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387 U.S. 485 87 Supreme Court Reporter 1754 18 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 905 The DENVER AND RIO GRANDE WESTERN RAILROAD CO. et al., Petitioners,v.UNITED STATES al. Number 305. Argued March 16, 1967. Decided June 5, [Syllabus from pages 485-486 intentionally omitted] William or Haw. Hawai‘i KFH45 A2 Dempsey, Jr., Washington, D.C., for appellants. Thomas D. Barr and Robert S. Rifkind, New York City, appellees. Mr. Justice BRENNAN delivered the opinion of Court. 1 question in this case is whether Interstate Commerce Commission complied with its statutory responsibilities under § 20a Act1 when it approved without consideration control anticompetitive consequences issuance to appellee Greyhound Corporation 500,000 shares common stock Railway Express Agency, Incorporated (REA). 2 REA provides railroad express service also a motor carrier. approximately 2,000,000 outstanding are entirely owned by railroads no stockholder may dispose first offering them other stockholders. authorized, however, issue additional Greyhound, which operates an carrier through wholly subsidiary Lines, Inc., passengers subject Act, agreed purchase these shares. thereupon applied ICC order approving transaction. Minority stockholders, bus competitors carriers, freight forwarders intervened proceeding protest against approval They alleged, among things, necessity hearing on questions Greyhound's acquisition was 'public interest' 'lawful object' as those terms used 20a. hearing. A three-judge District Colorado sustained order. 255 F.Supp. 704. We noted probable jurisdiction. 385 897, 201, 17 129. reverse direction enter new judgment remanding further proceedings consistent opinion. I. 3 organized 1929 until 1961 operated nonprofit basis pooling agreement railroads. See Securities Acquisition Control 150 I.C.C. 423. Financial difficulties forced abandonment operation converted profit loss effect more efficient economic operation. Contract, 1959, 308 545, 549—550. In addition, released restrictions use carriers than 1963 REA's by-laws were amended eliminate limitation ownership except railroads; disposition railroad, made right refusal not but only upon consent two-thirds 4 principally passenger carrier, became interested expanding growing business. January 1964 offered purchase, approval, at least 67% stock, intended offer 16% major airlines. finance part capital requirements plan coordinate services both companies. This proposal defeated 5 persisted their efforts operations. proposed acquire 20% interest authorized unissued shares, stating that 'interest * stems primarily our views improvements could be realized combination correlation certain facilities services.' pay $16 per share if permitted name one-fifth Board Directors would declare intention 'to consider seriously work toward long-term between consolidate operating functions *,' if, further, agree later time *'th e sale airlines general public. Finally, offered, enough $25 each give 50% REA, remain open 60 days following It expressed willingness, leave future giving opportunity reconcile question.' 6 countered sell $20 provided within 60-day period 1,000,000 same price. consummated approval. 7 application sought supplemented detailed data reviewing negotiations, statement financial condition purposes $10,000,000 applied. burden protests numerous intervenors transaction object,' rather step establishing virtual monopoly transportation, result 'control' necessitating Act.2 Department intervened. urged conduct determine violate Clayton Act,3 suggesting that, while might unnecessary, one instituted consolidated recommended Act proceeding, since issues involved virtually identical. 8 Division Three hearing, ruling investigation into 'anticompetitive' 'would appropriate *.' After denial petitions reconsideration action enjoin set aside filed. full meanwhile reconsidered affirmed postponed effective date pending conclusion judicial proceedings. 9 parties adhered basically positions maintained before ICC, abandoned position urging declined either support oppose sustaining reasoned required i ome circumstances 20a, properly exercised discretion defer such after determined what extent succeed purchasing stockholders; then 'chain events started (be) ascertainable conjectural.' 704, 709. 