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

Heading: Court Decisions.

Text: 68 There are two principal cases cited by the parties, one supporting the Commission's interpretation of Section 15, the other the Department of Justice's view. The latter, United States v. R. J. Reynolds Tobacco Company, 43 involved the question of whether the FMC has authority to exempt shipping industry mergers from the antitrust laws. The court observed in regard to the legislative history accompanying Section 15: 69 Consistently throughout the [Alexander] Report, mergers and other corporate reorganizations, when occasionally mentioned, are referred to by the terms consolidation by ownership and control through acquisition or variations thereof. Never is the word agreement used in the Report to refer to a merger agreement. It is clear that the Alexander Committee distinguished conceptually between agreements in the sense of ongoing, cooperative agreements and agreements of consolidation or acquisition (of which merger agreements are a form). . . . 70 It must be assumed that the Alexander Committee knew that acquisitions of water lines and ownership of accessories to such lines were the products of contracts or agreements, as that term is commonly understood. . . . 71 [The court], therefore, reach[es] the unavoidable conclusion that agreement is a term of art, a word of technical legal significance, as used by the Alexander Committee and Congress in enacting Section 15 of the Shipping Act. 44 72 The court thus concluded that mergers and other forms of corporate reorganization were beyond the protection from the antitrust laws afforded by Section 15. 73 This contrasts with the two-to-one decision of the Ninth Circuit in Matson Navigation Co. v. FMC, 45 relied upon by the Commission here. Matson involved the issue of FMC authority to approve an agreement for the proposed merger or consolidation of three steamship lines. The court found that mergers were included within the meaning of the term agreement as employed in Section 15 of the Shipping Act. However, the Matson court did not engage in the careful analysis of the legislative history which characterizes Judge Garth's opinion in Reynolds Tobacco, supra. Instead, it simply contented itself with saying, after quoting from the Supreme Court's decision in Volkswagenwerk v. FMC: 46 74 While Volkswagenwerk did not deal with a merger agreement, its holding applies to such agreements with rational force. The direct and destructive impact upon competition which may result from a merger renders it the kind of arrangement as to which expert scrutiny most clearly is to be desired. 75 [The court] conclude[s] that the Commission has jurisdiction under Sec. 15 to approve merger agreements. 47 76 We respectfully disagree with the majority in the Ninth Circuit, find Judge Carter's dissent persuasive, and submit that reliance on Volkswagenwerk, supra, by the Commission here and in Matson is misplaced. 48 Despite the Court's statement in Volkswagenwerk that [n]othing in the legislative history suggests that Congress, in enacting Sec. 15 of the Act, meant to do less than follow this recommendation of the Alexander Report [that all 'agreements' be filed for approval with the FMC] and subject to the scrutiny of a specialized government agency the myriad of restrictive agreements in the maritime industry, 49 the reference to a myriad of restrictive agreements does not include agreements other than those of a continuing nature. The myriad includes such diverse agreements as pooling of earnings, losses, or traffic; fixing or regulating rates; allotting ports; and the like. Furthermore, the agreement at issue in Volkswagenwerk itself was a cooperative working arrangement of a continuing nature, entered into by an association of shipping industry employers subject to the Shipping Act, for the purpose of allocating among themselves a common assessment for a union trust fund. 77 The legislative history discussed above, illuminated by Judge Garth's analysis in Reynolds Tobacco, supra, makes clear that agreements as used by the Alexander Committee embraced the type involved in Volkswagenwerk, but did not include mergers, acquisitions, and the like, such as the sale of all assets in the case at bar.