399 F.2d 953 | D.C. Cir. | 1968
This is a petition by Northern Natural Gas Company (Northern) and its subsidiary, Northern Natural Gas Transportation Company (Northern Transportation), to review an order of the Federal Power Commission. The challenged order, issued June 20, 1967, authorized the Great Lakes Gas Transmission Company, a Delaware corporation owned jointly by Trans-Canada Pipe Lines Limited and American Natural Gas Company, to construct and operate a 989-mile, 36-ineh, natural gas pipeline extending from the Canadian border in northern Minnesota through northern Wisconsin and the Upper Peninsula of Michigan, across the straits of Mackinac, and through the lower Michigan peninsula to the Canadian border at Sarnia, Ontario.
Simultaneously with the approval of the Great Lakes proposal, the Commission rejected a competitive application by Northern and Northern Transportation which proposed that the Canadian gas imported into northern Minnesota be utilized by Northern in its northern Minnesota markets and that Northern Transportation fulfill the needs of Michigan Consolidated and Trans-Canada by transporting domestic gas, originating in southwestern United States, from Northern’s terminal at Ogden, Iowa, through Michigan to the Canadian border at Sarnia, Ontario. To accomplish this exchange-displacement, Northern Transportation would have constructed a 285-mile, 36-ineh pipeline from Emerson, Manitoba, to Sandstone, Minnesota, and a 731-mile, 36-inch line from Ogden, Iowa, to Sarnia, Ontario.
Both proposals contemplated exportation of gas from northern Michigan to Sault Sainte Marie (in each case this would entail construction of a short lateral line) and additional importation of 116,000 Mcf per day of Canadian gas by Midwestern Gas Transmission Company and sale of this gas to Michigan Wisconsin Pipe Line Company. Thus the essential difference between the proposals was that Great Lakes would utilize an entirely new pipeline to transport Canadian gas from western Canada to eastern Canada whereas Northern and Northern
The principal question raised by this petition is whether the Great Lakes joint venture substantially lessened actual or potential competition and, if so, whether the Commission adequately took account of this factor. Although the Commission is not bound by the dictates of the antitrust laws, it is clear that antitrust concepts are intimately involved in a determination of what action is in the public interest, and therefore the Commission is obliged to weigh antitrust policy. People of State of California v. F. P. C., 369 U.S. 482, 484-485, 82 S.Ct. 901, 8 L.Ed.2d 54 (1962); United States v. Borden Co., 308 U.S. 188, 198-199, 60 S.Ct. 182, 84 L.Ed.181 (1939); Lynch-burg Gas Co. v. F. P. C., 119 U.S.App. D.C. 23, 27, 30-31, 336 F.2d 942, 946, 949-950 (1964) ; City of Pittsburgh v. F. P. C., 99 U.S.App.D.C. 113, 126, 237 F.2d 741, 754 (1956); Pennsylvania Water & Power Co. v. F. P. C., 89 U.S.App.D.C. 235, 240, 193 F.2d 230, 235 (1951), affirmed, 343 U.S. 414, 72 S.Ct. 843, 96 L.Ed. 1042 (1952).
I
Petitioners have challenged the Commission’s handling of the antitrust issues on three basic grounds: (1) the refusal by Trans-Canada either to deliver Canadian gas to petitioners or to purchase domestic gas from petitioners, the refusal by Michigan Consolidated to purchase gas from petitioners, and Midwestern’s refusal to participate in petitioners’ project constituted an illegal group boycott which contaminated the comparative proceeding conducted by the Commission and prejudiced petitioners’ application; (2) the Commission’s finding that the potential benefits from competition between Great Lakes and Northern in the taeonite region of northern Minnesota outweighed the possible benefits afforded by the entry of Northern Transportation into the lower Great Lakes region was not supported by substantial evidence; and (3) the joint venture resulted in an illegal division of the consumer market between Trans-Canada and American Natural, substantially lessened competition between United States distributors for the supply of Canadian gas, and illegally eliminated competition between independent applicants (Trans-Canada versus American Natural and Midwestern) in a Commission comparative proceeding.
It is the latter ground which is most troubling. The group boycott, though undesirable, did not overtly affect this proceeding because the Commission weighed petitioners’ proposal as if the threatened boycott did not exist. As
A. The Relevance of Antitrust Law to Regulatory Agencies.
Even though the Commission concedes that it must consider the antitrust implications of its action, in order to determine the required extent of that consideration we think it helpful to examine the overall relationship between antitrust law and regulatory agencies. Despite a continuing debate,
This theory of complementary regulation appears to be borne out by the Supreme Court cases holding that regulated industries must, to some degree at least, accommodate the antitrust laws. F. M. C. v. Aktiebolaget Svenska Amerika Linien, 390 U.S. 238, 88 S.Ct. 1005, 19 L.Ed.2d 1071 (1968) (ocean carriers); United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965) (labor union); United States v. El Paso Natural Gas Co., 376 U.S. 651, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964) (natural gas distributors); United States v. Philadelphia National Bank, 374 U.S. 321, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963) (banking); Silver v. New York Stock Exchange, 373 U.S. 341, 83 S.Ct. 1246, 10 L.Ed.2d 389 (1963) (stock exchange); United States v. Radio Corporation of America, 358 U.S. 334, 79 S.Ct. 457, 3 L.Ed.2d 354 (1959) (television communication); Georgia v. Pennsylvania R. Co., 324 U.S. 439, 65 S.Ct.
The complementary regulation theory is also supported by congressional directives requiring certain regulatory agencies to enforce portions of the antitrust laws.
This is not to suggest, however, that regulatory agencies have jurisdiction to determine violations of the antitrust laws. See People of State of California v. F. P. C., supra, 369 U.S. at 490, 82 S.Ct. 901; United States v.
