Carnation Co. v. Pacific Westbound Conference,
383 U.S. 213 (1966)

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U.S. Supreme Court

Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213 (1966)

Carnation Co. v. Pacific Westbound Conference

No. 20

Argued November 8, 1965

Decided February 28, 1966

383 U.S. 213


Petitioner ships evaporated milk from west coast ports to the Philippines. Respondent conferences are associations of shipping companies that establish rates for their members pursuant to agreements approved by the Federal Maritime Commission (FMC). Pacific Westbound Conference is composed of companies operating between the West Coast and the Far East, and the Far East Conference of companies operating between the Atlantic and Gulf Coasts and the Far East. In 1957, Pacific Westbound announced a rate increase for evaporated milk going to the Philippines. Petitioner tried to get the original rate restored, but the increase remained until 1962. Thereafter, petitioner filed an antitrust treble damage action against the conferences and their members, alleging that the increase was initiated and maintained to implement ratemaking agreements between the two conferences which had not been approved by the FMC, and that Pacific Westbound refused to restore the original rate only because the Far East Conference would not agree. Petitioner claimed treble damages because the implementation of such unapproved agreements is unlawful per se under the antitrust laws. Respondents moved to dismiss on the ground that the Shipping Act, 1916 repealed all antitrust regulation of the ratemaking activities of the shipping industry. The District Court granted the motion. The Court of Appeals affirmed on the ground that such action cannot be maintained until the FMC has passed on the agreements. After certiorari was granted, the FMC completed an investigation of respondents' activities and concluded that its approval of a 1952 agreement between the two conferences did not cover the implementation of subsequent unapproved agreements which are the basis of petitioner's treble damage complaint.

Held: The implementation of ratemaking agreements which have not been approved by the FMC is subject to the antitrust laws. Pp. 383 U. S. 216-224.

(a) Creation of an antitrust exemption under §15 of the Shipping Act for ratemaking activities lawful under the Act implies

Page 383 U. S. 214

that unlawful ratemaking activities are not exempt. United States v. Borden Co., 308 U. S. 188, 308 U. S. 201. Pp. 383 U. S. 216-217.

(b) The Shipping Act was not intended to remove all antitrust regulation of the shipping industry's ratemaking activities. Pp. 383 U. S. 217-220.

(c) The decisions in United State Navigation Co. v. Cunard Steamship Co., 284 U. S. 474, and Far East Conference v. United States, 342 U. S. 570, holding that courts must refrain from imposing antitrust sanctions for activities of debatable legality under the Act to avoid the possibility of conflict between the courts and the FMC, while precluding the courts from awarding treble damages for conduct arguably lawful under the Act, do not require that the shipping industry be totally immunized from antitrust regulation. Pp. 383 U. S. 220-222.

(d) Although the Court of Appeals thought respondents' activities were arguably lawful under the Act, it should have stayed the action instead of dismissing it, since the statute of limitations might bar petitioner's claims before the FMC ruled. Pp. 383 U. S. 222-223.

(e) Petitioner's failure to seek reparations under the Act in the FMC proceeding does not affect its rights under the antitrust laws, which are collateral to those which it might have sought under the Shipping Act. P. 383 U. S. 224.

(f) The case is remanded with instructions to proceed only after the final outcome of the Shipping Act proceedings. P. 383 U. S. 224.

336 F.2d 650 reversed and remanded.

Page 383 U. S. 215

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