inc. v. Federal Maritime Commission,
460 F.2d 932 (D.C. Cir. 1972) ........ 1, 6, 20, 28, 29, 31
Section 15 Agreements—South African Ps
Trade, 7 F.M.C. 159(1962) ........-ceeeeereeees 17
Section 15 Agreement—Coal to Japan/
Korea, 7 F.M.C. 295 (1962) . 17
| United States v. Borden Co., 308 U.S. 188 (1939)
r Act, Section 7, as amended by Act of
- December 29, 1950, S. 1184, 64 Stat. 1125 15
8
_ United States v. McKesson & Robbins, 351 U.S. 305
ES ieee Sea 18, 22
United States Navigation Co. v. Cunard S.S. Co., 284
a ES nee 17
United States v. Philadelphia National Bank, 374 U.S.
AEE OSES te re 22
United States y. R. J. Reynolds ‘Tobacco Company,
325 F. Supp. 656 (D.N.J. ee a 6, 20
United Stevedoring Corp. v. Boston Shipping Assn.,
13 Pike & Fischer Ship. Reg. Rep. 257 (F.M.C.
8 ee POM NE Meee s tine cc usec. , 21
Volkswagenwerk v. F.M.C., 390 US. 261(1968) ....... passim
Woodwork Manufacturers Assoc. v. N.L.R.B., 386
e.g 22
Zuber v. Allen, 396 U.S. 168 EAE ae 16
Statutes and Executive Orders:
Civil Aeronautics Act of 1938, reenacted as Title IV,
Federal Aviation Act of 1958, 49 U.S.C. §§1371
et seq.:
Section 408, 49 U.S.C. Br gs 8,9, 13, 14, 15
Section 412, 49 U.S.C. By PR te 8,9, 12, 13, 15
Section 414, 49 U.S.C. ih ig, il 8, 13
eee
(vi)
Merchant Marine Act, 1936, as amended, 46 U.S.C.
§1101 et seq.:
EE REEL IT ELE CL 3
46 USC. $112]... eee eee eee eens 3
ee anne eee ree
ae EE eer eran 4
Shipping Act, 1916, Section 15, as amended 46
so eis aoe ee sabes. passim
Act of December 14, 1966, P.L. No. 90-195, 81 Stat.
os ie a Ad 6 08 oe ees 4
EN yc ees wav ko oe vee ss 2
RI SON CUIED oe ee cpa ns cbt ses ense 2,4
Ne a ks dae wee es ns 4
i eo Oc a ec eae da cheese cee 4
NN So Se vce ka eee ne nes 4
Executive Order No. 6166 §312 (1933) .......-.---+-- 4
Miscellaneous:
35 F.R. 16114 (October 14,1970) ........---- ee eees ss
“Alexander Report,” House Committee on Merchant
Marine and Fisheries, Report on Steamship Agree-
ments and Affiliations in the American Foreign
and Domestic Trade, H.R. Dec. No. 605, 63rd
Cons. 2ndée, Vol. @ os. eee. 8, 23-28
HLR. Rep. No. 2360, 85th Cong., 2nd Sess. (1958), 2
U. S. Code Cong. & Ad. News 3741 (1958) .......... 12
S.Rep. No. 1775, 81st Cong., 2nd Sess. 7 (1950), 2
U. S. Code Cong. Serv. 4300(1950) ............5.. 31
S. Rep. No. 792, 90th Cong., Ist Sess. (1967), 2 US. .
Code Cong. Ad. News 2172 (1967) ...........-.55: 4
(PT
ese Dye
IN THE
_ SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1972
No. 71-1647
FEDERAL MARITIME COMMISSION, Petitioner,
Vv.
SEATRAIN LINES, INC.; PACIFIC FAR EAST LINE, INC.;
THE OCEANIC STEAMSHIP COMPANY: and UNITED
» STATES OF AMERICA, Respondents.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT
OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
BRIEF FOR RESPONDENTS PACIFIC FAR EAST LINE,
INC., and THE OCEANIC STEAMSHIP COMPANY
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 17)! is
Teported sub nom. Seatrain Lines, Inc. y. Federal Mari-
eS Pet. App.” refers to pages in the appendix to the Commis-
$ petition for a writ of certiorari. “App.” references are to
s of the single appendix filed by petitioner pursuant to Rules
ind 36.
}
2
time Comihission at 460 F.2d 932. The opinions of the
Federal Maritime Commission (Pet. App. 51 and Pet.
App. 55) are not yet reported.
JURISDICTION
The judgment of the United States Court of Appeals
for the District of. Columbia Circuit was entered on
March 23, 1972 (App. 70). The petition for a writ of
certiorari was filed on June 20, 1972 and granted on
December 11, 1972 (34 L.Ed. 2d 510). The jurisdiction
~~ of this Court rests on 28 U.S.C. § §1254(1) and 2350.
QUESTION PRESENTED
“Under Section 15 of the Shipping Act, 1916, Federal
Maritime Commission approval of certain anticompetitive
agreements among common carriers by water subject to
the Act excepts those agreements from the provisions of
the antitrust laws. The question presented is whether the
court of appeals correctly held that Section 15 does not
_ empower the Commission to approve and thereby
immunize from the antitrust laws a contract by one such
carrier to acquire the assets of another.
STATUTE INVOLVED
Section 15 of the Shipping Act, 1916, 39 Stat. 733, as
amended, 46 U.S.C. §814 (1970), is set out in pertinent
part at pp. 2 and 3 of petitioner’s brief.
3
STATEMENT
1. Background of the Agreement in Suit.
This case has its genesis in an October 1970 contract of
sale between Pacific Far East Line, Inc. (“PFEL’’) and
The Oceanic Steamship Company (“Oceanic’’), a wholly
owned subsidiary of Matson Navigation Company
(“Matson”). Under that contract (set out in pertinent
part at App. 2) PFEL acquired Oceanic’s four ships and
its interest in two “full containerships”? under construc-
tion, together with personnel and shoreside equipment
related to the vessels’ operations. The contract neither
terminated Oceanic’s corporate existence nor required
that carrier or its parent to refrain or withdraw from
competition with PFEL in any way (Pet. App. 53),
_ PFEL and Oceanic were not competitors, although
both were common carriers by water in the foreign
commerce of the United States Operating on routes in the
Pacific. Both carriers were subsidized under the Merchant
Marine Act, 1936,3 and confined by law and their
government subsidy contracts to operations on different
trade routes established by the Secretary of Commerce:
PFEL on Trade Route 29 (U.S. West Coast to the Far
East) and Oceanic on Trade Route 27 (U.S. West Coast
(0 Australia and New Zealand).* PFEL also maintained
~ *As distinguished from conventional freighters or “break-bulk”
thips, full containerships are modern vessels designed to carry cargo
stored in metal boxes of standard sizes in cells specially designed
for the purpose. See, Sea-Land Service, Inc. v. Connor, 418 F.2d
142 (D.C. Cir. 1969),
346 USC. §1101 et seq.
ae Merchant Marine Act, 1936 (in 46 U.S.C. §§1120 and
1121) authorizes the Secretary of Commerce to designate routes
“essential for the promotion, development, expansion, and mainte-
iM Se
Doe
4
an unsubsidized operation from the West Coast to Guam
with two vessels confined to that service by statute.* As
subsidized operators neither carrier could serve any other
trade route without government permission.
2. Proceedings Before the Federal Maritime Commission.
Under Section 15 of the Shipping Act, 1916, 46 U.S.C.
§814, certain agreements between common carriers by
water subject to the Act are unlawful unless first filed
with and approved by the Federal Maritime Commis-
sion. Commission approval of such agreements insulates
them from the operation of the antitrust laws.’ Contracts
icy oe
generally,
990, 992-93 (Ct. Cl. 1968);
United States, 413 F.2d 568, 570-71, 582 (Ct. Cl. 1969).
5 act of December 14, 1967, P. L. No. 90-195, 81 Stat. 581, 1
US. Code Cong. & Ad. News 633 (1967). See S. Rep. No. 792,
90th Cong., Ist Sess. (1967), 2 US. Code Cong. & Ad. News
2172-73 (1967).
6This authority was initially conferred on the United’ States
Shipping Board (39 Stat. 728, 733 (1916)), transferred to several
other agencies over the years (see Executive Order No. 6166,§12
(1933); 49 Stat. 1985 (1936); and 64 Stat. 1273 (1950)); and now
rests in the Commission, 75 Stat. 840 (1961). References to the
Commission in this brief include those predecessor agencies
the context requires. ;
7 Section 15 provides in pertinent part that: “Every agreement,
modification or cancellation lawful under this section, or per
mitted under section 813a of this title, shall be excepted from
the provisions of sections 1-11 and 15 of Title 15, and amendments
and Acts supplementary thereto.” 46 U.S.C. §814.
5
for the sale of ships and related assets by one ocean
carrier to another are not among those expressly included
in Section 15 as requiring such approval and entitled to
that exemption.