*960 “in the Interstate Commerce Commission where applicable to common car-o riers subject to the Interstate Commerce Act, as amended; in the Federal Communications Commission where applicable to common carriers engaged in wire or radio communication or radio transmission of energy; in the Civil Aeronautics Board where applicable to air carriers and foreign air carriers subject to the Civil Aeronautics Act of 1938; in the Federal Reserve Board where applicable to banks, banking associations, and trust companies; and in the Federal Trade Commission where applicable to all other character of commerce * *
In 1961 Trans-Canada concluded that the growing demand for gas in eastern Canada necessitated additional facilities to supplement the gas then being carried by its Canadian pipeline. Trans-Canada subsequently determined that it would be advantageous to build the new pipeline through the United States because: (1) it would be more economical than “looping” (building a parallel line) its existing line and again traversing the solid granite of the pre-Cambrian shield in Ontario, and (2) a United States line offered the potential of expanding Trans-Canada’s export sales. This interest in marketing gas to United States distributors while moving additional gas to eastern Canada
As a result of these preliminary discussions, American Natural and Trans-Canada carried on joint studies to determine the feasibility of a joint project. The parties were unable, however, to reach an agreement on the division of ownership and the amount of gas to be purchased by Michigan Wisconsin, the American Natural subsidiary. Consequently, Trans-Canada decided to have Great Lakes, a wholly owned subsidiary incorporated in Delaware, construct and operate a 36-inch pipeline following the route now planned for the joint venture. In accord with Section 7 of the Natural Gas Act, 15 U.S.C. § 717f (1964 ed.), Trans-Canada sought the approval of the Commission.
Shortly thereafter American Natural and Midwestern formulated an alternative to the transportation proposed by Trans-Canada, whereby Midwestern would take gas from Trans-Canada and transport it to Wisconsin, to be utilized there by Michigan Wisconsin in its domestic market, and Michigan Wisconsin would transport domestic gas from its Michigan storage fields to the Canadian border. Before submitting this alterna
Before the Commission had an opportunity to conduct competitive hearings on these mutually exclusive proposals, Trans-Canada and American Natural, subsequently joined by Midwestern, reopened their negotiations for a joint venture. As a result of these negotiations, the three companies withdrew their previous competitive proposals and in their places filed the joint Great Lakes proposal which has been certificated by the Commission. Different reasons were expressed for the withdrawals of the three parties and their concurrence in the Great Lakes joint venture which was to be owned equally by American Natural and Trans-Canada : Mr. E. H. Holstead, a vice president of Trans-Canada and vice president and general manager of Great Lakes, stated that Midwestern withdrew its prior application on the condition that Trans-Canada would sell to it, and Michigan Wisconsin would buy from it, an additional 113,000 Mcf of gas. Mr. Hol-stead further stated that Trans-Canada would not have withdrawn its original proposal unless Michigan Consolidated agreed to purchase 57,000 Mcf of gas, and, although no direct statements were discovered in the record which revealed the thinking of American Natural, other statements made therein and its oral argument make it clear that it was willing to withdraw its prior application and make additional purchases of Canadian gas under the subsequent joint proposal in order to guarantee itself a portion of the ownership of Great Lakes and a more direct link with the Canadian supply.
C. The Standards for Determining Whether the Joint Venture Was Contrary to Antitrust Policies.
The antitrust law most relevant to these facts is Section 7 of the Clayton Act:
“No corporation engaged in commerce shall acquire * * * the whole or any part of the stock or other share capital * * * of another corporation * * * where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.” 15 U.S.C. § 18 (1964 ed.).
The Supreme Court has emphasized many times that the purpose of Section 7 is “to arrest * * * the tendency to monopoly, before the consumer’s alternatives disappeared through merger * United States v. Philadelphia National Bank, 374 U.S. 321, 367, 83 S.Ct. 1715, 1744 (1963). (Emphasis by the Court.) In determining the applicability of Section 7 in specific cases, the judiciary has considered various elements. We may quickly dispose of several of these. First, the natural gas industry is obviously a “line of commerce,” United States v. El Paso Natural Gas Co., supra, 376 U.S. at 657, 84 S.Ct. at 1744, and the pipelines are in interstate commerce. Second, the relevant geographic market is easily defined by reference to the disputed pipelines. Also, it is no longer questioned that Section 7 applies to the acquisition of newly formed companies, such as this joint venture, as well as to the acquisition of companies already engaged in commerce. United States v. Penn-Olin Co., 378 U.S. 158, 167-168, 84 S.Ct. 1710, 12 L.Ed.2d 775 (1964). Thus the only unanswered question is whether the probable effect of the joint venture is substantially to lessen competition.
The Commission concluded that American Natural’s purchase of a 50 per cent interest in Great Lakes would not have a detrimental effect on competition because “there cannot be competition for * * * the transportation of western
1. Competition Among Suppliers in the Michigan-Wisconsin Market.
In considering the first of these anti-competitive effects, two facts should be recalled: (1) American Natural is the dominant supplier in Michigan and Wisconsin, supplying over 50 per cent of the gas utilized in both states
In determining whether the formation of the joint venture precluded this competition and, if it did, whether this competition would have been substantial, two questions must be considered: (1) Was Great Lakes, as a wholly-owned subsidiary of Trans-Canada, a probable entrant to the Michigan-Wisconsin market — that is, was Great Lakes a true potential competitor? (2) Could competition between Great Lakes and American Natural have a substantial effect on the marketing of natural gas in Wisconsin and Michigan?
The Supreme Court has suggested that, in deciding whether one is a true potential competitor, consideration should be given to “the nature or extent of [the] market, the nearness of the absorbed company to it, that company’s eagerness to enter the market, its resourcefulness, and so on.”
“This is not a field where merchants are in a continuous daily strug*964 gle to hold old customers and to win new ones over from their rivals. In this regulated industry a natural gas company (unless it has excess capacity) must compete for, enter into, and then obtain Commission approval of sale contracts in advance of constructing the pipeline facilities. In the natural gas industry pipelines are very expensive; and to be justified they need long-term contracts for sale of the gas that will travel them. * * * Once the Commission grants authorization to construct facilities or to transport gas in interstate commerce, once the distributing contracts are made, a particular market is withdrawn from competition. The competition then is for the new increments of demand that may emerge with an expanding population and with an expending industrial or household use of gas.” 376 U.S. at 659-660, 84 S.Ct. at 1049. (Emphasis by Mr. Justice Douglas.)
In this case the additional demand in the eastern Canadian market made a new pipeline feasible. Because this market is reached most easily by traversing a part of the large Lower Michigan market, now dominated by American Natural, and also the as yet undeveloped Upper Peninsula, there was additional incentive for Trans-Canada to seek the right to construct a pipeline to eastern Canada. In fact, every application made for the right to carry gas to eastern Canada contemplated the construction of a pipeline with a capacity in excess of the amount of gas needed to meet the Canadian demands since each hoped to market the excess gas in Michigan. Thus the nature and extent of the market would have been attractive to the Trans-Canada subsidiary.
The second consideration — the nearness of the absorbed company to the market — also suggests that the Trans-Canada subsidiary was a true potential competitor. Trans-Canada has a market and pipelines on both sides of the Michigan-Wisconsin market and, therefore, a link between the two was reasonable and practicable from a business viewpoint. This is obvious in light of Trans-Canada’s conclusion that a pipeline traversing the United States would be a more economical means of transporting gas to eastern Canada than looping its existing line in Canada.
