Opinion ID: 339800
Heading Depth: 2
Heading Rank: 1

Heading: Antitrust/Shipping Act

Text: 12 By the beginning of the twentieth century Congress had recognized the need for special legislation to prevent monopolies and unlawful restraints. The Interstate Commerce Act of 1887 and the Sherman Anti-Trust Act of 1890 attempted to limit corporate evils such as price-fixing and restrictive agreements. These legislative efforts to prevent abusive practices continued in 1914 with the adoption of the Clayton Act and Federal Trade Commission Act. 13 It was during this same period of increased interest in freedom of competition that Congress undertook an extensive study into the antitrust problems rampant in the maritime industry. The Shipping Act of 1916, now administered by the Federal Maritime Commission, was aimed at abuses in both domestic and foreign shipping caused by secret anticompetitive agreements 12 be tween shippers. Recognizing the beneficial aspects 13 of many agreements, Congress accepted a compromise: in order to participate in cooperative working arrangements shippers would have to submit the arrangements for approval by the federal regulatory agency before implementation. 14 Every common carrier by water, or other person subject to this chapter, shall file immediately with the Commission a true copy, or, if oral, a true and complete memorandum, of every agreement with another such carrier or other person subject to this chapter . . . fixing or regulating transportation rates or fares; giving or receiving special rates, accommodations, or other special privileges or advantages; controlling, regulating, preventing, or destroying competition; pooling or apportioning earnings, losses, or traffic; allotting ports or restricting or otherwise regulating the number and character of sailings between ports; limiting or regulating in any way the volume or character of freight or passenger traffic to be carried; or in any manner providing for an exclusive, preferential, or cooperative working arrangement. The term agreement in this section includes understandings, conferences, and other arrangements. 15 The Commission shall by order, after notice and hearing, disapprove, cancel or modify any agreement, or any modification or cancellation thereof, whether or not previously approved by it, that it finds to be unjustly discriminatory or unfair . . . or to operate to the detriment of the commerce of the United States, or to be contrary to the public interest, or to be in violation of this chapter, and shall approve all other agreements, modifications, or cancellations. . . . 16 Any agreement and any modification or cancellation of any agreement not approved, or disapproved, by the Commission shall be unlawful, and agreements, modifications, and cancellations shall be lawful only when and as long as approved by the Commission; before approval or after disapproval it shall be unlawful to carry out in whole or in part, directly or indirectly, any such agreement, modification, or cancellation; except that tariff rates, fares, and charges, and classifications, rules, and regulations explanatory thereof . . . . 17 46 U.S.C. § 814 (1970). In this way Congress attempted to preserve general principles of competition without eviscerating efforts of the nation's shipping lines to compete internationally. Although the desired agreements increased the prospects for fair competition within the specialized conditions of the shipping industry, they necessarily violated basic principles of general antitrust laws. Congress therefore created an exemption for approved plans: 18 Every agreement, modification, or cancellation lawful under this section . . . shall be excepted from the provisions of sections 1-11 and 15 of Title 15, and amendments and Acts supplementary thereto. 19 46 U.S.C. § 814 (1970). 20 Numerous Supreme Court cases interpreting section 15 have considered the interaction between the Shipping Act exemption and the antitrust laws. Recognizing the expertise of an administrative body especially trained and experienced in the intricate and technical facts and usages of the shipping trade, the Court declared that the Shipping Board, predecessor of the FMC, had primary jurisdiction in a case seeking a Clayton Act injunction against unapproved agreements with alleged antitrust consequences. United States Navigation Co. v. Cunard Steamship Co., 284 U.S. 474, 485, 52 S.Ct. 247, 76 L.Ed. 408 (1932). See also Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576 (1952). This concept of primary jurisdiction was defined more narrowly in Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 86 S.Ct. 781, 15 L.Ed.2d 709 (1966), where the Court stressed the limited nature of the antitrust exemption created by the Shipping Act and, distinguishing Cunard and Far East, held that a suit for treble damages for antitrust violations under an unapproved conference agreement would lie in district court. The Court stressed that since the Commission could approve these agreements only prospectively, awarding treble damages for completed conduct would not interfere with the Commission's future actions. 383 U.S. at 220-22, 86 S.Ct. 781. 21 In addition to these primary jurisdiction cases, suits involving the proper standards for approving section 15 agreements have led the Court to consider applicability of antitrust principles to Shipping Act concerns. In FMC v. Aktiebolage Svenska Amerika Linien, 390 U.S. 238, 88 S.Ct. 1005, 19 L.Ed.2d 1071 (1968), the Court recounted the historical development of the Act and determined that antitrust violations could serve as a basis for disapproving agreements under the contrary to the public interest language added to section 15 in 1961. 14 Congress has, it is true, decided to confer antitrust immunity unless the agreement is found to violate certain statutory standards, but as already indicated, antitrust concepts are intimately involved in the standards Congress chose. 390 U.S. at 245, 88 S.Ct. at 1009. In addition the Court has refused to expand potential antitrust immunity for agreements not clearly covered under section 15's emphasis on on-going arrangements. FMC v. Seatrain Lines, Inc., 411 U.S. 726, 733 & n. 8, 93 S.Ct. 1773, 36 L.Ed.2d 620 (1973) (acquisition-of-assets agreements). 22 These cases reveal the Court's acknowledgment of the delicate balance which Congress struck between the national economic policy of fair competition and the specialized needs of the shipping industry. This balance has become even more precarious when the labor factor also must be fitted into the jurisdictional equation.