Source: https://openjurist.org/358/us/334
Timestamp: 2019-04-23 14:40:21+00:00

Document:
RADIO CORPORATION OF AMERICA and National Broadcasting Company, Inc.
Mr. Sol. Gen. J. Lee Rankin, Washington, D.C., for appellant.
Mr. Bernard G. Segal, Philadelphia, Pa., for appellees.
Appellees, Radio Corporation of America and National Broadcasting Company, are defendants in this civil antitrust action brought by the Government under § 4 of the Sherman Act, 15 U.S.C. § 4, 15 U.S.C.A. § 4. After holding a preliminary hearing on three of appellees' affirmative defenses to that action, the federal district judge dismissed the complaint. 158 F.Supp. 333. The Government appealed directly to this Court under the Expediting Act, 15 U.S.C. § 29, 15 U.S.C.A. § 29. The principal question presented is whether approval by the Federal Communications Commission of appellees' agreement to exchange their Cleveland television station for one in Philadelphia bars this independent action by the Government which attacks the exchange as being in furtherance of a conspiracy to violate the federal antitrust laws.
One Philadelphia station, WPTZ, was owned by Westinghouse Broadcasting Company. This station and a Westinghouse-owned station in Boston were affiliated with the NBC network. In addition, Westinghouse desired NBC affiliation for a station to be acquired in Pittsburgh. In order to force Westinghouse to exchange its Philadelphia station for NBC's Cleveland station, it is alleged that NBC threatened Westinghouse with loss of the network affiliation of its Boston and Philadelphia stations, and threatened to withhold affiliation from its Pittsburgh station to be acquired. NBC also threatened to withhold network affiliation from any new VHF or UHF (ultra high frequency) stations which Westinghouse might acquire. By thus using its leverage as a network, NBC is alleged to have forced Westinghouse to agree to the exchange contract under consideration. Under the terms of that contract NBC was to acquire the Philadelphia station, while Westinghouse was to acquire NBC's Cleveland station plus three million dollars.
The Government asked that the conspiracy be declared violative of § 1 of the Sherman Act, 15 U.S.C. § 1, 15 U.S.C.A. § 1, that the appellees be divested of such assets as the District Court deemed appropriate, that 'such other and additional relief as may be proper' be awarded, and that the Government recover costs of the suit.
It was stipulated below that in passing upon the application, the Commission had all the information before it which has now been made the basis of the Government's complaint. It further appears that during the FCC proceedings the Justice Department was informed as to the evidence in the FCC's possession. It was further stipulated, and we assume, that the FCC decided all issues relative to the antitrust laws that were before it, and that the Justice Department had the right to request a hearing under § 309(b), to file a protest under § 309(c), to seek a rehearing under § 405, and to seek judicial review of the decision under § 402(b). See Far East Conference v. United States, 342 U.S. 570, 576, 72 S.Ct. 492, 495, 96 L.Ed. 576; U.S. ex rel. Chapman v. Federal Power Comm., 345 U.S. 153, 155, 156, 73 S.Ct. 609, 611 612, 97 L.Ed. 918. The Department of Justice took none of these actions. Accordingly, on January 22, 1956, after the period in which the Department could have sought review had expired, NBC and Westinghouse consummated the exchange transaction according to their contract. The Department did not file the present complaint until December 4, 1956, over ten months later.
Against this background, appellees assert that the FCC had authority to pass on the antitrust questions presented, and, in any case, that the regulatory scheme of the Communications Act has so displaced that of the Sherman Act that the FCC had primary jurisdiction to license the exchange transaction, with the result that any attack for antitrust reasons on the exchange transaction must have been by direct review of the license grant. Relying on this premise, they then contend that the only method available to the Government for redressing its antitrust grievances was to intervene in the FCC proceedings; that since it did not, the antitrust issues were determined adversely to it when the exchange was approved, so that it is barred by principles of collateral estoppel and res judicata; and that in any case the long delay between approval of the exchange and filing of this suit bars the suit because of laches.
