In enacting § 15 of the Shipping Act, 1916, Congress conferred
on the Federal Maritime Commission (FMC) the power to exempt from
the antitrust laws agreements, or those portions of agreements,
between carriers that create an ongoing arrangement in which both
parties undertake continuing responsibilities, and which therefore
necessitate continuous FMC supervision, but not one-time
acquisition of assets agreements that result in one of the
contracting parties ceasing to exist. Pp.
411 U. S.
731-746.
148 U.S.App.D.C. 424, 460 F.2d 932, affirmed.
MARSHALL, J., delivered the opinion for a unanimous Court.
MR. JUSTICE MARSHALL delivered the opinion of the Court.
Section 15 of the Shipping Act, 1916, 39 Stat. 733, as amended,
46 U.S.C. § 814, requires all persons subject to the Act to file
with the Federal Maritime Commission [
Footnote 1]
Page 411 U. S. 727
every agreement within specified categories reached with any
other person subject to the Act. The section further empowers the
Commission to disapprove, cancel, or modify any such agreement
which it finds to be unjustly discriminatory, to the detriment of
the commerce of the United States, contrary to the public interest,
or violative of the terms of the Act. [
Footnote 2] The Commission is
Page 411 U. S. 728
directed to approve all other agreements, and the statute
expressly provides that agreements so approved are exempt from the
antitrust laws. [
Footnote 3]
The question presently before us is whether a contract which calls
for the acquisition of all the assets of one carrier by another
carrier and which creates no ongoing obligations is an "agreement"
within the meaning of this section. The question is of some
importance, since, if such contracts are not approved by the
Commission, the antitrust laws are fully applicable to them.
See Carnation Co. v. Pacific Westbound Conference,
383 U. S. 213
(1966).
Cf. United States v. Borden Co., 308 U.
S. 188 (1939).
But cf. United States Navigation Co.
v. Cunard S.S. Co., 284 U. S. 474
(1932);
Far East Conference v. United States, 342 U.
S. 570 (1952). On the other hand, if they are within the
Commission's jurisdiction, the Commission may approve them even
though they are violative of the antitrust laws, although the
Commission must take antitrust principles into account in reaching
its decision.
See Volkswagenwerk Aktiengesellschaft v.
FMC, 390 U. S. 261,
390 U. S.
273-274 (1968);
Page 411 U. S. 729
FMC v. Aktiebolaget Svenska Amerika Linien,
390 U. S. 238,
390 U. S.
244-246 (1968).
In this case, the Court of Appeals for the District of Columbia
Circuit concluded that § 15 did not confer jurisdiction upon the
Commission to approve discrete acquisition of assets agreements. In
so holding, it followed a prior District Court decision in
United States v. R. J. Reynolds Tobacco
Co., 325 F.
Supp. 656 (NJ 1971), but declined to follow a Ninth Circuit
holding that the Commission had such jurisdiction.
See Matson
Navigation Co. v. FMC, 405 F.2d 796 (CA9 1968). We granted
certiorari in order to resolve this conflict and because the case
posed an important issue concerning the interface between the
antitrust laws and the Commission's regulatory powers. We conclude
that, in enacting § 15, Congress did not intend to invest the
Commission with the power to shield from antitrust liability merger
or acquisition of assets agreements which impose no ongoing
responsibilities. Rather, Congress intended to invest the
Commission with jurisdiction over only those agreements, or those
portions of agreements, which created ongoing rights and
responsibilities and which, therefore, necessitated continuous
Commission supervision. We therefore affirm the judgment below.
I
This case was initiated when respondent Seatrain Lines, Inc.
(Seatrain) filed a protest with the Commission against an agreement
reached between Pacific Far East Lines, Inc. (PFEL) and Oceanic
Steamship Co. (Oceanic), both of which are also respondents here,
whereby Oceanic agreed to sell all its assets to PFEL. Under the
terms of the agreement, Oceanic promised to transfer its entire
fleet and all the related equipment, together with Oceanic's
interest in two container ships then being constructed and all of
Oceanic's employees, to
Page 411 U. S. 730
PFEL. Although Oceanic did not formally merge with PFEL and
retained its corporate existence, it was left as a shell
corporation wholly without assets. However, Oceanic undertook no
continuing obligation not to reenter the business and compete with
PFEL. On October 6, 1970, Oceanic and PFEL notified the Commission
of the agreement, but accompanied the notification with an express
statement that, in their view, the agreement was not within the
Commission's jurisdiction. The Commission published notice of the
agreement,
see 35 Fed.Reg. 16114, and allowed 10 days for
interested parties to protest and request a hearing. Seatrain filed
such a request on October 21, 1970, alleging that it was a
potential competitor of PFEL and that the acquisition agreement
would have anticompetitive consequences, and, hence, was contrary
to the public interest standard of the statute.
