Opinion ID: 423893
Heading Depth: 3
Heading Rank: 1

Heading: The Original Panama Canal Act

Text: 47 Prior to 1912, the Interstate Commerce Act did not restrict the merger of two carriers, nor did the ICC regulate water [230 U.S.App.D.C. 113] carriers. The railroads used this freedom to engage in a variety of schemes to drive competing water carriers out of business. One popular tactic was to buy a water carrier, price its service so low that other water carriers were forced to close down, and then raise prices again. 13 48 In 1912, in § 11 of the Panama Canal Act, Congress acted to preserve rail-water competition by barring railroads from owning or controlling competing water carriers: 49 [After July 1, 1914], it shall be unlawful for any railroad company ... to own, lease, operate, control, or have any interest whatsoever (by stock ownership or otherwise, either directly, indirectly, through any holding company, or by stockholders or directors in common, or in any other manner) in any common carrier by water ... with which said railroad ... does or may compete .... 50 Congress gave the ICC jurisdiction to decide the factual question whether actual or potential competition existed: 51 Jurisdiction is hereby conferred on the Interstate Commerce Commission to determine questions of fact as to the competition or possibility of competition, after full hearing, on the application of any railroad company or other carrier. Such application may be filed for the purpose of determining whether any existing service is in violation of this section ... or for the purpose of asking an order to install new service not in conflict with the provisions of this paragraph. The commission may on its own motion ... inquire into the operation of any vessel in use by any railroad ... which has not applied to the commission and had the question of competition ... determined as herein provided. 52 Finally, Congress included a grandfather provision permitting railroads that already owned barge lines to continue to do so if continued ownership was in the public interest and water competition would not be reduced thereby: 53 If the Interstate Commerce Commission shall be of the opinion that any such existing specified service by water ... is being operated in the interest of the public and ... that such extension will neither exclude, prevent, nor reduce competition on the route by water under consideration, the Interstate Commerce Commission may, by order, extend the time during which such service by water may continue to be operated beyond July [1, 1914]. 54 There is no firm evidence, either in the statutory text or the legislative history, that Congress focused on the question of when --before or after the acquisition--the ICC would determine the existence or absence of competition in the event a rail carrier proposed to buy a water carrier. The second paragraph of the statute (quoted above) contemplates an application with regard to existing service, which suggests the possibility of acquiring first and applying for ICC approval later. On the other hand, this language may refer only to service existing at the time the Act was passed. It is likely that Congress gave little thought to new acquisition (though it clearly contemplated new service by existing carriers); its primary focus was on providing for divestiture where past mergers had reduced competition. 14 55 There was also no significant discussion of what the term interest might mean. The debate proceeded almost entirely in terms of the pros and cons of railroad ownership [230 U.S.App.D.C. 114] or control of water carriers. 15 It seemed to be agreed that a railroad could own neither all nor part of the stock of a competing water carrier. 16 But the one attempt in the debate to delineate what other relationships might be permitted ended inconclusively with the sponsor of the railroad provision urging the representative who had pointed out an ambiguity (concerning the same stockholders owning shares in both a railroad and a water carrier) to give that careful study and correct it if he can. 17