Opinion ID: 359862
Heading Depth: 3
Heading Rank: 1

Heading: The Obligation of the FMC under Section 15 to Consider Antitrust Implications

Text: 18 Section 15 of the Shipping Act of 1916 represents a compromise between the established national antitrust policy and the potential public benefits to be derived from allowing ocean carriers to restrict or eliminate competition among themselves. An extensive congressional study of the practices of carrier conferences and their advantages and disadvantages was made in 1914, culminating in what has come to be known as the Alexander Report. H.R.Doc. No. 805, 63d Cong., 2d Sess. (1914). While the report found that there were substantial advantages to conference arrangements, it also identified various abuses in which conferences had engaged. Consequently, it was the recommendation of the report, adopted by Congress, that shipping conferences be allowed to continue only under government regulation. 24 Congress created the United States Shipping Board, predecessor to the FMC, and under Section 15 of the Shipping Act charged it with responsibility for approving all such conference agreements. 25 It was directed to disapprove those agreements which were unjustly discriminatory or unfair, detrimental to United States commerce, or in violation of the Shipping Act, and to approve all others. Only with approval from the Commission would these anticompetitive agreements receive immunity from the antitrust laws. 19 In 1959 Congress undertook an extensive review of the Shipping Act. 26 As a result Section 15 was amended in 1961 to require the Commission, in addition to its consideration of the factors already enumerated in Section 15, to disapprove as well any agreement contrary to the public interest. 27 20 It has been repeatedly held, by the Supreme Court as well as this court, that the Commission's mandate to guard the public interest requires it to consider the antitrust implications of the agreements submitted to it for approval. In FMC v. Svenska Amerika Lines, 390 U.S. 238, 244-245, 88 S.Ct. 1005, 19 L.Ed.2d 1071 (1968), the Supreme Court rejected the argument that because the Shipping Act is designed to grant antitrust immunity to approved contracts, consideration of the antitrust implications of an agreement cannot serve as grounds for disapproval. The Court noted that (b)y its very nature an illegal restraint of trade is in some ways 'contrary to the public interest,'  Id. at 244, 88 S.Ct. at 1009, and it approved the strict antitrust standard applied by the Commission in that case 28 as giv(ing) understandable content to the broad statutory concept of 'the public interest.'  Id. at 244, 88 S.Ct. at 1009. In Volkswagenwerk Aktiengesellschaft v. FMC, 390 U.S. 261, 274 & n.21, 88 S.Ct. 929, 936, 19 L.Ed.2d 1090 (1968), the Supreme Court reiterated its holding that the Commission is required under Section 15 to consider antitrust implications, quoting with approval this court's statement in an earlier case 29 that (t)he condition upon which such authority (to grant exemptions from the antitrust laws) is granted is that the agency entrusted with the duty to protect the public interest scrutinize the agreement to make sure that the conduct thus legalized does not invade the prohibitions of the anti-trust laws any more than is necessary to serve the purposes of the regulatory statute. And finally, just this Term, the Supreme Court again reaffirmed the obligation of the FMC to examine the antitrust implications of all Section 15 agreements. FMC v. Pacific Maritime Ass'n, 435 U.S. 40, 53-54, 98 S.Ct. 927, 55 L.Ed.2d 96 (1978). 21 Under the Shipping Act, then, the FMC has the responsibility to consider carefully the antitrust aspects of all agreements submitted for its approval. While our task as a reviewing court is emphatically not to substitute our judgment as to the public interest for that reached by the Commission, we are charged under the Administrative Procedure Act with ensuring that the Commission has complied with its statutory mandate and considered the relevent factors set forth in the statute in reaching its decision. See Overton Park, supra, 401 U.S. at 415-416, 91 S.Ct. 814; Ethyl Corp. v. EPA, supra, 176 U.S.App.D.C. at 405-409, 541 F.2d at 33-37. In the case of Agreement 9902-3, the Commission has clearly failed to do so, for it neglected to consider adequately an extremely relevant factor: the antitrust implications of the agreement it approved.