This failure to include a provision permitting refusal of a license for antitrust violations in the absence of a judicial determination caused Congressman Davis to insert a lengthy Minority Report on H.R. 9108, which was old H.R. 5589 reintroduced by Congressman White.10 Consequently, when the bill (then numbered H.R. 9971) reached the floor of the House, Congressman Davis attempted to insert a number of amendments which would have strengthened the antitrusts aspects of the bill. See 67 Cong.Rec. 5484, 5485. All were defeated, including an amendment to § 2(C) (now § 311) which would have required refusal of a license to any company 'found by any Federal court or the commission to have been unlawfully monopolizing' radio communication. (Emphasis supplied.) See 67 Cong. Rec. 5501—5504, 5555.
Congress adjourned before any action could be taken on the bill at that session. At the next session, a Conference Committee reported out the version of the bills which became the Radio Act of 1927, with now § 311 being § 13 of the Act and now § 313 being § 15 of the Act, despite the vigorous but unsuccessful opposition of Congressman Davis in the House, see, e.g., 68 Cong.Rec. 2577, and Senator Pittman of Nevada in the Senate. See, e.g., 68 Cong.Rec. 3032, 3034.
Thus, appellees' reliance on repeal of the last sentence of § 311 is clearly misplaced.
Second, appellees urge that the italicized sentence as originally enacted had a very narrow scope; that it was intended to insure only that the granting of a license would not estop the Government from prosecuting antitrust violations subsequent to the transaction giving rise to the license proceeding, or of which the transaction was merely a small part. They argue that the sentence was intended to permit only actions such as in Packaged Programs v. Westinghouse Broadcasting Co., 3 Cir., 255 F.2d 708. But the language of the sentence cannot be naturally read in such a narrow manner, and it would take persuasive legislative history so to restrict its application. Appellees point to no such history, nor to any cases to holding.
Thus, the legislative history of the Act reveals that the Commission was not given the power to decide antitrust issues as such, and that Commission action was not intended to prevent enforcement of the antitrust laws in federal courts.
We now reach the question whether, despite the legislative history, the over-all regulatory scheme of the Act requires invocation of a primary jurisdiction doctrine. The doctrine originated with Mr. Justice (later Chief Justice) White in Texas & Pacific R. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553. It was grounded on the necessity for administrative uniformity, and, in that particular case, for maintenance of uniform rates to all shippers.14 A second reason for the doctrine was suggested by Mr. Justice Brandeis in Great Northern R. Co. v. Merchants Elevator Co., 259 U.S. 285, 291, 42 S.Ct. 477, 479, 66 L.Ed. 943, where he pointed to the need for administrative skill 'commonly to be found only in a body of experts' in handling the 'intricate facts' of, in that case, the transportation industry.
Thus, when questions arose as to the applicability of the doctrine to transactions allegedly violative of the antitrust laws, particularly involving fully regulated industries whose members were forced to charge only reasonable rates approved by the appropriate commission, this Court found the doctrine applicable.15 United States v. Pacific & Arctic R. Co., 228 U.S. 87, 33 S.Ct. 443, 57 L.Ed. 742; Keogh v. Chicago & N.W.R. Co., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183; United States Navigation Co. v. Cunard S.S. Co., 284 U.S. 474, 52 S.Ct. 247, 76 L.Ed. 408; State of Georgia v. Pennsylvania R. Co., 324 U.S. 439, 65 S.Ct. 716, 89 L.Ed. 1051; Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576. At the same time, this Court carefully noted that the doctrine did not apply when the action was only for the purpose of dissolving the conspiracy through which the allegedly invalid rates were set, for in such a case there would be no interference with rate structures or a regulatory scheme.16 United States v. Pacific & Arctic R. Co., supra; State of Georgia v. Pennsylvania R. Co., supra. The decisions sometimes emphasized the need for administrative uniformity and uniform rates, Keogh v. Chicago & N.W.R. Co., supra, while at other times they emphasized the need for administrative experience in distilling the relevant facts in a complex industry as a foundation for later court action. United States Navigation Co. v. Cunard S.S. Co., supra, and Far East Conference v. United States, supra, as explained in Federal Maritime Board v. Isbrandtsen Co., 356 U.S. 481, 497—499, 78 S.Ct. 851, 861—862, 2 L.Ed.2d 926.
