United States v. Radio Corporation of America

Decision Date24 February 1959
Docket NumberNo. 54,54
Citation79 S.Ct. 457,3 L.Ed.2d 354,358 U.S. 334
PartiesUNITED STATES of America, Appellant, v. RADIO CORPORATION OF AMERICA and National Broadcasting Company, Inc
CourtU.S. Supreme Court

Mr. Sol. Gen. J. Lee Rankin, Washington, D.C., for appellant.

Mr. Bernard G. Segal, Philadelphia, Pa., for appellees.

Mr. Chief Justice WARREN delivered the opinion of the Court.

Appellees, Radio Corporation of America and National Broadcasting Company, are defendants in this civil antitrust action brought by the Government under § 4 of the Sherman Act, 15 U.S.C. § 4, 15 U.S.C.A. § 4. After holding a preliminary hearing on three of appellees' affirmative defenses to that action, the federal district judge dismissed the complaint. 158 F.Supp. 333. The Government appealed directly to this Court under the Expediting Act, 15 U.S.C. § 29, 15 U.S.C.A. § 29. The principal question presented is whether approval by the Federal Communications Commission of appellees' agreement to exchange their Cleveland television station for one in Philadelphia bars this independent action by the Government which attacks the exchange as being in furtherance of a conspiracy to violate the federal antitrust laws.

The Government's complaint generally alleged the following facts. In 1954, National Broadcasting Company (NBC), a wholly owned subsidiary of Radio Corporation of America (RCA), owned five very high frequency (VHF) television stations. The stations were located in the following market areas: New York, which is the country's largest market; Chicago, second; Los Angeles, third; Cleveland, tenth; and Washington D.C., eleventh. According to the Government's allegations, in March 1954, NBC and RCA originated a continuing conspiracy to acquire stations in five of the eight largest market areas in the country. Since Philadelphia is the country's fourth largest market area, acquisition of a Philadelphia station in exchange for appellees' Cleveland or Washington station would achieve one goal of the conspiracy.1

One Philadelphia station, WPTZ, was owned by Westinghouse Broadcasting Company. This station and a Westinghouse-owned station in Boston were affiliated with the NBC network. In addition, Westinghouse desired NBC affiliation for a station to be acquired in Pittsburgh. In order to force Westinghouse to exchange its Philadelphia station for NBC's Cleveland station, it is alleged that NBC threatened Westinghouse with loss of the network affiliation of its Boston and Philadelphia stations, and threatened to withhold affiliation from its Pittsburgh station to be acquired. NBC also threatened to withhold network affiliation from any new VHF or UHF (ultra high frequency) stations which Westinghouse might acquire. By thus using its leverage as a network, NBC is alleged to have forced Westinghouse to agree to the exchange contract under consideration. Under the terms of that contract NBC was to acquire the Philadelphia station, while Westinghouse was to acquire NBC's Cleveland station plus three million dollars.

The Government asked that the conspiracy be declared violative of § 1 of the Sherman Act, 15 U.S.C. § 1, 15 U.S.C.A. § 1, that the appellees be divested of such assets as the District Court deemed appropriate, that 'such other and additional relief as may be proper' be awarded, and that the Government recover costs of the suit.

Appellees' affirmative defenses arose out of the fact that the exchange had been approved by the Federal Com- munications Commission.2 FCC approval was required under § 310(b) of the Communications Act of 1934, 48 Stat. 1086, as amended, 66 Stat. 716, 47 U.S.C. § 310(b), 47 U.S.C.A. § 310(b). Under that Section, appellees filed applications setting forth the terms of the transaction and the reasons for requesting the exchange. The Commission instituted proceedings to determine whether the exchange met the statutory requirements of § 310, that the 'public interest, convenience, and necessity' would be served. They were not adversary proceedings. After extensive investigation of the transaction, the Commission was still not satisfied that the exchange would meet the statutory standards, and, over three dissents, issued letters seeking additional information on various subjects, including antitrust problems, under § 309(b) of the Act. After receiving answers to the letters, the Commission, without holding a hearing, on December 21, 1955, granted the application to exchange stations.3