10 Government concedes, appellees assume arguendo, important effects ICC. has completely reversed arguing here designed accomplish limited objective protecting stockholders public fiscal manipulation, any event, postponement justified because facts relevant different end period, prejudice party's interests delay. II. 11 do Congress inquiry manipulation.4 Even Congress' primary concern prevent broad negate existence mandate close eyes indicating exceed limitations imposed laws. Common sense sound administrative policy point standards require some degree suggested surrounding particular Both have read broadly, all including effects. Thus weigh applications merger authorizing grant 'consistent interest.' McLean Trucking company versus States, 321 67, 64 370, 88 L.Ed. 544. And similarly encompassed like directives addressed agencies. E.g., National Broadcasting 319 190, 224, 63 997, 1013, 1344, FCC RCA Communications, 346 86, 94, 73 998, 1004, 97 1470; People State California FPC, 369 482, 484—485, 82 901, 903, 54. 12 true requirement readily found 5(11) enables confer immunity antitrust laws transactions 5(2).5 But foundations ICC's obligation largely applicable well. Section must context overall responsibilities. responsibility Act6 enforce Act's provisions them. advance Transportation Policy, standard another persistent overriding duty, equallyap plicable sum, we said Trucking, supra, transportation 'legislation constitutes immediate frame reference policies basic determinants action. *, executing faced overlapping times inconsistent embodied legislation enacted problems view. When true, cannot ignore latter.' U.S., 80, 377. 13 20a(2), itself acted though lacks power consequences. Columbia Terminals Co.—Issuance Notes, 40 M.C.C. 288, 293, notes 20a(2) granted competitive bidding. explicitly rejected argument 15 Code KF62 20, requiring bidding situations, superseded Stock Jersey, & I.R. Co., 94 727, 729, said, considering stock: '(I)t can performance duty us statute confine immediately involved. authority securities bound measure test whatever phase appear affected.' 14 'broad duty' significantly Chesapeake O.R. Purchase, 271 5. There, Contract O modification earlier so enable exercise 400,000 Central, two O's directors 20a(12) hold seats simultaneously Central Board. strikingly similar claims case, needed funds management, companies contemplating plans mutual advantage ultimately 5(2). took view responsibility. found, issue, insufficient showing had been 'neither nor private *' adversely affected interlocking directorate, citing own cases where lessening competition independence occurred, I.C.C., 18, pointing out even strengthened, directorate injure just great 40. treating request approve acquisition, referred detail (1) considered along long-range plans, Cnt ral; (2) extensive eliminated; (3) cooperation pose substantial threat 24—29. refused authorize concluding being asked sanction violation section 5(4) (requiring 5(2) acquiring carrier) Antitrust Act.' 39, 43. stated applicants confident long-run aims interest, they should seek These principles arguments relied rejecting equally here. differ concerned market. Appellees argue, ambivalence, anomalous 20a(2). consolidations. No exists 20a,7 contends therefore lead 'anomalous disallowed could, proper findings, notwithstanding considerations.' advances variant Sixty-sixth Congress, passed 'adopted erratic relaxing enforcement eliminated strick lesser harm occur.' 16 First, means greater necessarily results consolidations issuances consolidation increases respects, issuance, involving control, redeeming feature. Second, anomaly created juxtaposition §§ stems, fact special rule, exception. there good reasons providing conferred recognized 1940, 54 Statutes-at-Large 898, 1920, often benefits national system well Consequently, immunize interest. sometimes less likely come about mere unless merger; does result, he party invoke Commission's Appellees' reliance Alleghany Breswick 353 151, 77 763, 726; 355 415, 78 421, 374, misplaced. That litigation stands most proposition coming grips unlawful. acquired Exchange preferred stock. jurisdiction ground investment normally SEC, regulation. act rest approved. contrary oust regulatory noncarrier failed abide law. On remand illegality Alleghany's merits again, simply left 'as approved' 416, 422. However interpreted, fails protect relieved germane conclude, therefore, required, mean every never arise present. exercises issues, court closely scrutinize light