Charging violations of §§ 1, 2, and 3 of the Sherman Act, the
United States brought this civil suit against Pan American World
Airways, W. R. Grace & Co., and their jointly owned subsidiary,
Pan American-Grace Airways (Panagra). The complaint alleged that,
when Pan American and Grace organized Panagra in 1928, they agreed
that Pan American and Panagra would not parallel each other's air
routes, that this was a combination and conspiracy in restraint of
trade and monopolization and attempted monopolization of air
transportation between the United States and South America, and
also that Pan American had used its control over Panagra to prevent
it from obtaining authority from the Civil Aeronautics Board to
extend its route from the Canal Zone to the United States. The
District Court found that Pan American had violated § 2 of the
Sherman Act by suppressing Panagra's efforts to extend its route
from the Canal Zone to this country, and it ordered Pan American to
divest itself of its stock in Panagra; but it dismissed the
complaint against Grace and Panagra, holding that none of their
practices violated the Sherman Act.
Held: the narrow questions presented by this complaint
had been entrusted by Congress to the Civil Aeronautics Board, and
the entire complaint should have been dismissed. Pp.
371 U. S.
298-313.
(a) Since enactment of the Civil Aeronautics Act in 1938, the
airline industry has been regulated under a regime designed to
change the prior competitive system, and the Federal Aviation Act
of 1958 made no changes relevant to the problem presented by this
case. Pp.
371 U. S.
300-301.
(b) Under § 411 of the Federal Aviation Act of 1958, the Civil
Aeronautics Board has jurisdiction over "unfair practices" and
"unfair methods of competition," even though they originated prior
to 1938. Pp.
371 U. S.
302-303.
Page 371 U. S. 297
(c) In regulating air carriers, the Board is to deal with at
least some antitrust problems. In addition to its power under §
411, it is given authority by §§ 408, 409, and 412 over
consolidations, mergers, purchases, leases, operating contracts,
acquisition of control of an air carrier, interlocking relations,
pooling arrangements, etc.; and the Clayton Act is enforced by the
Board insofar as it is applicable to air carriers. P.
371 U. S.
304.
(d) The legislative history indicates that the Civil Aeronautics
Board was intended to have broad jurisdiction over air carriers
insofar as most facets of federal control are concerned. P.
371 U. S.
304.
(e) This Court does not hold, however, that there are no
antitrust violations left to the Department of Justice to enforce.
Pp.
371 U. S.
304-305.
(f) The Acts charged in this suit as antitrust violations are
precise ingredients of the Board's authority in granting,
qualifying, or denying certificates to air carriers, in modifying,
suspending, or revoking them, and in allowing or disallowing
affiliations between common carriers and air carriers. Pp.
371 U. S.
305-306.
(g) Whatever the unfair practice or unfair method employed, §
411 of the Act was designed to bolster and strengthen antitrust
enforcement. Section 411 is patterned after § 5 of the Federal
Trade Commission Act, and cases interpreting § 5 are relevant in
determining the meaning of § 411; but the application of § 411 in
any given situation must be determined in light of the standards
set by the Civil Aeronautics Act. Pp.
371 U. S.
306-308.
(h) The Act leaves to the Board under §411 all questions of
injunctive relief against the division of territories or the
allocation of routes or against combinations between common
carriers and air carriers. Pp.
371 U. S.
308-310.
(i) The Board's power to issue a "cease and desist" order is
broad enough to include the power to compel divestiture where the
problem lies within the purview of the Board. Pp.
371 U. S.
311-313.
193 F.
Supp. 18 reversed and cause remanded.
Page 371 U. S. 298
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
This is a civil suit brought by the United States charging
violations by Pan American, W. R. Grace & Co., and Panagra of
§§ 1, 2, and 3 of the Sherman Act, 15 U.S.C. §§ 1, 2, and 3. This
suit, which the Civil Aeronautics Board requested the Attorney
General to institute, charged two major restraints of trade. First,
it is charged that Pan American and Grace, each of whom owns 50% of
the stock of Panagra, formed the latter under an agreement that
Panagra would have the exclusive right to traffic along the west
coast of South America free from Pan American competition, and that
Pan American was to be free from competition of Panagra in other
areas in South America and between the Canal Zone and the United
States. Second, it is charged that Pan American and Grace conspired
to monopolize and did monopolize air commerce between the eastern
coastal areas of the United States and western coastal areas of
South America and Buenos Aires. Pan American was also charged with
using its 50% control over Panagra to prevent it from securing
authority from the CAB to extend its route from the Canal Zone to
the United States. [
Footnote
1]
Page 371 U. S. 299
In 1928, when Pan American and Grace entered into an agreement
to form Panagra, [
Footnote 2]
air transportation was in its infancy, and this was the first entry
of an American air carrier on South America's west coast. Pan
American in 1930 acquired the assets of an airline competing with
it for air traffic from this country to the north and east coasts
of South America, and received a Post Office air mail subsidy
contract. [
Footnote 3]
The District Court found that there was no violation by Pan
American and Grace of § 1 of the Sherman Act through the division
of South American territory between Pan American and Panagra.
[
Footnote 4] It held, however,
that Pan
Page 371 U. S. 300
American violated § 2 of the Sherman Act by suppressing
Panagra's efforts to extend its route from the Canal Zone to this
country -- in particular, by blocking Panagra's application to the
Civil Aeronautics Board for a certificate for operation north of
the Canal Zone. [
Footnote 5] It
indicated that Pan American should divest itself of Panagra stock.
But it directed dismissal of the complaint against Grace and
against Panagra, holding that none of their respective practices
violated the Sherman Act.
193 F.
Supp. 18. Both Pan American and the United States come here on
direct appeals (15 U.S.C. § 29), and we postponed the question of
jurisdiction to the merits. 368 U.S. 964, 966.
When the transactions now challenged as restraints of trade and
monopoly were first consummated, air carriers were not subject to
pervasive regulation. In 1938, the Civil Aeronautics Act (52 Stat.
973) was passed, which
Page 371 U. S. 301
was superseded in 1958 by the Federal Aviation Act, 72 Stat.
731, 49 U.S.C. § 1301
et seq., the latter making no
changes relevant to our present problem. Since 1938, the industry
has been regulated under a regime designed to change the prior
competitive system. As stated in S.Rep. No. 1661, 75th Cong., 3d
Sess., p. 2,
"Competition among air carriers is being carried to an extreme
which tends to jeopardize the financial status of the air carriers
and to jeopardize and render unsafe a transportation service
appropriate to the needs of commerce and required in the public
interest, in the interests of the Postal Service, and of the
national defense."
Some provisions of the 1938 Act deal only with the future, not
the past. Such, for example, are the provisions dealing with
abandonment of routes (§ 401(k)), with loans or financial aid from
the United States (§ 410), and with criminal penalties. § 902. The
Act, however, did not freeze the
status quo nor attempt to
legalize all existing practices. Thus, § 401 requires every "air
carrier" to acquire a certificate from the Board, a procedure being
provided whereby some could obtain "grandfather" rights. By §
401(h), the Board has authority to alter, amend, modify, or suspend
certificates whenever it finds such action to be in the public
interest.
Section 409, in regulating interlocking relations between air
carriers and other common carriers or between air carriers and
those "engaged in any phase of aeronautics," looks not only to the
future, but to the past as well. For the prohibition is that no air
carrier may "have and retain" officers or directors of the
described classes. Section 408, which is directed at
consolidations, mergers, and acquisition of control over an "air
carrier," makes it unlawful, unless approved by the Board, for any
"common carrier" to "purchase, lease, or contract to operate the
properties" of an "air carrier" or to "acquire control of any air
carrier in any manner whatsoever" or to "continue
Page 371 U. S. 302
to maintain any relationship established in violation of any of
the foregoing" provisions of § 408(a). By § 408(b), a common
carrier is taken to be an "air carrier" for the purposes of § 408;
and transactions that link "common carriers" to "air carriers"
shall not be approved unless the Board finds that
"the transaction proposed will promote the public interest by
enabling such carrier other than an air carrier to use aircraft to
public advantage in its operation and will not restrain
competition."
We do not suggest that Grace, a common carrier, need get the
Board's approval to continue the relationship it had with Panagra
when the 1938 Act became effective. [
Footnote 6] It is clear, however, that the Board, under §
411 of the 1958 Act, has jurisdiction over "unfair practices" and
"unfair methods of competition" even though they originated prior
to 1938.
That section provides.
