369 U.S. 482 (1962), 187, California v. Federal Power Commission

Docket Nº:No. 187
Citation:369 U.S. 482, 82 S.Ct. 901, 8 L.Ed.2d 54
Party Name:California v. Federal Power Commission
Case Date:April 30, 1962
Court:United States Supreme Court

Page 482

369 U.S. 482 (1962)

82 S.Ct. 901, 8 L.Ed.2d 54



Federal Power Commission

No. 187

United States Supreme Court

April 30, 1962

Argued March 1, 1962




One natural gas company acquired nearly all of the stock of another, and the Federal Government commenced an action in a Federal District Court to have the acquisition of stock declared to be in violation of § 7 of the Clayton Act and to require divestiture. Shortly thereafter, the company which had acquired the stock applied to the Federal Power Commission under § 7 of the Natural Gas Act for authority to merge the assets of the two companies. The Commission authorized the merger of assets while the antitrust action was still pending in the District Court. The Court of Appeals sustained the Commission's action.

Held: the Commission should not have proceeded to a decision on the merits of the merger application when there was pending in the courts a suit challenging the validity of that transaction under the antitrust laws. It should have awaited the decision of the courts. Pp. 483-490.

111 U.S.App.D.C. 226, 296 F.2d 348, reversed.

Page 483

DOUGLAS, J., lead opinion

Opinion of the Court by MR. JUSTICE DOUGLAS, announced by MR. JUSTICE BRENNAN.

El Paso Natural Gas Company first acquired the stock of the Pacific Northwest Pipeline Corp. and then applied to the Federal Power Commission for authority to acquire the assets pursuant to § 7 of the Natural Gas Act, 52 Stat. 825, 15 U.S.C. § 717f(c). This application was dated August 7, 1957. Prior thereto, on July 22, 1957, the Federal Government commenced an action against El Paso and Pacific Northwest, alleging that El Paso's acquisition of the stock of Pacific Northwest violated [82 S.Ct. 903] § 7 of the Clayton Act,1 38 Stat. 731, as amended, 64 Stat. 1125, 15 U.S.C. § 18. On September 30, 1957, El Paso and Pacific Northwest filed a motion to dismiss the antitrust suit or to stay it, pending completion of the proceedings before the Commission. On October 21, 1957, that motion was denied after hearing, and we denied certiorari. 355 U.S. 950.

Page 484

In May and June, 1958, the Department of Justice wrote four letters to the Commission, asking that the proceeding be stayed pending the outcome of the antitrust suit. On July 29, 1958, the Department of Justice was advised by the Commission that it would not stay its proceedings. The Commission invited the Antitrust Division of the Department to participate in the administrative proceedings, but it did not do so.

The hearings before the Commission started September 17, 1958. On October 2, 1958, El Paso and Pacific Northwest moved in the District Court for a continuance of the antitrust suit. On October 6, 1958, the Department of Justice asked the Commission to postpone its hearing, pending final outcome of the antitrust suit which had then been set for trial November 17, 1958. On October 7, 1958, the Commission wrote the District Court that, if the court denied El Paso and Pacific Northwest's motion for a continuance and proceeded with the antitrust trial, the Commission would continue its merger hearings to a date that would not conflict with the trial date of the antitrust case, but that if the court granted the motion for continuance, the Commission would proceed with its hearing. On October 13, 1958, the District Court continued the antitrust suit until the final decision in the administrative proceedings. The latter proceedings were concluded, the Commission authorizing the merger on December 23, 1959. 22 F.P.C. 1091, 23 F.P.C. 350. The merger was consummated December 31, 1959.

Petitioner intervened in the administrative proceedings August 27, 1957, and obtained review by the Court of Appeals, which affirmed the Commission (111 U.S.App.D.C. 226, 296 F.2d 348), Judge Fahy dissenting. We granted certiorari, 368 U.S. 810.

Evidence of antitrust violations is plainly relevant in merger applications, for part of the content of "public convenience and necessity" as used in § 7 of the Natural

Page 485

Gas Act is found in the laws of the United States. City of Pittsburgh v. Federal Power Commission, 99 U.S.App.D.C. 113, 237 F.2d 741.

Immunity from the antitrust laws is not lightly implied. The exemption of agricultural cooperatives from the antitrust laws granted by § 6 of the Clayton Act and § 1 and § 2 of the Capper-Volstead Act of 1922 became relevant in Maryland and Virginia Milk Producers Ass'n v. United States, 362 U.S. 458. While § 7 of the Clayton Act gave immunity [82 S.Ct. 904] to

transactions duly consummated pursuant to authority given by . . . the Secretary of Agriculture under any statutory provision vesting such power in such . . . Secretary,

we held that the only authority of the Secretary was to approve "marketing agreements" (id., 469-470), and not other types of agreements or restraints, typically covered by the antitrust laws. Accordingly, we held that the District Court was authorized to direct the cooperative to dispose as a unit of the assets of an independent producer that had been acquired to stifle competition and restrain trade. 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, 198-202. "When there are two acts upon the same subject, the rule is to give effect to both if possible." Id. at 198. Here, as in United States v. RCA, 358 U.S. 334, while "antitrust considerations" are relevant to the issue of "public interest, convenience, and necessity" (id. at 351), there is no "pervasive regulatory scheme" (ibid.) including the antitrust laws that has been entrusted to the Commission. And see National Broadcasting Co. v. United States, 319 U.S. 190, 223. Under the Interstate Commerce Act, mergers of carriers that are approved have an antitrust immunity, as § 5(11) of that Act specifically provides that the carriers involved "shall be and they are hereby relieved from the operation of the antitrust

Page 486

laws. . . ." See McLean Trucking Co. v. United States, 321 U.S. 67.

There is no comparable provision under the Natural Gas Act. Section 7 of the Clayton Act -- which prohibits stock acquisitions

where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly

-- contains a proviso that

Nothing contained in this section shall apply to transactions duly consummated pursuant to authority given by the . . . Federal Power Commission . . . under any statutory provision vesting such power in such Commission. . . .

The words "transactions duly consummated pursuant to authority" given the Commission "under any statutory provision vesting such power" in it are plainly not a grant of power to adjudicate antitrust issues. Congress made clear that, by this proviso in § 7 of the Clayton Act, ". . . it is not intended that . . . any . . . agency" mentioned "shall be granted any authority or powers which it does not already possess." S.Rep.No. 1775, 81st Cong., 2d Sess., p. 7. The Commission's standard, set forth in § 7 of the Natural Gas Act, is that the acquisition, merger, etc., will serve the "public convenience and necessity." If existing natural gas companies violate the antitrust laws, the Commission is advised by § 20(a) to "transmit such evidence" to the Attorney General "who, in his discretion, may institute the necessary criminal proceedings." Other administrative agencies are authorized to enforce § 7 of the Clayton Act when it comes to certain classes of companies or persons,2 but the Federal Power...

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