FMC v. Svenska Amerika Linien,
Annotate this Case
390 U.S. 238 (1968)
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U.S. Supreme Court
FMC v. Svenska Amerika Linien, 390 U.S. 238 (1968)
Federal Maritime Commission v.
Aktiebolaget Svenska Amerika Linien
Argued January 25, 1968
Decided March 6, 1968*
390 U.S. 238
The American Society of Travel Agents filed a complaint challenging certain practices of respondents, members of two transatlantic passenger steamship conferences, including (1) the "tying rule" of one conference prohibiting agents booking passage on conference ships from selling passage on competing, nonconference lines, and (2) the "unanimity rule" of the other conference requiring unanimous action by conference members before maximum commission rates payable to travel agents may be changed. The Federal Maritime Commission (FMC) after hearings disapproved both rules under § 15 of the Shipping Act, 1916, which authorizes FMC disapproval of any agreement that it finds
"unjustly discriminatory or unfair as between carriers . . . or to operate to the detriment of the commerce of the United States, or to be contrary to the public interest, or to be in violation of this chapter."
The Court of Appeals set aside the order and remanded the case to the FMC for more detailed findings and explanations. On remand, the FMC again disapproved both rules, and the Court of Appeals again set aside the FMC order. The FMC found that the unanimity rule blocked the desires of a majority of the conference for a commission rate increase; prevented conference members from competing effectively with the airlines (by keeping them from increasing commissions to travel agents on ship travel, and thus encouraging the agents to promote ship travel over air travel), and injured the undecided traveler who had no opportunity to deal with an agent uninfluenced by his own economic interest favoring the airlines. The FMC found that the tying rule denied passengers the advantages of being able to deal with a travel
agent who can sell any means of travel; denied agents the ability to serve passengers wishing to travel on nonconference lines, and denied nonconference lines the opportunity to reach the 80% of transatlantic ship passengers who book travel through conference-appointed agents. In reaching the conclusion that both rules were detrimental to the commerce of the United States and contrary to the public interest and that the tying rule was unjustly discriminatory as between carriers, the FMC relied on the failure of respondents to establish legitimate objectives for rules that contravened antitrust principles, a standard which the Court of Appeals held was not authorized by the tests for illegality set forth in the statute.
1. The Shipping Act, 1916, confers only a limited immunity from the antitrust laws, and the antitrust test formulated by the FMC, being an appropriate refinement of the statutory "public interest" standard, should have been upheld. Pp. 390 U. S. 242-246.
2. The FMC's conclusions supporting its disapproval of the unanimity rule, in part grounded upon inferences permissible from the record, were based upon substantial evidence, and should have been upheld by the Court of Appeals. Pp. 390 U. S. 246-250.
3. There was no showing made that the tying rule was necessary to serve the stability of the conference, that conference members actually bore substantial portions of the expense of selecting and supervising the travel agents, or that the rule served any other legitimate purpose, and the FMC was therefore warranted in concluding that the absolute prohibition against agents dealing with nonconference lines was unjustified. Pp. 390 U. S. 250-252.
4. Since these proceedings were commenced eight years ago, have been twice appealed to reviewing courts, and the FMC's findings are supported by substantial evidence, the Court of Appeals is directed to affirm the FMC's order. Pp. 390 U. S. 252-253.
125 U.S.App.D.C. 359, 372 F.2d 932, reversed and remanded.