Federal Maritime Commission v. Aktiebolaget Svenska Amerika Linien Swedish American Line American Society of Travel Agents, Inc v. Aktiebolaget Svenska Amerika Linien Swedish American Line, s. 257 and 258

• Citation: 19 L.Ed.2d 1071,88 S.Ct. 1005,390 U.S. 238
• Decision Date: 06 March 1968
• Docket Number: Nos. 257 and 258,s. 257 and 258
• Parties: FEDERAL MARITIME COMMISSION et al., Petitioners, v. AKTIEBOLAGET SVENSKA AMERIKA LINIEN (SWEDISH AMERICAN LINE) et al. AMERICAN SOCIETY OF TRAVEL AGENTS, INC., Petitioner, v. AKTIEBOLAGET SVENSKA AMERIKA LINIEN (SWEDISH AMERICAN LINE) et al
• Court: United States Supreme Court

390 U.S. 238

88 S.Ct. 1005

19 L.Ed.2d 1071

FEDERAL MARITIME COMMISSION et al., Petitioners,

v AKTIEBOLAGET SVENSKA AMERIKA LINIEN (SWEDISH

AMERICAN LINE) et al.

AMERICAN SOCIETY OF TRAVEL AGENTS, INC., Petitioner,

v. AKTIEBOLAGET SVENSKA AMERIKA LINIEN (SWEDISH

AMERICAN LINE) et al.

Nos. 257 and 258.

Argued Jan. 25, 1968.

Decided March 6, 1968.

[Syllabus from pages 238-239 intentionally omitted] Irwin A. Seibel, Washington, D.C., for Federal Maritime Commission and others.

Robert J. Sisk, New York City, for American Society of Travel Agents, Inc. Edward R. Neaher, New York City, for Aktiebolaget Svenska Amerika Linien (Swedish American Line and others).

Mr. Justice BLACK delivered the opinion of the Court.

The question presented in these cases is whether the Federal Maritime Commission properly disapproved two provisions of several shipping conference agreements. One of the provisions under attack, the so-called tying rule, prohibits travel agents who book passage on ships participating in the conferences from selling passage on competing, nonconference lines. The second provision, known as the unanimity rule, requires unanimous action by conference members before the maximum rate of commissions payable to travel agents may be changed.

The Commission's authority in this area stems from the Shipping Act, 1916. ¹ Section 15 of this Act, as amended, requires common carriers by water to submit most of their cooperative agreements to the Commission and directs it to:

'disapprove, cancel or modify any agreement, or any modification or cancellation thereof, whether of 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 * * *.'

In 1959 proceedings were initiated before the Federal Maritime Board, predecessor agency to the present Federal Maritime Commission, on the complaint of the American Society of Travel Agents, petitioner in No 258. The Society challenged a number of the practices of two conferences composed of steamship lines that furnish passenger service across the Atlantic. After extensive investigation and hearings before a Commission Examiner, the Commission disapproved both the tying and unanimity rules and ordered them eliminated. 7 F.M.C. 737 (1964). The Court of Appeals, however, set aside the order and remanded the case to the Commission for more detailed findings and explanations. 122 U.S.App.D.C. 59, 351 F.2d 756 (1965). On remand the Commission again disapproved both rules. The tying rule was found detrimental to the commerce of the United States, unjustly discriminatory as between carriers, and contrary to the public interest. The unanimity rule was found detrimental to the commerce of the United States and contrary to the public interest. —- F.M.C. —- (1966). On appeal, the Court of Appeals again set aside the order, holding that the Commission's new opinion had not remedied the defects noted in the prior decision on appeal, 125 U.S.App.D.C. 359, 372 F.2d 932 (1967), and we granted certiorari, 389 U.S. 816, 88 S.Ct. 67, 19 L.Ed.2d 67 (1967). We hold that the Commission's order was supported in all respects by adequate findings and analysis. We therefore reverse the judgment of the Court of Appeals and approve the order of the Commission.

I.

An understanding of the issues in these cases will be facilitated by a very brief discussion of the purposes of these shipping conferences and the federal statutes enacted to regulate them. Major American and foreign steamship lines which compete for traffic along the same routes have long joined together in conferences to fix rates and other charges, allocate traffic, and in other ways moderate the rigors of competition. Despite traditional hostility to anticompetitive arrangements of this kind however, Congress found after extensive investigation that the cooperative activity of these conferences was to some extent in the public interest. The House Committee that conducted the primary inquiry reported that the conferences promoted:

'regularity and frequency of service, stability and uniformity of rates, economy in the cost of service, better distribution of sailings, maintenance of American and European rates to foreign markets on a parity, and equal treatment of shippers through the elimination of secret arrangements and underhanded methods of discrimination.' H.R.Doc. No. 805, 63d Cong., 2d Sess., 416.