The cases all involved, however, common carriers by rail and water. These carriers could charge only the published tariff, and that tariff must have been found by the appropriate agency to have been resonable. Free rate competition was modified by federal controls. The Court's concern was that the agency which was expert in, and responsible for, administering those controls should be given the opportunity to determine questions within its special competence as an aid to the courts in resolving federal antitrust policy and federal regulatory patterns into a cohesive whole. That some resolution is necessary when the antitrust policy of free competition is placed beside a regulatory scheme involving fixed rates is obvious. Cf. McLean Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370, 88 L.Ed. 544. Accordingly, this Court consistently held that when rates and practices relating thereto were challenged under the antitrust laws, the agencies had primary jurisdiction to consider the reasonableness of such rates and practices in the light of the many relevant factors including alleged antitrust violations, for otherwise sporadic action by federal courts would disrupt an agency's delicate regulatory scheme, and would throw existing rate structures out of balance.
The facts of this case illustrate that analysis. Appellees, like unregulated business concerns, made a business judgment as to the desirability of the exchange. Like unregulated concerns, they had to make this judgment with knowledge that the exchange might run afoul of the antitrust laws. Their decision varied from that of an unregulated concern only in that they also had to obtain the approval of a federal agency. But scope of that approval in the case of the FCC was limited to the statutory standard, 'public interest, convenience, and necessity.' See, generally, Federal Radio Comm. v. Nelson Bros. Co., 289 U.S. 266, 53 S.Ct. 627, 77 L.Ed. 1166; Federal Communications Comm. v. Pottsville Broadcasting Co., 309 U.S. 134, 60 S.Ct. 437, 84 L.Ed. 656; Federal Communications Comm. v. Sanders Bros. Radio Station, supra; Federal Communications Comm. v. RCA Communications, 346 U.S. 86, 73 S.Ct. 998, 97 L.Ed. 1470. The monetary terms of the exchange were set by the parties, and were of concern to the Commission only as they might have affected the ability of the parties to serve the public. Even after approval, the parties were free to complete or not to complete the exchange as their sound business judgment dictated. In every sense, the question faced by the parties was solely one of business judgment (as opposed to regulatory coercion), save only that the Commission must have found that the 'public interest' would be served by their decision to make the exchange. No pervasive regulatory scheme was involved.
This is not to imply that federal antitrust policy may not be considered in determining whether the 'public interest, convenience, and necessity' will be served by proposed action of a broadcaster, for this Court has held the contrary.19 National Broadcasting Co. v. United States, 319 U.S. 190, 222—224, 63 S.Ct. 997, 1011—1013, 87 L.Ed. 1344. Moreover, in a given case the Commission might find that antitrust considerations alone would keep the statutory standard from being met, as when the publisher of the sole newspaper in an area applies for a license for the only available radio and television facilities, which, if granted, would give him a monopoly of that area's major media of mass communication. See 98 Cong.Rec. 7399; Mansfield Journal Co. v. Federal Communications Comm., 86 U.S.App.D.C. 102, 107, 109, 180 F.2d 28, 33, 34.
The other contentions of appellees fall of their own weight if the FCC has no power to decide antitrust questions. Thus, before we can find the Government collaterally estopped by the FCC licensing, we must find 'whether or not in the earlier litigation the representative of the United States had authority to represent its interests in a final adjudication of the issue in controversy.' Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 403, 60 S.Ct. 907, 917, 84 L.Ed. 1263. (Emphasis supplied.) But the issue in controversy before the Commission was whether the exchange would serve the public interest, not whether § 1 of the Sherman Act had been violated. Consequently, there could be no estoppel. Res judicata principles are even more inapposite.
Accordingly, the judgment of the District Court dismissing the action is reversed and the case is remanded for further proceedings not inconsistent with this opinion.
Judgment reversed and case remanded for further proceedings.
Mr. Justice HARLAN concurs in the result, believing, as he understands part 'I' of the Court's opinion to hold, that a Commission determination of 'public interest, convenience, and necessity' cannot either constitute a binding adjudication upon any antitrust issues that may be involved in the Commission's proceeding or serve to exempt a licensee pro tanto from the antitrust laws, and that these considerations alone are dispositive of this appeal.
Mr. Justice FRANKFURTER and Mr. Justice DOUGLAS took no part in the consideration or decision of this case.
Under present FCC regulations, NBC can own no more than five stations, 47 CFR, 1958, § 3.636, so that acquisition of a new station would require that an existing one be relinquished.