"The Board may, upon its own initiative or upon complaint by any
air carrier, foreign air carrier, or ticket agent, if it considers
that such action by it would be in the interest of the public,
investigate and determine whether any air carrier, foreign air
carrier, or ticket agent
has been or is engaged in unfair
or deceptive
practices or
unfair methods of
competition in air transportation or the sale thereof. If the
Board shall find, after notice and hearing, that such air carrier,
foreign air carrier, or ticket agent is engaged in such
unfair or deceptive
practices or
unfair
methods of competition, it shall order such air carrier,
foreign air carrier, or ticket agent to cease and desist from such
practices or methods of competition."
(Italics added.) 49 U.S.C. § 1381.
Page 371 U. S. 303
The words "has been or is engaged in unfair . . . practices or
unfair methods of competition" plainly include practices started
before the 1938 Act and continued thereafter, [
Footnote 7] as well as practices instituted after
the effective date of the Act.
The parentage of § 411 is established. As the Court stated in
American Airlines v. North American Airlines, 351 U. S.
79,
351 U. S. 82,
this section was patterned after § 5 of the Federal Trade
Commission Act, [
Footnote 8]
and "[w]e may profitably look to judicial interpretation of § 5 as
an aid in the resolution of . . . questions raised . . . under §
411." As respects the "public interest" under § 411, the Court
said:
". . . the air carriers here conduct their business under a
regulated system of limited competition. The business so conducted
is of especial and essential concern to the public, as is true of
all common carriers and public utilities. Finally, Congress has
committed the regulation of this industry to an administrative
agency of special competence that deals only with the problems of
the industry."
Id., 351 U. S.
84.
Page 371 U. S. 304
The Board, in regulating air carriers, is to deal with at least
some antitrust problems. Apart from its power under § 411, it is
given authority by §§ 408 and 409, as already noted, over
consolidations, mergers, purchases, leases, operating contracts,
acquisition of control of an air carrier, and interlocking
relations. Pooling and other like arrangements are under the
Board's jurisdiction by reason of § 412. Any person affected by an
order under §§ 408, 409 and 412 is "relieved from the operations of
the
antitrust laws,'" including the Sherman Act. § 414. The
Clayton Act, insofar as it is applicable to air carriers, is
enforceable by the Board. 52 Stat. 973, 1028, § 1107(g); 15 U.S.C.
§ 21.
There are various indications in the legislative history that
the Civil Aeronautics Board was to have broad jurisdiction over air
carriers, insofar as most facets of federal control are
concerned.
The House Report stated:
"It is the purpose of this legislation to coordinate in a single
independent agency all of the existing functions of the Federal
Government with respect to civil aeronautics, and, in addition, to
authorize the new agency to perform certain new regulatory
functions which are designed to stabilize the air transportation
industry in the United States."
H.R.Rep.No.2254, 75th Cong., 3d Sess., p. 1.
No mention is made of the Department of Justice and its role in
the enforcement of the antitrust laws, yet we hesitate here, as in
comparable situations, [
Footnote
9] to hold that
Page 371 U. S. 305
the new regulatory scheme adopted in 1938 was designed
completely to displace the antitrust laws -- absent an
unequivocally declared congressional purpose so to do. While the
Board is empowered to deal with numerous aspects of what are
normally thought of as antitrust problems, those expressly
entrusted to it encompass only a fraction of the total. Apart from
orders which give immunity from the antitrust laws by reason of §
414, the whole criminal law enforcement problem remains unaffected
by the Act.
Cf. United States v. Pacific & Arctic Co.,
228 U. S. 87,
228 U. S. 105.
Moreover, on the civil side, violations of antitrust laws other
than those enumerated in the Act might be imagined. We, therefore,
refuse to hold that there are no antitrust violations left to the
Department of Justice to enforce.
That does not, however, end our inquiry. Limitation of routes
and divisions of territories and the relation of common carriers to
air carriers are basic in this regulatory scheme. The acts charged
in this civil suit as antitrust violations are precise ingredients
of the Board's authority in granting, qualifying, or denying
certificates to air carriers, in modifying, suspending, or revoking
them, and in allowing or disallowing affiliations between common
carriers and air carriers. [
Footnote 10] The case is therefore quite unlike
Georgia v. Pennsylvania R. Co., supra, where a conspiracy
among carriers for the fixing of through and joint rates was held
to constitute a cause of action under
Page 371 U. S. 306
the antitrust laws, in view of the fact that the Interstate
Commerce Commission had no power to grant relief against such
combinations. [
Footnote 11]
And see United States v. RCA, 358 U.
S. 334,
358 U. S. 346.
And the present Act does not have anything comparable to the
history of the Capper-Volstead Act, which we reviewed in
Maryland and Virginia Milk Producers Assn. v. United
States, 362 U. S. 458, and
which showed that farmer-producers were not made immune from the
class of predatory practices charged in that civil suit as
antitrust violations.
Id., pp.
362 U. S.
464-467.
The words "unfair . . . practices" and "unfair methods of
competition," as used in § 411, contain a "broader" concept than
"the common law idea of unfair competition."
American Airlines
v. North American Airlines, supra, 351 U. S. 85.
They derive, as already noted, from the Federal Trade Commission
Act, and their meaning in the setting of that Act has been much
discussed. They do not embrace a remedy for private wrongs, but
only a means of vindicating the public interest.
Federal Trade
Comm'n v. Klesner, 280 U. S. 19,
280 U. S. 25-30.
The scope of "unfair practices" and "unfair methods of competition"
was left for case-by-case definition. The Senate Report stated:
"It is believed that the term 'unfair competition' has a legal
significance which can be enforced by the commission and the
courts, and that it is no more difficult to determine what is
unfair competition than it is to determine what is a reasonable
rate or what is an unjust discrimination. The committee was of
Page 371 U. S. 307
the opinion that it would be better to put in a general
provision condemning unfair competition than to attempt to define
the numerous unfair practices, such as local price cutting,
interlocking directorates, and holding companies intended to
restrain substantial competition."
S.Rep.No. 597, 63d Cong., 2d Sess., p. 13.
The legislative history was reviewed in
Federal Trade Comm'n
v. Raladam Co., 283 U. S. 643,
283 U. S.
649-650, the Court concluding that "unfair competition
was that practice which destroys competition and establishes
monopoly."
Id., 283 U. S. 650.
The provision was designed to supplement the Sherman Act by
stopping
"in their incipiency those methods of competition which fall
within the meaning of the word 'unfair.' . . . All three statutes
[the Sherman and Clayton Acts and § 5] seek to protect the public
from abuses arising in the course of competitive interstate and
foreign trade. [
Footnote
12]"
Id., 283 U. S. 647.
See Federal Trade Comm'n v. Beech-Nut Co., 257 U.
S. 441,
257 U. S.
453-454;
Federal Trade Comm'n v. R. F. Keppel &
Bro., 291 U. S. 304,
291 U. S.
310-312; 2 Toulmin's Anti-Trust Laws (1949) § 43.6.
Joint ventures may be combinations in violation of the antitrust
laws.
Timken Roller Bearing Co. v. United States,
341 U. S. 593,
341 U. S. 598.
Whatever the unfair practice or unfair method employed, § 411 of
this Act, like § 5 of the Federal Trade Commission Act (
Federal
Trade Comm'n v. Motion Picture Adv. Co., 344 U.
S. 392,
344 U. S.
394-395), was designed to bolster and strengthen
antitrust enforcement.
We have said enough to indicate that the words "unfair
practices" and "unfair methods of competition" are not limited to
precise practices that can readily be catalogued. They take their
meaning from the facts of each case and
Page 371 U. S. 308
the impact of particular practices on competition and
monopoly.
These words, transferred to the Civil Aeronautics Act, gather
meaning from the context of that particular regulatory measure and
the type of competitive regime which it visualizes.
Cf.
American Power & Light Co. v. Securities & Exchange
Comm'n, 329 U. S. 90,
329 U. S.
104-105. That regime has its special standard of the
"public interest" as defined by Congress. The standards to be
applied by the Board in enforcing the Act are broadly stated in §
2:
"In the exercise and performance of its powers and duties under
this chapter, the Board shall consider the following, among other
things, as being in the public interest, and in accordance with the
public convenience and necessity --"
"(a) The encouragement and development of an air transportation
system properly adapted to the present and future needs of the
foreign and domestic commerce of the United States, of the Postal
Service, and of the national defense;"
"(b) The regulation of air transportation in such manner as to
recognize and preserve the inherent advantages of, assure the
highest degree of safety in, and foster sound economic conditions
in, such transportation, and to improve the relations between, and
coordinate transportation by, air carriers;"
"(c) The promotion of adequate, economical, and efficient
service by air carriers at reasonable charges, without unjust
discriminations, undue preferences or advantages, or unfair or
destructive competitive practices;"
"(d) Competition to the extent necessary to assure the sound
development of an air transportation system properly adapted to the
needs of the foreign and domestic commerce of the United States, of
the Postal Service, and of the national defense; "
Page 371 U. S. 309
"(e) The regulation of air commerce in such manner as to best
promote its development and safety; and"
"(f) The encouragement and development of civil
aeronautics."
