Opinion ID: 391779
Heading Depth: 1
Heading Rank: 3

Heading: the antitrust enforcement responsibilities of the fcc

Text: 35 More than ten years ago this court made clear that competitive considerations are an important element of the 'public interest'  standard which governs federal agency decisions. Northern Natural Gas Co. v. FPC, 399 F.2d 953, 961 (D.C.Cir.1968). We therefore required such agencies to make findings related to the pertinent antitrust policies, draw conclusions from the findings, and weigh these conclusions along with other important public interest considerations. Id. at 961. 36 No party to this proceeding denies that the FCC must make the appropriate findings and conclusions. Western Union and American Satellite, however, urge us to adopt a more demanding standard for the enforcement by the FCC of the Clayton Act. They argue that under Section 11 of the Clayton Act, 15 U.S.C. § 21 (1976), the FCC has an unwaivable and unwavering obligation to enforce the Clayton Act, and that this obligation cannot be limited absent total frustration of the FCC's regulatory scheme   . 46 In other words, they argue that if a proposed entry would violate the Clayton Act the FCC must reject the proposal, no matter how important it might otherwise be to the public interest. 47 The FCC employed a different legal standard in reaching the decision under review: 37 (T)he Sherman and Clayton Acts assume that the public interest is served by competition, in and of itself. Under the statutory fabric of regulation and of the Communications Act, however, we are required to decide where the public interest lies, and competition is but one element of a determination of the public interest.    38 SBS Decision, 62 FCC2d at 1069 P 204, JA 1592. In other words, the FCC asserts that it has prosecutorial discretion with respect to antitrust enforcement. In this contention the FCC is joined not only by SBS, but also by the Department of Justice and the FTC. 39 The position urged by American Satellite and Western Union would seem to be foreclosed by our recent statement in Home Box Office, Inc. v. FCC, 567 F.2d 9, 40 n.67 (D.C.Cir.), cert. denied, 434 U.S. 829, 98 S.Ct. 829, 54 L.Ed.2d 89 (1977): We do not agree with the suggestion of some petitioners that the (Federal Communications) Commission must demonstrate that the means it has chosen have the least impact on competition consistent with achievement of the Commission's purposes.    Anticompetitive factors are also only one of a number of factors to be considered under the Communications Act   . (Citations omitted.) However, as the original panel opinion pointed out, 48 neither Home Box Office nor any other reported decision of this or the Supreme Court has specifically addressed the responsibility of the FCC under Section 11 of the Clayton Act. 49 We do so now, and find the interpretation suggested by Western Union and American Satellite unpersuasive.
40 Section 11 of the Clayton Act, 15 U.S.C. § 21 (1976), 50 provides in subsection (a) that authority to enforce certain substantive provisions of the Clayton Act, including Section 7, 15 U.S.C. § 18 (1976), is vested in the FCC where applicable to common carriers engaged in wire or radio communication or radio transmission of energy(.) Identical authority is vested in the Interstate Commerce Commission, the Civil Aeronautics Board, and the Federal Reserve Board with respect to their regulatory jurisdictions, and in the FTC with respect to other lines of commerce. 51 Subsection (b) provides: 41 Whenever the Commission or Board vested with jurisdiction thereof shall have reason to believe that any person is violating or has violated any of the (enumerated) provisions   , it shall issue and serve upon such person and the Attorney General a complaint   .    42 (Emphasis added.) The remainder of the subsection spells out the procedures to be followed. 52 Western Union and American Satellite argue that the emphasized words of the statute, whenever, shall, and shall, must be interpreted to mean that the Commission has no discretion in the matter; that it must take positive action when it has reason to believe that Section 7 has been violated. 53 43 This is by no means a necessary reading of the statute. The grant of enforcement authority in subsection (a) contains no mandatory language. Such language is used only in subsection (b), the subsection devoted to procedural protections. One plausible reading of the statute is that the Commission has discretion with respect to whether it will enforce the Clayton Act, 54 but that it has no discretion with respect to the procedural protections to be afforded once the decision to enforce has been made. 44 Contrary to the assertion of Western Union and American Satellite, this reading of the Act does not render the section superfluous. Rather, the section makes three changes in the law: it displaces the FTC by the FCC as the enforcement agent of the Clayton Act within the regulatory jurisdiction of the latter, it gives the FCC additional authority for enforcement of its antitrust responsibilities, and it protects the regulated businesses by prescribing their procedural rights during a Clayton Act enforcement proceeding. In the light of the legislative history, interpretation by the Supreme Court, and purpose of the statute, we find this interpretation compelling.