obligations Whether abuse present depend approved, possible consequences, justifications deferral. turn now question, respect deferral second issues. III. 19 undoubtedly raised serious operations pass Greyhound. judged realistically, matter degree. Rochester Tel. 307 125, 59 754, 83 1147. standing alone raise given clear evidence purpose negotiations bring joint alignment. treated ambitious project, seriousness other's intentions end. 20 What done must, placed perspective. denied present, issue. held deferred during ed extend up stressed unsatisfactory occur agencies uncertain rights obligations. Chicago, M. St. Pacific KF135 P2 P.R. 294 499, 510, 55 462, 467, 79 1023. observe apparently avoided reform contract ascertained 20a(2).8 Nevertheless, say exceeded issue; radical changes take place highly unlikely flow appellants 21 Resolution threshold established. assuming amount existing distribution, possibility. Some indicated holdings, dissident wind controlling latter refusal. obtain one-third will able composition Directors. added hands roads may, depending circumstances, find control.9 realistically resolved finality period. 22 Moreover, reasonably concluded allowing tentatively railroads' 'one million unable bylaws board, five directors, whom IV. 23 deferring footing. differs markedly, inapplicable questions. There is, short, reasonable justification 24 course, above, arises preliminary finding need trigger Clyt Act. e.g., E. Du Pont De Nemours 586, 872, 1057; American Crystal Sugar Cuban-American 152 (D.C.S.D.N.Y.1957), aff'd, 259 Federal Reporter, 2nd 524 (C.A.2d Cir. 1958). proscribes 'any part' company's 'may substantially lessen competition, tend create monopoly.' authority, course 5(4). But, held, initiate expect provision. contrast, prohibitive, imposes positive act. directed, whenever reason believe violating 7, 'issue serve person Attorney General complaint charges respect, containing notice 21(b). 26, excepts persons suits injunctive relief matters By thus limiting institute violations, provision underscores violations brought attention. 25 One principal advanced change settled way. possibility presented application. accept appellants, based distinction 'express' forms transport, see, Extension—Nashua, N.H., 91 311, 322, sub nom. Auclair Transportation, 221 328 (D.Mass.), 376 514, 84 966, 968, controls 88% 7% For correct increasing cross-competition groups carrying impossible categorize 'express,' appellant truck lines, trucking associations significance. precisely diversification transport activity, together considerable capacity economies efficiencies intend effectuate jointly, concerns 26 contemplate significant impact types carry. 'Memorandum Understanding' entered three weeks contemplates savings terminal service, garages, communications, advertising sales forces. realize large way ways strengthen position. Memorandum expresses determination engage aggressive capture larger business, especially utilizing opra tions complement air rail service. 'The effort companies,' states, market revenue arising complete package public.' 'new ability' reach off-airline points add revenues, estimated growth potential 10% year. Similarly, rail-bus expected generate millions business,' 'create capability compete LTL (less-than-load) foreseeable physical space fleet.' 27 nothing record rebut allegations many sort contemplated aided individually serve. fear reduction companies, commuter claim Greyhound-REA deprive business makes economically feasible operations, compel termination essential 28 assurance presently hardly question. holding continuing detriment concedes If correct, alliance requires stopped incipiency. Cf. FTC Dean Foods 384 597, 606, n. 86 1738, 1743, 802. 29 told funds, assures gain certainly needs free 'itself domination previously shareholders over operations.' 80 Ann.Rep., Page (1966). strong ties led interests, regard coincidence best Prior 1959 agreement, generated losses, see 546, distribute traffic patterns, utilize points. Changes enabled steadily increase corporate surplus. Study Express, Staff Liaison Group V—C, CAB, FMC 24—26 (1965). follow better off long run, advanced, shifts 30 While history provide blueprint future, 'afford lawfulness status activities, desirability apparent growth.' Study, op. cit. 3. indicates relationshi b etween depressed state Before acting premise, alleviate problem. past prosper inconceivable partial result. presumably, contend, minimize generally railroads, themselves modes how things? results, owners operate generally? effect, example, recent hauling varied volumes freight, lines forwarders? route shipments via preference economical modes, opposed absent approval? independent justify specific 31 finally, little merit Government's strongly supported considerations convenience. circumstance thwarted creates shortly vanish reversal itself. Of claim, wasted effort. still persuasive proved wrong face continue specifically Once fully weighed, task subsequent enlarges far manageable. 