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03/23/72 Seatrain Lines, Inc., v. Federal Maritime

March 23, 1972

SEATRAIN LINES, INC., PETITIONER

v.

FEDERAL MARITIME COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS AND PACIFIC FAR EAST LINES, INC., INTERVENOR 1972.CDC.73



Bazelon, Chief Judge, and MacKinnon and Wilkey, Circuit Judges.

UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

APPELLATE PANEL:

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WILKEY

Whether the Federal Maritime Commission acted in accordance with its statutory mandate in approving Agreement No. 9903, calling for the acquisition of all the assets of one carrier by water by another, is the principal issue presented for review. Whether the Commission had jurisdiction to act is necessarily the seminal question; the answer we reach here pretermits all other issues.

Our answer is not reached without difficulty. In addition to the expected divergent views of the private parties, we find the Federal Maritime Commission and the Department of Justice (representing the statutory respondent United States) on opposite sides of the jurisdictional issue. And, as we shall see later, the four United States judges who have considered the question have divided evenly. For the reasons set forth below, which to us seem persuasive, we hold the Commission here lacks the requisite jurisdiction. I. The Agreement, the Statute, and the Issue

Seatrain Lines, Inc., petitions for review and reversal of the Federal Maritime Commission's approval without a hearing of Agreement No. 9903 between Pacific Far East Line, Inc., and Oceanic Steamship Company, covering the sale by Oceanic of its entire fleet of four vessels, currently in service in the North American Pacific Coast-Australasian Trade (Trade Route 27), as well as Oceanic's interest in two container ships still building in the United States with the aid of construction-differential subsidy. Included in the sale of these assets are transfers of Oceanic personnel and all shoreside equipment to Pacific Far East Line. This sale comprises all of Oceanic's assets, although Oceanic, a wholly-owned subsidiary of the Matson Navigation Company, retains its corporate existence and is not restricted by the agreement from re-entering the North American Pacific Coast-Australasian or any other trade.

The question presented at the outset is whether this agreement falls within the scope of the Commission's *fn1 jurisdiction as defined by the Shipping Act of 1916. *fn2 As enacted, Section 15 of the Act provided in relevant part as follows:

That every common carrier by water, or other person subject to this Act, shall file immediately with the board, a true copy, or, if oral, a true and complete memorandum, of every agreement with another such carrier or other person subject to this Act, or modification or cancellation thereof, to which it may be a party or conform in whole or in part,

[1] fixing or regulating transportation rates or fares;

[2] giving or receiving special rates, accommodations, or other special privileges or advantages;

[3] controlling, regulating, preventing, or destroying competition;

[4] pooling or apportioning earnings, losses, or traffic;

[5] allotting ports or restricting or otherwise regulating the number and character of sailings between ports;

[6] limiting or regulating in any way the volume or character of freight or passenger traffic to be carried;

[7] or in any manner providing for an exclusive, preferential, or cooperative working arrangement.

The term "agreement" in this section includes understandings, conferences, and other arrangements.

The Board may by order disapprove, cancel, or modify any agreement, or any modification or cancellation thereof, whether or not previously approved by it, that it finds to be unjustly discriminatory or unfair as between . . .

Agreements existing at the time of the organization of the Board shall be lawful until disapproved by the Board. . . .

. . . Every agreement, modification, or cancellation lawful under this section shall be excepted from the provisions of the Act approved July second, eighteen hundred and ninety, entitled "An Act to protect trade and commerce against unlawful restraints and monopolies ", and amendments and Acts supplementary thereto, and the provisions of sections seventy-three to seventy-seven, both inclusive, of the Act approved August twenty-seventh, eighteen hundred and ninety-four, entitled "An Act to reduce taxation, to provide revenue for the Government, and for other purposes ", and amendments and Acts supplementary thereto. *fn3

While the agreement here at issue may at first impression be thought to fall within the third category -- "controlling, regulating, preventing, or destroying competition" -- inasmuch as the sale by Oceanic to Pacific Far East Line of all of its assets has the effect of eliminating Oceanic, at least for the present, from the North American Pacific Coast-Australasian trade, both the language and context of Section 15 itself and the legislative history accompanying it demonstrate that this particular agreement is not covered. II. The Statute's Treatment of Antitrust Considerations

A. Specific Language of Section 15.

The language of Section 15 is concerned with the implementation of "agreements," which definitely "includes understandings, conferences, and other arrangements," among common carriers by water. The first six categories specified in Section 15 refer to agreements which of necessity imply the continued existence of the parties and their participation in such agreements over time (e.g., fixing or regulating rates; pooling or apportioning earnings, losses, or traffic; allotting ports or restricting sailings between ports, etc.). In the case at bar, however, Oceanic is eliminated from the North American Pacific Coast-Australasian trade (as well as any others), at least until it decides to re-enter the trade by acquiring vessels and related personnel and equipment. The seventh category is intended merely to summarize the type of agreements covered -- those "in any manner providing for an exclusive, preferential, or cooperative working arrangement";4 and not to include those of an entirely different nature, such as involved here -- the acquisition of all the assets of one common carrier by water by another -- which can hardly be considered mere "working arrangements."

This view is supported by the language in the second and third paragraph, immediately following paragraph one, in Section 15. The second paragraph authorizes the Commission to disapprove, cancel or modify any agreement "whether or not previously approved" by it which it finds to be unjustly discriminatory. The third paragraph in Section 15 declares existing agreements lawful "until disapproved by the Commission." Both of these paragraphs of Section 15 undeniably envision agreements which are amenable to continuing Commission supervision. If changing conditions warrant it, the Commission may find a working arrangement hitherto not considered unfair to be unjustly discriminatory, and thus order its dissolution or modification. In the case of arrangements of a more permanent nature such as here involved, the sale of all the assets of one common carrier by water to another, subsequent Commission cancellation or modification of such a previously approved arrangement would be very difficult if not impossible to implement. The whole structure of Section 15, not only the first paragraph listing the type agreement covered, shows an intent to grant the Commission authority to deal with agreements of a continuing nature.5

B. Standards By Which the Statute Is Construed.

Aside from the specific language of Section 15, a contrary reading of its scope regarding agreements covered is likewise not warranted in view of the fundamental import of the nation's antitrust policies, expressed by Congress in a variety of legislative enactments, primarily the Sherman Act.6 The Supreme Court has "long recognized that the antitrust laws represent a fundamental national economic policy . . ."7 and stated that "repeals of the antitrust laws by implication from a regulatory statute are strongly disfavored, and have only been found in cases of plain repugnancy between the antitrust and regulatory provisions."8 Even where Congress has granted exemptions from the antitrust laws, the Court has held that it is "bound to construe them strictly, since . . . [they are] restrictive of a free economy."9 With specific reference to situations such as that presented by the case at bar, the Court has stated ...


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