Finally, it appears that Trans-Canada possessed the desire and resources to enter the market. Its intent is clearly demonstrated by its original application. And the mere size of its present operation would suggest that financing would not hinder its entry. Thus all factors indicate that a wholly-owned Trans-Canada subsidiary could have entered the Michigan-Wisconsin market.
If a wholly-owned subsidiary of Trans-Canada would have become an actual competitor of suppliers in Michigan and Wisconsin, we believe that the effect would have been substantial and that the northern Wisconsin and Michigan markets could have expected significant benefits. This is so, in large part, because competition, even in a regulated industry, secures benefits which might otherwise be unattainable. Admittedly the Commission possesses a rate-making power and this power is designed to protect the consumers of natural gas.
Consider the types of natural gas markets which exist. There are some markets which are natural monopolies — that is, where the most efficient allocation of resources results in a single supplier.
The above analysis suggests what might happen in a tight oligopoly market. But in practice it appears that firms selling in such a market do not always seek a uniform monopoly price and, if sought, do not always attain it. Among the reasons why uniform monopoly prices are not sought or attained is that one seller may believe he can maximize his profits by expanding his total sales rather than by taking a maximum profit on each sale. Also, even the mere addition of one seller to an oligopoly market makes the market more complex and less predictable.
One instance of such activity in a tight oligopoly market within the natural gas industry was noted by the Supreme Court in United States v. El Paso Natural Gas Co., supra, 376 U.S. at 654-655, 84 S.Ct. 1044. There Pacific Northwest Pipeline Corporation, a potential supplier to the California natural gas market, sought, in an attempt to gain entrance to that market, to attract a major customer from El Paso. Pacific Northwest offered lower prices and an un-interruptible supply to this customer whose El Paso supply was then subject to interruption during peak demands. Although El Paso was able to hold this customer and thereby prevent Pacific Northwest from entering the California market, it was able to do so only by giving the customer a. firm supply and by dropping its selling price 25 per cent. It is significant that these benefits were initially the result, not of Commission regulation to which El Paso had always been subjected, but rather of the competition of a single potential entrant to the market. Thereafter, since Section 4(b) of the Natural Gas Act, 15 U.S.C. § 717 c(b) (1964 ed.), prohibits suppliers of natural gas from maintaining preferential and unreasonable rates and Section 5(a), 15 U.S.C. § 717 d(a) (1964 ed.), empowers the Commission to set reasonable rates after it has established that the prior rates were unjust, it is probable that at least a portion of the 25 per cent drop in selling price enjoyed by this single customer who was the subject of the competition was subsequently extended to other customers of El Paso as well. Thus it appears that the competition and direct regulation would complement each other to the benefit of consumers generally.
This example demonstrates the important role competition can play as a complementary force in regulated industries. In the instant case, as the Commission recognized. Trans-Canada’s excess gas could have been marketed in the taconite area of northern Minnesota where Northern now enjoys a monopoly position.
In its analysis of the joint venture in the instant case, the Commission ignored these potential benefits of in
It should also be noted that the fact situation in the instant case presents the
“ * * * The rule of United States v. El Paso Natural Gas Co., 376 U.S. 651 [84 S.Ct. 1044, 12 L.Ed.2d 12] (1964), where a corporation sought to protect its market by acquiring a potential competitor, would, of course, apply to a joint venture where the same intent was present in the organization of the new corporation.” 378 U.S. at 170, 84 S.Ct. at 1716.32
Finally, we note that, although Congress has limited entry into natural gas markets by providing that new pipelines may not be built without prior certification of public convenience and necessity, 15 U.S.C. § 717 f(c) (1964 ed.),it has not evinced an intention to restrict competition among qualified operators or a preference for monopoly service. To the contrary, the language of the Natural Gas Act carefully guards against such inferences. Thus the provision relating to the granting of certification is stated positively:
“ * * * [A] certificate shall be issued to any qualified applicant * * if it is found that the applicant is able and willing properly to do the acts and to perform the service proposed and to conform to the [relevant law and regulations] * * * and that the proposed service * * * is or will*969 be required by the present or future public convenience and necessity * * Section 7(e), Natural Gas Act, 15 U.S.C. § 717 f(e) (1964 ed.).
And Section 7(g) of the Natural Gas Act provides •
“Nothing contained in this section shall be construed as a limitation upon the power of the Commission to grant certificates of public convenience and necessity for service of an area already being served by another natural-gas company.” 15 U.S.C. § 717f(g) (1964 ed.).
In accord with this statutory language, this court approved the Commission’s certification of an American Natural subsidiary seeking to invade the territory previously monopolized by Panhandle Eastern Pipe Line Company, and in so doing made the following observa-.yon.
* * * [N]othmg m the Natural Gas Act suggests that Congress thought monopoly better than competítion or one source of supply better than two, or intended for any reason to give an existing supplier of natural gas for distribution in a particular community the privilege of furnishing an increased supply. * * * ” Panhandle Eastern Pipe Line Co. v. F. P. C., 83 U.S.App.D.C. 297, 300, 169 F.2d 881, 884, cert. denied, 335 U.S. 854, 69 S.Ct. 81, 94 L.Ed. 402 (1948).
And in Lynchburg Gas Co. v. F. P. C., su/pra, 119 U.S.App.D.C. at 30-31, 336 F.2d at 949-950,
"* * * Investors in the natural gas industry, although granted an opportumty for a ‘fair return’, are by no means guaranteed freedom from risk °r competition. Such assurance would, 311 a case suc.^ as ^s’ deprive competi^ors ri£ht 1° compete, inhibit efficient allocation of resources and deny ultimate consumers the lowest prices to which they are entitled.”
In sum, Congress, the Supreme Court, and this court have concurred in the belief that competition has a role to play in the natural gas industry. Both
2. Competition Between Canadian Source Gas and United States Source Gas.
In addition to the effect on suppliers marketing gas to consumers and distribution companies in Michigan and Wisconsin, the joint venture appears to have eliminated competition between Trans-Canada, the only source of Canadian gas east of the Rocky Mountains, and United States sources of supply. That is, the joint venture agreement gave Trans-Canada an assured outlet for additional sales of 170,000 Mcf of gas per day without having to compete with United States sources.
