Source: https://www.law.cornell.edu/supremecourt/text/358/334
Timestamp: 2019-07-18 23:45:11
Document Index: 486629736

Matched Legal Cases: ['§ 4', '§ 4', '§ 29', '§ 1', '§ 1', '§ 310', '§ 310', '§ 310', '§ 309', '§ 151', '§ 311', '§ 2', '§ 2', '§ 2', '§ 311', '§ 2', '§ 312', '§ 2', '§ 311', '§ 13', '§ 311', '§ 313', '§ 3', '§ 153', '§ 201', '§ 201', '§ 203', '§ 204', '§ 205', '§ 15', '§ 817', '§ 221', '§ 222', '§ 5', '§ 814']

UNITED STATES of America, Appellant, v. RADIO CORPORATION OF AMERICA and National Broadcasting Company, Inc. | US Law | LII / Legal Information Institute
358 U.S. 334 (79 S.Ct. 457, 3 L.Ed.2d 354)
Argued: Dec. 8, 1958.
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.
The Government's complaint generally alleged the following facts. In 1954, National Broadcasting Company (NBC), a wholly owned subsidiary of Radio Corporation of America (RCA), owned five very high frequency (VHF) television stations. The stations were located in the following market areas: New York, which is the country's largest market; Chicago, second; Los Angeles, third; Cleveland, tenth; and Washington D.C., eleventh. According to the Government's allegations, in March 1954, NBC and RCA originated a continuing conspiracy to acquire stations in five of the eight largest market areas in the country. Since Philadelphia is the country's fourth largest market area, acquisition of a Philadelphia station in exchange for appellees' Cleveland or Washington station would achieve one goal of the conspiracy. 1
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.
Appellees' affirmative defenses arose out of the fact that the exchange had been approved by the Federal Communications Commission. 2 FCC approval was required under § 310(b) of the Communications Act of 1934, 48 Stat. 1086, as amended, 66 Stat. 716, 47 U.S.C. 310(b), 47 U.S.C.A. § 310(b). Under that Section, appellees filed applications setting forth the terms of the transaction and the reasons for requesting the exchange. The Commission instituted proceedings to determine whether the exchange met the statutory requirements of § 310, that the 'public interest, convenience, and necessity' would be served. They were not adversary proceedings. After extensive investigation of the transaction, the Commission was still not satisfied that the exchange would meet the statutory standards, and, over three dissents, issued letters seeking additional information on various subjects, including antitrust problems, under § 309(b) of the Act. After receiving answers to the letters, the Commission, without holding a hearing, on December 21, 1955, granted the application to exchange stations. 3
Whether these contentions are to prevail depends substantially upon the extent to which Congress authorized the FCC to pass on antitrust questions, and this in turn requires examination of the relevant legislative history. Two sections of the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U.S.C. 151 et seq., 47 U.S.C.A. § 151 et seq., deal specifically with antitrust considerations, Sections 311 and 313:
These provisions were taken from the Radio Act of 1927. 4 They appear to have originated in a bill drafted by Congressman White of Maine, H.R. 5589, 69th Cong., 1st Sess. What is now § 311 appeared as the third paragraph of § 2(C) 5 of that bill, while what is now s 313 appeared as § 2(G). 6 In the hearings on the bill before the House Committee, Congressman Reid of Illinois asked Judge Davis, Department of Commerce representative, whether the Secretary of Commerce 7 had any discretion to refuse a license under § 2(C) (now § 311) to a party which the Secretary believed to be violating the antitrust laws. The following colloquy ensued: 8
Congressman White. 'Yes. In other words, I tried to get away from placing upon the secretary the determination of a judicial question of that character. That involves, of course, a determination as to the facts; it requires a knowledge of the law and it irequires an application of the law to the facts, and then it requires the exercise of judicial powers, if you leave that in his discretion, and I tried to lift it away from the secretary.' Later on, the question arose as to what grounds were available to the Secretary to revoke licenses under § 2(F) (now § 312). After Congressman White mentioned one statutory ground, Congressman Reid observed: 9
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.
Thus, in the Senate consideration of a version of the bill, when asked whether there was 'anything in the bill providing in case the applicant for a permit is found to be acting in violation of the Sherman antitrust law or controls a monopoly that the commission may pass upon the question,' Senator Dill of Washington, who was in charge of the bill in the Senate, replied: 11
Only one change was made in those two Sections when they were incorporated into the Communications Act. Section 311 was modified merely to authorize rather than to require the revocation of a license by the Commission after a court had found a radio broadcaster in violation of the antitrust laws, but had not ordered its license revoked, 48 Stat. 1086. In all other respects §§ 13 and 15 of the Radio Act were identical with, and had the same purpose as, §§ 311 and 313 of the Communications Act. 12
Appellees attempt to avoid the force of the italicized sentence in two ways. First, they point to its repeal in the 1952 amendments to the Act, 66 Stat. 716. That repeal was occasioned by objections from the industry that it was unfair for radio broadcasters who had been found in violation of the antitrust laws to be subject to license refusals by the Commission, even when the court as a part of its decree did not see fit to order the license revoked under § 313. See S.Rep. No. 142, 82d Cong., 1st Sess. 9. Congress accordingly repealed all of the Section following the first comma, including the italicized sentence. It apparently considered that inherent in the scheme of the Act was the right to challenge under the antitrust laws even transactions approved by the Commission, for the Conference Committee carefully noted that repeal of the italicized sentence would not curtail such a right: 13
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.
While the television industry is also a regulated industry, it is regulated in a very different way. That difference is controlling. Radio broadcasters, including television broadcasters, see Allen B. Dumont Laboratories v. Carroll, 3 Cir., 184 F.2d 153, are not included in the definition of common carriers in § 3(h) of the Communications Act, 47 U.S.C. 153(h), 47 U.S.C.A. § 153(h), as are telephone and telegraph companies. Thus the extensive controls, including rate regulation, of Title II of the Communications Act, 47 U.S.C. 201222, 47 U.S.C.A. §§ 201222, do not apply. 17 Television broadcasters remain free to set their own advertising rates. As this Court said in Federal Communications Comm. v. Sanders Bros. Radio Station, 309 U.S. 470, 474, 60 S.Ct. 693, 697, 84 L.Ed. 869:
'In contradistinction to communication by telephone and telegraph, which the Communications Act recognizes as a common carrier activity and regulates accordingly in analogy to the regulation of rail and other carriers by the Interstate Commerce Commission, the Act recognizes that broadcasters are not common carriers and are not to be dealt with as such. Thus the Act recognizes that the field of broadcasting is one of free competition. The sections dealing with broadcasting demonstrate that Congress has not, in its regulatory scheme, abandoned the principle of free competition as it has done in the case of railroads. * * *' Thus, there being no pervasive regulatory scheme, and no rate structures to throw out of balance, sporadic action by federal courts can work no mischief. The justification for primary jurisdiction accordingly disappears. 18
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.
Similarly, there could be no laches unless the Government was under some sort of a duty to go forward in the FCC proceedings. But unless the FCC had power to decide the antitrust issues, and we have held that it did not, the Government had no duty either to enter the FCC proceedings or to seek review of the license grant. 20
We recently explained the nature of the doctrine in United States v. Western Pacific R. Co., 352 U.S. 59, 6364, 77 S.Ct. 161, 164165, 1 L.Ed.2d 126:
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.
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