Federal Maritime Commission v. Seatrain Lines, Inc 8212 1647

• Decision Date: 14 May 1973
• Docket Number: No. 71,71
• Citation: 411 U.S. 726,93 S.Ct. 1773,36 L.Ed.2d 620
• Parties: FEDERAL MARITIME COMMISSION, Petitioner, v. SEATRAIN LINES, INC., et al. —1647
• Court: U.S. Supreme Court

411 U.S. 726

93 S.Ct. 1773

36 L.Ed.2d 620

FEDERAL MARITIME COMMISSION, Petitioner,

v SEATRAIN LINES, INC., et al.

No. 71—1647.

Argued March 21, 1973.

Decided May 14, 1973.

Syllabus

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. 731—746.

148 U.S.App.D.C. 424, 460 F.2d 932, affirmed.

Edward G. Gruis, Washington, D.C., for petitioner.

Irwin A. Seibel, Washington, D.C., for respondents.

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 Com- mission¹ 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.² The Commission is directed to approve all other agreements, and the statute expressly provides that agreements so approved are exempt from the antitrust laws.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, 86 S.Ct. 781, 15 L.Ed.2d 709 (1966). Cf. United States v. Borden Co., 308 U.S. 188, 60 S.Ct. 182, 84 L.Ed. 181 (1939). But cf. United States Navigation Co. v. Cunard S.S. Co., 284 U.S. 474, 52 S.Ct. 247, 76 L.Ed. 408 (1932); Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576 (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, 273—274, 88 S.Ct. 929, 936—937, 19 L.Ed.2d 1090 (1968); FMC v. Aktiebolaget Svenska Amerika Linien, 390 U.S. 238, 244—246, 88 S.Ct. 1005, 1009—1010, 19 L.Ed.2d 1071 (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 (N.J.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 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 re-enter the business and compete with PEFL. 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.'⁴

After Seatrain's petition to reopen was denied, it appealed the Commission's ruling to the Court of Appeals.⁵ Seatrain argued that the Commission was required to hold a hearing on its objection, while the United States, as statutory respondent,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, 93 S.Ct. 550, 34 L.Ed.2d 510 (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 275, 88 S.Ct., at 937. In this case, the statute is ambiguous in its scope and must therefore be read in 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.'⁷ Without more, we might be inclined to agree that many merger agreements prob- ably 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, 316, 76 S.Ct. 937, 943, 100 L.Ed. 1209 (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, 350 351, 83 S.Ct. 1715, 1735, 10 L.Ed.2d 915 (1963) (footnotes omitted). As we observed only recently: 'When . . . relationships are governed in...