32 conclude although holdings resolution delay anti-competitive 'before Act,' 33 ordered. 34 Judgment direction. 35 WHITE, concurring dissenting part. 36 N Dec. Immigration Nationality Decisions Court's opinion, ac tors Corporation. am doubtful parts indicate factors connection demands threatened meaning disapproved. Under determining balanced permits despite actual impact. Mergers permissible acquisitions suspect 37 last analysis rests odd itself—that very relieves liability did transactions. think, ends matter, unconvincing speculative gives 38 Much me approach Pan World Airways, 371 296, 476, 325. Civil Aeronautics 1938, 52 973, re-enacted Aviation 1958, 72 731, 49 1301 seq., 408, 409, 412. attacked Sherman not, sections. Court, nevertheless, clearly kind committed regulation sections unassailable civil 39 us, shall unlawful issuance: '(a) lawful object purposes, compatible necessary impair ability perform (b) purpose.' 41 whole modifications conditions deem appropriate, make supplemental orders necessary. 20a(3). expressly '(t)he commission exclusive plenary, liabilities accordance securing specified herein.' 20a(7). 42 Having powers my view, deems otherwise seems At 'Nothing contained apply duly pursuant vesting 18. 43 it, impact, yet forbid falls short 'may' 44 approves weighed reaching decision concerning much viewed 370. decide powerless determines barred 45 HARLAN, STEWART joins, dissenting. 46 involves (REA,) type Commission, 'for (the applicant's) contracted block Corporation, railroad-stockholders entry preemptive rights. undisputed nevertheless succeeds cf. 145, 764, alleged intervenor anticipated co-ordination carriers1 regulated 11, 21. 47 deal substance 'antitrust' 'urgently proceeds *,'2 necessary, uncertainty relationship time. 'if o r applies, becomes imminent apparent, available interpose opposition 48 review, order, decision, saying 'that chain Id., '(i)n prerogative interfere discretionary powers.' 710. affirm dissent today's decision. holds 'the 20a(2).' Ante, 498. notes, '(t)his present,' ibid., concludes intervenors, improper refuse stage. misapplies statutes impedes practice. 50 dominant maintain structure credit,' Sharfman, 190 (1931),3 legislative background words encompass phrase broad, comparable embrace matters. Communications 307, 1083, construed 1470. inclusion language instance inquiry, entirety interpreted conjunction 51 contrast explicit deals problem responsibility,4 time,5 'control.' Indeed, laid directly various factual hypothesized Part IV solely transfers lease properties, 5(2)(a)(i), 5(4); Gilbertville 115, 217, 223, 177. integration would—with shares—fall purview establishes criteria making inquiry. '(1) adequate public; total fixed resulting transaction; (4) employees (c). industry governing transactions: account judging criteria, balance finds undertaking authorizes 5(11); Seaboard Air Line R. 382 154, 277, 223; Minneapolis L.R. 361 173, 229, supra. covers control; likewise, deat forbidding Hence sections, substantive aspects case. 53 procedural reasons, too, inappropriate vehicle replace augment applies authorization agencies, supervise finances objections (6). notify authorities heard.' 5(2)(b). believes intervene mandatory Given complexities field, devoted particularly them, quite evident sounder scheme financing source None cited envisioned encompassing apposite. dealt, situations 'by regulations prescribed rule Commission.' merely repealed written applicant indebtedness sole stockholder, distribution dividend. method acceptable; 56 third seem, anything, requested forbidden 20a(12). incorporate 12a(12). Quite contrary, consolidations, mergers, unification association 5,' id., 12; filed; '(i)t follows pertaining ultimate irrelevant disposing issues.' Ibid. determined, established acceptability improper, ose rved '(i)f firmly contend why file form act.' 41—42. 