52 Stat. 980.
And see 49 U.S.C. § 1302.
The "present and future needs" of our foreign and domestic
commerce, regulations that foster "sound economic conditions," the
promotion of service free of "unfair or destructive competitive
practices," regulations that produce the proper degree of
"competition" -- each of these is pertinent to the problems arising
under § 411.
It would be strange indeed if a division of territories or an
allocation of routes which met the requirements of the "public
interest" as defined in § 2 were held to be antitrust violations.
It would also be odd to conclude that an affiliation between a
common carrier and an air carrier that passed muster under § 408
should run afoul of the antitrust laws. Whether or not transactions
of that character meet the standards of competition and monopoly
provided by the Act is peculiarly a question for the Board,
subject, of course, to judicial review as provided in 49 U.S.C. §
1486.
Cf. Federal Maritime Bd. v. Isbrandtsen Co.,
356 U. S. 481;
Schaffer Transportation Co. v. United States, 355 U. S.
83.
In case of a prospective application of the Act, the Board's
order, as noted, would give the carrier immunity from antitrust
violations "insofar as may be necessary to enable such person to do
anything authorized, approved, or required by such order." § 414.
Alternatively, the Board, under § 411, can investigate and bring to
a halt all "unfair . . . practices" and all "unfair methods of
competition," including those which started prior to the Act.
[
Footnote 13]
Page 371 U. S. 310
If the courts were to intrude independently with their
construction of the antitrust laws, two regimes might collide.
Furthermore, many of the problems presented by this case, which
involves air routes to and in foreign countries, may involve
military and foreign policy considerations that the Act, as
construed by a majority of the Court in
Chicago & Southern
Air Lines v. Waterman S.S. Corp., 333 U.
S. 103, subjects to presidential, rather than judicial,
review. It seems to us, therefore, that the Act leaves to the Board
under § 411 all questions of injunctive relief against the division
of territories or the allocation of routes or against combinations
between common carriers and air carriers. [
Footnote 14]
See Texas & Pacific R. Co.
v. Abilene Cotton Oil Co., 204 U. S. 426;
Keogh v. Chicago & N.W. R. Co., 260 U.
S. 156.
The fact that transactions occurring before 1938 are involved in
this case does not change our conclusion. The past is prologue, and
the impact of pre-1938 transactions on present problems of air
carriers is eloquently demonstrated in a recent order of the Board
concerning the United States flag carrier route pattern between
this country and South America which is set forth in part in the
371
U.S. 296app|>Appendix to this opinion. The status of Panagra
--
Page 371 U. S. 311
jointly owned by Pan American and Grace -- is central to that
problem, [
Footnote 15] as
that order makes clear. What was done in the pre-1938 days may be
so disruptive of the regime visualized by the Act or so out of
harmony with the statutory standards for competition set by the Act
[
Footnote 16] that it should
be undone in proceedings under § 411. The transactions in question
are reached by the terms of § 411. But, more important, the
particular relation of this problem to the general process of
encouraging development of new fields of air transportation makes
it all the more appropriate that the Board should decide whether
these particular transactions should be undone in whole or in part,
or whether they should be allowed to continue.
It is suggested that the power of the Board to issue a "cease
and desist" order is not broad enough to include the power to
compel divestiture, and that, in any event, its power to do so
under § 411 runs solely to air carriers, not to common carriers or
other stockholders. We do not read the Act so restrictively. The
Board has no power to award damages or to bring criminal
prosecutions. Nor does it,
Page 371 U. S. 312
as already noted, have jurisdiction over every antitrust
violation by air carriers. But where the problem lies within the
purview of the Board, as do questions of division of territories,
the allocation of routes, and the affiliation of common carriers
with air carriers, Congress must have intended to give it authority
that was ample to deal with the evil at hand.
We need not now determine the ultimate scope of the Board's
power to order divestiture under § 411. It seems clear that such
power exists, [
Footnote 17]
at least with respect to the particular problems involved in this
case. Of principal importance here, we think, is the fact that the
Board could have retained such power over these transactions, if
they had occurred after 1938, by so conditioning its grant of
approval. The terms of § 411 do not distinguish between conduct
before or after that date. If the Act is to be administered as a
coherent whole, we think § 411 must include an equivalent power
over pre-enactment events of the kind involved in this case
[
Footnote 18] -- although,
of course,
Page 371 U. S. 313
the Board might find that the historic background of these
pre-1938 transactions introduces different considerations in
formulating a suitable resolution of the problem involved.
We think the narrow questions presented by this complaint have
been entrusted to the Board, and that the complaint should have
been dismissed. [
Footnote
19] Accordingly, we reverse the judgment and remand the case
for proceedings in conformity with this opinion.
So ordered.
MR. JUSTICE CLARK and MR. JUSTICE HARLAN took no part in the
consideration or decision of these cases.
[For dissenting opinion of MR. JUSTICE BRENNAN,
see
post, p.
371 U. S.
319.]
Page 371 U. S. 314
* Together with No. 47,
United States v. Pan American World
Airways, Inc., et al., also on appeal from the same Court.
[
Footnote 1]
Another charge relates to alleged restraints on Panagra by its
two stockholders which the District Court summarized as
follows:
"To a large extent, the evidence of restraints on Panagra in the
categories of joint offices, communications, equipment, publicity
and sales are matters of agreement that must be initially approved
by the CAB and to a large degree have been approved and others are
awaiting approval or extension of approval previously granted."
193 F.
Supp. 18, 22.
[
Footnote 2]
Panagra was organized January 25, 1929, and received, on March
2, 1929, an air mail contract from the Postmaster General
(
see 45 Stat. 248, 1449) even though it was not the lowest
bidder.
See 36 Op.Atty.Gen. 33.
[
Footnote 3]
The District Court said:
"The award of a Post Office contract for each sector of South
America, in effect, assured the American contractor of a monopoly
in that sector insofar as American flag operations were concerned,
and the invaluable assistance of the State Department and Post
Office Department in the carrier's relations with the countries
along its route."
193 F.
Supp. 18, 31.
[
Footnote 4]
The District Court said:
"The State Department actively assisted defendants in defeating
the foreign company designs for monopoly concessions and in
securing American operating rights along their routes. The
contracts awarded by the Post Office Department defined the
international route of the contractor, and so to a large extent
defined the area of development and expansion of any such
contractor. The Post Office policy during the years 1928 to 1938
was to award but one contract for each route, in effect to
subsidize one American carrier in a particular sector. The ideal
route pattern as envisaged by the CAB today is to have two
carriers, Pan American and a merged 'Panagra-Braniff,' and the only
difference from that existing prior to Braniff's entry would be the
extension of 'Panagra-Braniff' to the United States. Competition
among American carriers, under the policy of the Post Office
Department under the foreign mail contracts, was economically
impossible, and most likely detrimental to the sound development of
American flag service, which would have complicated or embarrassed
the effective rendition of diplomatic assistance from the State
Department, and actually cause a waste of public monies.
Competition between Panagra and Pan American certainly was not
encouraged by this government. On the contrary, there appears to
emerge from the evidence presented a definite policy of the
government approving a sort of 'zoning' for the operations of the
American international carriers in the nature of east and west
coast spheres, as was ultimately arranged between Pan American and
Panagra. Agreement not to parallel each other's service in South
America seems perfectly consistent with the air transportation
policy of this country in those formative years."
193 F.
Supp. 18, 34.
[
Footnote 5]
See Panagra Terminal Investigation, 4 C.A.B. 670,
remanded, W. R. Grace & Co. v. CAB, 154 F.2d 271. We
granted certiorari, 328 U.S. 832, and later dismissed the case as
moot, 332 U.S. 827, because Pan American and Panagra had settled
their dispute through an agreement approved by the CAB
(
see note 15
infra), after the CAB had said that joint control of
Panagra by Pan American and Grace was "unhealthy" (4 C.A.B. 670,
678) and that "the joint owners cooperatively should enable Panagra
to apply for access to the east coast of the United States."
Additional Service to Latin America, 6 C.A.B. 857,
914.
[
Footnote 6]
The Board has held that § 408(a) is not retroactive.
Railroad Control of Northeast Airlines, 4 C.A.B. 379, 386.
