Opinion ID: 303595
Heading Depth: 2
Heading Rank: 1

Heading: Congressional Action 1914 to 1916.

Text: 38 Besides the specific language of Section 15 itself, the legislative history accompanying the Shipping Act of 1916 lends support to the view that Congress did not intend to vest the Federal Maritime Commission with jurisdiction over the type of agreement involved in the case at bar. The work of the House Committee on the Merchant Marine and Fisheries of the 63d Congress, under the direction of its Chairman, Representative J. W. Alexander, formed the basis for the enactment of the Shipping Act. As the Supreme Court described it, [this Committee] undertook an exhaustive inquiry into the practices of shipping conferences. The work of this Committee is set forth in two volumes of hearings, a volume of diplomatic and consular reports, and a fourth volume containing the Committee's report, known as the Alexander Report. 17 The Alexander Report includes a questionnaire sent to the steamship lines engaged in the American foreign trade, inquiring into cooperative working arrangements with other lines and railroads. 18 As the Report itself summarizes: 39 The facts contained in the foregoing report show that it is 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 understandings, which have for their principal purpose the regulation of competition through either (1) the fixing or regulating 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 understandings, involving practically all the regular steamship lines operating on nearly every American foreign trade route, are described in the foregoing report. . . . The report also presents the economic advantages and disadvantages of steamship agreements and conference arrangements as presented to the Committee by steamship line representatives and the exporting and importing interests of the United States . . . 19 40 As the foregoing indicates, the subject of the Committee's investigations was agreements, conference arrangements, [and] gentlemen's understandings, all of which envision the continued existence of the parties and their participation in such agreements (e. g., in fixing rates, apportioning traffic, pooling earnings, etc.). 20 There is no intention on the part of the Committee to include, nor is there any language in fact so including, the type of arrangements involved in the case at bar-the acquisition of all the assets of one steamship line by another. The Committee employed terms other than the word agreement to refer to transactions not of a continuing nature: 41 The numerous methods of controlling competition between water carriers in the domestic trade, referred to in the preceding pages, may be grouped under three headings, viz., (1) control through acquisition of water lines or the ownership of accessories to the lines; (2) control through agreements or understandings; and (3) control through special practices. 21 42 It would be superfluous, then, for the Committee to have made this distinction if the Commission were correct in asserting that the Committee used the term agreement to encompass transactions other than those constituting cooperative working arrangements. 22 43 The Committee recommended against a complete prohibition of cooperative working arrangements among steamship lines since it found that, in the absence of such agreements, rate wars would occur which would have the ultimate effect of eliminating the weaker lines through failure or consolidation. 23 44 In order to forestall the outbreak of rate wars, the Committee concluded that the several [steamship] lines in any given trade [should be permitted] to cooperate through some form of rate and pooling arrangement under Government supervision and control. 24 The Committee went on, however, to find that [w]hile admitting their many advantages, the Committee is not disposed to recognize steamship agreements and conferences, unless the same are brought under some form of effective government supervision. 25 To this end, it urged, inter alia, that parties to such agreements be required to file for approval with the appropriate governmental authorities a copy of all agreements with other lines engaged directly or indirectly in the American trade or with American shippers, railroads or other transportation agencies. 26 45 The clear tenor of the Committee's analysis, the problems it faced and the solution it proposed, all related to agreements of a continuing nature. Section 15 embodied the Committee's solution; the arrangements it had considered were to be placed under government supervision and control. The Committee had neither sought information nor had discussion on ship sale agreements. They were neither part of the problem nor part of the solution. 46 Congress, in enacting the Shipping Act of 1916, followed the basic recommendations of the House Committee on the Merchant Marine and Fisheries as contained in the Alexander Report. 27 It is clear, then, that Congress intended to tolerate only the minimum anticompetitive behavior necessary to preserve an essentially competitive structure in the maritime industry by striving to avoid either the failure or consolidation of independent steamship lines by the method of government supervision of anticompetitive working arrangements. While Congress recognized that in order to accomplish this result a measure of competition might have to be sacrificed, such as permitting agreement on rates or pooling of earnings, it did not intend thereby to remove all effective competition or to have those agreements permitted under Section 15 of the Shipping Act be considered as permanent in every instance. Congress preserved ample room for competition in a variety of areas other than rates, especially those which relate to the quality of service provided by the various steamship lines. 28 Congress also provided that the agreements permitted under Section 15, none of which are invariably permanent, may be cancelled or modified by the Commission in the event changing circumstances warrant. 47