Seatrain International, S. A. v. Federal Maritime Commission

584 F.2d 546, 189 U.S. App. D.C. 388
CourtCourt of Appeals for the D.C. Circuit
DecidedJuly 28, 1978
DocketNo. 77-1542
StatusPublished
Cited by7 cases

This text of 584 F.2d 546 (Seatrain International, S. A. 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
Seatrain International, S. A. v. Federal Maritime Commission, 584 F.2d 546, 189 U.S. App. D.C. 388 (D.C. Cir. 1978).

Opinion

Opinion for the court filed by Chief Judge J. SKELLY WRIGHT.

J. SKELLY WRIGHT, Chief Judge:

Seatrain International, S.A., a common carrier by water, petitioned this court for review of an order of the .Federal Maritime Commission (FMC) issued under Section 15 of the Shipping Act, 46 U.S.C. § 814 (1970). The challenged order extends the authority of the Japan/Korea-Atlantie and Gulf Freight Conference (JKAG), an association of 13 ocean carriers, to establish conference intermodal tariffs to interior points in the United States. Applying the principles detailed today in our opinion in United States Lines, Inc. v. FMC (Euro-Pacific), 189 U.S.App.D.C. 361, 584 F.2d 519 (1978), we hold that this order does not reflect adequate consideration of the antitrust implications of the extension approved by the Commission, and we therefore remand the record in this case to the Commission for further consideration.

I. BACKGROUND

Intermodal service involves transportation of goods, generally in containerized shipments, over both land and sea; goods are carried from overseas ports, through ports on one coast of the United [390]*390States, to destinations inland or on opposite coasts. The rates for such through service, termed intermodal tariffs, must be filed with both the FMC and the Interstate Commerce Commission.1 Individual ocean carriers may operate this through intermodal service by simply filing the required tariff. Carrier conferences, however, must receive Commission approval under Section 15 of the Shipping Act,2 separate and independent from their authority to establish common rates for all-water service, in order to develop and file intermodal tariffs.

In January 1973 JKAG submitted to the Commission an amendment to its conference agreement to allow JKAG to establish rates and regulations for conference inter-modal services from ports in Japan and Korea, through United States Atlantic and Gulf ports, to inland points in the United States. The Commission, while modifying certain aspects of the JKAG amendment, approved the requested authority for an 18-month period.3 In January 1974 and again in November 1975 the Commission granted additional 18-month extensions of JKAG’s intermodal tariff authority.4 The 1975 extension provided, however, that a conference intermodal tariff could supersede a tariff between the same points previously filed by an individual conference member only if it contained “comparable rates, terms, and conditions of carriage”; otherwise the individual tariff would remain in effect as well.5

The instant action arose from JKAG’s subsequent request for FMC approval of an amendment extending indefinitely the conference’s intermodal ratemaking authority and eliminating the requirement that a conference tariff be comparable to an individual tariff in order to supersede it. Notice of this proposed amendment was published in the Federal Register on March 16, 1977,6 and an opportunity was afforded interested parties to submit comments and request a full Commission hearing.

Petitioner Seatrain filed a protest with the Commission in response to this notice and requested a hearing on the question whether approval was justified. Seatrain asserted that the agreement was a per se violation of the antitrust laws and claimed that sufficient need had not been shown for conference intermodal authority, pointing out that no intermodal tariffs had been filed by the conference over the four years the authority had existed. Seatrain also objected to elimination of the comparable tariff requirement and noted certain areas of the agreement which appeared unclear.7

On May 18, 1977 the Commission issued an order approving the JKAG amendment with certain modifications accepted by the conference.8 The Commission found there was no evidence presented to show that indefinite intermodal authority was necessary, but felt the progress which had been made by the conference toward filing an intermodal tariff was sufficient to justify another 18-month extension of its authority.9 In addition, the Commission required retention of the clause providing that only comparable conference tariffs can supersede individual tariffs and addition of certain clarifying language to the amendment.10 It is this order of the Commission which Seatrain has asked us to review.

II. ANALYSIS

Under Section 15 of the Shipping Act the FMC is authorized to grant exemptions from the antitrust laws to agreements [391]*391entered into by common carriers by water. As our opinion today in Euro-Pacific, supra, 189 U.S.App.D.C. at 369-370, 584 F.2d at 527-528, makes clear, the Commission is required to take account of the antitrust implications of an agreement in determining whether to approve it. In this ease, as in Euro-Pacific and in United States Lines, Inc. v. FMC (Combi Lines), 189 U.S.App.D.C. 385, 584 F.2d 543 (1978), also decided today, the Commission failed to consider the antitrust implications of the amendment it approved.

The intermodal conference agreement at issue here, as the Justice Department has pointed out in opposing the Commission’s action,11 represents a significant extension of the conference’s ratemaking authority to a new technique of transportation. What is involved in conference ratemaking is elimination of any price competition between conference members. This is price fixing in the traditional sense, long recognized to be a violation of the antitrust laws.

The only reference to these antitrust implications of the agreement in the Commission’s opinion is found in the context of its denial of unlimited authority to JKAG. There the Commission adverted to its test, upheld by the Supreme Court in FMC v. Svenska Amerika Linien, 390 U.S. 238, 243, 88 S.Ct. 1005, 19 L.Ed.2d 1071 (1968), that where an agreement constitutes a per se violation of the antitrust laws the proponents bear the burden of establishing that it is “required by a serious transportation need, necessary to secure important public benefits or in furtherance of a valid regulatory purpose of the Shipping Act.” In this ease, the Commission stated, “such evidence has not been presented,” and indefinite authority at this point could not be granted. JA 163. But the Commission went on to state that “inasmuch as the conference has recently agreed to publish and a file a port-to-port water/rail intermodal tariff at the earliest possible date and because the formulation of said tariff is nearing the final stages before filing, the Commission considers progress of this sort sufficient to warrant a limited extension of the conference’s intermodal authority.” JA 163.

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Bluebook (online)
584 F.2d 546, 189 U.S. App. D.C. 388, Counsel Stack Legal Research, https://law.counselstack.com/opinion/seatrain-international-s-a-v-federal-maritime-commission-cadc-1978.