45 Both sides in this controversy have sought, and purport to have found, support for their positions in the legislative history of Section 11 of the Clayton Act. Our review of that history reveals nothing conclusive. However, we can state with assurance that nothing in the legislative history establishes any clear intention on the part of Congress to make the FCC's Clayton Act enforcement mandatory, whereas a great deal in that history indicates the contrary. 46 1. Original passage of the Clayton Act. The Clayton Act and the Federal Trade Commission Act, passed within a few weeks of each other in 1914, both included grants of enforcement authority to the FTC. 55 During much of the time the Clayton Act was debated the enforcement provisions of the two bills were identical. In fact, the Senate committee that reported the Clayton Act proposed language in the bill stipulating that, once a complaint had issued, thereupon such proceedings shall be had as are provided for in section 5 of the (FTC) act. 56 Section 5 of the FTC bill then provided in relevant part: 47 Whenever the commission    shall have reason to believe that any person    is violating any of the provisions of    this act it shall issue and serve upon such person    a complaint   .    57 48 Senator Newlands, the principal sponsor of the FTC bill and Chairman of the Interstate Commerce Committee, interpreted the bill to mean that (a)nyone who felt himself injured    could, of course, apply to this commission. It would then be in its discretion as to whether it would grant a hearing. 58 Since the FTC bill had not yet been passed, however, the committee decided it would be inappropriate to refer specifically to that Act in the Clayton Act. It therefore substituted for the formulation quoted above the actual language of Section 5 of the FTC bill as it then existed. 59 This language was ultimately adopted as Section 11(b) of the Clayton Act and is with us still. 49 Subsequently, however, the language of Section 5 of the FTC bill was amended to make it clear that the FTC would have the discretion not to institute enforcement proceedings in unimportant cases. 60 The amendment added new language to the grant of authority, here italicized: 50 Whenever the commission shall have reason to believe that any such person    has been or is using any unfair method of competition in commerce, and if it shall appear to the commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person    a complaint   .    51 See H.R.Rep. No. 1142, 63d Cong., 2d Sess. 3 (1914). In this form the FTC bill was passed, and is unchanged today. 61 There is no indication in the legislative history of the Clayton Act that that Act was intended to vest any less discretion in its enforcement agencies than the FTC Act vested in the FTC. On the contrary, the express purpose of using the language as it was at the time of Section 5 of the FTC bill was to ensure that the enforcement provisions of the Clayton and FTC Acts would be exactly the same. 62 In order to carry out that intention, we must interpret Section 11 of the Clayton Act as vesting prosecutorial discretion in its enforcement agencies. 52 2. The Communications Act of 1934. Section 11 of the Clayton Act was amended by Section 602(d) of the Communications Act of 1934 63 to include the FCC as one of the Clayton Act enforcement agencies. This amendment, listed among the Miscellaneous Provisions of the Communications Act, was plainly not intended to alter the discretion of the enforcement agencies under Section 11; rather, its sole purpose was to allocate Clayton Act enforcement authority over the communications industry to the newly-created FCC. Both the Senate and the House Reports' sole explanation of Section 602(d) was:The latter section also makes certain changes in other law, including the Clayton Act, made necessary by the setting up of the new commission and conferring upon it jurisdiction over communications. 64 53 3. Later developments. Since the passage of the Communications Act of 1934, the enforcement agencies other than the FTC have seldom attempted to enforce the Act. Congress has been informed of this lack of enforcement, 65 and has never expressed any dissatisfaction. In 1938 bills were introduced in both houses of Congress that would have amended Section 313 of the Communications Act by adding a new paragraph: 54 It is hereby declared to be the intention and policy of the Congress to prevent monopoly and to encourage competition in direct foreign radio telegraph communication; and for the purposes of this act, in considering application for licenses   , the Federal Communications Commission shall consider competition in such communication to be in the public interest. 