From the beginning, it was obvious that the major reason Trans-Canada sought a United States partner in its venture to transport gas from western to eastern Canada was to help Trans-Canada market gas in the United States. Thus E. H. Holstead, the general manager of Trans-Canada, testified that one of the principal reasons Trans-Canada preferred a United States pipeline over a second Canadian line was to afford Trans-Canada greater access to United States markets. He further said that Trans-Canada was “particularly” interested in combining with United States companies which were “distributor-oriented” and that Trans-Canada “would not have entered into [the joint venture] agreement [with American Natural] without [the] sales [to Michigan Consolidated] .”
American Natural agreed to purchase this gas despite the fact that its system had an excess capacity of 300 to 350 MMcf of gas per day which could be utilized with greater flexibility to transport United States gas to its markets at prices equal to or less than the cost of the Canadian gas delivered at Marshfield, Wisconsin. When Karl E. Schmidt, vice president and chief engineer for American Natural, was asked why American Natural agreed to the purchase when it had this excess capacity, the only answer which was forthcoming was:
“Well * * * as you know * * we are a partner in the Great Lakes Transmission Company and the gas which we purchase and make a market for, as far as Great Lakes is concerned, enhances Great Lakes’ economics and that certainly was a consideration given in our incentive in being a purchaser at this time.”
From the above it is clear that .Trans-Canada will be able to market an additional 170,000 Mcf of gas per day in the United States without having to meet or beat the competition provided by United States source gas, and that American Natural’s agreement to purchase this gas through its subsidiaries was part of the bargaining price it had to pay in order to obtan a half interest in the joint venture. This had an effect not only on those who market United States gas at its source, but ultimately on the consumers in the American Natural system. The staff of the Commission detected this and commented:
“ * * * Thus the consumers of Michigan Wisconsin and Michigan Consolidated, to whom service could be rendered more readily and more economically through the combined American Natural System, are the sacrificial pawns by which American Natural received (1) half ownership in Great Lakes and (2) Midwestern’s quiet acquiescence in the withdrawal of their joint competitive proposal.”
To conclude this discussion of the antitrust issues, we believe that the joint venture substantially lessened competition among suppliers in the Michigan-Wisconsin consumer market and between Trans-Canada and suppliers of gas from United States sources. Unless the Commission finds that other important considerations militate in favor of the joint venture and that these considerations are more beneficial to the public than additional competition, the antitrust policies should be respected and the joint venture set aside.
D. Other Undesirable Effects of the Joint Venture.
The joint venture has two other undesirable effects which should have been weighed by the Commission. The first of these relates to its effects on administrative proceedings in general; the second to the opportunity it provides for future anticompetitive activities.
Petitioners have aptly noted that comparative proceedings before regulatory agencies are “sensitive mechanism [s] for weighing the relative merits of * * * rival * * * projects” and one of the “main competitive arenas” of the natural gas industry since it is there that the sellers challenge one another for the favor of the Commission. This process could easily be distorted if the Commission per-mitteed potential applicants to get together to decide how a market would be divided before submitting their proposals to the Commission, for then private parties rather than the Commission would be determining what means of meeting a market demand is most closely in accord with the public interest. We cannot permit such an abrogation of administrative responsibility.
The danger of allowing parties to agree among themselves prior to submitting their proposals to the Commission becomes all the more apparent when it is remembered that the Commission’s power is largely a negative one; it must rely heavily on private initiative to propose projects to meet consumer needs. Indeed, the judiciary has many times emphasized the importance of maintaining free and vital proposals. Thus the
“One of the most important duties of a public utility, inherent in its franchise to serve the public, is the duty to take the initiative in proposing reasonable rates and rendering adequate services, taking into account changing conditions; and the utility is not relieved from this duty because its activities are subject to governmental regulation, for a regulatory commission is not clothed with the responsibility or qualified to manage the utility’s business. * * * ”37 (Footnote omitted.)
Because independent proposals are so important to the administrative process, the Commission as well as this court must be chary about permitting corporate agreements which limit the nature of the proposals submitted to the Commission. There are few opportunities for consumers of natural gas to choose among the several suppliers offering a variety of services and prices. It is therefore extremely important that a competitive edge be maintained in Commission proceedings. This will increase the chance that the public will be given better service at a lower price. If the Commission determines, after reviewing individual proposals, that a joint project would be more advantageous, it can at that time refuse to certify the individual plans and itself suggest a joint application.
A second undesirable aspect of the joint venture is that it increases the risk of joint action between the parents in future endeavors. This increased risk was recognized in Timken Roller Bearing Co. v. United States, 341 U.S. 593, 600, 71 S.Ct. 971, 976, 95 L.Ed. 1199 (1951), where Mr. Justice Black said, with respect to an international joint venture, that if it were “not severed, the inter-company relationships will provide in the future, as they have in the past, the temptation and means to engage in the prohibited conduct.” Commentators considering this aspect of joint ventures have concurred in this analysis, explaining the phenomenon as follows:
“ * * * The joint venture puts the parents, particularly if they are competitors, in dangerous proximity to discuss and act jointly on aspects of their business apart from the joint venture and creates an aura of cooperative team spirit which is apt to dampen competitive fires between the firms involved. * * * ”38 (Footnote omitted.)
There is certainly the opportunity for such joint action from the parents in the instant case since here the officers of the joint venture are not only named by the parent companies but also serve as officers of those companies. There are many forms which this joint action may take. One form has already made its appearance: the threatened joint boycott of Northern and Northern Transportation if their proposals had been certificated. A second possibility is reciprocal dealing —that is, American Natural may continue to buy from Trans-Canada only if Trans-Canada promises not to sell to any competitors of American Natural,
E. Prior Agency Orders of the Federal Power Commission and the Securities and Exchange Commission.
Intervenors, not the Commission, have suggested that the prior Commission order dated August 6, 1965, permitting Trans-Canada and Michigan Wisconsin and Midwestern to withdraw their competitive proposals, and the order of the Securities and Exchange Commission authorizing American Natural to acquire 50 per cent of the stock of the joint venture, should be respected, and that accordingly we are precluded from requiring the Power Commission to weigh the joint venture against antitrust policies. We disagree.
As for the prior order of the Power Commission, it should be recognized that it was merely an “order granting withdrawal of [the competitive] applications and terminating [the] proceeding” for weighing the original Trans-Canada proposal and the Michigan Wisconsin and Midwestern proposal against the public interest. In issuing the order, the Commission clearly did not intend to put a stamp of approval on the joint venture, for, apart from the fact that the parties anticipated submitting a joint proposal, the Commission had no knowledge of the joint venture. And it must be assumed that its order was made in the belief that any future proposal would have to endure a full certification proceeding.