As a matter of business expediency PFEL and Oceanic
submitted the contract of sale to the Commission, but in
doing so expressly informed the agency that “‘they had
been advised by their counsel that the Contract of Sale
does not require approval of the Federal Maritime
Commission under the provisions of Section 15 of the
Shipping Act, 1916.” (App. 33). The Commission dis-
- agreed,® designated the contract as “Agreement
No. 9903,” and published notice in the Federal Register
that it had been filed “for approval pursuant to Section
15 of the Shipping Act, 1916.” 35 F.R. 16114 (October
14, 1970). . .
_ Seatrain Lines, Inc. (“‘Seatrain”’), which asserted that it
was “considering entry” into the West Coast—Far East
and South Pacific trades, objected to the agreement and
requested a hearing (App. 35). PFEL and Oceanic op-
posed the request on the ground that Seatrain lacked the
Fequisite interest, preserving as well their basic position
that in any event the contract of sale “‘is not subject to
Section 15.” (App. 52, n. 1). The Commission found,
inter alia, that Seatrain’s protest was based on “mere
speculation,” rejected the demand for hearing and ap-
proved the agreement on October 27, 1970; on December
*The Commission divided on the issue. Commissioner Day
of the view that “the Commission is without jurisdiction
and merger] agreements.” See Agreement 9827
States Lines, Inc., and Sea-Land Service, Inc. et
P. 2, (F.M.C. Docket Nos. 69-56 and 70-51,
73.)
6
8, 1970 the Commission denied Seatrdin’s motion for
reconsideration (Pet. App. 51, 57).?
3. Proceedings in the Court of Appeals.
On February 8, 1971 Seatrain petitioned the court
below for direct review of the Commission’s order under
the Hobbs Act,’ which makes the United States a
respondent in such proceedings.'’ PFEL and Oceanic
intervened as respondents and thie Department of Justice
appeared for the United States in that action. These three
respondents contended, inter alia, that Section 15 of the
Shipping Act did “not clothe the Commission with
authority to approve and immunize from the antitrust
laws contracts for the sale of assets between ocean
catriers. | :
The District of Columbia Circuit agreed, following
Judge Garth’s similar holding in United States v. R. J.
Reynolds Tobacco Co., 325 F. Supp. 656 (D.N.J. 1971),
and distinguishing the contrary result reached by a
divided court in Matson Navigation Co. v. F.M.C., 405
F.2d 796 (9th Cir. 1968). In a decision rendered March
23, 1972, the court of appeals held that “both the
language and context of Section 15 itself and the
legislative history accompanying it demonstrate” that
such agreements are not covered by the section, 460 F.2d
°The contract of sale was also contingent on certain approvals
by the Maritime Administration of the Department of Commerce,
which were obtained. See, 12 Pike & Fischer Ship. Reg. Rep. 218
(Jan. 15, 1971). -
10Now 28 U.S.C. § §2341 ff.
1128 USC. §2344.
7
932, 934 (Pet. App. 20-21). The court below vacated the
Commission’s approval of Agreement No. 9903 and
directed the Commission to remove the agreement from
its docket (Pet. App. 50). The Commission then 'peti-
tioned this Court to review the D.C. Circuit’s decision,
raising only the question of its jurisdiction under Section
15 (Pet. 2); no cross-petitions were filed.
SUMMARY OF ARGUMENT
I.
Section 15 of the Shipping Act, 1916, exempts certain
kinds of agreements among carriers subject tg the statute
from judicial scrutiny under the antitrust laws if they
receive the prior approval of the Federal Maritime
Commission. 46 U.S.C. $814. Contracts for the sale of
one Ocean carrier’s assets to another are not among those
specified in Section 15 as requiring approval and entitled
fo such immunization. The court below correctly held
that the section contemplates only limited antitrust
exemption for ongoing cooperative working agreements
‘among competing ocean carriers which are amenable to
the supervision of the Commission and does not reach
_ permanent, one-time transactions, like the sale of one
catrier’s .fleet to another, which are difficult if not
impossible to unscramble at a later date.
_ The Commission’s principal attack upon the decision
below purports to be based on its reading of the “‘plain
Meaning” of Section 15. When analyzed, however, its real
‘@gument is that a ship sale contract or merger arrange-
Ment is one potentially “destroying competition” and
fore within Section 15 by implication. The lower
8
court’s rejection bor this so-called “‘plain meaning” ap-
proach is on very sound ground. Congress has taken the
identical language from Section 15 upon which the
Commission relies and used it in what is now the Federal
Aviation Act of 1958 in a manner confirming that it
refers only to ongoing working and pooling agreements
and not to asset acquisitions or mergers. See 49 U.S.C.
§§1378, 1382, and 1384. The Commission’s contrary
view does not merit judicial deference; it is of recent
vintage and by no means a contemporaneous administra-
tive construction. Indeed, Commission practice until
recent years has always been to refuse jurisdiction over
ship sale contracts unless they were coupled with some
form of ongoing anticompetitive working agreement
between the parties such as one to refrain from competi-
tion. The Commission’s position also flies in the face of
the accepted principle that repeal of the antitrust laws by
implication are not favored. This Court’s earlier decision
in Volkswagenwerk v. F.M.C., 390 U.S. 261 (1968), does
not require a contrary result. The question of merger
jurisdiction under Section 15 was not before the Court in
that case and the decision itself makes plain that not all
agreements which might be read into Section 15 are in
fact within that provision. :
The legislative history confirms the court of appeals’
reading of Section 15. The “Alexander Report” upon
which it was based was the result of a Congressional
investigation which sought not to immunize cohsplida-
tions and mergers, but rather to bring anticompetitive
working arrangements and conference agreements in the
shipping industry out into the open and under govert-
ment regulation 2s a.means, among other things, of
discouraging such mergers and consolidations.
9
IV,
The Commission’s reliance on a 1950 amendment to
Section 7 of the Clayton Act as confirming its jurisdic-
tion over asset acquisitions was properly rejected as a
bootstrap attempt to gain additional authority where
none was intended to be conveyed. See California vy.
Federal Power Commission, 369 U.S. 482, 486 (1962).
After more than 50 years of operation, because Shipping
Act and antitrust policies are not identical there is no
reason now why the Commission’s jurisdiction must be ex-
panded to cover mergers and acquisitions in order to
enable it to do its job properly. At all events, that policy
atgument should be addressed to the Congress, which we
note has declined to grant other regulatory agencies
authority to immunize asset acquisitions and mergers
from the antitrust laws (See ‘e.g. California v. Federal
Power Commission, supra, and, even where it has done
$0, has insisted upon the application of different stand-
ards to suchetransactions than govern anticompetitive
working agreements. E.g., 49 U.S.C. § §1378 and 1382.
ARGUMENT
THE COURT OF APPEALS CORRECTLY CON.
STRUED SECTION 15 OF THE SHIPPING ACT,
Under Section 15 of the Shipping Act, 1916, certain
agreements must have Commission approval to be lawful;
‘Such agreements when approved are excepted from the
Ae
aititrust laws. The provision directs there be filed for
Pus
>
10
Commission approval every agreement between parties
subject to the Act (46 U.S.C. §814):
[1] “fixing or regulating transportation rates or
fares”;
{2] “giving or receiving special rates, accommoda-
tions, or other special privileges or advantages’’;
{3] “controlling, regulating, preventing, or destroy-
ing competition” ;
[4] “pooling or apportioning earnings, losses, or
traffic”’;
[5] “allotting ports or restricting or otherwise
regulating the number and character of sailings
between ports”;
[6] “limiting or regulating in any way the volume
or character of freight or passenger traffic to be
: carried”’; or
[7] “in any manner providing for an exclusive,
preferential, or cooperative working arrange-
ment.”
The arrangements Congress made subject to Commis-
sion approval—and for which it authorized antitrust
exemption—are thus spelled out in detail in Section 15;
conspicuous by their omission are references to contracts
involving asset acquisitions, such as the sale of ships
involved here, and mergers. It is the substance of the
Commission’s position that these are included by implica-
tion. It contends that PFEL’s contract to acquire
Oceanic’s assets was an agreement which could “quite
literally” eliminate or prevent competition between those
ocean carriers and, therefore, Commission jurisdiction to
approve that contract—and to immunize it from the
antitrust laws—“‘must follow from the plain meaning of
the language of Section 15 [Item 3].” (Brief, p. 7).
Z
1]
The ‘court of appeals rejected that “plain meaning”
_, Stgument on the ground that Section 15 is directed at a
" discrete problem: the control of ongoing anticompetitive
working arrangements among water carriers amenable to
Commission supervision. The court held that single
transactions of a permanent nature such as the sale of all
assets—which would be difficult if not impossible to undo
or modify at a later datée!? —were not intended to be
governed by the Section and not entitled to receive
"antitrust immunity. The D.C. Circuit was led to this
conclusion by the structure of the Act, its legislative
history, and its understanding of the “fundamental
import” of the nation’s antitrust policies. We are in
complete accord with th peals’ position
rest of brevity,
nts. We address
THE “PLAIN MEANING” OF SECTION 15 DOES
NOT MAKE ASSET ACQUISITIONS OR MERGERS
SUBJECT TO THE COMMISSION’S JURISDICTION.