Instead of holding a hearing to investigate these allegations,
however, the Commission issued a summary order denying the request
for an investigation and approving the agreement. The Commission
held that,
"[w]hile section 15 of the Shipping Act, 1916, requires notice
and opportunity for hearing, prior to agreement approval, there is
no requirement of law that the mere filing of a protest is
sufficient to require that a hearing be held before the Commission
may grant approval of any protested agreement."
Finding that
"the likelihood of any impact at all upon [Seatrain's]
operations which might result from approval of the agreement is a
matter of mere speculation,"
the Commission concluded that "Seatrain has no standing in this
matter, and that its protest is without substance." [
Footnote 4]
Page 411 U. S. 731
After Seatrain's petition to reopen was denied, it appealed the
Commission's ruling to the Court of Appeals. [
Footnote 5] Seatrain argued that the Commission
was required to hold a hearing on its objection, while the United
States, as statutory respondent, [
Footnote 6] and Oceanic and PFEL, as intervenors, argued
that the Commission lacked jurisdiction over the agreement. In a
comprehensive opinion, the Court of Appeals found it unnecessary to
reach the hearing issue, since it found that the Commission
"lacks jurisdiction under Section 15 of the Shipping Act, 1916,
to approve arrangements of the type involved here, which do not
require the continued existence or participation of the parties in
such arrangements."
148 U.S.App.D.C. 424, 441, 460 F.2d 932, 949 (1972). The Court
therefore vacated the Commission's decision and directed that the
agreement be removed from its docket. The case then came here on
the Commission's petition for certiorari. 409 U.S. 1058 (1972).
II
At the outset, it must be recognized that the statutory language
neither clearly embraces nor clearly excludes discrete merger or
acquisition of assets agreements. The situation is therefore
fundamentally different from that posed in
Volkswagenwerk
Aktiengesellschaft v. FMC, relied upon heavily by petitioner,
where we held in the context of an ongoing agreement that the
Commission's ruling that the agreement was without its § 15
jurisdiction "simply does not square with the structure of the
statute." 390 U.S. at
390 U. S. 275.
In this case, the statute is ambiguous in its scope, and must
therefore be read in
Page 411 U. S. 732
light of its history and the governing statutory
presumptions.
By its terms, the statute requires those covered by it to
"file immediately with the Commission a true copy, or, if oral,
a true and complete memorandum, of every agreement . . . or
modification or cancellation thereof"
which falls into any one of seven categories. These are
agreements
"[1] fixing or regulating transportation rates or fares; [2]
giving or receiving special rates, accommodations, or other special
privileges or advantages; [3] controlling, regulating, preventing,
or destroying competition; [4] pooling or apportioning earnings,
losses, or traffic; [5] allotting ports or restricting or otherwise
regulating the number and character of sailings between ports; [6]
limiting or regulating in any way the volume or character of
freight or passenger traffic to be carried; [7] or in any manner
providing for an exclusive, preferential, or cooperative working
arrangement."
None of these seven categories expressly refers to a one-time
merger or acquisition of assets agreement which imposes no
continuing obligation and which, indeed, effectively destroys one
of the parties to the agreement. The Commission vigorously argues
that such agreements can be interpreted as falling within the third
category -- which concerns agreements "controlling, regulating,
preventing, or destroying competition." [
Footnote 7] Without more, we might be inclined to agree
that many merger agreements probably
Page 411 U. S. 733
fit within this category. But a broad reading of the third
category would conflict with our frequently expressed view that
exemptions from antitrust laws are strictly construed,
see,
e.g., United States v. McKesson & Robbins, Inc.,
351 U. S. 305,
351 U. S. 316
(1956), and that
"[r]epeals of the antitrust laws by implication from a
regulatory statute are strongly disfavored, and have only been
found in cases of plain repugnancy between the antitrust and
regulatory provisions."