55 S. 3875, 75th Cong., 3d Sess. (1938); H.R. 10348, 75th Cong., 3d Sess. (1938). These bills were introduced in response to the holding of this court in Mackay Radio and Telegraph Co. v. FCC, 97 F.2d 641, 643 (D.C.Cir.1938), that the public interest standard of the Act does not apply to the radiotelegraph business the policy of free competition   . 66 Hearings on the bills were held, but no report ever issued; the bills were not adopted. Senator White, a major participant in the hearings, expressed his view of the policy of Congress toward competition in the communications industry: I would say that this encouragement of competition and the prevention of monopoly are only one of the elements or one of the factors that the Commission would take into consideration in passing on an application. 67 56 In 1959 an amendment to Section 11 was introduced that would have made cease and desist orders under that section final. 68 In supporting this amendment Congressman Patman remarked: This bill will not require better enforcement of the Clayton antitrust law, but it will make it possible for the Federal Trade Commission better to enforce the law if it cares to do so. 69 57 Congressional inaction and statements by individual congressmen are not strong evidence of congressional intention, and if there were evidence to the contrary we would disregard them. However, this legislative history, meager as it is, does indicate that Congress did not make the FCC's Clayton Act enforcement authority mandatory when it had the opportunity to do so. It would not be the place of this court to impose such mandatory responsibility without congressional authorization, even if we thought it desirable.
58 The Supreme Court thoroughly addressed the relation between the public interest determination and the antitrust policy of the United States for the first time in McLean Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370, 88 L.Ed. 544 (1944). There the Court held that the ICC's responsibility to enforce the antitrust laws is but one part of its overall public interest determination: 59 In short, the Commission must estimate the scope and appraise the effects of the curtailment of competition which will result from the proposed consolidation and consider them along with the advantages of improved service, safer operation, lower costs, etc., to determine whether the consolidation will assist in effectuating the overall transportation policy.    60 Id. at 87, 64 S.Ct. at 381. 70 The Court treated the issue similarly in Seaboard Air Lines R. Co. v. United States, 382 U.S. 154, 86 S.Ct. 277, 15 L.Ed.2d 223 (1965), a case that specifically addressed the ICC's responsibilities under Section 11 of the Clayton Act. The ICC had approved a railroad merger; a three-judge District Court reversed and remanded for a determination of whether the merger violated Section 7 of the Clayton Act. The Supreme Court reversed the lower court, reminding it that the ICC was obligated to determine whether the proposed merger is in the public interest and that, if it is, (i)t matters not that the merger might otherwise violate the antitrust laws(.) Id. at 156-157, 86 S.Ct. at 278. 71 61 In the communications field the Court has followed a parallel course. In FCC v. RCA Communications, Inc., 346 U.S. 86, 73 S.Ct. 998, 97 L.Ed. 1400 (1953), the Court squarely rejected the theory that Clayton Act antitrust principles govern the antitrust component of the public interest determination. The Court emphasized that the competitive consequences of proposals before the FCC must be read in the light of the special considerations that have influenced Congress to make specific provision for the particular industry. Id. at 98, 73 S.Ct. at 1006. 62 American Satellite and Western Union seek support for their view in language in Denver & Rio Grande Western Railroad v. United States, 387 U.S. 485, 87 S.Ct. 1754, 18 L.Ed.2d 905 (1967). The Denver case concerned ICC approval of the issuance of a large block of stock in a railroad express company to a major bus company. The opinion said that the agencies listed in Section 11 of the Clayton Act have an affirmative duty    to enforce the Act's provisions. Id. at 496 n.7, 87 S.Ct. at 1761. The Court also said that the obligation to enforce the Clayton Act is the rule, id. at 497, 87 S.Ct. at 1761, and the Clayton Act is prohibitive, and imposes a positive obligation upon the (agency) to act. Id. at 