The Commission’s basic
meaning” of Section 15
acquisitions and me
it must, that “
boil down to the
the statutory |
ences
"S00, ¢.g., California v. Federal Power Commission, 369 US.
- 482, 488-489 (1962).
12
ling, regulating, preventing or destroying competition.”
(Clause [3], supra). The superficial appeal of this
argument does not withstand a close analysis. |
A. Congress has elsewhere used the language
the Commission relies on in a manner contrary
to the Commission’s understanding.
There are a number of persuasive reasons why that
“plain meaning” argument lacks merit, not the least of
which is that Congress used the very language the
Commission relies on as a model in other legislation
which makes it abundantly clear that the phrase in
question does not encompass asset acquisitions or mer-
gers. Title IV of the Civil Aeronautics Act of 1938,
re-enacted without substantive change as Title IV of the
Federal Aviation Act of 1958, 49 U.S.C. §§1371 et
seq.,'* provides for aif carrier regulation in a manner
parallel to that governing ocean carriers under the
Shipping Act, 1916. Section 412, now 49 US.C.
§1382,!* requires Civil Aeronautics Board approval of
13 See Pan American World Airways v. United States, 371 US.
296, 300-301 (1963), and H. R. Rep. No. 2360, 85th Cong., 2nd
Sess. (1958), 2 U.S. Code Cong. & Ad. News 3741, 3755 (1958).
1 Section 412, 49 U.S.C. §1382, provides (emphasis added):
(a) Every air carrier shall file with the Board a true copy,
or, if oral, a true and complete memorandum, of every
contract or agreement (whether enforceable by provisions for
air
section or hereafter entered into, or any modification or
cancellation thereof, between such air carriers and any other
air carrier, foreign air carrier, or other carrier for pooling or
apportioning earnings, losses, traffic, service, or equipment,
or relating to the establishment of transportation rates, fares,
charges, or classifications, or for preserving and imp
safety, economy, and efficiency of operation, or for controt-
13
specified anticompetitive arrangements between air car-.
fiers and was explicitly modelled on Section 15 of the
Shipping Act. McManus v. C.A.B., 286 F.2d 414, 419
(D.C. Cir. 1961), certiorari denied, 366 U.S. 928.'5 In
language virtually identical to that of Section 15 of the
Shipping Act, 1916, which the Commission relies on here,
Section 412 requires air carriers to file for Board approval
“every contract or agreement {among air carriers] . . . con-
trolling, regulating, preventing or otherwise eliminating
destructive, oppressive or wasteful competition, * * *,”
As is the case with the Shipping Act, Board approval of
such agreements carries with it immunity from the
antitrust laws. 49 U.S.C. § 1384.
Congress did not, however, intend the quoted language
of Section 412 to apply to transactions in the nature of
asset acquisitions or mergers. Rather, it provided ex pli-
citly for such transactions in an entirely separate provi-
sion of the same Act, Section 408, now 49 U.S.C.
(footnote 14 continued)
ling, regulating, preventing, or otherwise eliminating destruc-
tive, , Or wasteful competition, or for regulating
stops, schedules, and character of service, or for other
cooperative working arrangements.
_ by it, that it finds to be adverse
_ Violation of this chapter, and
find to be adverse to the public
interest, or in violation of this chapter; except that the Board
_ Carrier not
flee, aloo, ATC Agency Resolution investigation, 29 CAB.
: 259, 307 (1959), the underlying Board decision.
14
§1378.'® See Pan American Airways V. United States,
371 U.S. 296, 301-304 (1963). Section 408—which has
no Shipping Act counterpart—provides in pertinent part
that: “‘(a) it shall be unlawful unless approved by orderof
the Board as provided in this section— * * * (2) For any
air carrier... to purchase, lease or contract to operate
the properties, or any substantial part thereof, of any air
16 Section 408, 49 U.S.C. §1378, provides in pertinent part:
(a) it shall be unlawful unless approved by order of the
Board as provided in this section—
(1) For two or more air carriers, or for any air carrier
and any other common carrier or any person engaged in
any other phase of aeronautics, to consolidate or merge
their properties, or any part thereof, into one person for
the ownership, management, or operation of the proper-
ties theretofore in separate ownerships,
(2) For any air carrier, any person controlling an air
carrier, any other common carrier, or any person engaged
in any other phase of aeronautics, to purchase, lease, or
contract to operate the properties, or any substantial part
thereof, of any air carrier; . . . .
(b) Any person seeking approval of a consolidation,
merger, purchase, lease, operating contract, or acquisition of
control, specified in subsection (a) of this section, shall
peered my wo to the Board,.... Unless, after...
the finds that the consolidation, merger, |
purchase, lease, operating contract, or acquisition of control |
will not be consistent with the public interest or that the
conditions of this section will not be fulfilled, it shall by
order approve such consolidation, merger, purchase, lease,
operating contract, or acquisition of control, upon Si
terms and conditions as it find to be just and reasonable
and with such modifications as it may prescribe Provided,
That the Board shall not approve any consolidation, merger,
purchase, lease, operating contract, or acquisition of ton
which would result in creating a monopoly or mono
and thereby restrain or dize another ait
carrier not a party to the consolidation, merger, purchase,
i
:
&
g
B68
:
15
carrier, * * *.” If the language in Section 412 taken from
_ Section 15 of the Shipping Act, relating to filing and
_ approval of agreements “controlling, regulating, preven-
ting or otherwise eliminating... competition,” was
meant to embrace asset acquisitions and mergers, ‘then
Sections 408 would be surplusage. '!7 This is a result not
lightly attributed to Congress. Rockbridge v. Lincoin,
449 F.2d 567, 571 (9th Cir. 1971).
We recognize that the ‘actions of a later Congress are
not necessarily controlling respecting the intentions of an
earlier one. The Civil Aeronautics and Shipping Acts,
however, represent legislative attempts to resolve compar-
"'The Commission attempts to distinguish the separate provisions
in the Civil Aeronautics Act, treating acquisitions differently than
misplaced: (1) the question was not before the Board in Marquette,
(2) the Board quoted only Section 408 (ie., the merger section)
language as the basis for its substantive jurisdiction over the
American World Airways v. United States, 371 U.S. 296, 304
(1963). Moreover, the Commission makes no attempt to explain
why Congress would want the same acquisition of assets transac-
tion covered by two separate provisions of the Act each applying
different standards for approval. Compare Section 408(b), 49
USCC. §1378(b), which directs that the Board “shall not approve
MY consolidation, merger, purchase [etc.] . . . which would result
Which provides that “the Board shall by order disapprove any such
‘GOiitract or agreement . . . that it finds to be adverse to the public
or in violation of this chapter, . . . .”
16
able problems facing related industries. In this context it
is appropriate to consider subsequent legislation in
interpreting related prior enactments. Great Northern R.
Co. v. United States, 315 U.S. 262, 277 (1942). Congress
used Section 15’s language in the Civil Aeronautics Act in
a manner directly inconsistent with the Commission’s
reading of that same language. At the very least, this
makes dubious the “plain meaning” of Section 15 which
the Commission here urges on the Court.
B. The Commission’s discovery of the “plain meaning”
of Section 15 of the Shipping Act, 1916, is very
recent and merits no judicial deference.
Nor is this a case where deference should be accorded
an agency’s reading of its own enabling legislation
because its administrators participated in the drafting and
directly made their views known to Congress in the
committee hearings. On the contrary, as the Court
observed in Zuber v. Allen, 396 U.S. 168, 193 (1969),
“{t]hese props that serve to support a disputable
administrative construction are absent here.”
Far from being a “contemporancous construction,”
the Commission’s perception of the “plain meaning” of
Section 15 is of recent origin. Sales of ships are common .
in the maritime industry. Yet, until this case, to the best
of our knowledge of Commission practice extending back
more than 40 years, the Commission did not require
approval of such agreements where. they did not limit
competition between the parties.'* The absence of a
18 Until the recent cases, all the reported Commission decisions
involved some restrictive arrangement in addition to the ship sales.
See New York and Porto Rico SS Co.—Waterman SS Corp.
