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

Heading: analysis

Text: 24 We appreciate the Commission's concern that Section 15 proceedings might result in delay to the benefit of protesting carriers of competition which would serve the public as a whole. Clearly, the public interest is no more served by competitors who seek, through lengthy evidentiary hearings, to delay implementation of agreements which would adversely affect them competitively than it is by those who seek to enter into agreements which would unjustifiably restrict competition. We appreciate, too, the Commission's recognition that an evidentiary hearing may be less appropriate where, as here, only short-term authority is involved. But the Commission's nearly exclusive focus on whether an evidentiary hearing was appropriate obscures its basic statutory responsibility in this case: to decide whether approval of the agreement at issue was justified in light of the factors set forth in Section 15. 25 As noted earlier, the Commission is required under Section 15 to disapprove agreements which it finds to be unjustly discriminatory or unfair as between carriers, shippers, exporters, or importers, to operate to the detriment of commerce, or to be contrary to the public interest. 32 In some sense, the Commission's analysis of the agreement's fairness as to USL might be said to be subsumed in its balance of the interest of Protestant in obtaining a trial type evidentiary hearing    against the interest of Proponents in modernizing their fleet. JA 86. Even as to this point, however, the Commission's analysis was facially incomplete: the balance it struck took account only of Euro-Pacific's interest in modernizing its fleet and made no mention of the second element of the amendment, the addition of a third party to the conference. More importantly, the Commission's analysis not only limited itself to USL as a competing carrier making no mention of any effects on other carriers, importers, or exporters but also failed completely to address the additional factors of the public interest and the antitrust implications of the agreement which had been raised by USL. 26 Whether the arrangement established by Agreement No. 9902-3 is viewed as a division of markets, and illegal Per se under the antitrust laws, 33 or as a joint venture to be considered under a rule of reason, 34 it is clear that serious antitrust issues are posed by its implementation. Elimination of ICT as a potential competitor in the market raises definite questions as to the extent to which competition is being restrained. 35 To be sure, any anticompetitive consequences of this arrangement were limited in duration; Agreement No. 9902-3 permitted ICT to enter the joint service only for the duration of the basic agreement, a period later expanded by the Pendente lite order until completion of the hearings. The limited duration of an arrangement is certainly a factor which may be taken into account by the Commission in evaluating the likely antitrust consequences of an agreement and determining whether the public interest supports approval notwithstanding these consequences. But this factor does not excuse the Commission from any consideration at all of antitrust consequences. Section 15 of the Shipping Act applies to any agreement entered into by carriers, including agreements limited in their duration. There must be adequate consideration and justification for Commission approval of an agreement restricting competition even for the brief period of five months, let alone the longer period until final hearings are completed. 27 In this case the only mention of the anticompetitive effects of 9902-3 comes in the context of the Commission's distinction of earlier cases in which evidentiary hearings have been required. Those cases, the Commission emphasized, involved arrangements which were Per se violations of the antitrust laws; in this case, on the other hand, the amendment would not, necessarily, eliminate or restrain any actual competition. JA 83. Perhaps not. But the fact remains that the agreement in this case on its face raised serious antitrust questions and presented the potential, nowhere denied by the Commission, that competition would be unduly restrained. If the Commission chooses not to determine whether competition will in fact be restrained substantially, then it must at least demonstrate that it has considered the antitrust implications and has found that the public interest supports approval notwithstanding the possible anticompetitive effects. The responsibility delegated to the Commission by Congress is not simply to guard against Per se violations of the antitrust laws; it is to protect the public interest, which may be adversely affected by all forms of anticompetitive arrangements. In this case the FMC simply failed to address itself in any way to one of the factors specified by Congress in the Shipping Act; it failed, in the words of Overton Park, to consider adequately the relevant factors. 28 Nor was this defect in Agreement 9902-3's approval cured by the Commission's decision extending the joint service authority Pendente lite. As might be expected, that decision simply examined whether the agreement as a whole, as it existed at that time, should be extended pending a full investigation 36 ; it did not address the somewhat separate question whether ICT's past and continued participation, as distinct from that of the two other conference members, was justified. This course might be acceptable had the Commission in its order approving 9902-3 considered the antitrust implications of ICT's participation before it concluded that approval was justified. But in this case it means that no consideration or explanation has yet been provided by the Commission as to the antitrust questions raised by ICT's entry into the joint service. 29 In seeking to justify its failure to address the antitrust implications in this case the Commission emphasizes two points. First, it asserts that the protestant, USL, merely alleged the existence of possible antitrust violations, rather than substantiating its claim with further argument and documentation. 37 The short answer to this argument is that the FMC has an independent statutory responsibility in the public interest to consider the factors set forth in Section 15 of the Act, including the antitrust implications of agreements, before granting its approval. In this case, where the amendment requested approval for addition of a third party, the fact that antitrust questions were raised was clear on the face of the amendment. And if it was not, USL's allegations were certainly sufficient to put the Commission on notice of the antitrust questions raised. See Marine Space Enclosures, Inc. v. FMC, 137 U.S.App.D.C. 9, 18, 420 F.2d 577, 586 (1969). More basically, while we have no dispute with the Commission's apparent desire for fuller argumentation and participation by protesting parties, its absence here seems most directly related to the Commission's own practices and decisional process. USL submitted its protest in the hope of securing a full hearing on the antitrust issues it raised. At no time did the Commission either request further substantiation from USL or suggest that it would or might reach its final decision on the basis of the parties' submissions, and that if USL wished to substantiate its claim further it should do so at that point. For the Commission then to grant approval without any hearing on the ground that USL had failed to substantiate its claims appears wholly inconsistent with its own refusal to notify USL of the pendency of its decision or the need for further substantiation. Indeed, the real point seems to be that if the parties are to participate meaningfully in Commission decisionmaking, as the FMC itself has asserted that it wishes, then they must be on notice as to the point in the process where a decision may be forthcoming so that they can submit all their arguments and documentations to the Commission for its consideration prior to its decision. See Bilingual Bicultural Coalition on Mass Media, Inc. v. FCC (No. 75-1855, decided May 4, 1978) (En banc ). And certainly the failure of USL to substantiate more fully its antitrust claims in this case cannot serve to justify the Commission's total failure to address itself to the antitrust implications of the agreement it approved. 30 The Commission's second justification for the failure of its decision to address the antitrust implications fares no better. In its brief to this court the Commission suggested that it had, indeed, considered the antitrust implications and, in addition, that its final decision was consistent with an analysis of the competitive ramifications of the contract. 38 It may well be that some or all of the members of the Commission in fact took account of the antitrust implications of this agreement in concluding that it should be approved. And it might also be that full consideration of the antitrust aspects of this agreement would in fact prove completely consistent with the Commission's final decision to approve the amendment. But we as a reviewing court are required to base our decision on the record in the case, See 5 U.S.C. § 706 (1970), not on the unstated considerations of Commission members or on reasoning or argument advanced for the first time on review. The Supreme Court has made clear that where, as here, there was a contemporaneous explanation given for agency action, the validity of that action must stand or fall on the propriety of that finding, judged, of course, by the appropriate standard of review. If that finding is not sustainable on the administrative record made, then the    matter (must be) remanded    for further consideration. Camp v. Pitts, 411 U.S. 138, 143, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973). See Burlington Truck Lines, Inc. v. United States, supra, 371 U.S. at 168-169, 83 S.Ct. 239; SEC v. Chenery Corp., 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943).