And see National Air Freight Forwarding Corp. v. CAB, 90
U.S.App.D.C. 330, 335, 197 F.2d 384, 389.
[
Footnote 7]
The Sherman Act was applied to pre-1890 combinations:
United
States v. Trans-Missouri Freight Assn., 166 U.
S. 290,
166 U. S. 342;
Waters-Pierce Oil Co. v. Texas (No. 1),
212 U. S.
86,
212 U. S.
107-108 (Texas version of the Sherman Act);
see also
Cox v. Hart, 260 U. S. 427,
260 U. S. 435;
American P. & L. Co. v. Securities & Exchange
Comm'n, 141 F.2d 606, 625 (C.A.1st Cir.),
affirmed,
329 U. S. 90.
Moreover, as we recently stated in
United States v. E. I.
duPont DeNemours & Co., 353 U. S. 586,
353 U. S.
607,
". . . the test of a violation of § 7 is whether,
at the
time of suit, there is a reasonable probability that the
acquisition is likely to result in the condemned restraints."
(Italics added.)
[
Footnote 8]
The original Act took out from under the jurisdiction of the
Federal Trade Commission "air carriers and foreign air carriers
subject to the Civil Aeronautics Act of 1938." 52 Stat. 973, 1028,
§ 1107(f).
[
Footnote 9]
Cf. Georgia v. Pennsylvania R. Co., 324 U.
S. 439, holding that the Interstate Commerce Act is no
bar to an antitrust suit against a carrier;
United States v.
RCA, 358 U. S. 334,
holding that the Federal Communications Act is no bar to an
antitrust suit against TV and radio licensees;
United States v.
Borden Co., 308 U. S. 188,
308 U. S.
195-199, holding that neither the Agricultural
Adjustment Act nor the Capper-Volstead Act displaced the Sherman
Act; and
California v. Federal Power Comm'n, 369 U.
S. 482, holding that the Clayton Act was not displaced
by the Natural Gas Act.
And see Maryland and Virginia Milk
Producers Assn. v. United States, 362 U.
S. 458.
[
Footnote 10]
In
Pan American-Matson Inter-Island Contract, 3 C.A.B.
540, the Board rejected a proposal for the creation of a joint
company similar to Panagra for service to Hawaii. Such joint
ventures, as we note in the opinion, may be combinations in
violation of the antitrust laws.
See Timken Roller Bearing Co.
v. United States, 341 U. S. 593,
341 U. S.
598.
[
Footnote 11]
It should be noted that the result in
Georgia v.
Pennsylvania R. Co., supra, might today be different as a
result of the Act of June 17, 1948, 62 Stat. 472, which gives the
Interstate Commerce Commission authority to approve combinations of
the character involved in that case and give them immunity from the
antitrust laws.
See S.Rep.No.1511, 79th Cong., 2d Sess.;
H.R.Rep.No.1212, 79th Cong., 1st Sess.; H.R.Rep.No.1100, 80th
Cong., 1st Sess. This Act was passed over a presidential veto.
See 94 Cong.Rec. 8435, 8633.
[
Footnote 12]
And see the debates in 51 Cong.Rec. 11874-11876;
12022-12025; 12026-12032.
[
Footnote 13]
We note in addition that the Board itself has assumed
jurisdiction under changed circumstances in those areas covered by
§ 408, in which it has found only prospective authority.
Railroad Control of Northeast Airlines, supra, note 6
[
Footnote 14]
An "air carrier" is defined in § 1(2) as
"any citizen of the United States who undertakes, whether
directly or indirectly or by a lease or any other arrangement, to
engage in air transportation:
Provided, That the Authority
may by order relieve air carriers who are not directly engaged in
the operation of aircraft in air transportation from the provisions
of this Act to the extent and for such periods as may be in the
public interest."
Whether there might be "a reasonable basis in law" (
Labor
Board v. Hearst Publications, Inc., 322 U.
S. 111,
322 U. S. 131)
for a Board conclusion that Grace is an "air carrier" by reason of
its negative control over Panagra is a matter on which we intimate
no view. We mention the matter so as not to foreclose the question
by any implication drawn from our separate treatment of common
carriers and air carriers.
[
Footnote 15]
Phases of issues related to those in the present litigation have
indeed been before the Board.
Note
5 supra. It held in an investigation that it had no
authority to accomplish the compulsory extension of Panagra's route
to the United States (
Panagra Terminal Investigation, 4
C.A.B. 670), a ruling reviewed by the Court of Appeals, which
remanded the matter to the Board for further consideration.
W.
R. Grace & Co. v. Civil Aeronautics Board, 154 F.2d 271.
Before that controversy had been resolved, Pan American and Panagra
entered a "through flight agreement" which, in essence, provided
that Pan American would charter any aircraft operated by Panagra
from the south to the Canal Zone and operate it on its schedules to
the United States. This agreement, with exceptions not material
here, was approved by the Board.
Pan American-Panagra
Agreement, 8 C.A.B. 50.
[
Footnote 16]
For a discussion of the Board's policy in issuing certificates
to competing air carriers,
see Hale and Hale, Competition
or Control IV: Air Carriers, 109 U. of Pa.L.Rev. 311, 314-318.
[
Footnote 17]
We have heretofore analogized the power of administrative
agencies to fashion appropriate relief to the power of courts to
fashion Sherman Act decrees.
Federal Trade Comm'n v. Mandel
Bros., 359 U. S. 385,
359 U. S.
392-393. Authority to mold administrative decrees is
indeed like the authority of courts to frame injunctive decrees
(
Labor Board v. Express Pub. Co., 312 U.
S. 426,
312 U. S. 433,
312 U. S. 436;
Labor Board v. Cheney Lumber Co., 327 U.
S. 385), subject, of course, to judicial review.
Dissolution of unlawful combinations, when based on appropriate
findings (
Schine Chain Theatres v. United States,
334 U. S. 110,
334 U. S.
129-130), is an historic remedy in the antitrust field,
even though not expressly authorized.
United States v. Crescent
Amusement Co., 323 U. S. 173,
323 U. S. 189.
Likewise, the power to order divestiture need not be explicitly
included in the powers of an administrative agency to be part of
its arsenal of authority, as we held only the other day in
Gilbertville Trucking Co. v. United States, 371 U.
S. 115.
Cf. Federal Trade Comm'n v. Eastman Kodak
Co., 274 U. S. 619.
[
Footnote 18]
There is no express authority for divestiture in either the
Sherman or Clayton Act.
See 15 U.S.C. §§ 4, 25. The
reasoning that supports such a remedy under those Acts is as
applicable to the Board as it is to the courts, and it is as valid
today as it was when originally stated by the first Justice
Harlan:
"All will agree that if the . . . Act be constitutional, and if
the combination in question be in violation of its provisions, the
courts may enforce the provisions of the statute by such orders and
decrees as are necessary or appropriate to that end and as may be
consistent with the fundamental rules of legal procedure."
Northern Securities Co. v. United States, 193 U.
S. 197,
193 U. S.
344.
[
Footnote 19]
If it were clear that there was a remedy in this civil antitrust
suit that was not available in a § 411 proceeding before the CAB,
we would have the kind of problem presented in
Hewitt-Robins,
Inc. v. Eastern Freight-Ways, Inc., 371 U. S.
84, where litigation is held by a court until the basic
facts and findings are first determined by the administrative
agency, so that the judicial remedy, not available in the other
proceeding, can be granted. Nor is this a case where a proceeding
before a second tribunal is desirable (
Thomson v. Magnolia
Petroleum Co., 309 U. S. 478) or
necessary (
General Am. Tank Car Corp. v. El Dorado Terminal
Co., 308 U. S. 422;
Thompson v. Texas Mexican R. Co., 328 U.
S. 134,
328 U. S.
150-151) for an authoritative determination of a legal
question controlling in the first tribunal.
Dismissal of antitrust suits, where an administrative remedy has
superseded the judicial one, is the usual course.
See United
States Nav. Co. v. Cunard S.S. Co., 284 U.
S. 474;
Far East Conference v. United States,
342 U. S. 570,
342 U. S.
577.
|
371
U.S. 296app|
APPENDIX TO OPINION OF THE COURT.
Order No. E-17289
UNITED STATES OF AMERICA
CIVIL AERONAUTICS BOARD
WASHINGTON, D.C.
Adopted by the Civil Aeronautics Board
at its office in Washington, D.C. on the
8th day of August, 1961.
I
n the matter of the
United States-South America Route Case
Docket 12895
ORDER INSTITUTING INVESTIGATION
The Board has decided that it is appropriate at this time to
institute a comprehensive review of the U.S. flag carrier route
pattern between the United States and South America. The most
recent extensive study of that route structure was undertaken in
1946, some 15 years ago. Since then, considerable developments,
hereinafter referred to, have taken place which affect these
services and require the review here contemplated.
