MCLEAN TRUCKING CO. ET AL. v. UNITED STATES ET AL.
No. 31
Supreme Court of the United States
January 17, 1944
321 U.S. 67
Argued November 12, 15, 1943.
Mr. E. B. Ussery submitted for the McLean Trucking Co., and Messrs. Martin Burns and Paul E. Mathias submitted for the American Farm Bureau Federation,—appellants.
Mr. Daniel W. Knowlton for the Interstate Commerce Commission; and Mr. Mortimer Allen Sullivan, with whom Mr. Hugh M. Joseloff was on the brief, for Associated Transport, Inc. et al.,—appellees.
MR. JUSTICE RUTLEDGE delivered the opinion of the Court.
This is an appeal from a decree of a statutory three judge court,1 48 F. Supp. 933, refusing to set aside certain orders of the Interstate Commerce Commission which had authorized consolidation of seven large motor carriers.
Associated Transport, Inc., was organized in Delaware in March, 1941, to bring about the proposed merger. In July, 1941, it applied to the Interstate Commerce Commission for permission, under
Before the Commission, approval of the applications was opposed by the Secretary of Agriculture, the Anti-Trust Division of the Department of Justice, the National Grange, four fruit growers associations and Super Service Motor Freight Company, a motor carrier.2 An examiner held hearings at which evidence was introduced, and the Commission heard argument on objections to his report before finally authorizing the consolidation.3 38 M. C. C. 137. McLean Trucking Company, Inc., a motor carrier which claims to compete with some of the carriers included in the merger, brought suit in the District Court to set aside the Commission‘s orders. The Secretary of Agriculture and the American Farm Bureau Federation intervened as plaintiffs. The United States confessed error. The Interstate Commerce Commission and the parties to the merger defended the Commission‘s order.
The principal issues, later set forth with particularity, are intertwined. They relate to whether the Commission applied a proper standard in concluding to approve the merger; whether it failed to give due weight to the prohibitions and policies of the anti-trust laws; and whether, upon the evidence and within the meaning of
In one respect, however, the case as presented to the court was in different posture than as it came to the Commission. This change arose from the elimination of one of the constituent companies, Arrow Carrier Corporation, from the merger between the time the Commission‘s orders were rendered and the hearing in the District Court. After the suit was begun the Commission, on the applicant‘s petition, modified its orders to exclude Arrow. Accordingly the Commission also amended its answer to indicate the change, and the case was decided on the orders аs modified. They present the only questions for our consideration. It may be noted that the elimination of Arrow has bearing upon the issue relating to anti-trust policy, but more particularly on that relating to railroad affiliation.
The eight carriers originally sought to be merged4 were Arrow Carrier Corporation, Paterson, N. J.; Barnwell Brothers, Inc., Burlington, N. C.; Consolidated Motor Lines, Inc., Hartford, Conn.; Horton Motor Lines, Inc., Charlotte, N. C.; McCarthy Freight System, Inc., Taunton, Mass.; M. Moran Transportation Lines, Inc., Buffalo, N. Y.; Southeastern Motor Lines, Inc., Bristol Va.; and Transportation, Inc., Atlanta, Ga. The merger embraces some of the principal operators along the Atlantic seaboard from Massachusetts to Florida. Certain of them
As a result of the proposed merger Associated will be the largest single motor carrier in the United States—at least in terms of its estimated revenues—and no other single motor carrier will compete with it throughout its service area. Nevertheless, after careful consideration and on evidence clearly sufficient to sustain it, the Commission found that on completion of the merger “there would remain ample competitive motor-carrier service throughout the territory involved” and in addition that
In connection with Arrow‘s participation, the Commission found that The Transport Company, whose stock was wholly owned by Kuhn, Loeb and Company, had an option to purchase Arrow‘s common stock and would receive Associated‘s stock therefor when the merger was effected. The stock thus received, together with 9,000 shares of Associated‘s common stock already held, would give The Transport Company, and through it Kuhn, Loeb and Company, 6,877 shares of Associated‘s preferred and 67,167 of Associated‘s common, a total of 13 per cent and 9.53 per cent, respectively, of the рreferred and common stocks expected to be outstanding at the conclusion of the transactions.6 Kuhn, Loeb and Company is represented on the boards of directors of several railroads
I.
The pertinent provisions of the Interstate Commerce Act, which is controlling, are set forth in the margin.7
However, in two particulars, pertinent especially to the issues concerning anti-trust policy and railroad affiliation,
II.
As has been said, they are intertwined. This is true especially of the issues concerning the propriety of the standards applied and whether due consideration was given to the anti-trust laws and policies, although the question of rail affiliation is closely related to both.