Agreement, 2 USMC 453 (1940) (sale of good will and agreement
17
jurisdictional claim over agreements of this type is
~ especially significant. If they are within Section 15, they
_ Must immediately be filed with the Commission for a
-. failure to file would itself violate Section 15, Volks-
wagenwerk v. F.M.C., 390 U.S. 261 (1968), a violation
‘the Commission could proceed against on its own
motion. United States Navigation Co. v. Cunard SS Co.,
— 284 US. 474, 484, 486 (1932).'® The Commission’s half
century of silence in the fate of innumerable unfiled asset
“aequisition agreements confirms that its jurisdiction over
‘ship sales contracts like the one at bar is far from “plain”
under Section 15.'*
not to compete for ten years); Agreements 8745 and 8745-1,
_ Purchase of Vessels “Alicia” and “Dorothy”, 7 FMC 199 (1962)
(Gale of two vessels and agreement not to compete for one year);
_ Agreement No. 8555 between Isbrandtsen Steamship, Inc.,
&brandtsen Co., Inc., and American Export Lines, Inc., 7 FMC 125
_ (1962) (sale of entire business including 14 vessels and agreement
~ not to compete); Agreement for Consolidation or Merger Between
Mail Line, Ltd., American President Lines Ltd., and
Pacific Far East Line, Inc., 11 FMC 53 (1967) (merger agreement
_ among competing carriers), rev’d on other grounds, Matson
_ Navigation Co. v. FMC, 405 F.2d 796 (9th Cir. 1968);
United States Lines, Inc. and Sea-Land Service, Inc. (and Walter
- Kidde & Co., Inc., and R. J. Reynolds Tobacco Co., Guarantors),
_ ii Pike & Fischer Ship. Reg. Rep. 759 ( 1970) (20 year charter of
16 vessels between competing carriers); cf., Agreement No.
- 9810—Prudential Lines and Grace Line, 1\ Pike & Fischer, Ship.
~ Reg. < 284 (1969) (merger agreement between non-competing
Carriers).
a See also, Unapproved Section 15 Agreements—South African
7 FMC. 159, 190-92 (1962); Unapproved Section 15
—Coal to Japan/Korea, 7 FMC. 295, 302 (1962).
Moreover, Section 15 applies with equal force to transactions
ween foreign-flag carriers which serve the United States. Alleged
Wate of Mitsui S.S. Co., 7 F.M.C. 248, 253 (1962); Armament
S.A. v. United States, 399 F.2d 794 (Sth Cir. 1968), \
18
C. Acceptance of the Commission’s construction
of Section 15 would repeal the
antitrust laws by implication.
_ Another sound reason why the Commission’s “plain
meaning” approach to Section 15 was properly rejected
by the court below is the substantive result its acceptance
would engender. To hold that the Commission has
jurisdiction over asset acquisitions or mergers is to decide
that Congress intended to grant antitrust immunity to
transactions not otherwise exempt. Federal Maritime
Commission v. Svenska Amerika Linien, 390 U.S. 238,
242-243 (1968). The Court’s decisions have long taught,
however, that a congressional purpose to grant such
immunity must be explicit. E.g., United States v. Borden
Co., 308 U.S. 188, 201 (1939). This is judicial
recognition of the “fundamental” role which the anti-
trust laws play in our economy, Carnation Co. v. Pacific
Westbound Conference, 383-U.S. 213, 219 (1966), and it
requires that exemptions from the antitrust laws be
strictly construed. United States v. McKesson & Robbins,
351 U.S. 305, 316 (1956).
This Court has explored the limits of Section 15
before. In so doing it has taken note of the fact that “(t]he
Congress which enacted the Shipping Act was not hostile
to antitrust regulation. On the contrary, the Shipping Act
was the end product of an extensive investigation of the
shipping industry that was conducted by the Congress
certiorari denied, 393 U.S. 1094. Ship sales and mergers are at least
as common among foreign carriers as domestic. The Commission
however, expressly disclaims Section 15 jurisdiction over mergers
between foreign-flag carriers but relies on the identical provision to
assert authority over foreign-flag agreements and sailing
arrangements. Compare Merger,—American Mail Line and Pacific
Far East Line, 11 F.M.C. 53, 57 (1967) with City of Portland,
Oregon v. FMC, 433 F.2d 502 (D.C. Cir. 1970). -
which enacted the Clayton Act.” Carnation Co. y. Pacific
_ Westbound Conference, supra, 383 U.S. at 218 (1966).
And with respect to the extent to which industry
transactions were to be excepted from the Sherman and
Clayton Acts, the Court concluded that (/d. at 218+220):
... the §15 exemption clearly demonstrates that
those who drafted the Shipping Act during the next
Congress decided not to give the industry complete
«” antitrust immunity. ‘Since the problem of the
“ application of the antitrust laws to the shipping
industry was one of the focal points of the entire
inquiry, the exemption provision could not have
been a casual afterthought. The language of that
provision must -have been selected as a matter of
deliberate choice... .
With all deference to the Commission, we submit that
_ the “Congress which enacted the Clayton Act” and
selected ‘“‘the language of [Section 15] as a matter of
deliberate choice,” was unlikely to endow a new admini-
strative agency with unprecedented authority to exempt
_ acquisition agreements and mergers from the antitrust
laws as “a casual afterthought”, ie., by implication
without express mention in the statute. In the circum-
stances, the court of appeals drew the correct conclusion:
“on the face of the Statute, the language of Section
15 does not vest the Commission with jurisdiction over
the type of agreement here at issue—the acquisition of all
the assets of one common carrier by water by another
Common carrier.” 460 F.2d at 938.20
_ ?°We fail to follow the Commission’s reasoning in attempting to
af the positions of the Interstate Commerce Commission
aad the Civil Aeronautics Board, which have jurisdiction over asset
- Sequisitions and mergers. (Brief, pp. 16-17). As this Court’s
‘decisions have repeatedly noted, each of those agencies derives that
from express statutory grants. See, e.g., Hughes Tool Co.
20
D. Volkswagenwerk vy. F.M.C. does not compel
acceptance of the Commission’s understanding
of the reach of Section 15.
The Commission’s conception of Section 15 appar-
ently stems from a belief that it is compelled by the
Court’s decision in Volkswagenwerk v. F.M.C., 390 US.
261 (1968).24 We respectfully suggest that this is not the
case. To begin with, whether asset acquisitions and
mergers were within the Commission’s jurisdiction under
Section 15 was neither an issue in nor decided by
Volkswagenwerk. That case held an agreement among
parties subject to the Shipping Act assessing contribu-
tions for a Fund to mitigate the effects of automation on
employees was subject to the Commission’s approval
under Section 15. The Commission itself had conceded in
its own decision, however, that the procedure decided
upon by the affected parties for raising the Fund was “a
cooperative working arrangement” within the express
language of Section 15 (390 U.S. at 271), but had
declined jurisdiction on the extra-statutory ground that
the arrangement did not “affect competition” (id. at
273). It was this conclusion by the Commission that the
Court held “does not square with the structure of the
statute.” (id. at 275).
y. Trans World Air Lines, Inc.,__ U.S. ____, 34 L. Ed. 2d 577,
582 (1972), and Pan American World Airways v. United States,
supra, (C.A.B.); Denver & R.G.W. R.R. Co. v. United States, 387
US. 485, 913 (1967) (1.C.C.).
21 4 similar conclusion was reached by the majority in Matson
Navigation Company v. F.M.C., 405 F.2d 796 (9th Cir. 1968), but
rejected by the dissenting judge (id. at 802), by the district court in
United States v. R. J. Reynolds Tobacco Company, 325 F. Supp.
656, 661 (D.N.J. 1971), and by the court below, 460 F. Supp. at
957.
21
To be sure, this Court did say in Volkswagenwerk that
the Commission had taken “‘an extremely narrow view of
a statute that uses expansive language.” (390 U.S. at
273). But that statement is to be understood in relation-
ship to the argument advanced by the Commission in, that
case that it could limit its jurisdiction over subject matter
Congress explicitly made subject to its authority in the
Act. It does not follow, however, that because the
Commission was off course in Volkswagenwerk a 180
degree turn was required. The Court itself recognized
- in that case that not all agreements which conceivably
could be read as within Section 15 are in fact embraced
by the provision. Thus the Court took pains in the
Volkswagenwerk decision to disassociate itself from any
suggestion that collective bargaining agreements in the
‘Maritime industry might be subject to the Commission’s
jurisdiction under Section 15, stating (390 U. S. at 278):
- Those agreements, reflecting the national labor
_ policy of free collective bargaining by representa- ©
tives of the parties’ own unfettered choice, fall in an
area of concern to the National Labor Relations
Board, and nothing we have said in this opinion is to
be understood as questioning their continuing
_ validity.??
An agreement subject to Section 15 and not filed for
Commission approval would, of course, be invalid.
Carnation Co. v. Pacific Westbound Conference, 383 U.S.
213 (1966).
_ The Commission, however, still insists it has Section 15
~ Sptisdiction over collective bargaining agreements at least to some
és . See Boston Shipping Assn. v. United States, _-~ F.2d__
4 & Fischer Ship. Reg. Rep. 20,828 (ist Cir. 1972); or on
temand to the Commission sub nom. United Stevedoring Corp. v.
Boston Shipping Assn., 13 Pike & Fisher Ship. Reg. Rep. 257
. 1972).
22
Asset acquisitions and mergers are on a similar footing,
Like the relations between. management and labor, they
involve basic national policies transcending the interests
of any single industry. See, Carnation Co. y. Pacific
Westbound Conference, supra; United States v. Phila-
delphiq National Bank, 374 U.S. 321 (1963); United
States v. McKesson & Robbins, supra; Schroegmann Bros,
v. Calvert Corp., 341 U.S. 384 (1951); United States y,
Borden Co., supra. Particularly in light of the Court’s
observations in Carnation Co. that the Congressional
draftsmen of Section 15 only “wanted to give the
shipping industry a limited antitrust exemption” (383
U.S. at 219-20), the court below very properly declined
to construe Volkswagenwerk as abandoning, sub silentio,
the carefully considered position which this Court
reiterated in the cases cited against implying exceptions
to the antitrust laws. Whether asset acquisitions or
mergers fall within Section 15 was simply not before this
Court in Volkswagenwerk. Not unexpectedly, the Court
made no attempt to discuss—much less distinguish—the
relevant cases and the fundamental antitrust principles
for which they stand.