Three U.S. carriers are presently certificated to provide the
major services to points in South America. Pan American World
Airways, Inc. (Pan American), is authorized to provide service
between San Francisco, Los Angeles, Houston, New Orleans,
Washington, Philadelphia and New York-Newark, on the one hand, and
points on the north and east coasts of South America including Rio
de Janeiro and Buenos Aires, on the other hand, via points in
Central America and the Caribbean, on route 136. Pan American-Grace
Airways, Inc. (Panagra) is authorized to provide service between
Balboa, Guayaquil, Lima, Santiago and Buenos Aires, via
intermediate points,
Page 371 U. S. 315
primarily along the west coast of South America, on route 146.
Braniff Airways, Inc. (Braniff) is authorized to provide service
between Houston and Miami, on the one hand, and Havana, Balboa,
Bogota, Guayaquil, Lima, Rio de Janeiro and Buenos Aires, on the
other hand, via intermediate points, on route FAM-34. [
Footnote 2/1]
As previously indicated, the basis U.S. flag carrier route
patterns between the United States and South America presently in
effect were established some years ago in the
Additional
Service to Latin America Case, 6 CAB 857 (1946). Matters
involving service between the United States and South America were,
however, further considered in the
New York-Balboa Through
Service Proceeding, Reopened, 18 CAB 501 (1954), 20 CAB 493
(1954), and certain through-service aircraft interchange agreements
were approved as a result of the
New York-Balboa case by
Order E-9481, 21 CAB 1005 (1955). Also, the certification of a Los
Angeles/San Francisco-Guatemala City route, last considered in
Order E-9514, August 3, 1955, permitted Pan American to operate
between the west coast of the United States and points in South
America.
Since the original establishment of the basic South America
route structure, there have been basic changes in technology and
patterns of service. Thus, in 1944, the range of aircraft was
relatively limited, and operational requirements, as well as
economic considerations, required multiple stops on the long-haul
service. Today, available aircraft can, and do, serve the most
distant points on a
Page 371 U. S. 316
nonstop basis. Of the relative attractiveness of nonstop to
multi-stop service in comparable equipment there can be no
question; consequently, the changed technology which has made
nonstop services operationally feasible warrants a careful review
of the economics of such service in relation to the existing and
future route structure. Similarly, changes have taken place in the
competitive picture. Prior to the decision in the
Latin America
Case, supra, Pan American and Panagra operated in competition
with three foreign air carriers. Today, 19 South American foreign
air carriers are authorized to serve the United States-South
America market. There has also been an increase in service within
South America by local carriers. Not only do these services
rendered by non-U.S. flag carriers dilute the potential economic
support for the services of the U.S. carriers, but also they bring
into question the need for point-to-point duplication of such
services. In this connection, we cannot be unmindful of the fact
that the U.S. flag carriers' operations are marginal
economically.
Our concern with the current South America route pattern is not
a recent one. As long ago as 1954, the Board publicly suggested
that the available traffic in South America did not warrant
continuation of three United States flag services. [
Footnote 2/2] In the Interim Opinion in the
New
York-Balboa case,
supra, it was noted that Braniff
was not an effective competitor for South American traffic, and
that the public interest of the United States would be served by
the establishment of a single independent carrier operation between
Houston and Miami, on the one hand, and the points served on the
combined routes of Panagra and Braniff, on the other hand. The
Board then also voiced its interest in making
Page 371 U. S. 317
such a route available to northeastern United States traffic.
The hope then was that the carriers concerned would voluntarily
seek to resolve the problem along the lines suggested. [
Footnote 2/3] In this connection, we were
fully cognizant of the recent institution of a suit by the Attorney
General against Pan American, Panagra, and W. R. Grace and Company,
which, on antitrust grounds, sought divestiture by Pan American and
Grace of their interest in Panagra. However, the principals did not
come forward with a proposal. Instead, the suit was permitted to
proceed to trial and judgment, and it is currently pending possible
review by the United States Supreme Court. [
Footnote 2/4]
Assuming that the District Court's judgment, at least insofar as
it ordered divestiture by Pan American of its interest in Panagra,
is sustained, [
Footnote 2/5] it is
clear that the Board will, in the near future, be called upon to
consider further the consequences of divestiture with respect to
U.S. flag services in South America. And in order for the Board to
be able promptly and effectively to take such further steps as
might be required in the circumstances, it would be well for it to
have considered carefully the overall need for U.S. flag services
in South America in the light of a litigated record.
Since the selection of carrier issues will remain somewhat
clouded until final resolution of the pending antitrust
Page 371 U. S. 318
suit, it appears appropriate and in the interest of a sound and
orderly disposition of this proceeding to consider separately the
appropriate route structure prior to consideration of selection of
carrier matters. We recognize that factual matters relative to
public convenience and necessity issues may also have their carrier
selection aspects; similarly, we are not unmindful of the fact
that, while the prescribed route pattern can be established in
substantial part without regard to carrier selection, some
adjustment in route pattern may be found necessary at the time we
decide the carrier selection issues. We anticipate, however, the
full cooperation of all concerned to facilitate an appropriate
separation of these issues.
The Board intends that the scope of the proceeding instituted
herein include issues with respect to authorization of services to
new points, the deletion of presently certificated points, and the
consolidation of separate routes into single routes. [
Footnote 2/6] Caribbean points will be
considered only to the extent that they are in issue as possible
intermediate points on United States-South America routes, and the
proceeding will not examine services wholly within the Caribbean
area, or between points in the United States and the Caribbean.
In its study of the South American route pattern, the Board has
tentatively concluded that an east coast route and a west coast
route are required. The details of the routes are set forth in the
attached analysis. In addition, and because we have found that
considerable route modifications are necessary to meet present
needs and problems, we have compiled and attached hereto data
which
Page 371 U. S. 319
we believe will facilitate hearing and decision. The attached
materials should serve as the focal point for the trial of this
case, and we direct that the presentation of participants in the
proceeding, unless otherwise ordered by the Board upon good cause
shown therefor, be pointed to showing why and in what manner the
conclusions derived from the study should be modified. Such an
approach can restrict the hearing to relevant and material facts
and otherwise minimize procedural delay.
[
Footnote 2/1]
Delta Air Lines, Inc. (Delta) is authorized to serve Caracas and
certain Caribbean points on its Caribbean route 114 from Houston
and New Orleans; and Aerovias Sud Americana, Inc. (ASA) is
authorized to provide cargo and mail service (on a nonsubsidy
basis) between Florida points and points in Central and South
America. The only South American points presently served by ASA are
Quito and Guayaquil, Ecuador.
[
Footnote 2/2]
Reopened New York-Balboa Through Service Case, 18 CAB
501.
[
Footnote 2/3]
The powers granted the Board in the Federal Aviation Act of 1958
and its predecessor, the Civil Aeronautics Act of 1938, do not
include authority to compel merger, or to terminate the entire
route of a carrier.
[
Footnote 2/4]
The District Court for the Southern District of New York handed
down a decision on May 8, 1961,
United States v. Pan American
World Airways, Inc., W. R. Grace and Company, and Pan
American-Grace Airways, Inc., Civ. 90-259. Pan American filed
a notice of appeal in the Supreme Court on May 11, 1961.
[
Footnote 2/5]
The Attorney General had sought divestiture by both Grace and
Pan American.
[
Footnote 2/6]
Pending certificate applications involving service between the
United States and South America will be considered for
consolidation upon appropriate request submitted within 20 days of
the date of service of this order. Applications not moved for
consolidation will be subject to dismissal for lack of
prosecution.
MR. JUSTICE BRENNAN, with whom THE CHIEF JUSTICE concurs,
dissenting.
The Court holds that the "narrow questions presented by this
complaint have been entrusted to the [Civil Aeronautics] Board, and
that the complaint should have been dismissed." The ground of the
decision is that the provisions for economic regulation in the
Civil Aeronautics Act of 1938, which were reenacted without change
in the Federal Aviation Act of 1958, displaced the Sherman Act
insofar as
"all questions of injunctive relief against the division of
territories or the allocation of routes or against combinations
between common carriers and air carriers"
is concerned. With all respect, I think this conclusion is
contrary to reason and precedent.