United States v. Philadelphia National Bank,
374 U. S. 321,
374 U. S.
350-351 (1963) (footnotes omitted). As we observed only
recently:
"When . . . relationships are governed in the first instance by
business judgment, and not regulatory coercion, courts must be
hesitant to conclude that Congress intended to override the
fundamental national policies embodied in the antitrust laws."
Otter Tail Power Co. v. United States, 410 U.
S. 366,
410 U. S. 374
(1973).
See also Silver v. New York Stock Exchange,
373 U. S. 341
(1963);
Pan American World Airways, Inc. v. United States,
371 U. S. 296
(1963);
California v. FPC, 369 U.
S. 482 (1962);
United States v. Borden Co.,
308 U. S. 188
(1939). This principle has led us to construe the Shipping Act as
conferring only a "limited antitrust exemption" in light of the
fact that "antitrust laws represent a fundamental national economic
policy."
Carnation Co. v. Pacific Westbound Conference,
383 U.S. at
383 U. S. 219,
383 U. S. 218.
[
Footnote 8]
Our reluctance to construe the third category of agreements
broadly so as to include discrete merger arrangements is bolstered
by the structure of the Act. It should be noted that, of the seven
categories, six are expressly
Page 411 U. S. 734
limited to ongoing arrangements in which both parties undertake
continuing responsibilities. Indeed, even the third category refers
to agreements,"controlling," "regulating" and "preventing"
competition -- all of which are continuing activities. Only the
reference to the destruction of competition supports the
Commission's argument that the provision was intended to cover
one-time, discrete transactions. But even this reference must be
read in light of the final, comprehensive category which refers to
agreements "in any manner providing for an exclusive, preferential,
or cooperative working arrangement." As the Court of Appeals noted,
this last category was clearly meant as a catchall provision,
"intended . . . to summarize the type of agreements covered." 148
U.S.App.D.C. at 427, 460 F.2d at 935.
Cf. FMB v. Isbrandtsen
Co., 356 U. S. 481,
356 U. S. 492
(1958). It is, of course, a familiar canon of statutory
construction that such clauses are to be read as bringing within a
statute categories similar in type to those specifically
enumerated.
See 2 J. Sutherland, Statutes and Statutory
Construction § 4908
et seq. (3d ed.1943) and cases there
cited. Since the summary provision is explicitly limited to
"
working arrangement[s]" (emphasis added), it is
reasonable to conclude that Congress intended this limitation to
apply to the specifically enumerated categories as well. [
Footnote 9]
This reading of the statute is especially compelling in light of
the rest of the statutory scheme, which simply does not make sense
if the statute is read to encompass one-time agreements creating no
continuing obligations. For example, the statute directs the
Commission to
"disapprove,
Page 411 U. S. 735
cancel or modify any agreement . . .
whether or not
previously approved by it, that it finds to be unjustly
discriminatory or unfair as between carriers, shippers, exporters,
importers, or ports, or between exporters from the United States
and their foreign competitors, 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."
(Emphasis added.) The statute thus envisions a continuing
supervisory role for the Commission, and invests it with power to
disallow an agreement after a period of time even though it had
initially been permitted. But it is hard to see how the Commission
can exercise this supervisory function when there are no continuing
obligations to supervise. And we think it unlikely that Congress
intended to permit the Commission to approve acquisition of assets
agreements, allow them to go into effect, and then, sometime in the
indefinite future, resuscitate the expired company and unscramble
the assets under its continuing power to disapprove agreements
previously approved.
Similarly, the provision in the Act which provides that "[t]he
Commission shall disapprove any . . . agreement . . . on a finding
of inadequate policing of the obligations under it" makes no sense
unless the agreements create continuing obligations to police. The
statutory requirement that "continued approval" shall not be
permitted for agreements
"between carriers not members of the same conference or
conferences of carriers serving different trades that would
otherwise be naturally competitive, unless in the case of
agreements between carriers, each carrier, or in the case of
agreement between conferences, each conference, retains the right
of independent action"
suggests an ongoing relationship between the contracting
parties. And the requirement that the contracting parties
"adopt and maintain reasonable procedures for promptly and
fairly
Page 411 U. S. 736
hearing and considering shippers' requests and complaints"
can only be understood in the context of a continuing
relationship between the contracting parties.