These advantages, the Committee concluded, could probably not be preserved in the face of unrestricted competition, and accordingly it recommended that the industry be granted some exemption from the antitrust laws. On the other hand, the Committee stressed that an unqualified exemption would be undesirable. The conferences had abused their power in the past and might do so in the future unless they were subjected to some form of effective governmental supervision. In response to these findings Congress enacted the Shipping Act, 1916. The statute not only outlawed a number of specific abuses but set up the United States Shipping Board, a predecessor of the present Federal Maritime Commission, with permanent authority under § 15 of the Act to modify or disapprove conference agreements. The antitrust immunity conferred was, as the House Committee had recommended, a limited one—only agreements receiving the approval of the Board were exempted. Originally the Board could disapprove an agreement on only three grounds: unjust discrimination, detriment to commerce, or illegality under one of the specific provisions of the Act. In 1959, however, Congress began an extensive review of regulation under the Shipping Act,² and amendments passed in 1961 in response to these studies³ included a provision granting considerably broader authority by permitting disapproval under § 15 of any agreement found to be 'contrary to the public interest.' The scheme of regulation adopted thus permits the conferences to continue operation but insures that their immunity from the antitrust laws will be subject to careful control.

II.

A crucial issue in these cases is respondents' challenge to the Commission's reliance on antitrust policy as a basis for disapproving these rules. Since the contention is equally relevant to analysis of the tying and unanimity rules, we consider it at the outset.

The Commission has formulated a principle that conference restraints which interfere with the policies of antitrust laws will be approved only if the conferences can 'bring forth such facts as would demonstrate that the * * * rule was required by a serious transportation need, necessary to secure important public benefits or in furtherance of a valid regulatory purpose of the Shipping Act.' See —- F.M.C., at —-. In the present cases, but for the partial immunity granted by the Act, both the tying and unanimity rules undoubtedly would be held illegal under the antitrust laws, and respondents failed to satisfy the Commission that the rules were necessary to further some legitimate interest. The Commission found this sufficient reason to disapprove the rules, but the Court of Appeals disagreed. Emphasizing that '(t)he statutory language authorizes disapproval only when the Commission finds as a fact that the agreement operates in one of the four ways set out in the section by Congress,' the court held, 'We do not read the statute as authorizing disapproval of an agreement on the ground that it runs counter to antitrust principles * * *.' 122 U.S.App.D.C., at 64, 351 F.2d., at 761 (opinion on first appeal).

Insofar as this holding rests on the absence of an explicit antitrust test among the 'four ways set out in the section,' we think the Court of Appeals was excessively formalistic in its approach to the Commission's findings. By its very nature an illegal restraint of trade is in some ways 'contrary to the public interest,' and the Commission's antitrust standard, involving an assessment of the necessity for this restraint in terms of legitimate commercial objectives, simply gives understandable content to the broad statutory concept of 'the public interest.' Certainly any reservations the Court of Appeals may have had on this point should have been dispelled by the Commission's careful explanation on remand of the connection between its antitrust standard and the public interest requirement. See —- F.M.C., at -. As long as the Commission indicates which of the statutory standards is the ultimate authority for its disapproval, we can see no objection to the Commission's casting its primary analysis in terms of the requirements of its antitrust test.

Respondents argue more broadly, however, that the antitrust test is not a permissible elaboration of the statutory standards. They contend that the whole purpose of the statutory scheme would be defeated if incom- patibility with the antitrust laws can be a sufficient reason for denying immunity from these laws. Congress, it is argued, has already decided that there is a justification for intrusions on our antitrust policy by the conference system, and accordingly the Commission cannot require further justifications from the shipping lines but must itself demonstrate the way in which the statutory requirements are violated.

Respondents' arguments, however, are not even superficially persuasive. Congress has, it is true, decided to confer antitrust immunity unless the agreement is found to violate certain statutory standards, but as already indicated, antitrust concepts are intimately involved in the standards Congress chose. The Commission's approach does not make the promise of antitrust immunity meaningless because a restraint that would violate the antitrust laws will still be approved whenever a sufficient...