Source: https://www.chanrobles.com/usa/us_supremecourt/321/67/case.php
Timestamp: 2020-04-05 15:08:19
Document Index: 436433094

Matched Legal Cases: ['§ 5', '§ 5', '§ 5', '§ 5', '§ 11', '§ 21', '§ 5']

8. The Commission's conclusion that the consolidated corporation would not be "affiliated" with a rail carrier, within the meaning of §§ 5(2) and 5(6) of the Act, was supported by the findings and the evidence. P. 321 U. S. 91. chanrobles.com-red
Associated Transport, Inc., was organized in Delaware in March, 1941, to bring about the proposed merger. In July, 1941, it applied to the Interstate Commerce Commission for permission, under Section 5 of the Interstate Commerce Act, as amended, 49 U.S.C. § 5, 54 Stat. 898, 905, to obtain control of eight motor carriers, through purchase of their capital stock, and to consolidate their operating rights and properties into one unit within a year from the chanrobles.com-red
The principal issues, later set forth with particularity, are intertwined. They relate to whether the Commission applied a proper standard in concluding to approve the merger; whether it failed to give due weight to the prohibitions and policies of the antitrust laws, and whether, upon the evidence and within the meaning of Section 5(2)(b) chanrobles.com-red
The eight carriers originally sought to be merged [Footnote 4] were Arrow Carrier Corporation, Paterson N.J.; Barnwell Brothers, Inc., Burlington, N.C.; Consolidated Motor Lines, Inc., Hartford, Conn.; Horton Motor Lines, Inc., Charlotte, N.C.; McCarthy Freight System, Inc., Taunton, Mass.; M. Moran Transportation Lines, Inc., Buffalo, N.Y.; Southeastern Motor Lines, Inc., Bristol, Va., and Transportation, Inc., Atlanta, Ga. The merger embraces some of the principal operators along the Atlantic seaboard from Massachusetts to Florida. Certain of them chanrobles.com-red
As a result of the proposed merger, Associated will be the largest single motor carrier in the United States -- at least in terms of its estimated revenues -- and no other single motor carrier will compete with it throughout its service area. Nevertheless, after careful consideration and on evidence clearly sufficient to sustain it, the Commission found that, on completion of the merger, "there would remain ample competitive motor carrier service throughout the territory involved," and, in addition, that chanrobles.com-red
In connection with Arrow's participation, the Commission found that The Transport Company, whose stock was wholly owned by Kuhn, Loeb, and Company, had an option to purchase Arrow's common stock, and would receive Associated's stock therefor when the merger was effected. The stock thus received, together with 9,000 shares of Associated's common stock already held, would give The transport Company, and, through it, Kuhn, Loeb, and Company, 6,877 shares of Associated's preferred and 67,167 of Associated's common, a total of 13 percent and 9.53 percent, respectively, of the preferred and common stocks expected to be outstanding at the conclusion of the transactions. [Footnote 6] Kuhn, Loeb, and Company is represented on the boards of directors of several railroads chanrobles.com-red
The pertinent provisions of the Interstate Commerce Act, which is controlling, are set forth in the margin. [Footnote 7] chanrobles.com-red
Section 5(2) makes lawful a consolidation of the sort here attempted only if the Commission authorizes it. The Commission is empowered to authorize and approve a chanrobles.com-red
consolidation either as applied for or as qualified by such terms and conditions as it deems "just and reasonable," if it finds that the merger "will be consistent with the chanrobles.com-red
The chief attack on the orders is that the Commission improperly construed the standards by which Congress intended it to determine the propriety of a consolidation, and the burden of this complaint is that it did so "by failing to consider and give due weight to the antitrust and other laws of the United States." The argument seems to be that the merger, notwithstanding the Commission's approval, violates the Sherman Anti-Trust Act; hence, the Commission is without power to approve the merger. This presupposes that Congress did not intend, by enacting the specific exemption of Section 5(11), to give the Commission leeway to approve any merger which, but for the exemption chanrobles.com-red
On its face, the contention would seem to run in the teeth of the language and the purpose of Section 5(11). Nothing in its terms indicates an intention to create one authority chanrobles.com-red
To secure the continuous, close, and informed supervision which enforcement of legislative mandates frequently requires, Congress has vested expert administrative bodies such as the Interstate Commerce Commission with broad discretion, and has charged them with the duty to execute stated and specific statutory policies. That delegation does not necessarily include either the duty or the authority to execute numerous other laws. Thus, here, the Commission has no power to enforce the Sherman Act as such. It cannot decide definitely whether the transaction contemplated constitutes a restraint of trade or an attempt to monopolize which is forbidden by that Act. The Commission's task is to enforce the Interstate Commerce Act and other legislation which deals specifically with transportation facilities and problems. That chanrobles.com-red