In short, while the statute neither expressly includes nor
expressly excludes one-time acquisition of assets arrangements, the
words must be read in context, and the context makes undeniably
clear the ongoing, supervisory role which the Commission was
intended to perform. As the Court of Appeals concluded,
"[t]he whole structure of Section 15, not only the first
paragraph listing the type agreement covered, shows an intent to
grant the Commission authority to deal with agreements of a
continuing nature."
148 U.S.App.D.C. at 427, 460 F.2d at 935.
III
This construction of the Shipping Act is strongly supported by
the legislative history of the Act and by Congress' treatment of
other industries in contemporaneous and related statutes. As this
Court recognized in
FMB v. Isbrandtsen Co., 356 U.S. at
356 U. S. 490,
most of the legislative history of the Act is contained in the
so-called Alexander Report, which culminated a comprehensive
investigation into the shipping industry by the House Committee on
the Merchant Marine and Fisheries chaired by Congressman Alexander.
See House Committee on the Merchant Marine and Fisheries,
Report on Steamship Agreements and Affiliations in the American
Foreign and Domestic Trade, H.R.Doc. No. 805, 63d Cong., 2d Sess.
(1914) (hereinafter Alexander Report). Although legislation
designed to carry out the Report's recommendations initially failed
to pass,
see H.R. 17328, 63d Cong., 2d Sess., a
substantially similar bill was enacted in the next Congress, and
was clearly intended to write the Alexander proposals into law.
See H.R.Rep. No. 659, 64th Cong., 1st Sess., 27; S.Rep.
No. 689, 64th Cong., 1st Sess., 7.
Page 411 U. S. 737
After examining some 80 steamship agreements and conference
arrangements, the Alexander Committee concluded that
"practically all the established lines operating to and from
American ports work in harmonious cooperation, either through
written or oral agreements, conference arrangements, or gentlemen's
understandings."
Alexander Report 281. The Committee found that this network of
agreements, many of them secret, provided a comprehensive system
for fixing rates and suppressing competition.
See id. at
282-295. As the Committee described the resulting competitive
structure of the industry,
"The primary object of [the] conferences and agreements is to
prevent new lines from being organized in a trade and to crush
existing lines which refuse to comply with conditions prescribed by
the combination, or which, for other reasons, are not acceptable as
members of the conference. The methods which have been adopted from
time to time to eliminate competition show the futility of a weak
line attempting to enter a trade in opposition to the combined
power of the established lines when united by agreement. By
resorting to the use of the 'fighting ship,' or to unlimited rate
cutting, the conference lines soon exhaust the resources of their
antagonists. By distributing the loss resulting from the rate war
over the several members of the conference, each constituent line
suffers proportionately a much smaller loss than the one line which
is fighting the entire group. Moreover, the federated lines can
conduct the competitive struggle with the comfortable assurance
that, following the retirement of the competing line, they are in a
position to reimburse themselves through an increase in rates. To
allow conferences, therefore, generally means giving the trade to
the lines now enjoying it. Only a powerful
Page 411 U. S. 738
line can hope to fight its way into the trade, and with the
inevitable result, if successful, that it will join the combination
or be allowed to exist by virtue of some rate understanding."
Alexander Report 304-305.
Yet despite these findings, the Committee decided against
recommending the outright banning of the conference system.
Instead, it chose to place that system under government
supervision, and to invest an administrative agency with the power
to approve or disapprove various conference arrangements. The
Committee's reasons for this decision are crucial to the issue
presently before us. The Committee found that:
"[O]pen competition cannot be assured for any length of time by
ordering existing agreements terminated. The entire history of
steamship agreements shows that, in ocean commerce, there is no
happy medium between war and peace when several lines engage in the
same trade. Most of the numerous agreements and conference
arrangements discussed in the foregoing report were the outcome of
rate wars, and represent a truce between the contending lines. To
terminate existing agreements would necessarily bring about one of
two results: the lines would either engage in rate wars which would
mean the elimination of the weak and the survival of the strong,
or, to avoid a costly struggle, they would consolidate through
common ownership. Neither result can be prevented by legislation,
and either would mean a monopoly fully as effective, and it is
believed more so, than can exist by virtue of an agreement."
Id. at 416.