The chief attack on the orders is that the Commission improperly construed the standards by which Congress intended it to determine the propriety of a consolidation; and the burden of this complaint is that it did so “by failing to consider and give due weight to the anti-trust and other laws of the United States.” The argument seems to be that the merger, notwithstanding the Commission‘s approval, violates the Sherman Act; hence the Commission is without power to approve the merger. This presupposes that Congress did not intend, by enacting the specific exemption of
It is conceded this is not true of rail consolidations, though they are authorized, and subjected to the same standards, by the identical sections of the statute. A difference in application of the language is said to arise from the difference which existed in the conditions under which rail and motor carriers, respectively, were brought within the purview of the statutory commands. Thus, it is said, the Transportation Act of 1920 (41 Stat. 456) made a broad departure from previous policy by relieving rail consolidations, with the Commission‘s approval, from anti-trust restrictions in order to rehabilitate a broken-down industry. But, it is also said, such a condition did not characterize motor carriers when they were brought under regulation in 1935 or at the time of any subsequent legislation affecting them. Hence, it is admitted the Commission with propriety may approve a rail consolidation, otherwise prohibited by the anti-trust laws, in order to bring about needed or desirable improvement in service and economies in operation. But, as to motor carriers, it is urged the consolidation cannot be effected with any such purposes or consequences. Only when the existing service is inadequate and consolidation is necessary to bring about adequate service to the public, the argument runs, can the Commission approve it.
On its face the contention would seem to run in the teeth of the language and the purpose of
III.
To secure the continuous, close and informed supervision which enforcement of legislative mandates frequently requires, Congress has vested expert administrative bodies such as the Interstate Commerce Commission with broad discretion and has charged them with the duty to execute stated and specific statutory policies. That delegation does not necessarily include either the duty or the authority to execute numerous other laws. Thus, here, the Commission has no power to enforce the Sherman Act as such. It cannot decide definitively whether the transaction contemplated constitutes a restraint of trade or an attempt to monopolize which is forbidden by that Act. The Commission‘s task is to enforce the Interstate Commerce Act and other legislation which deals specifically with transportation facilities and problems. That
But in executing those policies the Commission may be faced with overlapping and at times inconsistent policies embodied in other legislation enacted at different times and with different problems in view. When this is true, it cannot, without more, ignore the latter. The precise adjustments which it must make, however, will vary from instance to instance depending on the extent to which Congress indicates a desire to have those policies leavened or implemented in the enforcement of the various specific provisions of the legislation with which the Commission is primarily and directly concerned. Cf. National Broadcasting Co. v. United States, 319 U. S. 190; New York Central Securities Corp. v. United States, 287 U. S. 12.
The national transportation policy is the product of a long history of trial and error by Congress in attempting to regulate the nation‘s transportation facilities beginning with the Interstate Commerce Act of 1887.9 For present purposes it is not necessary to trace thе history of those attempts in detail other than to note that the Transportation Act of 1920 marked a sharp change in the policies and objectives embodied in those efforts.10 “Theretofore, the effort of Congress had been directed mainly to the prevention of abuses; particularly, those arising from ex-
Since that initial effort at reshaping regulation of railroads to “ensure . . . adequate transportation service,”13 Congress has extended federal regulation in connection with other forms of transportаtion14 and has elaborated
The history of the development of the special national transportation policy suggests, quite apart from the explicit provision of
Whatever may be the case with respect either to other kinds of transactions by or among carriers20 or to consolidations of different types of carriers,21 there can be little doubt
Therefore, the Commission is not bound, as appellants urge, to accede to the policies of the anti-trust laws so completely that only where “inadequate” transportation facilities are sought to be made “adequate” by consolidation can their dictates be overborne by “the public interest.” That view, in effect, would require the Commission to permit only those consolidations which would not оffend the anti-trust laws. As has been said, this would render meaningless the exemption relieving the participants in a properly approved merger of the requirements of those laws, and would ignore the fact that the Motor Carrier Act is to be administered with an eye to affirmatively improving transportation facilities, not merely to preserving existing arrangements or competitive practices.25 Compare Dayton-Goose Creek Ry. Co. v. United States, supra; The New England Divisions Case, supra.