502, 87 S.Ct. at 1764. American Satellite and Western Union interpret Denver to mean that an enforcing agency under Section 11 must disapprove any proposal that violates the Clayton Act, no matter how strong the public interest in the proposed service might otherwise be. 63 This interpretation of the Denver opinion stretches its words too far. It must be remembered that the question decided by the Court in Denver was whether the Interstate Commerce Commission complied with its statutory responsibilities under § 20a of the Interstate Commerce Act when it approved without consideration of control or anticompetitive consequences the proposed stock issuance. Id. at 487, 87 S.Ct. at 1756 (emphasis added; footnote omitted). In reversing the ICC the Court required at least some degree of consideration of control and anticompetitive consequences. Id. at 492, 87 S.Ct. at 1759 (emphasis added). Any contention that Clayton Act considerations must outweigh other aspects of the public interest is belied by the Court's statements that the Commission is required to consider( )    all important consequences including anticompetitive effects, id. at 492, 87 S.Ct. at 1759, that the Commission has the responsibility to weigh anticompetitive consequences, id. at 494, 87 S.Ct. at 1760, and that the Commission is, of course, required to consider anticompetitive issues under the public interest standard, id. at 501, 87 S.Ct. at 1764. 72 The Denver decision stands for the principle, not different from this court's holding in Northern Natural Gas, that the agency is required to consider anticompetitive consequences as one part of its public interest calculus. Neither Denver nor any other authority we have found makes the antitrust component of that calculus conclusive.
64 A holding that the FCC's enforcement of the Clayton Act is mandatory would clash with decisions holding that the FTC and the ICC have prosecutorial discretion in enforcing that Act, 73 since the enforcement authority of all three agencies derives from Section 11. Moreover, it is well established that the Department of Justice has prosecutorial discretion with reference to criminal laws of the United States. 74 These include the Clayton and Sherman Acts, despite seemingly mandatory language in those statutes. 75 There is no reason we can discern that the FCC, alone of these agencies, should retain no discretion over its antitrust enforcement actions. 76 65 More fundamentally, the inflexible interpretation urged by American Satellite and Western Union runs counter to the purpose of industry regulation. As this court has observed before: The whole theory of licensing and regulation by government agencies is based on the belief that competition cannot be trusted to do the job of regulation in that particular industry which competition does in other sectors of the economy. Hawaiian Telephone Co. v. FCC, 498 F.2d 771, 777 (D.C.Cir.1974). 77 Since the basic goal of direct governmental regulation through administrative bodies and the goal of indirect governmental regulation in the form of antitrust law is the same to achieve the most efficient allocation of resources possible, Northern Natural Gas Co. v. FCC, supra, 399 F.2d at 959, we have insisted that the agencies consider antitrust policy as an important part of their public interest calculus. But the agencies are not strictly bound by the dictates of (the antitrust) laws, id. at 961; rather, they are entrusted with the responsibility to determine when and to what extent the public interest would be served by competition in the industry. 66 The agency's determination about the proper role of competitive forces in an industry must therefore be based, not exclusively on the letter of the antitrust laws, but also on the special considerations of the particular industry. 78 As the Supreme Court has said, resolution of the sometimes-conflicting public interest considerations is a complex task which requires extensive facilities, expert judgment and considerable knowledge of the    industry. Congress left that task to the Commission   . McLean Trucking Co. v. United States, supra, 321 U.S. at 87, 64 S.Ct. at 381. 79 We therefore reject American Satellite's and Western Union's attempt to constrict the FCC's discretion within the parameters of the antitrust laws. We hold that the requirements of Section 11 of the Clayton Act and Section 309(a) of the Communications Act are satisfied when the Commission seriously considers the antitrust consequences of a proposal and weighs those consequences with other public interest factors. 67