Court Opinion

ID: 9443561
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:24:55.240649+00
Date Added: 2024-06-11T17:29:32.347442
License: Public Domain

PRETTYMAN, Circuit Judge
(dissenting).
I disagree with my brethren in this matter.
The facts are comparatively simple. The case concerns cable and radio between the United States and The Netherlands and Portugal. Five companies are involved. RCAC is independent of the other companies involved and has the only direct radio circuit between New York and The Netherlands and between New York and Portugal. Western Union is independent of the other companies and has cables, owned or leased, from New York to The Netherlands and (via British pick-up) to Portugal. The Commercial Cable Company and Mackay are wholly-owned subsidiaries of the American Cable & Radio Corporation, called AC&R. Commercial has cables between New York and The Netherlands and from New York to Portugal, both services being via retransmission or British pick-up. Mackay gets a portion of the Portugal business indirectly through a circuit via Lima. In summary, therefore, there are one direct radio service and two cable services to The Netherlands and to Portugal; and one other indirect radio service to Portugal.
The Commission proposes to grant Mack-ay a direct radio circuit to The Netherlands and one to Portugal.1
The Commission 'found, on the one hand, that there is ample business to justify another radio carrier and that another carrier would not endanger the financial stability or the service of the carriers now operating; and it found, on the other hand, that the capacity of existing facilities is in excess of that required to handle the expected volume of traffic, that the new service would not result in lower rates or speedier service except that the new service would be superior to the present cable service, and that the new service would result ill a reduction of the revenues of RCAC and Western Union but would not reduce their expenses. It further found that the radio business which would go to Mackay would largely be drawn from the cable business of Commercial and that there would be some diversion from RCAC and Western Union.
On the basis of the foregoing findings, the problem reduces itself to (1) whether the Commission can authorize a competitive service as a matter of policy where one is not actually needed and (2) whether the contemplated diversion of traffic from the cables of Commercial to the radio of Mack-ay would violate Section 314 of the statute.
RCAC says, principally, that the common carrier concept, applicable in railroad, etc., regulation, applies here and that the new service cannot be authorized unless a public need for it is affirmatively proved. The Commission says that competition, whenever it is “reasonably feasible” is part of the public interest, convenience and necessity. By “reasonably feasible” the Commission seems to mean that the new service will not endanger the old.
I think that, when existing traffic permits more than one carrier, and where the existence of a second carrier would not endanger the stability or fhe service of the existing carrier, competitive service may well be in the public interest. If that be so, then, where the necessary conditions are established, the question whether there should or should not be a second carrier is for the Commission to decide.
The point is brought into sharp focus by the discussion of the so-called Oslo case.2 *700In that case, under somewhat similar facts, Mackay applied for a license to operate to Oslo, Norway. The Commission denied the application. Mackay contended that the public convenience necessarily required competing service. This court affirmed the Commission, holding that competition is not necessarily or inevitably in the public interest. As I read the opinion we did not hold that competition is not in the public interest.
I hesitate to disagree with the author of the Oslo opinion, who is also the author of the present opinion of the court, as to what the court held in that case. He says that in that case we affirmed a decision the other way on the very question now before us. But it seems to me clear that the question there and the question here were not the same but were two distinct questions.
The controlling basic principle of public utility regulation is the public interest, convenience and'necessity. That requires, in a nutshell, efficient servicq at reasonable rates. That, in turn, requires a financially sound operator and at the same time denies him exorbitant profits. Hence it follows that, if there be between two points traffic enough ,to support only one efficient operator and supply him with no more than reasonable profits, the public interest requires that only one operator be licensed. Two operations dividing business sufficient only for one will inevitably result in poor service. On the other hand, if there be enough traffic to support two efficient operators and supply both with reasonable profits, it may well be that the public interest requires the injection of an element of competition into the situation. Given business enough for two operators, some competition in service may well increase the standards of both and thus be in the public interest. These principles have been the guides for certification hy the Interstate Commerce Commission. I need not delay this case to exhaust the authorities. I cite a few in the footnote.3 The point is clearly contained in the declaration of the national transportation policy in the statute.4 It is agreed that the principles of Interstate Commerce Commission regulation apply to> the regulation of common carrier communication under the present statute.5
In the Oslo case, supra, the question was whether competition is always necessarily in the public interest. The answer was “No”. I agree with that answer to that question. The question here is whether competition is ever in the public interest. The answer, it seems to me, is “Yes”. The nub of the matter is the amount and nature of the available and prospective business. If the business will support two operators, the regulatory authority has a wide discretion in determining whether to serve the public interest by drastic supervision of a single operator or to install an automatic self-regulator in the form of a competitor.6
*701In tlie present case the Commission made extensive findings, which I have summarized. They were amply supported in the record. They in turn support the ultimate finding that the competition of Mack-ay will not imperil the financial stability of RCAC. And that finding is ample support for the exercise of the judgment of the Commission that the presence of Mackay in the field will serve the public interest.7