The national transportation policy is the product of a long history of trial and error by Congress in attempting to regulate the nation's transportation facilities beginning with the Interstate Commerce Act of 1887. [Footnote 9] For present purposes, it is not necessary to trace the history of those attempts in detail other than to note that the Transportation Act of 1920 marked a sharp change in the policies and objectives embodied in those efforts. [Footnote 10] "Theretofore, the effect of Congress had been directed mainly to the prevention of abuses; particularly those arising from excessive chanrobles.com-red
Since that initial effort at reshaping regulation of railroads to "insure . . . adequate transportation service," [Footnote 13] Congress has extended federal regulation in connection with other forms of transportation, [Footnote 14] and has elaborated chanrobles.com-red
The history of the development of the special national transportation policy suggests, quite apart from the explicit provision of Section 5(11), that the policies of the antitrust laws determine "the public interest" in railroad regulation only in a qualified way. And the altered emphasis in railroad legislation on achieving an adequate, efficient, and economical system of transportation through close supervision of business operations and practices, rather than through heavy reliance on the enforcement of free competition in various phases of the business, cf. New York Central Securities Corp. v. United States, 287 U. S. 12, has its counterpart in motor carrier policy. The premises of motor carrier regulation posit some curtailment of free and unrestrained competition. [Footnote 17] The origins [Footnote 18] and legislative chanrobles.com-red
Whatever may be the case with respect either to other kinds of transactions by or among carriers [Footnote 20] or to consolidations of different types of carriers, [Footnote 21] there can be little doubt chanrobles.com-red
that the Commission is not to measure proposals for all-rail or all-motor consolidations by the standards of the antitrust laws. Congress authorized such consolidations because it recognized that, in some circumstances, they were appropriate for effectuation of the national transportation policy. It was informed that this policy would be furthered by "encouraging the organization of stronger units" in the motor carrier industry. [Footnote 22] And, in authorizing those consolidations, it did not import the general policies of the antitrust laws as a measure of their permissibility. [Footnote 23] It in terms relieved participants in appropriate mergers from the requirements of those laws. Section 5(11). In doing so, it presumably took into account the fact that the business affected is subject to strict regulation and supervision, particularly with respect to rates charged the public an effective safeguard against the evils attending monopoly at which the Sherman Act is directed. Against this background, no other inference is possible but that, as a factor in determining the propriety of motor carrier consolidations, the preservation of competition among carriers, although still a value, [Footnote 24] is significant chiefly as it aids in the chanrobles.com-red
Congress, however, neither has made the antitrust laws wholly inapplicable to the transportation industry nor has authorized the Commission, in passing on a proposed merger, to ignore their policy. Congress recognized that the process of consolidating motor carriers would result in some diminution of competition, and might result in the creation of monopolies. To prevent the latter effect and to make certain that the former was permitted only where appropriate to further the national transportation policy, it placed in the Commission power to control such developments. [Footnote 26] The national transportation policy requires chanrobles.com-red
79 Cong.Rec. 12207. "The wisdom and experience of that commission," not of the courts, must determine whether the proposed consolidation is chanrobles.com-red
The Commission found, as has been noted, that the proposed consolidation would result in improved transportation service, greater efficiency of operation, and substantial operating economics. The higher load factor on trucks, reduction in the number of trucks used, and the mileage traversed would lead to more efficient use of equipment and save motor fuel. Terminal facilities would be consolidated and used more effectively, through movement of freight would reduce costs, and, in a multitude of other ways, the stability and safety of the service rendered would be enhanced. [Footnote 27] The Commission also considered the extent to which competition among the merging carriers would be diminished, the effects of the consolidation on competing carriers, and the consequences for transportation service and motor carrier operations in general in the areas affected. It found that in each of the areas served by the present components of the merger there are from 44 to more than 100 Class I carriers, many chanrobles.com-red