Thus, the Committee chose to permit continuation of the
conference system, but to curb its abuses by requiring government
approval of conference agreements. It did
Page 411 U. S. 739
so because it feared that, if conferences were abolished, the
result would be a net decrease in competition through the mergers
and acquisition of assets agreements that would result from
unregulated rate wars. It is readily apparent that the Commission's
reading of the statute would frustrate this legislative purpose.
The Committee gave the Commission power to insulate certain
anticompetitive arrangements in order to prevent outright mergers.
Yet the Commission would have us construe this authority in such a
way as to allow it to shield the mergers themselves -- the very
thing which Congress intended to prevent.
Cf. Carnation Co. v.
Pacific Westbound Conference, 383 U.S. at
383 U. S.
218-220.
The illogical nature of the Commission's argument is especially
apparent when one remembers that, at the time the Act was passed,
the Commission was arguably not permitted to take antitrust
policies into account when ruling on proposed agreements. We have
construed the "public interest" standard contained in the Act as
requiring the Commission to consider the antitrust implications of
an agreement before approving it.
See Volkswagenwerk
Aktiengesellschaft v. FMC, 390 U.S. at
390 U. S. 274
n. 20;
FMC v. Aktiebolaget Svenska Amerika Linien, 390
U.S. at
390 U. S.
242-244.
Cf. Mediterranean Pools Investigation,
9 F.M.C. 264, 289 (1966). But the "public interest" criterion was
not added to the Act until 1961.
See 75 Stat. 763. Thus,
under the petitioner's interpretation, at the time the Act was
passed, the Commission was arguably required to approve merger
agreements despite strong antitrust objections to them if the other
criteria of the Act were met. We simply cannot believe that
Congress intended to require approval of the very arrangements
which, as the legislative history clearly shows, it wanted to
prevent.
The legislative history also demonstrates that the Alexander
Committee used the term "agreements" as
Page 411 U. S. 740
a word of art, and that mergers and other arrangements creating
no continuing rights, and obligations were not included within its
definition. As the District Court in
United States v. R. J.
Reynolds Tobacco Co. observed,
"The catalog or 'full classification of these agreements'
(
i.e., the 'agreements' to which the Alexander Committee's
attention was primarily directed and to which its recommendations
were exclusively directed) does not include a single agreement of
merger or other form of corporate reorganization. The 'agreements'
represented in the Report are all 'on-going' in nature. Most of
these 'agreements' are cooperative working arrangements. These
'agreements' describe practices or regular activities in which two
or more shipping companies have agreed to participate over a
considerable period of time. None of the 'agreements' studied by
the Alexander Committee bears the slightest resemblance to an
agreement of merger, which is essentially a single, discrete event,
which transforms the relationship of the merging parties at the
instant of merger."
325 F. Supp. at 658-659 (footnotes omitted). [
Footnote 10]
Page 411 U. S. 741
Moreover, in the few places where the Committee did discuss
mergers, it distinguished sharply between such arrangements and the
ongoing agreements to which its recommendations were directed. For
example, in summarizing its findings, the Committee wrote:
"The numerous methods of controlling competition between water
carriers in the domestic trade, referred to in the preceding pages,
may be grouped under three headings,
viz., (1) control
through the acquisition of water lines or the
ownership of
accessories to the lines; (2) control through
agreements
or understandings; and (3) control through
special
practices."
Alexander Report 409 (emphasis added).
As the
Reynolds court concluded,
"Consistently throughout the Report, mergers and other corporate
reorganizations, when occasionally mentioned, are referred to by
the terms 'consolidation by ownership' and 'control through
acquisition,' or variations thereof. Never is the word 'agreement'
used in the Report to refer to a merger agreement.
Page 411 U. S. 742
It is clear that the Alexander Committee distinguished
conceptually between agreements in the sense of ongoing,
cooperative agreements and agreements of 'consolidation' or
'acquisition' (of which merger agreements are a form)."
325 F. Supp. at 69 (footnotes omitted).
Finally, an examination of contemporaneous and related statutes
makes clear that, when Congress intended to bring acquisitions and
mergers under control, it did so in unambiguous language. For
example, only a few years prior to passage of the Shipping Act,
Congress expressly dealt with mergers involving water carriers. In
the Panama Canal Act, 49 U.S.C. § 5(14), Congress provided that
"[I]t shall be unlawful for any carrier [as defined in the
Interstate Commerce Act] . . . to own, lease, operate, control, or
have any interest whatsoever (by stock ownership or otherwise,
either directly indirectly, through any holding company, or by
stockholders or directors in common, or in any other manner) in any
common carrier by water operated through the Panama Canal or
elsewhere with which such carrier aforesaid does or may compete for
traffic or any vessel carrying freight or passengers upon said
water route or elsewhere with which said railroad or other carrier
aforesaid does or may compete for traffic."