In short, we submit that the language of Section 15
relied on by the Commission can not fairly be understood
to cover asset acquisitions and mergers. Even assuming ©
arguendo that the words can be stretched to cover the
Commission’s reading of them, “i]t is a ‘familiar rule, that
a thing may be within the letter of the statute and yet
not within the statute, because not within its spirit, nor
within the intention of its makers’.”” Woodwork Manu-
facturers Assoc. v. N.L.R.B., 386 U.S. 612, 619 (1967),
quoting Holy Trinity Church y. United States, 143 U.S.
457, 459 (1892). As we now show, the court below was
equally correct in concluding that the legislative history
of Section 15 does not support the Commission’s
position.
23
THE LEGISLATIVE HISTORY OF SECTION 15
CONFIRMS THAT IT WAS DIRECTED AT REG-
ULARIZING ONGOING ANTICOMPETITIVE
AGREEMENTS IN THE SHIPPING INDUSTRY —
AND NOT IMMUNIZING ASSET ACQUISITIONS
OR CONSOLIDATIONS.
, The legislative history of ‘Section 15 does not support
the*contention that the provision was intended to give
the Commission jurisdiction over ship acquisitions or
consolidations of lines. The Court has previously noted
that “*[t] he genesis of the Shipping Act was the ‘Alexan-
der Report’?? in 1914,” and that the Act was intended to
catry out the recommendations of that Report.”* Pre-
pared under the supervision of Congressman J.W. Alexan-
der, then chairman of the House Committee on Merchant
Marine afid Fisheries, it encompassed the results of an
“exhaustive inquiry” into anticompetitive practices
prevalent in the maritime industry at the time. The
hearings were far-ranging, but the Committee’s focus of
interest is clearly illustrated its “Recommendations
Relating to Water Carriers Engaged in the Foreign
Trade,” (Alexander Report, p. 415 et seq., and repro-
duced in its entirety as an appendix to this brief, infra,
pp. la-10a):
23 House Committee on Merchant Marine and Fisheries, Report
on Steamship Agreements and Affiliations in the American Foreign
and Domestic Trade, H. R. Doc. No. 605, 63rd Cong., 2nd Sess.,
Vol_4 (1914) [hereinafter referred to as the Alexander Report] .
24 Federal Maritime Board v. Isbrandtsen Co., 356 US. 481
488 (1958); Carnation Co. v. Pacific Westbound Conference, supra,
a at 218-220; Volkswagenwerk v. F.M.C., supra, 390 U.S.
24
The facts contained in the foregoing report show
that it is the almost universal practice for steamship
lines engaging in the American foreign trade to
operate, both on the in-bound and out-bound
voyages, under the terms of written agreements,
conference arrangements or gentlemen’s understand-
ings, which have for their principal purpose the
regulation of competition through either (1) the
fixing or regulation of rates, (2) the apportionment
of traffic by allotting the ports of sailing, restricting
the number of sailings, or limiting the volume of
freight which certain lines may carry, (3) the
pooling of earnings from all or a portion of the
traffic, or (4) meeting the competition of non-
conference lines, Eighty such agreements or under-
standings, involving practically all the regular steam-
ship lines operating on nearly every American
foreign trade route, are described in the foregoing
report. (For a full classification of these agreements
see pp. 281 to 295 of the report.) The report also
presents the economic advantages and disadvantages
of steamship agreements and conference arrange-
ments as presented to the Committee by steamship
line representatives and the exporting and importing
interests of the United States. (For a full classifica-
tion of the advantages and disadvantages see pp. 295
to 307 of the foregoing report.)
It was against this background of largely secret
anticompetitive conference arrangements among the lines
which were “almost universal practice” that the Com-
mittee framed its proposals (Alexander Report 415-416):
In formulating its recommendations it became
apparent to the Committee, in view of all the facts
presented, that only two courses of action were
open for adoption. Either the agreements and
understandings, now so universally used, may be
25
prohibited with a view to attempting the restoration
of unrestricted competition, or the same may be
recognized along lines which would eliminate exist-
ing abuses.
After describing the claimed advantages of the system
as it operated under those agreements—regularity and
frequency of service, stability and uniformity of rates,
economy in the cost of service, better distribution of
‘sailings, rate parity and equal treatment of shippers—the
Committee decided in favor of allowing them to continue
under government supervision (Alexander Report at 416,
emphasis added): '
These advantages, the Committee believes, can be
secured only by permitting the several lines in any
given trade to cooperate through some form of rate
and pooling arrangement under Government super-
vision and control. It is the view of the Committee
that open competition can not be assured for any
length of time by ordering existing agreements
terminated, The entire history of steamship agree-
ments shows that in ocean commerce there is no
happy medium between war and peace when several
lines engage in the same trade. Most of the numer-
ous agreements and conference arrangements dis-
cussed in the foregoing report were the outcome of
rate wars, and represent a truce between the
contending lines. To terminate existing arrange-
ments would necessarily bring about one of two
results: the lines would either engage in rate wars
.. which would mean the elimination of the weak and
the survival of the strong, or, to avoid a costly
_ struggle, they would consolidate through common
“ownership. Neither result can be prevented by
’ Iegislation, and either would mean a monopoly fully
as effective, and it is believed more so, than can
_ €xist by virtue of an agreement.
26
The Alexander Committee was focusing on the prob-
lems inherent in ongoing arrangements among inde-
pendent steamship companies. It recognized that circum-
stances did not justify a flat prohibition against such
arrangements, for it appreciated that the result would be
consolidation and merger of the existing lines. This, in
the Committee’s view, was an even more undesirable evil.
One of the purposes of the Committee was to discourage
the trend to such consolidations by authorizing and
regularizing conference agreements which shielded the
weaker ‘lines. Alexander Report, p. 301. The Committee's
solution, adopted by the Congress, was to make the
conferences open and public and the restrictive agree-
ments subject to government approval and supervision.”
See Carnation Co. v. Pacific Westbound Conference,
US. at 219.
below property conciided that Congress’
the Shigping Act, 1916, was “to
miptaum cuticompetitive behavior
Hl:
Th
:
it
supervisio
anticempetitive arrangements”. (460 F.2d at
27
post ee ee ee |
Or
no basis to read into Section 15 of the Act any implied
intention on Congress’ part to cover such agreements;
they were not part of the problem. As for consolidations
and mergers, as noted the Committee was attempting to
discourage, not immunize, them. It had no reason to
author a means by which they could be protected from
the reach of the antitrust laws.
. “To be sure, the Committee did receive some data
lating to consolidations among the lines. However,
these were significant only in domestic commerce, not in
the foreign trades. The Committee’s own summaries of
the anticompetitive practices it uncovered lists “control
through acquisitions” only as a problem with respect to
water carriers in the domestic trade (Alexander Report,
p. 409), but makes no mention of any ‘similar problem
respecting the lines in American Foreign Trade (Alexan-
der Report, pp. 281-314). Not unexpectedly, the
_ Alexander Report made no recommendations regarding
ship acquisitions or mergers in the foreign trades but did
as to the domestic trades, limited, however, to pro-
scribing railroad acquisitions of interstate barge lines.
Alexander Report, p. 424.2© Given the Committee’s very
limited recommendations respecting consolidations of
domestic water carriers where such mergers were a
problem, it simply does not follow that the Committee
4
~- 26“Recommendation Relating to Water Carriers Engaged in the
senate Trade. ...(12) That all interstate traffic on canals be
: placed under the supervision of the Interstate Commerce Commis-
fon; and that the railroads be prohibited in the future from
quiring, either directly or indirectly ownership and control of or
st in canals, or water lines, forwarding companies and other
gationa facilities on such canals, when the same are used in
tstate transportation.
28
wanted to vest blanket jurisdiction over these matters in
the Commission respecting the foreign trades where they
were not a problem and unmentioned in its “Recom-
mendations.” The excerpts from the Report cited by the
Commission are not to the contrary.”’
The conclusion that Congress did not intend to
provide, sub silentio, for the antitrust immunization of*
acquisitions and mergers in enacting Section 15 is further
supported by the terms used in the Alexander Report.
For example, the Committee carefully distinguished
among “(1) control through: the acquisition of water lines
or the ownership or accessories to the lines; (2) control
through agreements or understandings; and (3) control
through special practices.” Alexander Report at 409. As
the court of appeals noted (460 F.2d at 939), term
“agreement” was not used in the Report to refer to asset
acquisitions or consolidations.”®
Moreover, it is to be recalled that the 62nd Congress,
which authorized Chairman Alexander’s investigation
into the shipping industry in 1912, was the same one
which enacted the Panama Canal Act later that year.