57 lack decisions. complex litigation, summarized ante, Pages 497-498, difficult intercorporate protracted tangled character simplicity affirmance approach, warning unfortunate complicating proliferating hearings unfamiliar fields; are, here, achieving 58 Although accepting reading urged, nonetheless appears recognize separate regularity, appropriately dealt proceeding. Since acknowledges, (11) exemption, play insistence essentially academic one. wished '§ proceeding' henceforth labeled proceeding.' recognition postpone determination, postponed. recalled desire 'a non-railroad purchaser,' concedely issuer purposes. transaction, purchases All successful effecting purchases. determination. Because outcome offer, agrees proper. crucial likelihood increased obtains with, REA. hand, bought whose adverse minimal. core then, inexorably tied deny overlap. holding, permissibly postponed, but, other, abused 61 To proliferation single transaction—one straightforward neot iated parties—is obstruct smooth workings process. penetrating observations Professor Jaffe seem pertinent situation: 62 'I gather impression judges who insistently display 'correct' attitude deference decisions: hesitate protract complicate Their premise dictate decisions ones. partly true. task, expertness discretion. '* (An agency) ration resources time, energy money. devote exigent soluble nearly related exigent, solved solution peculiarly feeling situation. fitted solve agency, level intermittent, disjected criticism disperses accountability, deployment forces involved.' Judicial Administrative Action 566—567 courts traditionally busy flexibility formulating internal procedures, encouraged duplicative repetitive hearings. See, Chicago N.W.R. Atchison T. S.F.R. 326, 341—343, 1585, 1594—1595, 803. Power Tennessee Gas 153—155, 211, 215—217, 199 'two-step procedure' 'not tradition practice'; Pierce Auto 327 515, 534—536, 66 687, 697, 90 821; Baltimore 386 372, 459, 1100, 1146, 159 (dissenting opinion); Fahey Mallonee, 332 245, 67 1552, 92 2030; Opp Cotton Mills Administrator Wage Hour Div. Dept. Labor, 312 126, 152—154, 524, 536, 85 624; Illinois 291 457, 471, 909. 65 allowance flexibility, prudence courts, where, so, consummated, feared businesses 'unscramble' Compare 1738. concern, parade examples indicates, 505-506, implications coordination crystallize legal any, REA; coordinated activities planned. prejudged, provisional 5(2), (7), (9); 129 131, 225—226. district likewise Commission. 5(8). postponing consideat ion completed later. regrettable preoccupation possibilities situation, acknowledged speculative, interfere, unnecessarily, obviously sensible procedure adopted amended, 494, part: '(2) creating corporation, until, uses thereof, *. (a) comon 214 557, 314. 5(2)(a)(i) 480, Upon seeking 'shall afford heard,' reasonable, scope subdivision conditions, modifications, 'No corporation engaged commerce acquire, indirectly, commerce, line country, originally 437(1) H.R. 10453, 66th Cong., almost identical House 1910 1914. Cong.Rec. 8317—8318 (1919). version study condemned evil' Report Railroad H.R.Doc. 256, 62d Sess., (1911). findings eventually Trade Acts. 5(11), corporations, officers persons, participating 21, Authority compliance (§ 7) respectively thereto vested Whenever complained show cause cease desist Airways 325, entrusted narrow CAB; unlike 6, contains imposing affirmative agency provisions. 'regulated regime prior system,' 301, S.Ct., CAB retained actions occurred passage 411 1003, 312, 486. developed facts, unnecessary buy sell, combined stockholdings Brief 9. (REA) facilities, cooperate lawful, jointly advantageous economies, improve receptivity patronage Understanding,' official methods goals. dealing legitimacy said: urgently program modernizing terminals equipment keep costs level; handicapped borrowing unfavorable debt equity ratio; ratio reduce required; price fair reasonable; expenses $15,000 watered Congressman Rayburn: write law land securities, put market, constituted governmental lay situation body, tell body intends money derived received regulating ad goes puts empowered call expended money, application.' 8376 Esch, 8317—8318. MacVeagh, 486—492 (1923). reads entirety: 'It bond (hereinafter collectively termed 'securities') lessor, lessee, guarantor, indorser, surety, otherwise, person, natural artificial, assumption assumption. assumption: 494.

Classification Label: 7