Persian Gulf Outward Freight Conference v. Federal Maritime Commission

361 F.2d 80, 1966 A.M.C. 1155
CourtCourt of Appeals for the D.C. Circuit
DecidedMarch 8, 1966
DocketNo. 19322
StatusPublished
Cited by2 cases

This text of 361 F.2d 80 (Persian Gulf Outward Freight Conference v. Federal Maritime Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Persian Gulf Outward Freight Conference v. Federal Maritime Commission, 361 F.2d 80, 1966 A.M.C. 1155 (D.C. Cir. 1966).

Opinion

FAHY, Circuit Judge:

Persian Gulf Outward Freight Conference petitions this court to vacate as contrary to Section 15 of the Shipping Act, 1916, as amended,1 the Commission’s Order of April 14, 1965, approving Conference Agreement No. 8900, and to remand the Agreement to the Commission for disapproval. The Agreement created a second conference of shipping lines engaged in trade between Atlantic and Gulf ports of the United States and ports in the Persian Gulf and waters adjacent thereto in the range west of Kurachi and northeast of Aden. The carriers in the Agreement do not fly the American Flag, as do the two shipping lines which compose the petitioner Conference. At an earlier period all carriers in both groups, with one exception, composed a single conference. Later an independent entered the same area and transported large quantities of automobiles at rates below those then charged by the carriers in the petitioner Conference. Since petitioner would not reduce its rates to meet this competition the carriers now in Agreement No. 8900 withdrew. After a severe rate war, and in the effort to gain rate stability, they formed this new Conference with the independent carrier.

The principal question is whether the Commission may validly approve a second rate-making agreement “in the same trade” which the older Conference says it serves. It contends that earlier Commission approval of its agreement precludes approval of another conference among carriers engaged in transportation from and to the ports aforesaid. The Act itself does not in express terms support this contention. Section 15, set forth in pertinent part in the margin,2 [82]*82provides that the Commission shall approve all agreements between carriers except as therein set forth. Though there is no express provision that only one agreement between carriers transporting from and to ports in the same or similar location shall be approved petitioner urges that the legislative history of Section 15 and other facets of the Act demonstrate that Congress so intended. Illustrative is H.R.Doc.No. 805, 63d Cong., 2d Sess. 416 (1915), known as the Alexander Report. It is there said that the advantages sought,

can be secured only by permitting the several lines in any given trade to cooperate through some form of rate and pooling arrangement under Government supervision and control.

Other language relied upon it found in S.Rep.No. 2494, 81st Cong., 2d Sess. (1949), where conference agreements are referred to as agreements “between the American and foreign operators engaged in each particular service.” These and perhaps other references do seem to indicate that those engaged in the formulation of the Act contemplated that ordinarily carriers in a particular trade would form one conference.3 Special consideration seems not to have been given to the particular problem with which we are concerned; but it seems equally clear that the right of the Commission to approve more than one conference in circumstances like those now before us was not prohibited. In this situation for the court to prohibit it would do what Congress should do if it is to be done at all. The language of the Act itself is broad enough to authorize more than one conference in the circumstances. Therefore we should not narrow the Commission’s authority by a doubtful construction which would preclude the exercise of its discretion, governed by those limitations which are clearly expressed in the Act. The Commission itself in Oranje Line et al. v. Anchor Line Limited et al., 5 FMB 714, 731, though for reasons there stated it did not approve a second conference, said the contention that it could not do so “is not supported by the language of the Act nor by its legislative history.”

Petitioner also challenges what it terms the Commission’s justification for approving the agreement, namely, that there is substantially no present or foreseeable competitive relation between the conferences in regard to either ports served, cargoes carried, rates charged, or service to shippers. The Commission found that since conflicting competitive conditions were lacking the basic premises upon which its Examiner recommended disapproval of the Agreement disappeared. The basic Commission decision contains a rather detailed statistical analysis of relevant factors. This shows that of the ports served by carriers in petitioner Conference and those in the new Conference the overlap was at 6 out of 21 ports during the period tested, with “substantial differences in the number of calls and service” at the six ports. The analysis of cargo carried, rates charged, and service to shippers supports the conclusion reached that “there is substantially no present or foreseeable competitive relation between the parties.” This decision does not find an absence of all competitive relation but gives several reasons for the conclusion that the competition was not sufficient to prevent approval of the Agreement. One of the reasons given for approval is that the Agreement would assist in achieving the objective of enabling United States merchants to compete better with foreign [83]*83shippers in the Persian Gulf area, particularly in carrying automobiles and bagged flour. With other factors this was thought to outweigh any conceivable detriment to the commerce of the United States. The carriers of petitioner are charging higher rates than the carriers seeking approval of the new Agreement. This is because the former predominantly carry government cargo required, to the extent they are available, to be shipped on commercial vessels flying the United States flag,4 and Defense Department cargo, all of which must be carried on U. S. flag ships.5 American exporters to the area find these rates unattractive compared with those offered by the carriers in Agreement No. 8900, which are not likely to adopt the higher rates. In view of this situation the decision states:

We would not foreclose opportunities to independents to form what might well prove to be an effective conference and by such foreclosure prompt them (even if such prompting were possible) to join the present highrate Conference; thereby insuring its existence, thereby having only high rates available to commercial exporters from the United States, and thereby reducing the opportunities for United States exporters to participate in the trade in competition with foreign competing shippers who possibly might have lower rates available to them.
* * * * *
The record shows further that if rate wars and instability are a factor they will be diminished by approval because all the incentives to reduce rates opportunistically exist between the applicant carriers rather than between applicants and protestants. There is a potentially destructive competitive relationship among the independent applicant carriers which compete in regard to rates and serve many ports in common.

The analysis of the competitive situation referred to finds adequate support in the evidence and furnishes basis for the decision contrary to that of the Examiner.

The details to which we have referred are from the joint decision of two Commissioners, the Vice Chairman and Commissioner Patterson.

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Bluebook (online)
361 F.2d 80, 1966 A.M.C. 1155, Counsel Stack Legal Research, https://law.counselstack.com/opinion/persian-gulf-outward-freight-conference-v-federal-maritime-commission-cadc-1966.