27The material quoted by the Commission at the bottom of
Witnesses for Proposed Legislation.” Alexander Report, p. 307.
Examination of the full quotation in context also makes clear that
the witnesses were concerned with the “regulation of rates” and
“conditions of water transportation,” not ship acquisitions or
mergers. Jd. at 308.
29
Among other provisions, that Act amended the Interstate
Commerce Act to make unlawful the control by railroads
of common carriers by water using the Canal. 49 U.S.C.
$5(14). And the Congress to which the Alexander
Report was submitted in 1914 enacted the Clayton Act.
Section 7 of that Act, as the court of appeals observed,
“speaks in terms of the ‘acquisition by one corporation
of the [whole or any part of the] stock of another’ and is
directed at controlling corporate mergers.” 460 F.2d at
‘937. The draftsmen of the Shipping Act were thus well
aware of statutory language to preclude corporate con-
solidations. In the circumstances, the court below rightly
concluded that (460 F.2d at 937, footnote omitted):
It is highly unlikely, in view of this specific
statutory treatment by Congress of the antitrust
implications of acquisitions of corporate control,
that Congress originally intended to exempt such
acquisitions under Section 15 of the Shipping Act
__ by making no specific reference to them but simply
_by including them under the rubric “agreement.”
_ On the contrary, the silence of Congress in Section
15 with respect to the subject of acquisition of
control or ownership can only be taken to mean
_. that Congress had no intention by the Shipping Act
- of 1916 to exempt such arrangements from the
_ Rormal administration of the antitrust laws. The
__ Federal Maritime Commission’s attempt to derive a
_ contrary affirmative intent on the part of Congress
_ from its silence is not a favored method of statutory
_ interpretation.
__ Because the court of appeals’ opinion delves fully into
the legislative history of Section 15, we have limited our
Own recapitulation to certain salient points. The estab-
hent of negative proposition, however, i.e., what
ess did not intend in enacting Section 15 over half a
30
century ago, is a difficult task. Congressional committee
reports are normally drafted in terms of their positive
goals and the Alexander Report is no exception. Reading
excerpted passages does not always convey fully the
direction of the authors’ concerns. For this reason we
have appended to this brief the entire section of the
Report containing the “Recommendations of the Cgm-
mittee.” (/nfra,. pp. 1a-10a). We respectfully submit that
even a cursory review of that section will confirm that
the Congressional authors of the Shipping Act did not
intend to convey the jurisdiction over ship sales, asset
acquisitions and mergers which the Commission here
claims.
IV.
NEITHER POST ENACTMENT LEGISLATIVE
ACTIONS NOR POLICY CONSIDERATIONS SUP-
PORT THE COMMISSION’S POSITION,
1. As it did in the court below, the Commission again
asserts “‘post enactment consideration of Section 15 by
Congress” supports its claimed authority over asset
acquisitions and mergers in the shipping industry (Brief,
p. 38). In particular, it relies on a 1950 amendment to.
Section 7 of the Clayton Act?? expanding the scope of
that Section to include asset acquisitions but exempting
from its application transactions authorized by several
agencies, including one of the Commission’s predecessors.
The Commission urges that this confirmed its merger
jurisdiction under Section 15.
29 act of December 29, 1950, c. 1184, 64 Stat. 1125-26, 15
USC. §18. .
31
“ The court below properly rejected the contention as
no more than a “bootstrap attempt” to gain additional
authority. As the court of appeals stated (460 F.2d at
941-942), the Commission was added to the list only as
the result of its own request which acknowledged. that
the legislative proposal in question did not purport to
affect any pre-existing authority. The correctness of that
acknowledgement was promptly confirmed in the Senate
geport on the measure.*° We note that a similar argument
was rejected in California v. Federal Power Commission,
369 U.S. 482, 486 (1962):
’ The words “transactions duly consummated pur-
suant to authority” given the Commission “under
“any statutory provision vesting such power” in it are
plainly not a grant of power to adjudicate antitrust
issues. Congress made clear that by this proviso in
§7 of the Clayton Act “...it is not intended
_ that... any... agency” mentioned “shall be grant-
_.ed any authority or powers which it does not
_ already possess.” S.Rep.No. 1775, 81st Cong. 2d
~ Sess., p. 7.
In short, here as in Rainwater.v. United States, 356
US. 540, 543 (1958), “at most the... amendment is
Merely an expression of how the. . . Congress interpreted
@ statute passed by another Congress... half a century
: nae, No. 1775, 81st Cong., 2d Sess. 7 (1950), 2 U.S. Code
mmission, or, for that matter, any other agency included
ae calnancy, shall be granted any authority or powers
it does not already possess. [Emphasis added] .
32
before. Under these circumstances such interpretation has
very little, if any, significance.”
2. Finally, the Commission’s brief urges that antitrust
and Shipping Act standards respecting asset acquisitions
and mergers are not the same and therefore “Commission
expertise must be called upon to reconcile the conflicting
national policies.” (Brief, p. 43). The extent of the
Commission’s “expertise” in this troublesome area is, te
say the least, a matter of some debate even among the
Commissioners.*' Be that as it may, however, policy
arguments of this sort are properly addressed to the
Congress. Without immobilizing the industries concerned,
31 By a 3 to 2 vote on February 12, 1973 the Commission
33
that body in its judgment has declined to grant other
regulatory agencies authority to immunize transactions of
this nature from the antitrust laws.*? And even where it
has granted this authority to agencies regulating other
modes of transportation, it has insisted that asset
acquisitions and mergers meet different standards for
‘approval than ongoing cooperative working arrangements
between: competitors.*? We respectfully suggest that the
Commission’s contentions regarding the appropriate
‘manner for handling these problems are being presented
before the wrong forum.*
32 See, e.g, California v. Federal Power Commission, supra, 369
US. at 485-487.
- 33See, e.g., the Sadeenl Aviation Act of 1958, discussed supra,
~ note 17 on page 15, supra.
_**PFEL and Oceanic have not briefed the issue whether the
~Commission’s approval of the contract of sale should be affirmed
Section 15, the issue not being presented here as no
raising it was filed. Alaska Industrial Board v.
gach Assn., 356 U.S. 320, 325 (1958). Should the Court reach
‘ewe nonetheless, respondents believe the Commission’s order
i be affirmed and respectfully request opportunity to address
34
CONCLUSION
For the reasons stated, the judgment of the court of
appeals should be affirmed.
Respectfully submitted,
ODELL KOMINERS .”
RICHARD S. SALZMAN
Attorneys for Respondents
Pacific Far East Line, Inc.,
and The Oceanic Steamship
Company.
KOMINERS, FORT, SCHLEFER & BOYER
Of Counsel.
February 26, 1973
la
APPENDIX
ALEXANDER REPORT, pp. 415-424
“Recommendations of the Committee”
_ The resolution (H. R. 587) under which the Committee has been
investigating shipping combinations directs the Committee “ to report
to the House all facts disclosed by said investigation, and what leg-
islation, if any, it deems advisable in relation thereto.” In compli-
ance with the directions of the resolution relating to legislation, the
Committee submits the following recommendations:
RECOMMENDATIONS RELATING TO WATER CARRIERS ENGAGED
IN THE FOREIGN TRADE.
_ The facts contained in the foregoing report show that it is the
~lmost universal practice for steamship lines engaging in the
American foreign trade to operate, both on the in-bound and out-
bound voyages, under the terms of written agreements, conference
arrangements or gentlemen’s understandings, which have for their
principal purpose the regulation of competition through either (1)
the fixing or regulation of rates, (2) the apportionment of traffic by
allotting the ports of sailing, restricting the number of sailings, or
limiting the volume of freight which certain lines may carry, (3)
the pooling of earnings from all or a portion of the traffic, or (4)
meeting the competition of non-conference lines. Eighty such agree-
‘ments or understandings, involving practically all the regular
.tteamship lines operating on nearly every American forcign trade
route, are described in the foregoing report. (For a full classifi-
cation of these agreements see pp. 281 to 295 of the report.) The
report also presents the economic advantages and disadvantages of
steamship agreements and conference arrangements as prescntéd
to the Committee by steamship line representatives and the exporting
and importing interests of the United States. (For a full classifi-
cation of the advantages and disadvantages see pp. 295 to 307 of the
foregoing report.)
In formulating its recommendations it became apparent to the
- Committee, in view of all the facts presented, that only two courses
of setion were open for adoption. Either the agreements and under-
“anc now so universally used, may be prohibited with a view
y attempting the restoration of unrestricted competition, or the
Ds may be recognized along lines which would eliminate existing
2a
416° REOOMMENDATIONS OF THE COMMITTER.
disadvantages and abuses. It isclaimed that the adoption of the first
courso—the prohibition of cooperative arrangements between practi-
cally all the lines in nearly all the divisions of our foreign trade—
would not only involve a wholesale disturbance of existing conditions
in the shipping business but would deprive American exporters and
importers of the advantages claimed as resulting from agreements
and conferences if honestly and fairly conducted, such as greater
regularity and frequency of service, stability and uniformity of raits,
economy in the cost of service, better distribution of sailings, mainte-
nance of American and European rates to foreign markets on a
parity, and equal treatment of shippers through the elimination of
secret arrangements and underhanded methods of discrimination.