Moreover, the duty imposed upon the Commission by Section 7 of the Natural Gas Act is not merely to determine which of the submitted applications is most in the public interest, but also to give proper consideration to logical alternatives which might serve the public interest better than any of the projects outlined in the applications.
The Securities and Exchange Commission order permitting American Natural to acquire the joint venture stock is more troublesome. The S.E.C. order was sought and obtained because American Natural is a registered public utility holding company and, as such, requires S.E.C. approval before extending its holdings. Although some of the factors which are relevant to the Power Commis
II
A second question raised on appeal is whether there is substantial evidence in the record to support the conclusions of the Commission with respect to cost analysis, expansibility of the proposed pipelines, and supply analysis. We find substantial evidence to support all conclusions other than two aspects of the cost analysis.
The Commission’s initial opinion stated that in final analysis the costs of the joint venture were less than the costs of petitioners’ project:
“ * * * [W]e are convinced * * that the alleged rate savings to Trans-Canada and Michigan Consolidated under [the Northern] proposal would be but shortrun.”
But in the opinion following the rehearing, the Commission stated:
“ * * * We are fully aware of the cost savings intrinsic in an exchange*975 transaction and the benefits that may result to consumers. However, here we find, as set out in our original opinion, that Northern Natural will incur significant costs which in a rate case would appear allocable to Northern Transportation’s proposed service to Trans-Canada and Michigan Consolidated. Such an allocation does not deny that savings might arise from the exchange transaction; but it would alter the economics of the Northern proposal by increasing the costs alloca-ble to Trans-Canada and Michigan Consolidated to the point where those costs would exceed the cost of the Great Lakes proposal. * * * ”
The Commission’s conclusion is unfounded. In the initial opinion the Commission found that Northern Transportation’s costs were understated because: (1) it failed to add the additional $14,-000,000 investment Northern would have to make in Minnesota in order to accommodate the Canadian gas; and (2) it failed to attribute to Northern Transportation any of the costs of transporting gas from its United States source to Ogden, Iowa, which the Commission alleged was necessary under its rolled-in-costs system of determining rates.
While it may be true that Northern would have to invest $14,000,000 to handle the Canadian gas, Northern also claimed that by utilizing the Canadian gas in Minnesota it would save an additional expenditure of $29,000,000 which was otherwise necessary to meet the Minnesota market demand with gas from United States sources. Since this claimed saving was not disputed by the Commission, it seems that Northern would in fact experience a $15,000,000 saving in investment costs.
As for allocating to Northern Transportation part of the transportation cost incurred by Northern in transporting the gas to Ogden, Iowa, this would not detract from the overall savings of petitioners’ project. True, it would effect a rise in the costs of the Northern Transportation project which would be reflected in higher rates for its customers. But such a shift in costs would produce a corresponding decrease in costs allocable to Northern, thereby permitting lower rates for its customers. Since the public interest which the Commission is obliged to consider includes all natural gas resources and consumers, this overall saving should have been treated as a beneficial aspect of petitioners’ exchange-displacement project.
The second aspect of the cost analysis which is faulty relates to the Commission’s justification of the cost estimates of the joint venture. The staff’s mini
The Commission rejected this adjustment by its staff, saving that “the Great Lakes estimate * * * was not only substantiated by the testimony of Mr. David Williams, Jr., of the Williams Brothers Construction Co., but that company offered to complete the major construction effort within the Great Lakes estimate.” Careful review of Mr. Williams’ testimony in the joint appendix does not reveal any testimony attempting to justify a 13.5 per cent adjustment for raising cost figures to obtain an approximation of the costs of installing 36-inch pipe. Nor were we able to discover any “offer” by Williams to complete the Great Lakes project within his estimates.
“Q. Does William Brothers intend to submit a bid to Great Lakes should they get certificated? A. Well, it depends upon the prior commitments that we may have. * * * [W]e would be prepared to submit a proposal for the work in 1967 — that is, the remaining eight hundred-some-odd miles— within our estimate, with possibly the contingency that applies strictly to the construction alone. * * * I doubt if we would submit on individual sections.”
This statement does not foreclose Williams from declining to bid for the work altogether or, if a bid is made, from adjusting his costs; it is not an offer to complete the job within the previous cost estimates. We do not mean to suggest that the Commission could not have accepted a lower adjustment factor than was indicated by its 1965 study, but only that it was imprudent to do so for the reasons it has advanced.
Thus we believe that the Commission did not have sufficient evidence to accept the Great Lakes cost estimate in its entirety, and that the estimated cost saving of petitioners’ proposal has not been adequately explored.
Ill
The final question raised by petitioners is whether the corporate structure of Great Lakes, which gives each owner a veto power over the principal actions of the corporation, renders Great Lakes incapable of discharging its responsibilities as a regulated natural gas company. We find this contention without merit. As the Commission has noted, in most instances there would be a sufficient community of interest between
IV
To conclude, we find that the Commission failed to apply proper standards to determine relevant antitrust policy and consequently ignored significant anti-competitive effects of the joint venture. We therefore remand this case for further consideration in accord with this opinion. On reconsideration the Commission should weigh the foreseeable gains from limited competition along with other economic, social and political factors encompassed within the “public interest” concept.
In remanding this case, we are fully aware of the pressures under which the Commission was working. But, as Mr. Justice Holmes once noted, cases such as this often result in “bad law” because they “exercise a kind of hydraulic pressure which makes what previously was clear seem doubtful, and before which even well settled principles of law will bend.” Northern Securities Co. v. United States, 193 U.S. 197, 400-401, 24 S.Ct. 436, 48 L.Ed. 679 (1904) (dissent). The judiciary and administrative agencies must strive to resist such pressures.
Remanded.
. Besides certificating the construction and operation of the Great Lakes facilities, the Commission issued certificates of public convenience and necessity for construction and operation of facilities to Midwestern Gas Transmission Company and Michigan Wisconsin Pipe Line Company, authorized the transportation, sale, importation and exportation above described, and issued Presidential Permits for the border connections. The requested authorizations are contained in interdependent applications of Great Lakes, Michigan Wisconsin, and Midwestern.
These actions are required by § 7 (e) of the Natural Gas Act, 15 U.S.C. § 717f (c) (1964 ed.):
“No natural-gas company * * * shall engage in the transportation or sale of natural gas * * * or undertake the construction or extension of any facilities therefor, or acquire or operate any such facilities or extensions thereof, unless there is in force with respect to such natural-gas company a certificate of public convenience and necessity issued by the Commission authorizing such acts or operations * * *»
. In addition, Michigan Consolidated has an option to take another 50,000 Mcf per day in the fifth year. S.E.C. opinion, March 7, 1966 (Holding Company Act Release No. 15422), reprinted in Appendix B of intervenors’ brief, pp. 4a, 6a.
