Opinion ID: 391779
Heading Depth: 1
Heading Rank: 5

Heading: the reasonableness of the commission's procedures

Text: 83 All parties to this appeal agree that some sort of hearing was needed to investigate the antitrust consequences of the SBS entry; the disputed question is what particular kind of hearing was needed. The FCC, on two different occasions, invited interested parties to submit whatever written material they wanted the Commission to consider, and on one occasion heard oral argument en banc on the antitrust issues of the SBS venture. All of the business parties to this case, and others, participated in the argument, 91 and the submitted materials were voluminous. Appellants, however, argue that notice, comment, and oral argument were insufficient; they demand a trial-type evidentiary hearing, complete with discovery, witnesses, and cross-examination. No one can predict how long such a proceeding would take; at the least, it would surely take several months, and it would be more likely to take over a year. The Commission decided not to conduct an evidentiary hearing because it concluded that the benefits of such a hearing would be outweighed by the delay and attendant costs. 92 84 In evaluating that judgment we observe at the outset that the FCC has consistently acted without evidentiary hearings during the course of the domestic satellite communications decisions. Each of the appellants has been either a proponent or a beneficiary of this policy. 93 Throughout the proceedings the FCC has emphasized the importance of getting satellite communications systems under way without procedural delay. This court has approved this FCC policy when it was challenged before. Network Project v. FCC, supra, 511 F.2d 786. In view of this consistent policy, suggested by the Department of Justice, 94 adopted by the FCC, 95 and affirmed by this court, 96 appellants bear a heavy burden of explaining why a change is in order now. 97
85 As the FCC has pointed out, 98 the domestic satellite communications industry is in its highly risky and experimental phase. The field is rapidly changing technologically and economically. As a result the Commission's determinations must necessarily depend to a greater extent upon policy judgments and less upon purely factual analysis. Industrial Union Department, AFL-CIO, v. Hodgson, 499 F.2d 467, 474 (D.C.Cir.1974). As the Supreme Court has said, where agency decisions are of a judgmental or predictive nature, FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775, 813, 98 S.Ct. 2096, 2121, 56 L.Ed.2d 697 (1978), complete factual support in the record for the Commission's judgment or prediction is not possible or required; 'a forecast of the direction in which future public interest lies necessarily involves deductions based on the expert knowledge of the agency,'   . Id. at 814, 98 S.Ct. at 2122. 86 Only a few years ago there were no firms in the industry; soon there will be half a dozen; in ten years there might be many more. On the other hand, technological developments and resultant economies of scale might make the FCC's present policy of limited open entry obsolete; conceivably there might emerge a natural monopoly. We are in similar ignorance about the extent of the demand for satellite services: it might be immense or it might be limited to a relatively small class of specialized users. We do not know, and months of hearings and witnesses and cross-examinations will not enable us to divine, the future course of the industry. 87 Even the economist solicited by Western Union as an expert witness to urge further hearings admitted in his affidavit that we are not dealing with a static or settled product line, like cement or steel or even transportation service, but with a rolling, sometimes galloping, technology, creating new markets and new ways to serve old ones as it goes along. JA 1489. The best this expert could claim was that at any given time the 'reasonable interchangeability' of services can be identified and 'relevant submarkets' delineated   . Id. (emphasis added). But the FCC's decision cannot be based on competitive conditions at any given time; it must be based on a reasonable prediction of future conditions. The FCC has concluded that the attempt to resolve these speculative matters through adversary proceedings would be futile. We believe that conclusion is reasonable. 88 Merely stating the problem exposes the formidable obstacles to obtaining probative evidence in a case such as the one at bar. 99 The first step is to decide what markets or submarkets exist that might be affected by the joint venture. Essentially, the appellants attempt to identify a communications submarket that does not yet exist, made up of data processing customers, large users, or some other subgroup. Once an industry pattern emerges it will become possible to talk of reasonable interchangeability and cross-elasticity and the other economic concepts that are used to define relevant markets and submarkets. In the meantime, the Commission can do little more than analyze suggested submarkets and make an informed guess about their future characteristics. This the Commission has done. We accept its judgment that expert witnesses and cross-examination would not add appreciably to its already-expert knowledge of the field. 89 But even if it were possible to delineate relevant markets and submarkets more precisely, there would remain the difficulty of predicting whether, if the SBS venture were disallowed, IBM and Comsat would enter separately, or whether the presence of one of them on the fringes of the industry would exert a pro-competitive effect. Appellants seek to procure testimony from IBM officers about their intentions, and from actual and potential competitors about their reactions to hypothetical competitive situations. Unfortunately, such subjective evidence of the intentions and perceptions of the companies involved is often misleading and unreliable. Even disregarding the ever-present tendency of interested witnesses to adapt the facts to their courtroom strategy, corporate decisionmaking processes are too decentralized and too much the product of compromise to yield clear answers about corporate intentions. 