(A classifieation of the advantages claimed as resulting from the
aforementioned factors is presented on pp. 295 to 308 of the fore-
going report.)
These advantages, the Committee believes, can be secured only by
permitting the several lines in any given trade to cooperate through
some form of rate and pooling arrangement under Government
supervision and control. It is the view of the Committee that open
competition can not be assured for any length of time by ordering
existing agreements terminated. The entire history of steamship
agreements shows that in ocean commerce there is no happy medium
between war and pence when several lines engage in the same trade.
Most of the numerous agreements and conference arrangements
discussed in the foregoing report were the outcome of rate wars,
and represent « truce between the contending lines. To terminate
existing agreements would necessarily bring about one of two re -
sults: the lines would either engage in rate wars which would mean
the elimination of thé weak and the survival of the strong, or, to
avoid a costly struggle, they would consolidate through common
ownership. Neither result can be prevented by legislation, and
either would mean « monopoly fully as effective, and it is believed
more so, than can exist by virtue of an agreement. . Moreover, steam-
ship agreements and conferences are not confined to the lines en-
gaging in the foreign trade of the United States, They are os uni-
yorsally used in the foreign trade of other countries as in our own.
The merchants of these countries now enjoy the foregoing advantages
of cooperative arrangements, and to restore open and cutthrost
competition among the lines serving the United States would plece
a
3a
RECOMMENDATIONS OF THE COMMITTEE. 417
eon exporters at a disadvantage in many markets as com-
with their foreign competitors.
~~ ‘Steamship line representatives, as well as the tec of the lines,
were almost a unit in emphasizing to the Committce the importance
and necessity of the aforementioned advantages of agreements and
conferences, and in asserting that these advantages can only be
flected by permitting the several lines in a given trade to cooperate
-« fm the regulation of their rates and the expeditious handling of their
business. Very few of the mafy exporters and importers, who com-
‘municated with the Committee, were opposed to agreements and con-
‘ferences in themselves, provided they are fairly and hdnestly con-
ducted. Many, however, objected to the secrecy with which agree-
ments and conferences are now conducted; and stated that, while the
advantages must be admitted, they have no assurance and no means
ot knowing whether the conditions claimed for agreements and con-.
ferences are always fulfilled. A considerable number of complaints
were also filed with the Committee objecting to excessive rates, dis-
erimination between shippers in rates and cargo space, indifference
to the landing of freight in proper condition, arbitrariness in the
_ ‘gettlement of just claims, failure to give due notice to shippers
when rates were to be increased, refusal to properly adjust rates as
between various classes of commodities, and the unfairness of certain
* methods—such as fighting ships, deferred rebates, and threats to re-
fuse shipping accommodations—used by some ‘conference lines to
meet the competition of nonconference lines. Unfortunately the
truth of many of these complaints could not be ascertained because
of the confidential nature of the information furnished. As pointed
out in the report (p. 306), it seemed to be the general impression
‘among shippers who filed complaints with the Committee that the
es conference lines—
‘0 completely dominate the shippers with whom they dcal that these shippers
% ‘qn not afford, for fear of retaliation, to place themselves in a position of active
i Matagonism to the lines by openly giving particulars of their grievances.
oe » While admitting their many advantages, the Committee is not dis-
peed to recognize steamship agreements and conferences, unless the
e are brought under some form of effective government super-
on. To permit such agrcements without government supervision
mean giving the parties thereto unrestricted right of action.
- 28655°—vor 4—14——27
4a
418 RECOMMENDATIONS OF THE COMMITTER, —
Abuses exist, and the numerous complaints received by the Com.
mittee show that they must be recognized. In nearly all the trade
routes to and from the United States the conference lines have vir-
tually s monopoly of the line service.
All monopolies—
Ae pointed uk la the foregoing report (p. 804)—
are Mable to abuse, and in our foreign carrying trade the monopoly obtained
by the conference lines has not been subjected to any legal control. While ar
riers by Jand are supervised and must conform to statutory requirements: ta
the matter of rates and treatment of shippers, steamship companies, through
private arrangements, have secured for themselves monopolistic powers as
effective in many instances as though they were statutory. Even granting the
_ advantages claimed for steamsbip conferences and agreements, all may be witb-
drawn in the absence of supervisory control without the shippers having any
redress or protection, The }ines are under no Jegal obligation to continue these
advantages. They exercise their powers as private combinations and are apt
te abuse the same unless brought under effective government control.
The Committee believes that the disadvantages and abuses con-
nected with steamship agreements and conferences as now conducted
are inherent, and can only be eliminated by effective government
control; and it is such control that the Committee recommends as
the means of preserving to American exporters and importers the
advantages enumerated, and of preventing the abuses complained of.
‘The consensus of opinion (see pp. 307 to 808 of the Report)—
As expressed in the testimony of witnesses and in the numerous
communications received by the Committee from shippers— ,
is overwhelmingly to favor of some form of government regulation of steam
ship carriers engaged in this country’s foreign trade. Nearly all the steamship -
ine representatives, who appenred before the Committee, expressed themselves as
not opposed to government supervision which is reasonable and which is limited
to the requirements of full publicity and approval of all, agrocments or arrange
ments which steamship lines may have entered into with other steamship lines,
with shippers, or with other carriers and trunsportation agencies. On the other
hand, the shippers who appeared as witnesses, or otherwise submitted recon
mendations for proposed legislation, were in the great majority of instances
favorable to a comprebensive system of government supervision, sufticiently
brosd to embpace the regulation of rates without actually fixing them, the
approval of contracts, agreements, and arrangements, and the genéral super
vision of all conditions of water transportation which vitally affect the inter
eats of shippers. While few of the shippers who communicated with the Com
mittee by letter (and the same may be said of witnesses) attempted to specify
Sa
¢ RECOMMENDATIONS OF THE COMMITTEE. 419
e
‘the detatle of their recommendations, they are almost a unit in stating that
they are convinced of the desirability of baving the Interstate Commerce Com-
/ pilasion, or a similar commission, exercise a general supervisory power over
foreign water carriers and enforce among the conference lives at all times the
" ¢arlous contentions which they have claimed for themselves during the beariugs
“pefore the Coumittce, It is noteworthy that only five of the many communica-
> -{lons received by the Committce, which were unfavorable to steamship agree-
~ eats and conferences as now conducted, display an attitude of hostility
_ feward government regulation. In. fict, many of the communications received
‘from shippers make it clear that the writers regard the contentions of the con-
"ference line representatives as advantageous to shipper and shipowner if they
are houestly and fairly carried out, but state that their experience bas been
* to the effect that, once the combination of lines is established, it is apt to be
“weed in an arbitrary and unfair way by favoring some large corporation or
> friend to the detriment of other shippers. Such discriminations and arbitrary
; “treatment, it is believed, can only be eliminated by the establishment of some
legally constituted authority which is empowered to bear Ss pcre and to
_order the discontinuance of abuses.
_ Relative to such supervisory control by the government of steam-
ship carriers in the foreign trade of the United States, the Committee.
_oflérs the following recommendations:
(1) That navigation companies, firms or lines engaged‘in the for-
’ “eign trade of the United States be brought under the supervision of
_ the Interstate Commerce Commission as regards the regulation of _
__rates, the approval of contracts entered into with other water car-
tiers, with shippers, or with American railroads and other trans-
portation agencies, and such other conditions of water transporta-
_, tion as affect the interests of shippers. The Committee has had under
e - tonsiderution the recommendation of a separate Commission for
this purpose, but believes that, in view of the close relations existing
ey between rail and water transportation, it would be best to entrust
"the supervisory control to the Interstate Commerce Commission. If
and necessary, in view of the added duties involved in the exten-
of the Interstate Commerce Commission’s jurisdiction to water
Atausportation in accordance with the recommendations to follow,
Committee further recommends that the membership of the
mission be enlarged.
(2) That all carriers engaged in the foreign trade of the United
parties to any agreements, understandings, or conference ar-
) nts hereinafter referred to, be required to file for approval
| Interstate Commerce Commission 2 copy of all written agree-
6a
sits teat vig titi WE thi wining, 0 sei
. ment is oral) entered into (1) with any other steamship companies,
firms, or lines engaged directly or indirectly in the American trade,
or (2) with American shippers, railroads or other transportation
pao All modifications and cancellations of such agreements or
understandings as may be made from time to time should also be
promptly filed, The Commission should be empowered to ondér
canceled any such agreements, or any parts thereof, that it may find
to be discriminating or unfair in character, or detrimental to the
commercial interests of the United States.
