Carnation Company v. Pacific Westbound Conference, 20

Citation86 S.Ct. 781,383 U.S. 213,383 U.S. 932,15 L.Ed.2d 709
Decision Date28 February 1966
Docket NumberNo. 20,20
PartiesCARNATION COMPANY, Petitioner, v. PACIFIC WESTBOUND CONFERENCE et al
CourtUnited States Supreme Court

[Syllabus from pages 213-214 intentionally omitted] Arthur B. Dunne, San Francisco, Cal., for petitioner.

Daniel M. Friedman, Washington, D.C., for the United States and Federal Maritime Commission.

Edward D. Ransom, San Francisco, Cal., and Elkan Turk, Jr., for respondents.

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

We granted certiorari in this case in order to determine whether the Shipping Act of 1916, 39 Stat. 728, as amended, 75 Stat. 762, 46 U.S.C. §§ 801—842 (1964 ed.), precludes the application of the antitrust laws to the shipping industry.

The petitioner in this case is a shipper in foreign commerce that ships substantial quantities of evaporated milk from the West Coast of the United States to the Philippine Islands. The respondent conferences are associations of shipping companies that establish rates for their respective members pursuant to agreements approved by the Federal Maritime Commission. Pacific Westbound Conference is composed of companies operating between the West Coast and the Far East; Far East Conference, of companies operating between the Atlantic and Gulf Coasts and the Far East.

In 1957, Pacific Westbound announced a rate increase of $2.50 per ton for the shipment of evaporated milk to the Philippine Islands. Petitioner attempted to persuade Pacific Westbound to restore the original rate, but Pacific Westbound declined to do so until 1962.

Petitioner filed an antitrust treble-damage action against the respondent conferences and their respective members shortly after the original rate was restored. Petitioner alleged that Pacific Westbound initiated and maintained the rate increase in order to implement certain rate-making agreements between the conferences which have never been approved by the Maritime Commission. Petitioner also alleges that it asked Pacific Westbound to restore the original rate and that Pacific Westbound refused to do so only because Far East would not agree to it. Petitioner claimed that it is entitled to recover treble damages because the implementation of such unapproved agreements is unlawful per se under the antitrust laws.

Respondents moved to dismiss, claiming that the Shipping Act, 1916 repealed all antitrust regulation of the rate-making activities of the shipping industry. The District Court granted the motion. The Court of Appeals for the Ninth Circuit affirmed the dismissal of the action on the ground that such an action cannot be maintained until the Commission has passed upon the agreements, 336 F.2d 650. We granted certiorari, 380 U.S. 905, 85 S.Ct. 885, 13 L.Ed.2d 793, and hold that the implementation of rate-making agreements which have not been approved by the Federal Maritime Commission is subject to the antitrust laws.

The Shipping Act contains an explicit provision exempting activities which are lawful under § 15 of the Act from the Sherman and Clayton Acts. This express provision covers approved agreements, which are lawful under § 15, but does not apply to the implementation of unapproved agreements, which is specifically prohibited by § 15.1 The creation of an antitrust exemption for rate-making activities which are lawful under the Shipping Act implies that unlawful rate-making activities are not exempt. This Court so interpreted an analogous provision of the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, 7 U.S.C. § 601 et seq. (1964 ed.), exempting marketing agreements approved by the Secretary of Agriculture from the antitrust laws. The Court there declared that the 'explicit provisions requiring official participation and authorizations show beyond question how far Congress intended that the Agricultural Act should operate to render the Sherman Act inapplicable. If Congress had desired to grant any further immunity, Congress doubtless would have said so.' United States v. Borden Co., 308 U.S. 188, 201, 60 S.Ct. 182, 189, 84 L.Ed. 181.

Respondents contend, nevertheless, that the § 15 exemption does not reflect the true intent of the Congress which enacted it. They insist that the structure of the Act and its legislative history demonstrate an unstated legislative purpose to free the shipping industry from the antitrust laws.

