Pennsylvania R. Co. v. Interstate Commerce Commission
| Decision Date | 16 June 1933 |
| Docket Number | No. 4638.,4638. |
| Citation | 66 F.2d 37 |
| Parties | PENNSYLVANIA R. CO. et al. v. INTERSTATE COMMERCE COMMISSION. |
| Court | U.S. Court of Appeals — Third Circuit |
Henry Wolf Bikle, of Philadelphia, Pa. (C. B. Heiserman, of Haverford, Pa., of counsel), for Pennsylvania R. Co. et al.
Frank M. Swacker, of New York City, for petitioner Guiterman.
Wm. H. Bonneville, and E. M. Ebert, both of Washington, D. C., for respondent.
Before WOOLLEY, DAVIS, and THOMPSON, Circuit Judges.
This case is here on petition to set aside an order of the Interstate Commerce Commission requiring the Pennsylvania Railroad Company and the Pennsylvania Company, which is an investment company, whose stock is held by the railroad company, to divest themselves of all the shares of the capital stock of the Lehigh Valley Railroad Company and the Wabash Railway Company, which they own.
The par value of the total amount of outstanding capital stock of the Wabash Railway Company is:
Preferred A ....................... $69,333,050
Convertible Preferred B ........... 2,462,132
Common ............................ 66,697,775
The par value of the shares of all classes of the stock is $100, and all classes have equal voting power.
The par value of the amount of the Wabash stock held by the Pennsylvania Company is:
Preferred A ................. $31,290,000
Common ...................... 36,290,000
The par value of the total amount of outstanding stock of the Lehigh Valley Railroad Company is:
Cumulative Preferred ........... $ 106,300
Common ......................... 60,501,700
The par value of the shares of both classes of the stock is $50, and both classes have equal voting power.
The par value of the shares of stock of the Lehigh Valley Railroad Company held by the Pennsylvania Company is $18,251,950.
This proceeding was brought under the authority of section 7 of the Clayton Act of October 15, 1914 (38 Stat. 730 15 USCA § 18), the material parts of which provide as follows:
The general question is whether or not there is any substantial evidence in the case that brings it within the provisions of the above section of the act.
Section 11 of the act (15 USCA § 21), provides that "the findings of the commission or board as to the facts, if supported by testimony, shall be conclusive." The Commission found that the effect of the acquisition may be to substantially lessen competition between the Pennsylvania Railroad Company and the other two companies, and that the purchase was not solely for investment. Accordingly, if there is any substantial evidence to sustain these findings, they are binding upon us. Federal Trade Commission v. Curtis Publishing Company, 260 U. S. 568, 43 S. Ct. 210, 67 L. Ed. 408.
Whether or not there is any substantial evidence to support the findings of the commission depends in this case somewhat upon the interpretation of the words "may be" in the sentence, "where the effect of such acquisition may be to substantially lessen competition."
The Commission contends that, where the effect of the acquisition by one corporation engaged in commerce of the stock of another likewise engaged may possibly be "to substantially lessen competition" between them, the acquisition is prohibited by the statute. It says that the mere possibility that it will have such effect, the possession of the power regardless of its use, brings the acquisition within the inhibition of the statute. This was the trend of the decisions of the Supreme Court under the earlier Sherman Act (15 US CA § § 1-7, 15 note) cases. Northern Securities Co. v. United States, 193 U. S. 197, 24 S. Ct. 436, 48 L. Ed. 679; Harriman v. Northern Securities Co., 197 U. S. 244, 25 S. Ct. 493, 49 L. Ed. 739; United States v. Reading Co., 253 U. S. 26, 40 S. Ct. 425, 64 L. Ed. 760; United States v. Southern Pacific Co., 259 U. S. 214, 42 S. Ct. 496, 66 L. Ed. 907. But in the later cases the Supreme Court has brought the element of "probability" into the interpretation of the words "may be." The mere possession of power is not, under all circumstances, sufficient to bring the acquisition of stock by one corporation of another within the inhibition of the act. The possession of power must be accompanied by the probability that it will be exercised to lessen competition to a substantial degree, before it is prohibited by the act. The purpose of using the words "may be" was to prevent such acquisition of the stock of a competitor as would under the circumstances probably lessen competition to a substantial degree. Standard Fashion Co. v. Magrane-Houston Co., 258 U. S. 346, 357, 42 S. Ct. 360, 66 L. Ed. 653; International Shoe Co. v. Federal Trade Commission, 280 U. S. 291, 50 S. Ct. 89, 91, 74 L. Ed. 431. In the last case cited, the Supreme Court said: "Mere acquisition by one corporation of the stock of a competitor, even though it result in some lessening of competition, is not forbidden; the act deals only with such acquisitions as probably will result in lessening competition to a substantial degree." In discussing the word "may" in section 3 (15 USCA § 14) in the case of Standard Fashion Company v. Magrane-Houston Company, 258 U. S. 346, 42 S. Ct. 360, 66 L. Ed. 653, the Supreme Court used substantially the same language.
The Clayton Act (38 Stat. 730) was in the nature of a supplement to the Sherman Act, and was intended as a preventive measure which would restrain in their incipiency acts prohibited by the statute. United States v. United Shoe Machinery Co. (D. C.) 264 F. 138; Swift & Co. v. Federal Trade Commission (C. C. A.) 8 F.(2d) 595; Standard Fashion Co. v. Magrane-Houston Co., 258 U. S. 346, 42 S. Ct. 360, 66 L. Ed. 653.
The exact question then is whether or not there is any competent evidence showing such circumstances as would justify the conclusion that the effect of the acquisition of the Wabash and Lehigh Valley stock by the Pennsylvania Company will probably lessen competition to a substantial degree. While the act provides that the findings of fact made by the Commission are conclusive, this does not relieve the court of the duty of determining whether or not there is any evidence which justifies the conclusion that the effect of the acquisition will be to lessen competition between the Pennsylvania and the Wabash and Lehigh Valley Companies to a substantial degree. Temple Anthracite Coal Company v. Federal Trade Commission (C. C. A.) 51 F.(2d) 656, 659.
We cannot assume that this will result from the mere acquisition of the stock. As a matter of fact, there...
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