I
The root error, as I set it, in the Court's decision is that it
works an extraordinary and unwarranted departure from the settled
principles by which the antitrust and regulatory regimes of law are
accommodated to each other. As a result of today's decision,
certain questions under the antitrust laws are placed in the
exclusive competence of the Board. and will not be the subject of
original court actions to enforce the antitrust laws. In effect,
a
Page 371 U. S. 320
pro tanto repeal of the antitrust laws is contemplated,
since the law to be applied in Board proceedings under § 411 is
based not upon the antitrust laws, but upon the "public interest"
and "competition to the extent necessary" standards of the Board's
overall mandate.
See 49 U.S.C. § 1302. And though the
Board's decisions under § 411 are subject to judicial review,
presumably such review will be limited to ensuring that the Board
adheres to the criteria set out in its mandate.
See American
Airlines, Inc. v. North American Airlines, Inc., 351 U. S.
79,
351 U. S.
85.
But, of the instruments of accommodation that are available,
pro tanto repeal of the antitrust laws by implication from
a regulatory statute such as the Aeronautics Act is surely the very
last that ought to be resorted to. It cannot be justified as a
matter of statutory construction. Section 414 of the Act immunizes
from the operation of the antitrust laws transactions as to which
the Board has issued orders of approval under §§ 408, 409, and 412
(consolidations and mergers, interlocking directorates, and
cooperative working arrangements). The existence of this express
and specific provision for exemption would seem to presuppose the
general applicability of the antitrust laws to the airline
industry, and to limit the Board's exempting power to the
enumerated orders, which do not include orders issued under § 411;
the Court concedes that the Board has no power under §§ 408, 409,
or 412 to approve the transactions upon which the instant suit is
predicated. Furthermore, it is odd indeed that the Board should
have express statutory authorization to enforce §§ 2, 3, 7, and 8
of the Clayton Act (
see 15 U.S.C. § 21), while the Sherman
Act is not enforceable by any procedure with respect to the wide
range of transactions comprised in the rule laid down by the Court
today. It is odd because the Clayton Act was intended to supplement
and reinforce the basic antitrust prohibitions of the Sherman
Page 371 U. S. 321
Act, rather than to form an independent and self-sufficient
scheme of regulation. By its action today, the Court subjects the
airline industry to a crazy quilt of antitrust controls that
Congress can hardly have contemplated.
Two further aspects of the Aeronautics Act cut against the
Court's interpretation. The first is the presence of a saving
clause:
"Nothing contained in this chapter shall in any way abridge or
alter the remedies now existing at common law or by statute, but
the provisions of this chapter are in addition to such
remedies."
49 U.S.C. § 1506. The second is the total absence from the Act
of any provision for damages or reparations. This lacuna leads the
Court, somewhat unusually in light of certain prior decisions,
[
Footnote 3/1] to intimate that the
damages remedy under the antitrust laws survives where the
injunctive remedy is barred -- an impractical solution, as I shall
try to demonstrate,
see infra, pp.
371 U. S.
326-327. The more reasonable interpretation of the
absence of a provision for damages is that the Act was not intended
to be an absolutely all-inclusive scheme of regulation which would
oust every remedy afforded by a different statute or by the common
law. The antitrust laws were to be allowed to function, save as
regards the specific exemptions provided for in § 414, and these
laws would support actions for damages and for equitable
relief.
I am satisfied that the scheme of the Aeronautics Act refutes
any inference that
pro tanto repeal of the antitrust laws
was intended. Nor does the legislative history furnish any support
for the Court's position. The Court cites but a single
sentence:
"It is the purpose of this legislation
Page 371 U. S. 322
to coordinate in a single independent agency all of the existing
functions of the Federal Government with respect to civil
aeronautics. . . ."
H.R.Rep. No. 2254, 75th Cong., 3d Sess., p. 1. Prior to the
enactment of the Aeronautics Act of 1938, the regulation of civil
aviation had been divided between the Interstate Commerce
Commission, the Department of Commerce, and the Post Office
Department; and the plain meaning of the quoted sentence,
especially in light of the debates that preceded passage of the
Act, is that as a result of the Act regulation of civil aviation
would be centralized in one agency, the CAB.
See Hearings
on H.R. 9738 before the House Committee on Interstate and Foreign
Commerce, 75th Cong., 3d. Sess., p. 37.
But a still more conclusive refutation of the Court's reading of
the Act is provided by an unbroken chain of decisions by this Court
rejecting, in comparable situations, claimed
pro tanto
repeals by implication of the antitrust laws. Perhaps the leading
case is
United States v. Borden Co., 308 U.
S. 188,
308 U. S.
197-206, where the Court held emphatically that the
enactment of a regulatory statute would not be deemed to work a
pro tanto repeal of the antitrust laws, save only if there
was a plain repugnancy between the two regimes (which the Court
does not suggest, except in the vaguest conclusional terms, is the
case here), in which case. repeal would be implied only to the
extent of the repugnancy. But the holding of the
Borden
case had been anticipated in much earlier decisions of the Court.
See United States v. Trans-Missouri Freight Assn.,
166 U. S. 290,
166 U. S. 315;
Keogh v. Chicago & N.W. R. Co., 260 U.
S. 156,
260 U. S.
161-162;
Central Transfer Co. v. Terminal Railroad
Assn., 288 U. S. 469,
288 U. S.
475-476;
Terminal Warehouse Co. v. Pennsylvania R.
Co., 297 U. S. 500,
297 U. S. 515.
See also United States v. Joint Traffic Assn.,
171 U. S. 505;
United States v. Pacific & Arctic Ry. & Nav. Co.,
228 U. S. 87,
228 U. S.
107-108. And the
Page 371 U. S. 323
canon of construction that repeals by implication are not
favored has even a longer history in this Court's jurisprudence.
See, e.g., 78 U. S. Tynen,
11 Wall. 88,
78 U. S. 92;
Henderson's
Tobacco, 11 Wall. 652.
Georgia v. Pennsylvania R. Co., 324 U.
S. 439,
324 U. S.
456-457, strongly reaffirmed the
Borden
principle in the context of a regulatory scheme, the Interstate
Commerce Act, no less pervasive than that which governs the airline
industry. I believe it is accurate to say that the Court had never
until today deviated from this position.
See United States v.
United States Alkali Export Assn., 325 U.
S. 196,
325 U. S.
205-206;
Allen Bradley Co. v. Local Union No.
3, 325 U. S. 797,
325 U. S. 805;
United States v. Radio Corp. of America, 358 U.
S. 334;
Maryland & Va. Milk Producers Assn. v.
United States, 362 U. S. 458,
362 U. S.
464-465;
California v. Federal Power Comm'n,
369 U. S. 482.
Cf. United States v. Socony-Vacuum Oil Co., 310 U.
S. 150,
310 U. S.
226-227;
Federal Maritime Bd. v. Isbrandtsen
Co., 356 U. S. 481.
Only last Term, in
California v. Federal Power Comm'n,
supra, we wrote:
"Immunity from the antitrust laws is not lightly implied. . . .
We could not assume that Congress, having granted only a limited
exemption from the antitrust laws, nonetheless granted an overall
inclusive one.
See United States v. Borden Co.,
308 U. S.
188,
308 U. S. 198-202."
369 U.S. at 4
369 U. S.
85.
Furthermore, although this Court had not until today passed on
the question whether the Aeronautics Act repealed by implication
any part of the antitrust laws, the lower federal courts have
uniformly held that it did not.
See S.S.W., Inc. v. Air
Transport Assn., 89 U.S.App.D.C. 273, 191 F.2d 658 (1951),
cert. denied, 343 U.S. 955;
Apgar Travel Agency, Inc.
v. International Air Transport Assn., 107 F.
Supp. 706 (D.C.S.D.N.Y.1952);
Slick Airways, Inc. v.
American Airlines, Inc., 107 F.
Supp. 199 (D.C.N.J.1951),
petition for prohibition
dismissed sub nom. American Airlines v. Forman, 204 F.2d
230
Page 371 U. S. 324
(C.A.3d Cir.),
cert. denied sub nom. American Airlines, Inc.
v. Slick Airways, Inc., 346 U.S. 806.
Finally, it has been held that § 411 of the Aeronautics Act was
modeled on § 5 of the Federal Trade Commission Act, 15 U.S.C. § 45,
and that decisions under § 5 are precedents for the construction of
§ 411.
American Airlines, Inc. v. North American Airlines,
Inc., 351 U. S. 79,
351 U. S. 82.
And § 5 has uniformly been construed to provide for duly
enforcement by courts and agency of the antitrust laws, not
exclusive enforcement by the agency.
United States Alkali
Export Assn. v. United States, 325 U.
S. 196,
325 U. S.
205-211;
Federal Trade Comm. v. Cement
Institute, 333 U. S. 683,
333 U. S.
692-695;
United States v. Charles Pfizer &
Co., 205 F. Supp.