90 This difficulty is greatest when the subject of the inquiry is purely hypothetical: What would IBM have done if the SBS venture had not been available? How would RCA and Western Union behave competitively if IBM or Comsat were waiting in the wings? The uncertainty of subjective evidence on such questions has led observers and courts to suggest principal reliance on objective, not subjective, evidence. 100 As the Supreme Court has said, Potential competition cannot be put to a subjective test. It is not 'susceptible of a ready and precise answer.'  101 In view of this, the suggested cross-examination of IBM and other corporate officers might well be considered futile. We cannot fault the FCC for making such a judgment. 91 Moreover, we observe that the basic information needed for the SBS Decision was in the possession of the FCC. 102 The hard facts concern the economic power and capability of IBM and Comsat, the nature of the proposed services, the characteristics of the competition, and the capacity of IBM and Comsat to enter the field. All else is inference or speculation. 92 Finally, even though the FCC concluded, based on the limited available information, that Comsat and IBM were unlikely both to enter the field separately, it analyzed the merits of the venture on the assumption that the anticompetitive effects charged by the opposing parties would occur. 103 Even granting that assumption, the FCC concluded that the technological advance, efficient operation, and competitive nudge to AT&T that the SBS venture offers would outweigh the assumed harms. 104 There remained no material issue of disputed fact on which to hold an evidentiary hearing, because the FCC was able to conclude that the SBS license should be approved even if the appellants are correct in their factual speculations. An evidentiary hearing would be a mere waste of time, since it would not aid in, nor change, the result. 105 93 Appellants challenge the FCC's use of this assumption, quoting the Supreme Court's statement in United States v. Third National Bank, 390 U.S. 171, 183, 88 S.Ct. 882, 890, 19 L.Ed.2d 1015 (1968): 94 Because the District Court erroneously concluded that the merger would not tend to lessen competition, its conclusion upon weighing the competitive effect against the asserted benefits to the community is suspect. To weigh adequately one of these factors against the other requires a proper conclusion as to each.    95 Appellants infer from this statement that a court or agency may not conduct a balancing of competing factors without first reaching conclusive factual findings based on an evidentiary hearing. We do not read Third National Bank that way. In Third National Bank the District Court erred in its assessment of both competitive consequences of the challenged merger and the public benefits resulting from it. In contrast, in this case we expressly affirm the FCC's substantive conclusions regarding the competitive consequences and public benefits from the SBS venture. 106 Moreover, the hypothetical balance struck here by the FCC was not based on its actual conclusions about the competitive consequences of the SBS venture, but rather on the assumed consequences posed by appellants. The ultimate balance reached is therefore not subject to the same suspicion as was that reached by the District Court in Third National Bank. 107 96 The position urged by appellants is directly contrary to the expressed intent of Congress that, in its pre-grant procedures, the FCC should be guided by rules applicable to a motion for summary judgment   . S.Rep. No. 690, 86th Cong., 1st Sess. 4 (1959). In deciding whether to grant summary judgment a court is not required to reach full factual findings on every issue; if, granting the inferences and assumptions of the party opposing summary judgment, the moving party is entitled to judgment as a matter of law, then the court must grant the motion. The FCC did as much here.
97 Ever since the decision in Domsat II the FCC has designed its procedures to minimize delay in developing the domestic satellite communications industry. This court has specifically approved that approach. Network Project v. FCC, supra, 511 F.2d at 797 n.13. In this dynamic and technologically innovative industry, a proposed venture may become obsolete in just a few years. Even without regulatory delay, a satellite firm is faced with the daunting prospect of time-consuming research and construction, which entail advance planning and risky lead time and which may lead to naught. To delay a proposed project six months will increase capital cost and diminish technological advantage; to delay it a year or more may destroy its attractiveness as an investment. Unless this proceeding is further delayed, an SBS satellite will be operating in early 1981. If it is remanded for trial-type hearings, the SBS launching will be much delayed, if not precluded altogether. 108 We recognize that the need for expedition will not justify an agency's failure to carry out its statutory responsibilities, 109 but the relative urgency of a decision is a thoroughly appropriate factor for an agency to consider when crafting its procedures. 98 Under the circumstances of this proceeding, we cannot find the FCC's decision not to conduct an evidentiary hearing on the antitrust issues to be arbitrary or capricious; indeed, we recognize that an evidentiary hearing would less promote reasoned decisionmaking in this case than it would delay and impede technological progress.