Opinion ID: 305731
Heading Depth: 1
Heading Rank: 6

Heading: the coal industry

Text: 24 The evidence showed that coal had been a dying industry prior to the 1950's. During the post-World War II period (starting in 1947) the number of coal companies declined considerably, and there has been a more gradual decline in the number of the larger coal companies. 25 During the period from 1948 to 1958 the coal industry was on the decline. However, from 1959 forward there has been a considerable upsurge, notwithstanding that domestic consumption declined, railroad use declined and general manufacturing use of coal declined; consumption of coal in the electrical utility industry increased markedly. This increase in consumption (by electrical utilities) was considerable-86 million tons in 1947 to 272 million tons in 1967. This phenomenal increase in sales to utilities has been attributable to more efficient coal production methods, including mining techniques and general mechanization. Transportation methods have also improved, and the net result has been that the coal industry has been able to compete successfully with gas and other energy sources for use in the generating plants. All of this is noted in the findings of the Commission which declares that by the year 2000 it is expected that coal consumption by electric utilities will reach 755 million tons. 4 26 The Commission has noted that despite the expansion the market has tended to become concentrated: 27 Notwithstanding the ever growing demand for, and the concomitant expansion of production of, coal, the industry is experiencing a steady trend toward rising concentration. In 1947, there were 68 firms producing more than one million tons of coal annually. In 1947, their share of the domestic coal production amounted to 48 percent; by 1967, it reached 70 percent. During the period 1954 to 1967, the top four companies increased their share of production from 15.8 percent to 29.2 percent. While during the same period the market expanded by 40.9 percent, the share of the top four companies grew by 160.5 percent. Further, the top four firms accounted for 63 percent of the total market expansion. This trend, unless halted, foreshadows ominous developments in the coal industry, with production and sale of coal concentrating in fewer and fewer hands. Cf. United States v. Von's Grocery Co., 384 U.S. 270, 273, 274, 276-[277, 86 S.Ct. 1478, 16 L.Ed.2d 555] (1966). 28 One noteworthy fact is that the coal reserves are being bought up by the oil companies and other large corporations, including Standard of Ohio, Gulf Oil, Bethlehem Steel, General Dynamics, U.S. Steel and Republic Steel. For example, the second largest coal company, Consolidated, is owned by Continental Oil Company. The chart appended hereto shows this ownership in relation to the individual and total production of the several producers which exceeded three million tons in 1967. 29 It is thus apparent that the coal industry has changed in many respects in recent years. First of all, Peabody's growth has been remarkable. It has, in a ten-year period, from 1955, increased its sales from 19 million tons to 60 million tons per year. On this question, the Commission found that of the increase in domestic production in this ten-year period of 88 million tons, Peabody accounted for 45 percent of the increase. In 1965 Peabody accounted for 90 percent of the total domestic increase. 30 The total market share of the four largest firms, according to the findings of the Commission which are supported by the evidence, rose from 15.8 percent in 1954 to 29.2 percent in 1967, and the top eight companies increased their market share from 23.6 percent to 39.7 percent in the same period. Both the top four and top eight companies experienced phenomenal disproportionate growth in this period. 31 A number of factors militated against new entry into the coal business. The fact that the big demand was for consumption by utility companies involving long-term contract, extensive reserves and ready ability to deliver all contributed. Thus, experience, know-how and equipment are essentials. 32 There is, of course, no lack of demand for coal. The oil companies are, which has been shown, likely purchasers of coal reserves, but not necessarily with a view to entering the coal business, although some of them have done so. Rather, the oil companies are concerned with a possible source of petroleum and petroleum products. Therefore, the coal market as such, although perhaps not concentrated at the time of trial, is headed in that direction. As the Commission points out, it seems inevitable that the market shares will, to an increasing extent, go to the top producers in the industry not only because of their reserves but also because of their productive capacities, transportation facilities, expertise in extraction and marketing and, of course, because of their great resources which are shown to be essential to the coal business in it present and foreseeable future form. 33 Kennecott tries to turn these facts to its advantage, pointing out that substantial concerns like Continental Oil Company, Occidental Petroleum, U.S. Steel, Gulf Oil and Standard Oil of Ohio operate as a stabilizing factor in the competition picture and furnish some assurance that Peabody and Kennecott will not simply because of Kennecott's resources make any great impact.