Congress however neither has made the anti-trust laws wholly inapplicable to the transportation industry nor has authorized the Commission in passing on a proposed merger to ignore their policy. Congress recognized that the process of consolidating motor carriers would result in some diminution of competition and might result in the creation of monopolies. To prevent the latter effect and to make certain that the former was permitted only where appropriate to further the national transportation policy, it placed in the Commission power to control such developments.26 The national transportation policy re-
In short, the Commission must estimate the scope and appraise the effects of the curtailment of competition which will result from the proposed consolidation and consider them along with the advantages of improved service, safer operation, lower costs, etc., to determine whether the consolidation will assist in effectuating the over-all transportation policy. Resolving these considerations is a complex task which requires extensive facilities, expert judgment and considerable knowledge of the transportation industry. Congress left that task to the Commission “to the end that the wisdom and experience of that Commission may be used not only in connection with this form of transportation, but in its coordination of all other forms.” 79 Cong. Rec. 12207. “The wisdom and experience of that commission,” not of the courts, must determine whether the proposed consolidation is
IV.
The Commission found, as has been noted, that the proposed consolidation would result in improved transportation service, greater efficiency of operation and substantial operating economies. The higher load factor on trucks, reduction in the number of trucks used and the mileage traversed would lead to more efficient use of equipment and save motor fuel. Terminal facilities would be consolidated and used more effectively, through movement of freight would reduce costs and in a multitude of other ways the stability and safety of the service rendered would be enhanced.27 The Commission also considered the extent to which competition among the merging carriers would be diminished, the effects of the consolidation on competing carriers and the consequences for transportation service and motor carrier operations in general in the areas affected. It found that in each of the areas served by the present components of the merger there are from 44 to more than 100 Class I carriers, many
The Commission determined, on the basis of facts appearing in the record and its experience with other consolidations, that it was not likely that Associated‘s size and competitive advantages would enable it to control the price and character of interchange traffic, to drain off substantial amounts of shippers’ business or in other ways to smother the competition of other motor carriers. It concluded that ample competition would remain and, weighing all the factors, that the consolidation was “consistent with the public interest.”
Necessarily in its inquiry the Commission had to speculate to some extent as to the future consequences and effects of a present consolidation. But it based its judgment on available facts as to present operations and business practices and past experience with transportation operations and analogous transactions.
We cannot say that the Commission measured “the public interest” by standards other than those Congress provided or that its findings do not comply with the requirements of the Act. The material findings are supported by evidence; and while a more meticulous regard for its function might have impelled the Commission to accede to the Anti-Trust Division‘s request for certain information from other shippers bearing on the question of
V.
Appellants also attack the propriety of the Commission‘s conclusion that Associated is not, and would not be, on consummation of the consolidation, “affiliated” with any railroad. Whatever might have been the case if Arrow had been included in the merger, a different question is presented by the orders now under review.
“That if . . . any person which is controlled by a [rail] carrier, or affiliated therewith within the meaning of paragraph (6), is an applicant in the case of any such proposed transaction involving a motor carrier, the Commission shall not enter such an order unless it finds that the transaction proposed will be consistent with the public interest and will enable such carrier to use service by motor vehicle to public advantage in its operations and will not unduly restrain competition.”
“For the purposes of this section a person shall be held to be affiliated with a carrier if, by reason of the relationship of such person to such carrier (whether by reason of the method of, or circumstances surrounding organization or operation, or whether established through common directors, officers, or stockholders, a voting trust or trusts, a holding or investment company or companies, or any other direct or indirect means), it is reasonable to believe that the affairs of any carrier of which control may be acquired by such person will be managed in the interest of such other carrier.”
The only relevant evidence now pointing toward affiliation of the applicant with rail carriers are the facts that Kuhn, Loeb and Company indirectly owns 9,000 shares
Accordingly the judgment is
Affirmed.
MR. JUSTICE MURPHY is of the opinion that the judgment should be reversed.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BLACK concurs, dissenting:
I think that the Commission misconceived its authority under the merger and consolidation provisions of the Act. I agree that the Commission is not to measure motor vehicle consolidations by the standards of the anti-trust acts. Such a construction would make largely meaningless, as the opinion of the Court demonstrates, the power of the Commission under
I agree that the standard of the “public interest” which governs mergers and consolidations under
But I am of the opinion that the concept of the “public interest” as used in
For these reasons I would resolve the ambiguities of the Act in favor of the maintenance of free enterprise. If that is too niggardly an interpretation of the Act, Congress can rectify it. But if the Commission is allowed to take the other view,1 a pattern of consolidation will have been approved which will allow the cartel rather than the competitive system to dominate this field. His-
But there is anothеr phase of the case which in my view requires a reversal of the judgment below. The Commission has allowed the investment banker of railroad companies to be represented on the board of the motor vehicle company. It did so after a finding that it was not “reasonable to believe that the affairs of applicant would be managed in the interest of any railroad” and therefore that the motor vehicle company would not be affiliated with any railroad within the meaning of the Act.
I agree that if