. Just last year the Supreme Court summarized the responsibility of the regulatory agencies in this regard:
“ * * * Both the ICC and this Court have read terms such as ‘public interest’ broadly, to require consideration of all important consequences including anticompetitive effects. Thus the ICC is required to weigh anticom-petitive effects in approving applications for merger or control under § 5 of the Act, authorizing the ICC to grant such applications only if ‘consistent with the public interest.’ McLean Trucking Co. v. United States, 321 U.S. 67 [64 S.Ct. 370, 88 L.Ed. 544], And similarly broad responsibilities are encompassed within like broad directives addressed to other agencies. E. g., National Broadcasting Co. v. United States, 319 U.S. 190, 224 [63 S.Ct. 997, 87 L.Ed. 1344]; F. C. C. v. RCA Communications, Inc., 346 U.S. 86, 94 [73 S.Ct. 998, 97 L.Ed. 1470]; [People of State of] California v. F. P. C., 369 U.S. 482, 484-485 [82 S.Ct. 901, 903, 8 L.Ed.2d 54].”
Denver & Rio Grande Western R. Co. v. United States, 387 U.S. 485, 492-493, 87 S.Ct. 1754, 1759, 18 L.Ed.2d 905 (1967).
. See Symposium, on Regulated Industries and Antitrust, 32 A.B.A. Antitrust L.J. 215 (1966). Much of this debate seems to center on the objection of practicing lawyers to dealing with two heads of United States agencies on a single problem. That is, they com plain that there are unnecessary complications when an antitrust question arises in a regulated industry because it often requires them to deal with not only the relevant regulatory agency but also the Department of Justice. It appears that this problem could be alleviated if the regulatory agencies were conscientiously to examine the antitrust implications of their actions, thereby taking much of the burden from the Department of Justice. This may have been one of the objectives of the recent Savings and Loan Holding Company Amendments, Pub.L. 90-255, § 408 (e), 90th Cong., 2d Sess., 36 U.S.L. Week 77 (February 6, 1968).
. See Lynchburg Gas Co. v. F. P. C., 119 U.S.App.D.C. 23, 31, 336 F.2d 942, 950 (1964); California v. F. P. C., 111 U.S.App.D.C. 226, 231-232, 296 F.2d 348, 353-354 (1961), reversed, 369 U.S. 482, 82 S.Ct. 901 (1962); Symposium, supra Note 4, at 239-242 (Zimmerman).
. In the original enactment, Congress stated that it was “the intention of Congress that natural gas shall be sold in interstate commerce for resale for ultimate public consumption for domestic, commercial, industrial, or any other use at the lowest possible reasonable rate consistent with the maintenance of adequate service in the public interest.” Natural Gas Act, 52 Stat. 825 (1938).
. Section 11 of the Clayton Act, 15 U.S.C. § 21(a) (1904 ed.), vests authority to enforce compliance with § 7 by the persons subject thereto
. Section 20(a) of the Natural Gas Act, 15 U.S.O. § 717s(a) (1964 ed.).
. Savings and Loan Holding Company Amendments, supra Note 4; Bank Merger Act, 12 U.S.C. § 1828(c) (1964 ed.); Civil Aeronautics Act, 49 U.S.C. § 488(b) (1964 ed.); Interstate Commerce Act, 49 U.S.C. § 5(2) (c) (1964 ed.).
. F. M. C. v. Aktiebolaget Svenska Amerika Linien, 390 U.S. 238, 243-246, 88 S.Ct. 1005 (1968); People of State of California v. F. P. C., 369 U.S. 482, 484-485, 82 S.Ct. 901 (1962); United States v. Radio Corporation of America, 358 U.S. 334, 351-352, 79 S.Ct. 457 (1959); National Broadcasting Co. v. United States, 319 U.S. 190, 222-224, 73 S.Ct. 998 (1943).
. See Seaboard Air Line R. Co. v. United States, 382 U.S. 154, 86 S.Ct. 277, 15 L.Ed.2d 223 (1965); Pan American World Airways, Inc. v. United States, 371 U.S. 296, 83 S.Ct. 476, 9 L.Ed.2d 325 (1963); McLean Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370 (1944). Also note the exceptions mentioned above which the F. M. O. has written into its policy.
. Trans-Canada now exports gas into Minnesota at Emerson, Manitoba, and into Vermont east of Lake Champlain.
. Petitioners allege that American Natural supplies over 50 per cent of the gas used in Wisconsin and over 78 per cent of Michigan’s gas. American Natural contends that it supplies just over 50 per cent.
. Great Lakes Gas Transmission Company’s Application for Certificate of Public Convenience and Necessity, Docket No. CP65-171. Petitioners have alleged that Trans-Canada proposed to serve in the United States 93 communities, four major iron ore producing areas, an extensive pulp and paper industry and public and privately-owned power generating plants, and that Trans-Canada estimated that the gas sold in the United States would produce revenues of more than $23,000,000 a year.
The Commission found that by the fifth year of operation (1970-71) the certificated Great Lakes pipeline, which is essentially the same as the one proposed originally, would carry approximately 734,000 Mcf/day, and be capable of carrying an additional 86,000 Mcf/day merely by increasing the compression of the system. It further found that by the fifth year of operation approximately 224,000 M2cf/year (about 612,000 Mcf/day) would be transported to eastern Canada. Therefore, approximately 248,000 Mcf/day, or 30 per cent of the capacity of the system, would be available for marketing in the United States.
. Professor Brodley has criticized this mode of analysis as being too dependent on subjective factors and has argued that a superior test for determining potential entrants would be one resting primarily on the nearness of the market to the potential entrant. Brodley, Oligopoly Power Under the Sherman, and Clayton Acts — From Economic Theory to Legal Policy, 19 Stan.L.Rev. 285, 335 (1967).
. Sections 4 and 5 of the Natural Gas Act, 15 U.S.O. §§ 717c and 717d (1964 ed.).
. See Symposium supra Note 4, 32 A.B.A. Antitrust L.J. at 240 (Zimmerman) .
. Section 5(a) of the Natural Gag Act, 15 Ü.S.O. § 717d(a) (1964 ed.).
. Professors Kaysen and Turner defined a natural monopoly as follows:
“In the economic sense, natural monopoly is monopoly resulting from economies of scale * * * such that one firm of efficient size can produce all or more than the market can take at a remunerative price, and can continually expand its capacity at less cost than that of a new firm entering the business.”