Similarly, when Congress meant to require agency approval for
mergers and acquisitions, it did so unambiguously. Thus, the
Interstate Commerce Act, 49 U.S.C. § 5(2)(a)(i) authorizes the
Interstate Commerce Commission to give its approval
"for two or more carriers to consolidate or merge their
properties or franchises, or any part thereof, into one corporation
for the ownership, management, and operation of the properties
Page 411 U. S. 743
theretofore in separate ownership."
In the same manner, the Federal Communications Act, 47 U.S.C. §
222(b)(1) provides:
"It shall be lawful, upon application to and approval by the
[Federal Communications] Commission as hereinafter provided, for
any two or more domestic telegraph carriers to effect a
consolidation or merger; and for any domestic telegraph carrier, as
a part of any such consolidation or merger or thereafter, to
acquire all or any part of the domestic telegraph properties,
domestic telegraph facilities, or domestic telegraph operations of
any carrier which is not primarily a telegraph carrier."
Examination of the Federal Aviation Act is particularly
instructive in this regard. Title 49 U.S.C. § 1382(a) requires air
carriers to file with the Civil Aeronautics Board for prior
approval
"every contract or agreement . . . for pooling or apportioning
earnings, losses, traffic, service, or equipment, or relating to
the establishment of transportation rates, fares, charges, or
classifications, . . . or otherwise eliminating destructive,
oppressive, or wasteful competition, or for regulating stops,
schedules, and character of service, or for other cooperative
working arrangements."
This provision closely parallels § 15 of the Shipping Act, and
was obviously modeled after it. Yet Congress clearly thought the
provision insufficient to bring discrete merger and acquisition
agreements within the Civil Aeronautics Board's jurisdiction, since
it enacted another, separate provision requiring Board approval
when air carriers "consolidate or merge their properties." 49
U.S.C. § 1378(a)(1). [
Footnote
11]
Page 411 U. S. 744
IV
In light of these specific grants of merger approval authority,
we are unwilling to construe the ambiguous provisions of § 15 to
serve this purpose a purpose for which it obviously was not
intended. As the Court of Appeals found, the House Committee which
wrote § 15 "neither sought information nor had discussion on ship
sale agreements. They were neither part of the problem nor part of
the solution." 148 U.S.App.D.C. at 432, 460 F.2d at 940. If, as
petitioner contends, there is now a compelling need to fill the gap
in the Commission's regulatory
Page 411 U. S. 745
authority, the need should be met in Congress where the
competing policy questions can be thrashed out and a resolution
found. We are not ready to meet that need by rewriting the statute
and legislative history ourselves.
But the Commission contends that, since it is charged with
administration of the statutory scheme, its construction of the
statute over an extended period should be given great weight.
See, e.g., NLRB v. Hearst Publications, Inc., 322 U.
S. 111 (1944). This proposition may, as a general
matter, be conceded, although it must be tempered with the caveat
that an agency may not bootstrap itself into an area in which it
has no jurisdiction by repeatedly violating its statutory mandate.
In this case, however, there is a disjunction between the abstract
principle and the empirical data. The court below made a detailed
study of the prior Commission cases relied upon by petitioner to
bolster its interpretation of the statute, and concluded that none
of them involved assertion of jurisdiction over a case such as
this, where the agreement in question imposed no ongoing
obligations. We find it unnecessary to decide whether every prior
case decided by the Commission can be reconciled with our opinion
today. It is sufficient to note that the cases do not demonstrate
the sort of longstanding, clearly articulated interpretation of the
statute which would be entitled to great judicial deference,
particularly in light of the clear indications that Congress did
not intend to vest the Commission with the authority it is now
seeking to assert. As this Court held in a related context,
"The construction put on a statute by the agency charged with
administering it is entitled to deference by the courts, and
ordinarily that construction will be affirmed if it has a
'reasonable basis in law.' . . . But the courts are the final
authorities on issues of
Page 411 U. S. 746
statutory construction,
FTC v. Colgate-Palmolive Co.,
380 U. S.
374,
380 U. S. 385, and"
"are not obliged to stand aside and rubber-stamp their
affirmance of administrative decisions that they deem inconsistent
with a statutory mandate or that frustrate the congressional policy
underlying a statute."