94 (D.C.S.D.N.Y.1962);
United States v. Cement
Institute, 85 F. Supp.
344 (D.C.D.Colo.1949).
In light of this decisional history, it cannot be supposed that
Congress, when it first enacted a scheme of comprehensive economic
regulation of the airline industry in 1938 and when it reenacted
these economic provisions without change in 1958, intended any
displacement of the antitrust laws beyond that specifically
provided for in § 414. Nor did the decisions I have cited rest upon
the mechanical application of one of the common law's canons of
statutory construction. However questionable the principle that
repeals by implication are not favored may be in other contexts, it
is entirely sound when dealing with the antitrust laws, and
especially the Sherman Act. For this Act embodies perhaps the most
basic economic policy of our society, basic and continuing:
abhorrence of monopoly. The kind of conduct proscribed by the
Sherman Act is simply not such that congressional silence may be
interpreted as congressional approval. Where, as here, neither the
scheme of the regulatory statute nor anything in the legislative
history supports a
pro tanto repeal by implication of the
Sherman Act,
Page 371 U. S. 325
it seems to me inescapable that we must reject such a solution.
Nor can it be seriously contended that, on the facts of the instant
case, judicial enforcement of the antitrust laws would disrupt,
even slightly, the Board's regulation of civil aviation.
See Part III, p.
371 U. S. 327
infra. And since no question of certification for foreign
air carriage is involved, there is no danger of court interference
in matters committed to the President's discretion by 49 U.S.C. §
1461.
II
The decision today is, to me, not only unsound in law, but
impractical. The Court purports to lay down a general rule
governing the division of responsibilities between the courts and
the CAB; and while certain antitrust questions, including those at
bar, are to be withdrawn from the courts, others are to remain
subject to judicial enforcement. I consider the Court's proposed
line of demarcation between the judicial and administrative regimes
unsupportable. I see no basis upon which to withdraw questions of
route allocation, territorial division, and combinations between
common carriers and air carriers from judicial cognizance, yet
leave unaffected (as the Court appears to intend to do) questions
of rate-fixing, combinations between air carriers simpliciter, and
other serious anticompetitive practices. By what arcane logic does
a conspiracy to fix routes go more to the heart of the regulatory
scheme than a conspiracy to fix rates? True, the Board, while it
has authority to fix routes in foreign air transportation, has no
authority to fix rates therein; but the Act broadly prohibits all
forms of unjust discrimination, which, of course, would embrace
many rate-fixing practices.
See 49 U.S.C. § 1374(b);
Georgia v. Pennsylvania R. Co., 324 U.
S. 439,
324 U. S. 478,
324 U. S. 480
(dissenting opinion). And what justification can there be for the
Board's having exclusive jurisdiction of a combination one party to
which is probably outside the Board's jurisdiction,
Page 371 U. S. 326
see infra, pp.
371 U. S. 330-331, but not of a combination both parties
to which are clearly within the Board's jurisdiction? The only
explanation I can conceive for these dubious distinctions is that
the Court does not want to go so far as flatly to overrule some
well established decisions of this Court. [
Footnote 3/2]
I find it equally difficult to understand the Court's apparently
limiting its
pro tanto repeal of the antitrust laws to
questions of injunctive relief. It is true that an order of
divestiture or some other equitable remedy may be more effective to
deter certain antitrust violations than either criminal or damages
sanctions. But the difference in effectiveness is one only of
degree. An air carrier is not likely to persist in a course of
conduct if heavy criminal penalties and awards of treble damages
may be visited upon it. But just this possibility the Court seems
to allow. I find it hard to follow the Court's attempted
justification for mutilating the antitrust laws in terms of
avoiding
Page 371 U. S. 327
clashes between two regimes of law, the administrative and the
judicial, when, the mutilation achieved, the clashes remain acutely
present. In part, I must conclude that the Court's artificial
distinction again was prompted by a desire to skirt, however
disingenuously, prior holdings. [
Footnote 3/3] In addition, the Court had to conjure with
the fact that the CAB's statute nowhere provides a remedy, damages
or reparations, for past misconduct.
III
I should also like to suggest the unreality of the Court's
decision in the light of the particular circumstances of the
instant case. By its decision today, the Court brings to naught
nine years of litigation. Yet these nine years actually represent
only the most recent phase of a continuing problem first placed
before the Civil Aeronautics Board 22 years ago. [
Footnote 3/4] For 22 years, Pan American World
Airways has staved off the day of reckoning in respect to the
tactics which, Judge Murphy found below, violated § 2 of the
Sherman Act. Today's decision vindicates these tactics beyond Pan
American's fondest expectations, for the problem is now back with
the CAB, which has, from the outset, protested its inability to
deal with it.
This suit was instituted by the Government at the urging of the
CAB, which, in addition, filed an
amicus curiae brief in
the District Court in support of the Government's
Page 371 U. S. 328
position. And repeatedly over a period of many years, the Board
has adverted to its felt helplessness in the face of the divided
control of Panagra by two powerful corporations, one the dominant
United States company in the field of foreign transportation.
[
Footnote 3/5] To be sure, we are
not obliged to honor the Board's disinclination to assume
jurisdiction.
Trans-Pacific Airlines, Ltd. v. Hawaiian
Airlines, Ltd., 174 F.2d 63 (C.A.9th Cir., 1949). But it is
entitled to some weight,
see 3 Davis, Administrative Law
(1958) 14, and indeed, since the Board's position has been long and
consistently adhered to, to great weight.
United States v.
Radio Corp. of America, 358 U. S. 334,
358 U. S. 350,
n. 18. The search for a practical accommodation of court and
agency, which is the problem of this case, is not advanced by our
ignoring the agency's considered sense of self-limitation.
It is not as if the Board's hesitancy to move against the abuses
disclosed by the record in this case were not based upon
substantial considerations. We may concede the breadth of the
Board's power under § 411 to remedy unfair methods of competition,
which may sometimes be violations of the Sherman Act, yet still
recognize the unsuitableness of such a remedy in the particular
circumstances of this case. For one thing, I should think a
proceeding respecting control of Panagra would be rather lopsided
unless the Board had jurisdiction of Grace; but I am not sure that
could be done. Section 411 only proscribes unfair methods of
competition by air carriers and ticket agents. Grace is neither,
unless it fits the broad
Page 371 U. S. 329
language in which the Act defines an "air carrier" as anyone
"who undertakes, whether directly or indirectly or by a lease or
any other arrangement, to engage in air transportation." 49 U.S.C.
§ 1301(3). It is not entirely clear that "air carrier" may be read
as including a 50% owner of an air carrier, for the Act in general
does not purport to regulate stockholders of its subject carriers,
and, where it does, notably in § 408, it does so explicitly.
[
Footnote 3/6] The opinion of the
Court sees fit not to resolve this jurisdictional difficulty. I
fear the Board has solid justification for not proceeding against
Pan American unless it can proceed against Grace as well. But, at
all events, the Court's silence is sure to result in an added step
in this already intolerably prolonged litigation.
A further basis for the Board's hesitancy is that the Board has
no experience in the enforcement of the antitrust laws, because §
411 has only been used against common law unfair competition, never
against practices deemed unfairly competitive by virtue of the
antitrust laws. Hale and Hale, Competition or Control IV: Air
Carriers, 109 U. of Pa.L.Rev. 311, 346-347 (1961). [
Footnote 3/7] Most of the legal issues which have
arisen in the instant litigation -- the right of a joint owner to
exercise his negative control in an anticompetitive fashion, the
substantiality of the commerce restrained as a result of the
Page 371 U. S. 330
defendants' conduct, the relevant geographical and services
markets, the appropriateness of divestiture as a remedy, and so
forth -- are typical antitrust problems, and not at all typical
airline law problems. The expertness required is that of the judge
skilled in antitrust adjudication -- not that of the Board, which,
so far as I can tell, has never dealt with an antitrust
problem.
Nor is remission of the instant case to the CAB necessary to
protect the integrity of the Board's regulatory scheme for the
airline industry. Pan American argues that if its holdings in
Panagra are divested, Panagra will apply for and be granted
terminal points in the continental United States, with the result
that Pan American will be driven out of business on many routes, to
the serious detriment of the airline industry. But there is more to
acquiring a route certificate than applying for it. If Panagra,
freed of Pan American's negative control, applies for a northward
extension of its routes, it will be open to Pan American to argue
before the Board the unwisdom of its granting the application. A
judicial order in the instant case would not affect a single route,
but would simply free the process whereby routes are established
and territories are divided from the obstructive effects of
monopolistic tactics. Judicial enforcement of the Sherman Act here
would thus remove the clog of monopolization from the
administrative process -- not disrupt that process.