C. Kaysen & D. Turner, Antitrust Policy 191 (1959).
. A tight oligopoly market is one which is highly concentrated and which has been defined as a market in which eight or fewer firms supply over 50 per cent of the market, with the largest firm at least 20 per cent. A partial monopoly is defined as a market in which one supplier controls 60 per cent of the market and no other single seller has a significant proportion. C. Kaysen & D. Turner, supra Note 19, at 72. As noted earlier, American Natural supplies over 50 per cent of the Wisconsin and Michigan markets. Two other suppliers compete with American Natural in Lower Michigan, and Northern competes with it in a small corner of northern Michigan.
. Because the number of competitors is so small and because the demand is generally inelastic, one seller cannot significantly increase his market share without causing a significant decrease in the market shares held by his competitors. See Brodley, supra Note 15, 19 Stan. L.Rev. at 289. See yenerally E. Cham-berlin, Theory oe Monopolistic Competition (8th ed. 1962).
. See Brodley, supra Note 15, 19 Stan.L. Rev. at 289-290.
. IMd.; C. Kaysen & D. Turner, supra Note 19, at 25.
. Brodley, supra Note 15,19 Stan.LRev. at 290.
. See Brodley, supra Note 15, 19 Stan. L.Rev. at 291 n. 20:
“ ‘[A] three-person game is very fundamentally different from a two-person game, a four-person game from a three-person game, etc. The combinatorial complications of the problem . . . increase tremendously with every increase in the number of players . . . Whenever the number of players, i. e. of participants in a social economy, increases, the complexity of*966 the economic system usually increases too; e. g. the number of commodities and services exchanged, processes of production used, etc.’ J. Yon Neumann & O. Morgenstern, Theory oe Games and Economic Behavior 13 (3d ed. 1953). See also [E.] Machlue, [The Economics oe Sellers’ Competition], at 429-30.”
. The Commission has the power to maximize the effectiveness of limited competition by specifying the service area in which the certified pipeline may compete. See § 7(e) (f) of the Natural Gas Act, 15 U.S.C. § 717f(e) (f) (1964 ed.).
. It seems that competition would be more likely to develop sooner here than in the taconite region because it is a virgin market which a wholly-owned Trans-Canada subsidiary could seek immediately without waiting for the expiration of long-term contracts which encumber the taconite market. The development of this northern Michigan market was a factor which contributed to the Commission’s conclusion that the route of the joint venture pipeline was more in the public interest than was the proposal of the petitioners.
. American Natural is not utilizing excess capacity or making possible other economies of scale. It is merely paying one-half the cost of the new line. In fact, American Natural may be sacrificing economies of scale in order to protect its market from an independent competitor. See § 1, O, 2 of text, infra. Although the certifications granted by the Commission would result in Midwestern’s utilizing some of its excess capacity to bring Canadian gas to the Michigan Wisconsin Pipe Line Company, this was technically unrelated to the joint venture project after the second year.
If on remand Michigan Wisconsin and Midwestern choose to file their original proposal and Great Lakes again files an independent application, the Commission may find it necessary to weigh, along with other factors, the advantages of the limited competition offered by an independent Great Lakes against certain economies of scale which Michigan Wisconsin and Midwestern might be able to demonstrate. A recent opinion of the Supreme Court indicates that the former is entitled to substantial weight. See Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 141-142, 87 S.Ct. 932, 17 L.Ed.2d 814 (1967), wherein the Court overturned the District Court divestiture decree ordered in United States v. El Paso Natural Gas Co., 376 U.S. 651, 662, 84 S.Ct. 1044 (1964), thereby indicating its preference for some overlapping facilities in order to obtain meaningful competition between the parent company and the divested company.
. El Paso sought to accomplish the merger by purchasing the stock of Pacific Northwest and later acquiring the assets. After the Department of Justice had challenged the stock acquisition, El Paso sought to immunize the merger from § 7 of the Clayton Act by obtaining the approval of the Power Commission for the asset transfer and arguing that the proviso in § 7 was intended to preclude the Department of Justice from attacking a merger receiving the approval of the Commission. The Supreme Court rejected this argument. People of State of California v. F. P. C., supra Note 10. The effect of the proviso need not be considered here as this case only raises the question what the Commission must examine before approving an acquisition, not the question what significance this approval has.
. In such a market, the entry of the joint venture would actually decrease market concentration. Contrast the instant case, where the joint venture increases American Natural’s share of the market and thereby decreases market competition.
. After remand to the District Court for a determination of this question, the District Court found that neither participant in the joint venture would have entered the market by itself and, therefore, again gave judgment to the defendants. The Department of Justice has again appealed to the Supreme Court. 36 U.S.L. Week 3233 (December 12, 1967).
. See generally Brodley, supra Note 15, 19 Stan.L.Rev. 329-337. After recognizing that some joint ventures may be in the public interest for a variety of reasons, id. at 333, none of which are applicable to this ease, Professor Brodley comments:
“* * * Thus, to suggest the scope of the problem, if (1) the parents’ market is highly concentrated, (2) at least one of the parents has a significant market share, and (3) the joint venture is horizontal, then any supposed advantage from the increase in the number of competitors in the market as a result of the joint venture seems wholly illusory. Indeed, the most probable result of the formation of the joint venture would be to add to the already excessive market share of the parent or parents. It must be assumed that parent and progeny will not compete, but will work together to extract a joint maximum return from the market they influence together.” Id. at 335.