It was stipulated below that in passing upon the application, the Commission had all the information before it which has now been made the basis of the Government's complaint. It further appears that during the FCC proceedings the Justice Department was informed as to the evidence in the FCC's possession. It was further stipulated, and we assume, that the FCC decided all issues relative to the antitrust laws that were before it, and that the Justice Department had the right to request a hearing under § 309(b), to file a protest under § 309(c), to seek a rehearing under § 405, and to seek judicial review of the decision under § 402(b). See Far East Conference v. United States, 342 U.S. 570, 576, 72 S.Ct. 492, 495, 96 L.Ed. 576; U.S. ex rel. Chapman v. Federal Power Comm., 345 U.S. 153, 155, 156, 73 S.Ct. 609, 611 612, 97 L.Ed. 918. The Department of Justice took none of these actions. Accordingly, on January 22, 1956, after the period in which the Department could have sought review had expired, NBC and Westinghouse consummated the exchange transaction according to their contract. The Department did not file the present complaint until December 4, 1956, over ten months later.

Against this background, appellees assert that the FCC had authority to pass on the antitrust questions presented, and, in any case, that the regulatory scheme of the Communications Act has so displaced that of the Sherman Act that the FCC had primary jurisdiction to license the exchange transaction, with the result that any attack for antitrust reasons on the exchange transaction must have been by direct review of the license grant. Relying on this premise, they then contend that the only method available to the Government for redressing its antitrust grievances was to intervene in the FCC proceedings; that since it did not, the antitrust issues were determined adversely to it when the exchange was approved, so that it is barred by principles of collateral estoppel and res judicata; and that in any case the long delay between approval of the exchange and filing of this suit bars the suit because of laches.

I.

Whether these contentions are to prevail depends substantially upon the extent to which Congress authorized the FCC to pass on antitrust questions, and this in turn requires examination of the relevant legislative history. Two sections of the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U.S.C. § 151 et seq., 47 U.S.C.A. § 151 et seq., deal specifically with antitrust considerations, Sections 311 and 313:

'Sec. 311. The Commission is hereby directed to refuse a station license and/or the permit hereinafter required for the construction of a station to any person (or to any person directly or indirectly controlled by such person) whose license has been revoked by a court under section 313. * * *

'Sec. 313. All laws of the United States relating to unlawful restraints and monopolies and to combinations, contracts, or agreements in restraint of trade are hereby declared to be applicable to the manufacture and sale of and to trade in radio apparatus and devices entering into or affecting interstate or foreign commerce and to interstate or foreign radio communications. Whenever in any suit, action, or proceeding, civil or criminal, brought under the provisions of any of said laws or in any proceedings brought to enforce or to review findings and orders of the Federal Trade Commission or other governmental agency in respect of any matters as to which said Commission or other governmental agency is by law authorized to act, any licensee shall be found guilty of the violation of the provisions of such laws or any of them, the court, in addition to the penalties imposed by said laws, may adjudge, order, and/or decree that the license of such licensee shall, as of the date the decree or judgment becomes finally effective or as of such other date as the said decree shall fix, be revoked and that all rights under such license shall thereupon cease: Provided, however, That such licensee shall have the same right of appeal or review as is provided by law in respect of other decrees and judgments of said court.'

These provisions were taken from the Radio Act of 1927.4 They appear to have originated in a bill drafted by Congressman White of Maine, H.R. 5589, 69th Cong., 1st Sess. What is now § 311 appeared as the third paragraph of § 2(C)5 of that bill, while what is now s 313 appeared as § 2(G).6 In the hearings on the bill before the House Committee, Congressman Reid of Illinois asked Judge Davis, Department of Commerce representative, whether the Secretary of Commerce7 had any discretion to refuse a license under § 2(C) (now § 311) to a party which the Secretary believed to be violating the antitrust laws. The following colloquy ensued:8

Judge Davis. 'He has no discretion under this act.'

Congressman Reid. 'They have to be found guilty first; is that the idea?'

Congressman White. 'Yes. In other words, I tried to get away from placing upon the secretary the determination of a judicial question of that character. That involves, of course, a determination as to the facts; it requires a knowledge of the law and it irequires an application of the law to the facts, and then it requires the exercise of judicial powers, if you leave that in his discretion, and I tried to lift it away from the secretary.'

Later on, the question arose as to what grounds were available to the Secretary to revoke licenses under § 2(F) (now § 312). After...

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