Federal Communications Commission Report No. 2793, Public Notice 27067, December 28, 1955.
44 Stat. 1162. See H.R.Conf.Rep. No. 1918, 73d Cong., 2d Sess. 47, 49.
As then phrased, the Act was to be administered primarily by the Secretary of Commerce.
Hearings before the House Committee on the Merchant Marine and Fisheries on H.R. 5589, 69th Cong., 1st Sess. 27.
See H.R.Rep. No. 404, 69th Cong., 1st Sess. 6, 16, 23.
H.R.Conf.Rep. No. 1918, 73d Cong., 2d Sess. 47, 49.
H.R.Conf.Rep. No. 2426, 82d Cong., 2d Sess. 19.
See, generally, 3 Davis, Administrative Law Treatise, §§ 19.05, 19.06; Jaffe, Primary Jurisdiction Reconsidered: The Anti-Trust Laws, 102 U. of Pa.L.Rev. 577; Schwartz, Legal Restriction of Competition in the Regulated Industries: An Abdication of Judicial Responsibility, 67 Harv.L.Rev. 436; von Mehren, The Antitrust Laws and Regulated Industries: The Doctrine of Primary Jurisdiction, 67 Harv.L.Rev. 929.
This followed because, in the words of Mr. Justice Brandeis in Keogh v. Chicago & N.W.R. Co., supra, 260 U.S. at page 161, 43 S.Ct. at page 49, '* * * a combination of carriers to fix reasonable and nondiscriminatory rates may be illegal.' This Court in State of Georgia v. Pennsylvania R. Co., supra, took the position that shippers were entitled to have rates filed by carriers who were not parties to a conspiracy, even though the rates filed were the lowest which would be found to be reasonable. The risk that future filings would be at the uppermost limits of the zone of reasonableness was too great, and damage from the conspiratorial filings was presumed to flow. Of course, when the agency is permitted to exempt from antitrust coverage rates filed cooperatively, the doctrine equally applies to an attack on the alleged conspiracy. United States Navigation Co. v. Cunard S.S. Co., supra; Far East Conference v. United States, supra.
Under Title II, common carriers are required to furnish communications service on reasonable request and may charged only just and reasonable rates, § 201. Such carriers must file rates with the FCC, and can charge only the rates as filed, § 203. The Commission may hold hearings on the lawfulness of filed rates, § 204, and after hearings may itself set the applicable rate, § 205. Cf. 49 U.S.C. § 15 et seq., 49 U.S.C.A. § 15 et seq.; 46 U.S.C. § 817, 46 U.S.C.A. § 817. In view of this extensive regulation, Congress has provided that certain actions of telephone and telegraph companies may be exempted from the antitrust laws by the Commission, § 221(a) and § 222(c)(1). Cf. 49 U.S.C. §§ 5(11), 5b(9), 49 U.S.C.A. §§ 5(11), 5b(9) and 46 U.S.C. § 814, 46 U.S.C.A. § 814. Such exemptions are, however, subject to review, see Federal Maritime Board v. Isbrandtsen Co., 356 U.S. 481, 78 S.Ct. 851.
Nor was this position taken merely for the purposes of this litigation, for it has been the view of the Commission over a period of years. See Report on Uniform Policy as to Violation by Applicants of Laws of United States, FCC Docket No. 9572 (1950), 1 Pike and Fischer, Radio Regulation, Part III, 91:495; National Broadcasting Co. v. United States, 319 U.S. 190, 63 S.Ct. 997, 87 L.Ed. 1344. Since, as Mr. Justice Brandeis observed, the doctrine of primary jurisdiction rests in part upon the need for the skill of a 'body of experts,' (259 U.S. 285, 42 S.Ct. 479) it would be odd to impose the doctrine when the experts deny the relevance of their skill.
See also Report on Uniform Policy as to Violation by Applicants of Laws of United States, FCC Docket No. 9572, 1 Pike and Fischer, Radio Regulation, Part III, 91:495.
It is relevant to note that the Commission is not expressly required to give the Government notice that antitrust issues have been raised in a § 310(b) proceeding. Compare § 222(c)(1) of the Act relating to common carriers, which expressly makes consolidations and mergers exempt from antitrust coverage if approved by the Commission, but which also expressly requires that notice be given to the Attorney General of the United States prior to approval.

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