We cannot say that the Commission measured "the public interest" by standards other than those Congress provided, or that its findings do not comply with the requirements of the Act. The material findings are supported by evidence, and, while a more meticulous regard for its function might have impelled the Commission to accede to the Anti-Trust Division's request for certain information from other shippers bearing on the question of chanrobles.com-red
The only relevant evidence now pointing toward affiliation of the applicant with rail carriers are the facts that Kuhn, Loeb, and Company indirectly owns 9,000 shares chanrobles.com-red
of Associated's common stock, has one representative among the nine directors of Associated, has investment banking connections with competing rail carriers, and is represented on the boards of directors of other railroads. For present purposes, we may assume that, by virtue of those connections, the rail carriers' interests will be the banking house's interests in directing the affairs of Associated. But, aside from the proportionately small (9,000 out of 1,000,000 common shares) stock ownership and the place on the board of directors, the Commission found no connection -- either in the origins of the present proposal or in personnel, financing, or otherwise -- between Kuhn, Loeb, and Company and the rail carriers, on the one hand, and Associated, on the other. This contrasts sharply with the circumstances in Transport Co., 36 M.C.C. 61, where a much larger merger of eastern motor carrier operators, sought to be consummated with at least the assistance of Kuhn, Loeb, and Company, was denied approval by the Commission. And, in the present merger, others, not associated, so far as this record shows, with Kuhn, Loeb, and Company or rail carriers, would have substantial blocks of stock. [Footnote 28] We cannot find anything arbitrary or unreasonable in the conclusion that the consolidation, as finally authorized, will not result in Associated's being affiliated with a carrier by rail. It may be added that, under the Commission's order in this case, the relatively close holdings which will emerge from the consolidation cannot be altered without the Commission's approval. And it is the consolidation as approved which is exempted from the operation of the antitrust laws and the prohibition against rail affiliation without approval. Any future chanrobles.com-red
I agree that the standard of the "public interest" which governs mergers and consolidations under § 5 embraces the national transportation policy contained in the Act. That declared policy calls, among other things, for the recognition and preservation of "the inherent advantages" of motor vehicle transportation; the promotion of "safe, adequate, economical, and efficient service," and the fostering of "sound economic conditions in transportation and among the several carriers;" the establishment and maintenance of reasonable charges "without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices" -- to the end of "developing, coordinating, and preserving a national transportation system" which is "adequate to meet" the national needs. 54 Stat. 899. Those standards are specifically referred chanrobles.com-red
But I am of the opinion that the concept of the "public interest," as used in § 5, also embraces the antitrust laws. Those laws extend to carriers as well as to other enterprises. But for the approval of the Commission, the present consolidation would run afoul of the Sherman Act. United States v. Southern Pacific Co., 259 U. S. 214. And the Clayton Act (which makes specific references to common carriers) by § 11 expressly entrusts the Commission with the authority of enforcement of its provisions "where applicable to common carriers." 38 Stat. 734, 15 U.S.C. § 21. Those laws still stand. We thus have a longstanding policy of Congress to subject these common carriers to the antitrust laws. And we should remember that, so far as motor vehicles are concerned, we are dealing with transportation units whose rights of way -- the highways of the country -- have been furnished by the public. These considerations indicate to me that, while the power of Congress to authorize the Commission to lift the ban of the antitrust laws in favor of common carriers is clear (New York Central Securities Corp. v. United States, 287 U. S. 12, 287 U. S. 25-26), administrative authority to replace the competitive system with a cartel should be strictly construed. I would read § 5 of the Transportation Act so as to make for the greatest possible accommodation between the principles of competition and the national transportation policy. The occasions for the exercise of the administrative authority to grant exemptions from the antitrust laws should be closely confined to those where the transportation need is clear. chanrobles.com-red
For these reasons, I would resolve the ambiguities of the Act in favor of the maintenance of free enterprise. If that is too niggardly an interpretation of the Act, Congress can rectify it. But if the Commission is allowed to take the other view, * a pattern of consolidation will have been approved which will allow the cartel, rather than the competitive system, to dominate this field. chanrobles.com-red