(8) That the Interstate Commerce Commission be empowered to
investigate fully complaints charging the unreasonableness or un-
fairness of rates, or to institute proceedings on its own initiative,
and to order such rates changed if convinced that the rate under con-
sideration is unreasonably high, or discriminating in character as
between shippers, or ports, or between exporters of the United States
_and their foreign competitors; and to order restitution to shippers
of all sums collected in excess of reasonable rates. This recom-—
mendation is also intended to extend to the supervision of freight
classifications used by the lines, and the investigation of complaints
charging refusal on the part of any carrier to properly adjust the
rates between classes of commodities.
The committee realizes that the steamship business differs essen-
tially from that of the railroads (for those differences see pp. 309 to
811 of the Report), and that it might prove injurious to both ship own.
ers and American exporters to require the lines to file their rates and.
not be permitted to lower the same until after a stipulated period of
notice to change rates had been given. On the other hand, the com-
mittee feels that in the absence of government control steamship
codaidiils may in many instances have it within their power to
arbitrarily raise rates to an unreasonable degree both as regards the
general level and in the case of particular commodities; or, if they
20 desire, to fail in maintaining rates from the United States to for-
eign markets on a parity with those from other countries. It is not
the purpose of this recommendation to prevent steamship lines from
promptly lowering their rates to meet competitive conditions and thus
to favor American exporters, who, in competing with foreign
markets, often find it necessary in order to close their contracts to have
quoted an immediate and favorable rate; but the purpose of the law
7a
RECOMMENDATIONS OF THE COMMITTEE. 421
be to protect the shipper against any unreasonably high rate
the combination lines may have within their power, by virtue
tie agreements and conference arrangements, arbitrarily to im-
™ in the absence of government supervision and control.
~ (4) That rebating of freight rates to shippers be made illegal;
‘and thet, with due regard to the proper loading of the vessel and the
"tonnage available, discrimination between shippers, or ports, in the
matter of rates and space accommodations be prohibited. In this
“connection it is the belicf of the’committee that water carriers should ©
‘be required to charge equal rates to all shippers, irrespective of the
yoluine of freight offered for shipment.
~ (8) That the Interstate Commerce Commission be empowered to
investigate fully all complaints (or to undertake such investigation
ga its own initiative) charging (1) failure on the part of any carrier
‘ to give reasonable notice of increase in rates, (2) .unfair treatment
ef shippers in the matter of cargo space and other facilities, (3) the
- tristence of discriminating or unfair contracts with ‘certain ship-
| pers, and (4) unfairness in the settlement of claims and indifference
to the Janding of freight in proper condition. In this connection
* the Commission should be empowered to order the discontinuance
of all unfair or discriminating practices which it may find to exist,
and to adopt whatever measures it may deem necessary to protect
the complainant against retaliation.
(6) That the use of “fighting ships” and deferred rebates be pro-
hibited in both the export and import’ trade of the United States.
_ Moreover, all carriers should be prohibited from retaliating against
any shipper by refusing space accommodations when such are avail-
. #ble, or by resorting to other unfair methods of discrimination, be-
¢ause such shipper has patronized an independent line, or has filed
; ‘ogo charging unfair treatment, or for any other reason.
(1) That adequate penalties be provided to correct and prevent
the abuses hereinabove set forth.
> ‘RECOMMENDATIONS RELATING TO WATER CARRIERS ENGAGED
Se, IN THE DOMESTIC TRADE.
e _ Unlike the practice of water carriers in the foreign trade of the
; States, agreements to divide the territory or charge certain
c din the domestic trade are few. Competition in rates between
¢ water lines, however, has been quite as effectively eliminated
8a
42 * meeeenimenaenue ov un coeurTree.
as in the forcign trade and this has been accomplished by the sev.
eral lines through one or more of the numerous methods discussed
in Part II of the foregoing report and summarized on pp. 409 to
412, (Also see pp. 408 to 412 giving a “summary of the extent and
methods of control of competition between water carriers in the
domestic trade.”)
The Act of August 9, 1912, providing for the opening, maisity
nance, protection and operation of the Panama Canal, contains pro-
visiohs extending the jurisdiction of the Interstate Commerce Com- °
‘mission over interstate transportation which involves the carriage
of property by rail and water, in the following particulars; viz,
(1) to establish physical connection, where this is reasonably prac-
ticable and justifiable, between the rail carrier and the dock of the
water carrier by directing either or both of the carriers to construct the
connecting tracks; (2) “to establish through routes and maximum
joint rates over such rail and water lines, and to determine all the
terms and conditions under which such lines shall be operated in the
handling of the traffic embraced”; and (3) “to establish maximum
proportional rates by rail to and from the ports to which the traffic is
brought, or from which it is taken by the water carrier, and to
determine to what traffic and in connection with what vessels and
upon what terms and conditions such rates will apply.” Section 11
of the Act glso provides for the divorcing of common carriers by
water from the railroads under certain conditions. These legisla-
tive requirements go far toward eliminating some of the unde-
sirable practices which were found by the Committee to exist in
the domestic commerce of the United States. The Committee. how- ©
ever, believes, in view of the facts presented in Part II of the report,
that additional legislation is required, and wishes to offer the fol-
lowing recommendations:
(1) That the jurisdiction of the Interstate Siena Commission
be extended to the interstate port-to-port traffic of domestic water
carriers, with full power to require all such carriers to file their
" port-to-port rates and to submit reports of their financial and busi-
ness operations. As regards interstate port-to-port traffic the Com-
aniceien, shoell be given Tell power to regulate eaten and to Geter
mine maximum charges.
(2) That water carriers be required to file for approval with the
Interstate eee Commission all agreements or arrangements .
9a
RECOMMENDATIONS OF THE COMMITTEE. 423
affecting interstate transportation, whether written or oral, and all
modifications or cancellations thereof, with other water carriers, with
railroads or other transportation agencies, or with shippers.
(8) That the carriers be prohibited from granting rebates of any
kind to shippers and from discriminating between shippers in rates,
- jn the giving of space accommodations and other facilities, and in
the making of unfair contracts based on the volume of freight
offered. Water carriers should also be prohibited from using fighting
ships, or deferred rebates, or from threatening or resorting to retalia-
tory or pther unfair measures against shippers or competitors. The
Interstate Commerce Commission should be empowered to adopt
whatever measures it may consider necessary to protect shippers or
+ competitors against such retaliatory methods. Water carriers, if
" gutting rates with a view to driving out a competitor, should be
denied the privilege of restoring rates; and jurisdiction should be
conferred on the Interstate Commerce Commission to determine
whether rates were cut with the object of crushing such competitor.
(4) That the Interstate Commerce Commission be empowered’ to
investigate fully all complaints charging unfairness in the settlement
of claims, and indifference to the Jon ting and landing of freight in
proper condition ; and to ‘adopt all necessary rules and regulations for
| the adjustment and seitlement of claims.
(8) That as regards all matters relating to Interstate transpor- °
"tation, all traffic associations or conferences, whether pertaining to
through rail-and-watcr transportation or to port-to-port traffic only,
be brought under the supervision of the Interstate Commerce Com-
mission. The Committce recommends that the conditions under
Which an outside water carrier is admitted to such associations or
. tonferences should be approved by the Commission, and that an out-
tide line should not be denied membership for unfair reasons or
‘simply because the unanimous consent of existing members of the
“ttociation or conference to the admission of said line cannot be
-, obtained.
> (8) That the railroads be prohibited from within the through
d-water route unprofitable as compared with the all-rail route
charging more for the same service on water-borne commodities
they charge for the proportionate share of the all-rail haul.
} That the Interstate Commerce Commission be empowered to
‘ failroads to allow competitive water carriers to apply effective
10a
424 RECOMMENDATIONS OF THE COMMITTES.
differentials. The Commission should also have full supervisory
power over divisions between railroads and water carriers as regards
_ through rail-and-water rates. The Committee recommends that rate
divisions on any trade route should be opened equally to all water
carriers that comply with such conditions of quality and regularity
of service as the Commission may determine to be reasonable. »?
(8) That the railroads and water carriers be required to inne
through bills of lading to all interstate water carricrs that meet
such conditions of quality and regularity of service as the Interstate
Commerce Commission may consider reasonable.
(9) That railroads be required to account separately to the Inter.
state Commerce Commission for the income and expenditures of
interstate water lines owned or controlled by them.
(10) That railroads be required to make their terminal facilities
available to water carriers on equal terms and under such reasonable
conditions as the Interstate Commerce Commission may prescribe.
The Committee also believes that the Federal Government should
pursue a policy of not expending money in the interests of any port
for harbor or channel improvements, unless that port has efficient
dock facilities available to all water carriers.
(11) That there should be legislation providing for equal treat-
ment to all shippers and water carriers by transfer and lighterage
concerns when forming a Jink in interstate or foreign commerce.
(12) That all interstate traffic on canals be placed under the super-
vision of the Interstate Commerce Commission; and that the rail-
roads be prohibited in the future from acquiring, either directly or
indirectly, ownership and control of or interest in canals, or water
lines, forwarding companies and other navigation facilitics on such
canals, when the same are used in interstate transportation. °
Respectfully submitted.
; : J. W. Aurxanver,
\ poe tens Chairmen.
.
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