Cf. Georgia
v. Pennsylvania R. Co., 324 U. S. 439. The
Court's reliance on
Texas & Pac. R. Co. v. Abilene Cotton
Tie Co., 204 U. S. 426, and
Keogh v. Chicago & N.W. R. Co., 260 U.
S. 156, is misplaced. The plaintiff in
Keogh
sought damages under the antitrust laws, complaining that, but for
the conspiracy, the rates he had paid, though lawful because
approved by the ICC, would have been lower. The Court held that the
exclusive remedy for excessive rates had been vested by
Congress
Page 371 U. S. 331
in the ICC. It did not matter on what theory the shipper sought
to recover; the courts had no power to undo a lawful rate by
granting damages, whether on common law grounds (as in
Abilene) or under the antitrust laws. The Court in
Keogh made very plain, however, that injunctive relief in
respect of a conspiracy to raise rates might lie, at least if such
relief was sought by the Government, as here. 260 U.S. at
260 U. S.
161-162. For (as
Georgia shows) an injunction
may be granted with no disturbance to the existing rate
structure.
It should also be noted that the Court's decision today
vindicates Pan American's hardly creditable "tactic . . .
characteristic of its litigious nature" of first raising the
jurisdictional issue in a post-trial brief filed six years after
the complaint. 193 F. Supp. at 46. Of course, we are obliged to
consider such issues
sua sponte. United States v.
Western Pacific R. Co., 352 U. S. 59,
352 U. S. 63;
Note, Regulated Industries and the Antitrust Laws: Substantive and
Procedural Co-ordination, 58 Col.L.Rev. 673, 690 and n. 114 (1958).
But I find it a wry commentary on the Court's result that every
factor of fairness and practicality argues against our abdicating
jurisdiction of the present case.
IV
In seeking to accommodate the regulatory and antitrust regimes
by means of
pro tanto repeal of the antitrust laws, the
Court does not tell us why it has departed from the usual pattern
of preferring a more flexible technique of accommodation: that
afforded by the doctrine of primary jurisdiction.
See
generally 3 Davis, Administrative Law (1958), 1-55. That
doctrine requires that the courts abstain from proceeding in a case
of which they have original jurisdiction, remitting the parties in
the first instance to their rights and remedies before the agency,
where necessary
Page 371 U. S. 332
to protect the integrity of the regulatory scheme administered
by the agency. Such a requirement of prior resort does not preclude
a later judicial antitrust proceeding, but simply ensures that the
later proceeding will fully recognize the agency's interest in the
premises. The antitrust laws are in no wise repealed.
Cf.
Federal Maritime Bd. v. Isbrandtsen Co., 356 U.
S. 481,
356 U. S.
498-499. This mode of resolving conflicts between court
and agency avoids the practical and conceptual difficulties of
pro tanto repeals by implication. Until today, the Court
had never failed to invoke primary jurisdiction in preference to
repeal by implication as a means of accommodating the antitrust and
regulatory laws; I see no basis for deviation in the instant case
from that salutary approach. Certainly the Court suggests none.
I must, in candor, add that to apply the doctrine of primary
jurisdiction to the case at bar would be somewhat of an extension
of our decisions in the area, so jealously have we guarded the
obligation of judicial enforcement of the antitrust laws. The
tendency of the cases has been to invoke the doctrine not when
there are simply overlapping judicial and administrative remedies
for the same conduct, as is the case here, but only when "there is
a possibility that a subsequent administrative decision would
approve the questioned activities," as is not true here, since the
approval power vested in the CAB by § 414 does not include orders
under § 411. Schwartz, Legal Restriction of Competition in the
Regulated Industries: An Abdication of Judicial Responsibility, 67
Harv.L.Rev. 436, 464 (1954).
Compare United States Nav. Co. v.
Cunard S.S. Co., 284 U. S. 474,
and Far East Conference v. United States, 342 U.
S. 570,
with United States v. Pacific & Arctic
Ry. & Nav. Co., 228 U. S. 87;
Georgia v. Pennsylvania R. Co., 324 U.
S. 439;
United States v. Radio Corp. of
America, 358 U. S. 334;
and 369 U. S.
Page 371 U. S. 333
Federal Power Comm'n, 369 U. S. 482.
See generally Jaffe, Primary Jurisdiction Reconsidered:
The Anti-Trust Laws, 102 U. of Pa.L.Rev. 577 (1954). But even if it
would take some straining to fit the instant case within the
established framework of the law of primary jurisdiction, what the
Court has done today is a far graver departure from heretofore
settled guideposts of the law. [
Footnote 3/8]
[
Footnote 3/1]
.
See T.I.M.E. Inc. v. United States, 359 U.
S. 464, and cases cited therein. At least one Federal
Court of Appeals has held that the CAB's lack of power to award
money reparations leaves open a court action for damages sounding
in tort.
Fitzgerald v. Pan American World Airways, Inc.,
229 F.2d 499 (C.A.2d Cir., 1956).
[
Footnote 3/2]
See United States v. Pacific & Arctic Ry. & Nav.
Co., 228 U. S. 87,
228 U. S. 105;
Georgia v. Pennsylvania R. Co., 324 U.
S. 439;
Keogh v. Chicago & N.W. R. Co.,
260 U. S. 156,
260 U. S.
161-162;
Central Transfer Co. v. Terminal Railroad
Assn., 288 U. S. 469,
288 U. S. 475;
Terminal Warehouse Co. v. Pennsylvania R. Co.,
297 U. S. 500,
297 U. S.
513-515. The Court's handling of
Georgia v.
Pennsylvania R. Co., supra, seems to me particularly
disingenuous. The Court concedes that a conspiracy to secure CAB
approval of illicit agreements might form the predicate of an
antitrust suit, yet nowhere explains why the use of negative
control to further a scheme of monopolization by preventing CAB
approval of a route extension for Panagra cannot form such a
predicate. Furthermore, it is not the case that the ICC was
helpless to grant the relief sought in
Georgia v. Pennsylvania
R. Co. The Court conceded that the Commission had "authority
to remove discriminatory rates of the character alleged to exist
here." 324 U.S. at
324 U. S. 459.
To be sure, the Commission did not have authority to regulate
rate-fixing combinations as such. But neither has the CAB authority
to prohibit violations of the antitrust laws as such; it is limited
by its mandate, so the Court holds, to facilitating "competition to
the extent necessary."
[
Footnote 3/3]
See, e.g., United States v. Pacific & Arctic Ry. &
Nav. Co., 228 U. S. 87,
Terminal Warehouse Co. v. Pennsylvania R. Co.,
297 U. S. 500,
297 U. S.
515.
[
Footnote 3/4]
On December 16, 1941, Grace filed a petition with the CAB
requesting modification of Panagra's certificate so as to provide
for a terminal in the continental United States; on April 29, 1942,
Grace requested the Board to proceed under § 411 to order Pan
American to divest itself of its holdings in Panagra.
See W. R.
Grace & Co. v. CAB, 154 F.2d 271, 274 (C.A.2d Cir., 1946),
cert. dismissed for mootness sub nom. Pan American Airways
Corp. v. W. R. Grace & Co., 332 U.S. 827.
[
Footnote 3/5]
See Panagra Terminal Investigation, 4 C.A.B. 670, 678
(1944);
Additional Service to Latin America, 6 C.A.B. 857,
913-914 (1946);
Pan American-Panagra Agreement, 8 C.A.B.
50, 61 (1947);
New York-Balboa Through Service Proceeding,
Reopened, 18 C.A.B. 501, 504-506 (1954);
Reopened New
York-Balboa Through Service Proceeding, 20 C.A.B. 493, 516-517
(1954).
Cf. New York-Mexico City Nonstop Service Case, 25
C.A.B. 323 (1957).
[
Footnote 3/6]
For example:
"It shall be unlawful unless approved by order of the Board as
provided in this section --"
"
* * * *"
"(2) For any air carrier, any person controlling an air carrier,
any other common carrier, or any person engaged in any other phase
of aeronautics, to purchase, lease, or contract to operate the
properties . . . of any air carrier. . . ."
49 U.S.C. § 1378(a)(2).
[
Footnote 3/7]
Also, although the CAB has express authority to enforce the
Clayton Act,
see 15 U.S.C. § 21, I have found no instance
of its ever having attempted to do so.
[
Footnote 3/8]
Since the Court disposed of the case at bar on jurisdictional
grounds, and did not reach the merits of the antitrust issues, I
deem it inappropriate for me to intimate any view of those
merits.