RCAC also argues that the proposed grant to Mackay would be in violation of Section 314 of the Communications Act.7
8 It is not necessary for the court, in the view it takes of the case, to consider that point. But, since I would affirm the Commission on the first question, above described, I have to consider the Section 314 point. That section, in pertinent part, provides: “ * * * no person engaged * * * in the business of transmitting * * * for hire * * * communications * * * by radio * * * shall * * * acquire * * * or operate any cable * * * between any place in any State * * * and any place in any foreign country * * * if * * * the purpose is and/or the effect thereof may be to substantially lessen competition or to restrain commerce * * * or unlawfully to create monopoly in any line of commerce; * * The section also contains a converse provision prohibiting cable operators from owning or operating radio stations, etc.
It is shown in the record that if these radio- circuits be licensed to Mackay some of the cable business of its sister company (Commercial) will be diverted to it. RCAC argues that this is a lessening of competition and a restraint of commerce in flat violation of Section 314.
Section 314, it must be noted, does not prohibit all common ownership of radio and cable. It prohibits such ownership when certain conditions exist, that is, when the purpose or effect is substantially to lessen competition, to restrain commerce, or to create a monopoly. Certainly complete common ownership removes subsidiaries from competition with each other. If Section 314 be construed to- prohibit a lessening of competition between sister companies regardless of other circumstances, the conditions specified in the section become meaningless and superfluous. So construed the section would flatly prohibit all common ownership of radio and cable operations, which it obviously does not do. The section must have been aimed at some condition or tendency other than those inherent in common ownership as such. It must have been aimed at a lessening of competition discernible in the circumstances of the specific situation, in addition to- the bare fact of common ownership. This idea is supported by the fact that, although it was known to the committees of Congress that Mackay and 'Commercial were under common ownership when the Communications Act of 1934 was under consideration, no unconditional prohibition of continued common ownership appears in that Act.
After the hearing but before the decision in the present case, the Commission had before it in another case, known as Docket 9093, the question whether the operation of Mackay (radio) and Commercial (cable) in common ownership violated Section 314. That proceeding was devoted to that question. After a full hearing, to which our present appellant, RCAC, was a party, and extensive findings, the Commission concluded that, while the Section applied, the ownership, control and operation of the companies within this system (AC&R) did not violate the section. The Commission referred, inter alia multa, to- the fact that Mackay, a part of a radio-cable system since 1929, had -been granted "an increasing number” of radio circuits to points in Europe during many years, prior and subsequent to- the passage of the Act. In this connection it is significant that, despite the grant to Mackay of numerous duplicating circuits in the years 1936-1947, R’CAC actually handled a larger proportion of the total international telegraph traffic in 1947 than it did in 1936; 31.7 per cent as com*702pared with 20.6 per cent. It is also significant in this connection that the record shows that international telegraph rates, competitive, have not increased as much as domestic rates, for all practical purposes non-competitive. The decision in Docket 9093, rendered in May, 1950, was not appealed, was not encompassed in the appeal here, and is not before us.
Three considerations-, principally, lead me to the conclusion reached by the Commission upon the Section 314 point. 1. Before this application there was a competitive situation between radio and cable services by the several companies in respect to Netherlands and Portugal business. It was a three-cornered competition. Western Union offered cable, RCAC offered radio', and AC&R offered cable. That competition will not be changed substantially by the grant of a radio circuit to AC&R. Western Union will still seek cable business. RCAC will still seek radio business. AC&R will certainly still seek cable business in the public market. There is nothing to show that it intends to shut down Commercial; rather the natural assumption is that in view of its agreement with The Netherlands Administration it will be a more acute seeker for cable business. It does not appear that the competition between cable and radio as presently offered by the three companies will be lessened by the grant of a radio circuit to AC&R. Upon the basis of exhaustive studies and findings the Commission reached that conclusion. It is -clearly correct.
As a matter of fact appellant RCAC does not rest its case upon a claim of a lessening of inter-company competition. It rests upon an intra-company shifting of business within the AC&R system.
'2. If it be determined, as it has been (in Docket 9093), that the present operation of Mackay and Commercial in common ownership does not violate Section 314, I -do not see how a shift of business from one twin to the other would lessen competition between them. There is no substantial competition between them now; there never— o-r hardly ever — is between twin subsidiaries. The present allocation of business between them is not the result of competition between them; it is the result of either parent’s policy or customer requirement. A change in the parent’s policy, which is what the proposed agreement is, is not a lessening of existing competition. So, it the common ownership in this case does not violate the section, a mere change in business allocation as between the non-competing twins would not violate it.
3. Section 314 embodies a portion of antitrust policy, specifically provided by the immediately preceding Section 313. The Commission was entitled to look at the whole picture in formulating its judgment as to the public interest. Thus viewed this grant of a radio- circuit to Mackay certainly tends to serve the purposes of the statute. RCAC now enjoys a monopoly in radio between the places here involved. Mackay, by this grant, would introduce competition, would reduce restraint on commerce, and would destroy instead of create monopoly. The Commission thought these broader considerations pertinent and important. I think so too.
I think the decision of the Commission should be affirmed.