"
NLRB v. Brown, 380 U. S. 278,
380 U. S.
291."
Volkswagenwerk Aktiengesellschaft v. FMC, 390 U.S. at
390 U. S.
272.
In this case, we find that the Commission overstepped the limits
which Congress placed on its jurisdiction. The judgment of the
Court of Appeals must therefore be
Affirmed.
[
Footnote 1]
Originally, the Shipping Act conferred jurisdiction on the
United States Shipping Board.
See 39 Stat. 728, 729, 733.
Over the years, the jurisdiction here at issue has been shifted to
the United States Shipping Board Bureau of the Department of
Commerce,
see Exec.Order No. 6166, § 12 (1933), the United
States Maritime Commission,
see 49 Stat. 1985, the Federal
Maritime Board,
see 64 Stat. 1273, and finally, the
Federal Maritime Commission,
see 75 Stat. 840. For
convenience, we will follow the practice of the parties and the
court below and refer throughout to the "Commission."
[
Footnote 2]
Section 15 provides in pertinent part:
"Every common carrier by water, or other person subject to this
chapter, shall file immediately with the Commission a true copy,
or, if oral, a true and complete memorandum, of every agreement
with another such carrier or other person subject to this chapter,
or modification or cancellation thereof, to which it may be a party
or conform in whole or in part, fixing or regulating transportation
rates or fares; giving or receiving special rates, accommodations,
or other special privileges or advantages; controlling, regulating,
preventing, or destroying competition; pooling or apportioning
earnings, losses, or traffic; allotting ports or restricting or
otherwise regulating the number and character of sailings between
ports; limiting or regulating in any way the volume or character of
freight or passenger traffic to be carried; or in any manner
providing for an exclusive, preferential, or cooperative working
arrangement. The term 'agreement' in this section includes
understandings, conferences, and other arrangements."
"The Commission shall by order, after notice and hearing,
disapprove, cancel or modify any agreement, or any modification or
cancellation thereof, whether or not previously approved by it,
that it finds to be unjustly discriminatory or unfair as between
carriers, shippers, exporters, importers, or ports, or between
exporters from the United States and their foreign competitors, 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, and shall approve all other agreements,
modifications, or cancellations. . . ."
"
* * * *"
"Any agreement and any modification or cancellation of any
agreement not approved, or disapproved, by the Commission shall be
unlawful, and agreements, modifications, and cancellations shall be
lawful only when and as long as approved by the Commission. . .
."
[
Footnote 3]
Section 15 provides that
"[e]very agreement, modification, or cancellation lawful under
this section . . . shall be excepted from the provisions of
sections 1 to 11 and 15 of Title 15, and amendments and Acts
supplementary thereto."
Since the Act makes lawful those agreements approved by the
Commission, its effect is to vest the Commission with the power to
shield those agreements approved by it from antitrust attack.
See Carnation Co. v. Pacific Westbound Conference,
383 U. S. 213,
383 U. S. 216
(1966).
But cf. FMC v. Aktiebolaget Svenska Amerika
Linien, 390 U. S. 238,
390 U. S.
242-246 (1968).
[
Footnote 4]
In light of our holding that the Commission lacked jurisdiction
over this agreement, we do not decide whether the Commission's
decision that Seatrain was not entitled to a hearing would have
been proper in a case in which the Commission properly asserted
jurisdiction.
Cf. Marine Space Enclosures, Inc. v. FMC,
137 U.S.App.D.C. 9, 420 F.2d 577 (1969).
[
Footnote 5]
Direct appeal to the Court of Appeals of final orders of the
Commission is authorized by 28 U.S.C. § 2342(3).
[
Footnote 6]
See 28 U.S.C. § 2344.
[
Footnote 7]
The Commission's position in this regard is not without irony.
In denying Seatrain's application for a hearing and approving the
agreement, the Commission held that Seatrain had failed to make
sufficient allegations to show that the acquisition of assets would
be destructive of competition. Yet the Commission now contends that
it had jurisdiction over the agreement because it was one
"preventing" competition.
