U. S. Atlantic & Gulf/Australia-New Zealand Conference v. Federal Maritime Commission

364 F.2d 696, 1968 A.M.C. 513
CourtCourt of Appeals for the D.C. Circuit
DecidedJune 30, 1966
DocketNos. 19637, 19704
StatusPublished
Cited by3 cases

This text of 364 F.2d 696 (U. S. Atlantic & Gulf/Australia-New Zealand 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
U. S. Atlantic & Gulf/Australia-New Zealand Conference v. Federal Maritime Commission, 364 F.2d 696, 1968 A.M.C. 513 (D.C. Cir. 1966).

Opinion

McGOWAN, Circuit Judge:

These statutory review petitions bring before us the action of the Federal Maritime Commission in enlarging the scope of one of the ocean carrier conferences existing under the Shipping Act of 1916. Section 15 of that statute, 46 U.S.C. § 814, contemplates that competitors may, with the Commission’s prior approval, engage in concerted activities with respect to rates and other aspects of the service they offer.' Petitioner is such a shipping conference created under an approved agreement. It is composed of six carriers serving between Atlantic and Gulf ports of the United States, on the one hand, and Australia and New Zealand ports, on the other.

The validity of this approved conference agreement as it relates to this trading area is not in issue. What petitioner complains of are certain limitations placed by the Commission upon petitioner’s effort to enlarge its agreement by amendment to include Great Lakes and St. Lawrence ports. We do not now decide that the Commission could in no event have properly done what it did. We do hold that, in respect of two of the three major points pressed upon us by petitioner, the Commission’s findings are inadequate to support affirmance on this review; and we remand for further proceedings by the Commission consistent with what is said hereinafter.

I

With the opening of the St. Lawrence Seaway in 1959, the significance of the Great Lakes as the origin and destination of seaborne traffic was materially increased. Ports on the Lakes provide competitive alternatives to Atlantic and Gulf ports, and some shippers use both. The location of the Lakes gives rise to both advantages and disadvantages in this competition. Shippers on'or near the Lakes save the cost of inland transportation to the Atlantic and Gulf ports; and this is- a considerable factor. But the disadvantages are, first, the closing of the' Lakes to navigation during five or six months of the year; and, second, the longer sailing time required to make the voyage from, for example, Chicago to Sydney as compared with New York to the same destination.

Three of the six members of the U. S. Atlantic & Gulf/Australia-New Zealand Conference conceived a purpose to serve the ports on the Lakes as well. Only one had actually engaged in such trade prior to the hearing in this case, and it found [698]*698the volume so slender as to make it necessary to try to fill out its cargoes by calls at Canadian ports in the St. Lawrence and U. S. Atlantic ports as well. Independent carriers — not members of the Conference — have provided the most formidable competition for the trade between the Lakes and the Antipodes.

The amendment proposed by petitioner to the Conference agreement sought to extend its coverage to the Lakes and the St. Lawrence. It created a Great Lakes Section within the Conference. Carriers maintaining regular service from and to the Lakes would be eligible for membership in the Section. Action by the Section on rates was made dependent upon a % vote of its members, although the Conference agreement required only a % vote on the setting of rates. The amendment also provided that, if the Section fixed rates at levels less than those offered at the Atlantic and Gulf ports, the prior assent of the entire Conference would have to be obtained. Lastly, the amendment encompassed the extension to the Lakes of the dual rate contract arrangements operative in respect of the Atlantic and Gulf. Under a dual rate system, which is made legally possible by Section 14b of the Act, lower rates are available to the shipper who contracts to give all his business to conference carriers.

The examiner who presided over the hearing recommended approval of the proposed amendment. Exceptions were filed by a major chemical company in the Lakes region, a Montreal carrier contemplating service between the Lakes and Australia, and the Commission’s Hearing Counsel. The Commission approved the amending agreement to the extent that it enlarged the trading area of the Conference by creating the Great Lakes Section. Its reason for doing so was that of administrative economy; it believed that a single conference administration for “separate trade areas,” to use its own phrase, was justified by the savings in administrative costs. It disapproved, however, of the provisions in the amendment for (1) a % vote on rates in the Great Lakes Section, (2) the requirement of Conference consent to Section rates lower than Atlantic and Gulf rates, and (3) the extension of the Conference’s dual rate system to the Lakes. It is these limitations upon the Commission’s approval which petitioner attacks here.

No one is before us urging that the Commission is wholly lacking in authority to put two competitive trading areas in the same conference, even for administrative cost-sharing purposes. There are perhaps means by which this last could be achieved short of what is at least in form an enlargement of the Conference. In any event, we doubt that petitioner was motivated to amend its agreement by any burning desire to reduce office overhead, although that would appear to be about all the Commission gave it. We are not clear whether it is the Commission’s real belief that it lacks authority under the statute to do more than that in the case of separate trading areas circumstanced as these are here. We venture no view on that question since no one has asked us to; and we proceed to address ourselves to the issues in the framework in which they have been presented to us, that is to say, whether the Commission’s actions complained of here are adequately supported by its findings, bearing in mind that, where findings are otherwise adequate, our function is limited to seeing whether there is substantial support for them in the record. Consolo v. FMC, 383 U.S. 607, 618-620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966).

II

We turn first to the Commission’s rejection of the proposed extension of dual rate system. Petitioner argued to the Commission that the threat of competition on the Lakes from non-conference carriers justified this provision; and that it would have the further advantage of discouraging Atlantic and Gulf shipper-signatories from getting around the contract by sending their goods to the Lakes. The Commission recognized the first point to the extent [699]*699of indicating its willingness to approve a separate dual rate contract for the Lakes. But it stated its belief to be that the inclusion of the two trading areas under the existing contract system applicable to the Atlantic and Gulf would, within the meaning of Sections 14b and 15 of the Shipping Act, be (1) detrimental to the commerce of the United States, (2) discriminatory vis-a-vis the Lakes, and (3) contrary to the public interest. Its reasons for this finding are set forth in the quotation from its opinion contained in the margin.1 We cannot say that this conclusion js arbitrary or lacking in substantial support in the record. See The Dual Rate Cases, 8 F.MC. 16 (1964), remanded on other grounds, sub. nom. Pacific Coast European Conference v. United States, 9 Cir., 350 F.2d 197, cert. denied, 382 U.S. 958, 86 S.Ct. 433, 15 L.Ed.2d 362 (1965).

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364 F.2d 696, 1968 A.M.C. 513, Counsel Stack Legal Research, https://law.counselstack.com/opinion/u-s-atlantic-gulfaustralia-new-zealand-conference-v-federal-maritime-cadc-1966.