. The order also includes an indirect service to Amsterdam via Tangier, but that grant does not figure separately in the argument.

. Mackay Radio & Tel. Co. v. Federal Communications Comm., 1938, 68 App. D.C. 336, 97 F.2d 641.

. McLean Trucking Co. v. United States, 1944, 321 U.S. 67, 86-88, 64 S.Ct. 370, 88 L.Ed. 544, particularly footnotes 9-24; Texas & Pac. Ry. v. Gulf, Etc., Ry., 1926, 270 U.S. 266, 277, 46 S.Ct. 263, 70 L.Ed. 578; Chesapeake & Ohio Ry. Co. v. United States, 1931, 283 U.S. 35, 42, 51 S.Ct. 337, 75 L.Ed. 824; Interstate Commerce Comm. v. Parker, 1945, 326 U.S. 60, 65 S.Ct. 1490, 89 L.Ed. 2051; American Trucking Ass’n v. United States, 1945, 326 U.S. 77, 86, 65 S.Ct. 1499, 89 L.Ed. 2065; N.Y. Central Securities Corp. v. United States, 1932, 287 U.S. 12, 53 S.Ct. 45, 77 L.Ed. 138; Clarke v. United States, D.C.D.C.1951, 101 F.Supp. 587; Hudson Transit Lines v. United States, D.C.S.D.N.Y.1948, 82 F.Supp. 153, affirmed 1949, 338 U.S. 802, 70 S.Ct. 59, 94 L.Ed. 485; Norfolk Southern Bus Corp. v. United States, D.C.E.D.Va.1950, 96 F.Supp. 756, affirmed, 1950, 340 U.S. 802, 71 S.Ct. 68, 95 L.Ed. 590; Lang Transp. Corporation v. United States, D.C.S.D.Cal.1948, 75 F.Supp. 915; C. E. Hall & Sons v. United States, D.C.Mass.1950, 88 F.Supp. 596. See also Sharfman, The Interstate’ Commerce Commission, Part III-A, pp. 355-359 (1935).

. 54 Stat. 899 (1940), 49 U.S.C.A. preceding § 1.

. 48 Stat. 1066 (1934), 47 U.S.C.A. § 153 (k); Sen.Rep. No. 781, 73rd Cong., 26 Sess.

. United States v. Pierce Auto Freight Lines, 1946, 327 U.S. 515, 536, 66 S.Ct. 687, 90 L.Ed. 821.

. Chesapeake & Ohio Ry. v. United States, 1931, 283 U.S. 35, 51 S.Ct. 337, 75 L.Ed. 824.

. 48 Stat. 1087 (1934), 47 U.S.C.A. § 314.