. But see Pennsylvania Water & Power Co. v. F. P. C., 89 U.S.App.D.C. 235, 193 F.2d 230 (1951), affirmed, 343 U.S. 414, 72 S.Ct. 843, 96 L.Ed. 1042 (1952), where a divided panel of this court affirmed a Commission proceeding approving certain rates even though foundation contracts upon which the rates depended had previously been found to be in violation of the antitrust laws. The majority there concluded:
“ * * * But where a statute provides for comprehensive and detailed regulation of a particular industry, as to the Interstate Commerce Act * * * and the Federal Power Act, there is, as we have indicated, only a limited area for application of antitrust considerations to Commission decisions.” 89 U.S.App.D.C. at 240, 193 F.2d at 235. (Footnotes omitted.) The underlying rationale of this case seems to have been eroded by subsequent decisions in this court and in the Supreme Court and, therefore, does not appear to be controlling. See, e. fir., F. M. C. v. Aktiebolaget Svenska Amerika Linien, supra Note 10; People of State of California v. F. P. C., supra Note 10. Furthermore, within a few months of the decision in Pennsylvania Water <& Power, the Fourth Circuit considered a related case and rejected the above reasoning, Consolidated Gas Electric Light & Power Co. of Baltimore v. Pennsylvania Water & Power Co., 4 Cir., 194 F.2d 89, cert. denied, 343 U.S. 963, 72 S.Ct. 1056, 96 L.Ed. 1360 (1952). See also Pennsylvania Water & Power Co. v. Consolidated Gas, Electric Light & Power Co., 4 Cir., 184 F.2d 552, cert. denied, 340 U.S. 906, 71 S.Ct. 282, 95 L.Ed. 655 (1950). Finally, even in Pennsylvania Water & Poioer the court recognized that “regulated industries are not per se exempt from the antitrust laws and repeals by implication are not favored,” and therefore the court only said that “the antitrust laws are superseded by more specific regulatory statutes to the extent of the repugnancy between them.” 89 U.S.App.D.C. at 240, 193 F.2d at 235. (Emphasis by Hle court.) For the reasons already set 0UC we believe that to a large degree the objectives of the Natural Gas Act and antitrust laws are not repugnant but rather complementary,
. 113,000 Mcf of gas per day was to be purchased by Michigan Wisconsin from Midwestern, which in turn purchased an additional 113,000 from Trans-Canada. Michigan Consolidated agreed to take 57,-000 Mcf of gas per day from Great Lakes, whose gas was also supplied by Trans-Canada.
. One of the main purposes of tying this sale-purchase into this proceeding seems to have been to avoid a Commission rejection of the Great Lakes project because Midwestern’s excess capacity was not being utilized.
. Pennsylvania Water & Power Co. v. F. P. C., supra Note 33, 89 U.S.App.D.C. at 241, 193 F.2d at 236.
. Pennsylvania Water & Power Co. v. Consolidated Gas, Electric Light & Power Co., supra Note 33, 184 F.2d at 567. See also Baltimore & Ohio R. Co. v. United States, 386 U.S. 372, 437, 87 S.Ct. 1100 (1967) (Mr. Justice Brennan concurring) ; Georgia v. Pennsylvania R. Co., 324 U.S. 439, 458-460, 65 S.Ct. 716 (1945).
. Brodley, supra Note 15, 19 Stan.L.Rev. at 333-334. See also C. Kaysen & D. Turner, supra Note 19, at 138; Comment, 26 Ohio L.J. 439, 441 (1965).
. The temptation to apply this type of pressure is made obvious by the following testimony of Ray J. Lynch, vice president of Michigan Wisconsin:
“We know that each day gas is getting tighter here in the States * * *. And we feel very strongly that the long-range gas supply for our area, and, indeed, for many areas in the U. S. will be Western Canadian gas. And we want to be there to protect ourselves, and our customers.”
. The Commission noted this duty in its brief and gave partial recognition to it in its opinion by considering the merits of the staff proposal.
. This S. E. C. approval conceivably may prohibit the courts from ever determining if this joint venture violates § 7 of the Clayton Act. The proviso to § 7 states: “Nothing contained in this section shall apply to transactions duly consummated pursuant to authority given by the * * * Federal Power Commission, * * * the Securities and Exchange Commission in the exercise of its jurisdiction under section 79j [the Public Utilities Holding Company Act], * * * or the Secretary of Agriculture * * 15 U.S.C. § 18 (1964 ed.). Although none of the parties attempted to do so, it is possible to argue that if the Power Commission denied the joint venture application on the basis of policy underlying the broad prohibition of § 7 of the Clayton Act, then the Commission would be frustrating the policy of the proviso. That is, if the Department of Justice could not attack the joint venture on the basis of § 7, after the S. E. C. approved it, how can the Power Commission utilize § 7 for defining public policy?
In the first place it is far from clear that the approval of the S. E. C. would immunize the joint venture from a § 7 violation since this proviso has been restrictively interpreted in favor of the broader policy of § 7. People of State of California v. F. P. C., supra Note 10 (Power Commission approval of acquisition does not immunize agreement from pending Justice Department antitrust suit); cf. Maryland & Virginia Milk Producers Ass’n v. United States, 362 U.S. 458, 80 S.Ct. 847 (1960) (acquisition is not immune from antitrust suit since authority of Secretary of Agriculture to approve marketing arrangements is narrowly construed). Secondly, even if the S. E. C. approval of American Natural’s acquisition of the Great Lakes stock prevented the courts from finding American Natural in violation of § 7 of the Clayton Act, neither statutory language nor policy would prohibit the Power Commission from relying on § 7 policy in determining the public interest. The Power Commission is obliged to take those steps most likely to accomplish an efficient allocation of natural gas resources and give consumers better service at a lower price. To find that prior approval by the S. E. C. precludes the Power Commission from relying on the general policy underlying § 7 would permit the limited exception to § 7 to not only frustrate the broader § 7 prohibition but also the broader policy of the Natural Gas Act.
. The staff of the Commission, while recognizing many other drawbacks to petitioners’ proposal, concluded:
“Northern Natural, by including in its application a means whereby its customers could profit through an avoidance of construction costs, has injected that single instance in the combined applications which contemplates a positive benefit to United States consumers. * * * ”
. The Commission contends that it would be fallacious reasoning to recognize this saving because “the Commission * * * would be burdened with the impossible task of determining to what service or customers the cost of any particular new facility should be attributed.” We reject this contention. First, petitioners’ claimed savings do not require such an allocation; rather, they merely ask the Commission to recognize a total saving, irrespective of whether it is enjoyed by the customers of Northern or Northern Transportation. Second, the “impossible task” of allocating the costs of a common service between petitioners is precisely what the Commission performed to defeat petitioners’ proposals.
. The staff prefaced its adjustments with this statement:
“ * * * These adjustments were made only where the record fully supported the new figures. When certain cost estimates were the subject of contradictory statements, as between those of witnesses for Great Lakes and those of Northern Natural, the staff utilized the Great Lakes figures. * * * ”
. Certain adjustments were made which were favorable to the joint venture so that the total upward adjustment was only $3,000,000.
. He did say that his firm would be willing to construct the Mackinac Straits crossing for the amount of his estimate.
. We note in passing that the Commission attached significant weight to the national security interests promoted by having a United States company participate in the management of the Great Lakes pipeline. Recognizing that in any event the supply for this pipeline will be controlled solely by Canadian interests and that Great Lakes will be a Delaware corporation subject to Commission regulation, we find it less than obvious how national security is advanced. If the Commission again chooses to rely on this factor, the reasons should be explained more fully.