We do not believe that the remaining provisions of the Shipping Act can reasonably be construed as an implied repeal of all antitrust regulation of the shipping industry's rate-making activities. We recently said: 'Repeals 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, 350—351, 83 S.Ct. 1715, 1734, 10 L.Ed.2d 915. We have long recognized that the antitrust laws represent a fundamental national economic policy and have therefore concluded that we cannot lightly assume that the enactment of a special regulatory scheme for particular aspects of an industry was intended to render the more general provisions of the antitrust laws wholly inapplicable to that industry. We have, therefore, declined to construe special industry regulations as an implied repeal of the antitrust laws even when the regulatory statute did not contain an accommodation provision such as the exemption provisions of the Shipping and Agricultural Acts. See, e.g., United States v. Philadelphia National Bank, supra.

The historical background of the Shipping Act does not indicate that a different rule of construction should be applied in interpreting that Act. The Congress which enacted the Shipping Act was not hostile to antitrust regulation. On the contrary, the Shipping Act was the end product of an extensive investigation of the shipping industry that was conducted by the Congress which enacted the Clayton Act.2

Respondents claim, nonetheless, that the Committee which conducted the investigation must have been hostile to antitrust regulation of the shipping industry because it concluded that the abolition of the conference system, which the Sherman Act probably required, would not be in the public interest. But the Committee also concluded that the conference system had produced sub- stantial evils and that it should not be permitted to continue without governmental supervision.

The Committee said: 'While admitting their many advantages, the Committee is not disposed to recognize steamship agreements and conferences, unless the same are brought under some form of effective government supervision. To permit such agreements without government supervision would mean giving the parties thereto unrestricted right of action. Abuses exist, and the numerous complaints received by the Committee show that they must be recognized.' H.R.Doc. No. 805, 63d Cong., 2d Sess., pp. 417 418.

Therefore, it seems likely that the Committee really only wanted to give the shipping industry a limited antitrust exemption. We do not believe that its purpose would be frustrated by the application of the antitrust laws to the implementation of conference agreements which have not been subjected to public scrutiny and examination by a governmental agency.3

But even if the Committee considered the possibility of a complete antitrust exemption at the time of the 1914 Report, the § 15 exemption clearly demonstrates that those who drafted the Shipping Act during the next Congress decided not to give the industry complete antitrust immunity. Since the problem of the application of the antitrust laws to the shipping industry was one of the focal points of the entire inquiry, the exemption provision could not have been a casual afterthought. The language of that provision must have been selected as a matter of deliberate choice in order to indicate the extent to which the industry's rate-making activities remain subject to the antitrust laws as well as the extent to which those activities are exempted from antitrust regulation.

This Court's decisions in United States Navigation Co. v. Cunard Steamship Co., 284 U.S. 474, 52 S.Ct. 247, 76 L.Ed. 408, and Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576, do not conflict with our interpretation of the Shipping Act. Those cases merely hold that courts must refrain from imposing antitrust sanctions for activities of debatable legality under the Shipping Act in order to avoid the possibility of conflict between the courts and the Commission.

The plaintiffs in the Cunard and Far East cases were seeking to enjoin activities which allegedly implemented unapproved agreements even though the Commission had never determined whether those alleged activities constituted the implementation of unapproved agreements. There was a real risk that the District Court might find that the defendants had implemented unapproved agreements while the Commission might find in some later proceeding that the same activities constituted the implementation of approved agreements. This Court decided that the danger of such a conflict could best be avoided by holding that one tribunal or the other has the exclusive right to make the initial factual determination. Since the Commission has specialized knowledge of the industry, the Court concluded that such primary jurisdiction should be vested in the Commission and accordingly instructed the District Court to refrain from acting until the Commission had ascertained and interpreted the circumstances underlying the legal issues.

The relief requested in the Cunard and Far East cases also created another source of possible...

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