[
Footnote 8]
It is true that "antitrust exemption results not when an
agreement is submitted for filing, but only when the agreement is
actually approved."
Volkswagenwerk Aktiengesellschaft v.
FMC, 390 U. S. 261,
390 U. S. 273
(1968). But the fact remains that an expansive reading of the
Commission's jurisdiction would increase the number of cases
subject to potential antitrust immunity.
[
Footnote 9]
The statute itself provides no definition of the term
"agreement" beyond the statement that "[t]he term
agreement' in
this section includes understandings, conferences, and other
arrangements." Although certainly not dispositive, it is at least
worthy of note that these synonyms given for "agreement" are all
evocative of ongoing activity.
[
Footnote 10]
The
Reynolds court's observations were directed at the
Committee's study of foreign trade. In this context, the Committee
found that competition was largely frustrated by extensive use of
conference arrangements. When the Committee turned to domestic
trade, it found that,
"[u]nlike the practice of water carriers in the foreign trade of
the United States, agreements to divide the territory or charge
certain rates in the domestic trade are few."
Alexander Report 421. Rather, in the domestic arena, the
Committee found that competition was controlled largely through
mergers, chiefly between railroads and water carriers. The
Commission argues from this fact that Congress intended merger
agreements to be filed, since the legislation which was ultimately
enacted made no distinction between foreign and domestic trade.
But, throughout the Report, whenever the Committee referred to
mergers and acquisitions, it distinguished sharply between them and
agreements, for which the filing and approval mechanism was
applicable.
See the discussion in text.
Cf. Note,
The Shipping Industry Seeks a Safe Haven: Merger Jurisdiction for
the FMC?, 5 Law & Pol. Int'l Bus. 274, 285-286 (1973).
Moreover, a careful reading of the Report makes clear that the
Committee envisioned other devices for controlling the mergers
prevalent in the domestic field. Thus, the Committee noted that the
Panama Canal Act of 1912, 49 U.S.C. § 5(14), already prohibited
railroads from owning or controlling water carriers,
see
infra at
411 U. S. 742,
and observed that this requirement went
"far toward eliminating some of the undesirable practices which
were found by the Committee to exist in the domestic commerce of
the United States."
Alexander Report 422. While the Committee made other
recommendations with respect to domestic carriers, these merely
paralleled its foreign recommendations, and, hence, pertained to
"agreements" and "arrangements," rather than "mergers" and
"acquisitions," which it thought were sufficiently regulated by
existing legislation.
See id. at 422-424.
[
Footnote 11]
The Commission would have us infer that the 1916 Act conferred
jurisdiction upon it from an amendment added in 1950 to § 7 of the
Clayton Act, 15 U.S.C. § 18, as amended by 64 Stat. 1125, 1126. As
amended, the provision specifies that:
"Nothing contained in this section shall apply to transactions
duly consummated pursuant to authority given by the Civil
Aeronautics Board, Federal Communications Commission, Federal Power
Commission, Interstate Commerce Commission, the Securities and
Exchange Commission . . . the United States Maritime Commission, or
the Secretary of Agriculture."
As is clear from the face of the statute, the Act confers no new
jurisdiction on any of the listed agencies, but merely provides
that mergers already exempt from Clayton Act coverage were to be
unaffected by changes in the Act. As this Court held in
California v. FPC, the amended § 7 was "plainly not a
grant of power to adjudicate antitrust issues."
369 U.
S. 482,
369 U. S. 486
(1962). Hence, nothing about the Commission's jurisdiction can be
inferred from the inclusion of its predecessor on the list. This
view is confirmed by the legislative history of the 1950 amendment.
Although acceding to the Commission's request that it be included
in the list of agencies left unaffected by the Clayton Act,
see Letter of Grenville Mellen, Vice Chairman, United
States Maritime Commission, to Senator Herbert O'Conor, Chairman,
Senate Subcommittee to consider H.R. 2734, Sept. 29, 1949,
reprinted in Brief for Petitioner 52-54, the Committee made
explicit that,
"[i]n making this addition . . . , it is not intended that the
Maritime Commission, or, for that matter, any other agency included
in this category, shall be granted any authority or powers which it
does not already possess."
S.Rep. No. 1775, 81st Cong., 2d Sess., 7 (1950).