It has been stated that the bill as it now stands exempts the railroads, their associations, and other persons from the provisions of the antitrust laws, with respect to all action that they might take. We do not agree with such a broad assertion but we do believe that the exemption of the railroads and their associations from the antitrust laws as contained in H. R. 2536 should be clarified by adding at the end of paragraph 8 a statement to the effect that "in all other respects parties to any agreement approved by the Commission under this section and other persons are not exempt from the operation of the antitrust laws." We believe that the enactment of the Bulwinkle bill, with the safeguards we have proposed, would be in the interests of the members of the national council of farmer cooperatives as shippers and receivers of agricultural commodities and farm supplies. Hon. ALFRED L. BULWINKLE, House Office Building., Washington, D. C.: CHICAGO, ILL., July 1, 1947. Conference of American Small Business Organizations, representing chambers of commerce and trade associations throughout the country with underlying membership of about 600,000, is convinced that Senate bill 110 is definitely in the best interest of small shippers, whose business is not large enough to warrant employment of traffic experts. We find that other small business groups, freight forwarder groups, etc., as well as numerous individual small businessmen, unanimously favor passage of this bill. If bill is defeated, we believe a chaotic condition would result for shippers, as well as carriers, and create unnecessary hardship. The fact that rate making, as provided for in Senate bill 110, has been in effect more than a generation with the knowledge of Department of Justice and Interstate Commerce Commission, it is difficult to understand why this system of rate making should now become the subject of dispute as to its application under the Sherman Act. We believe in fair competition, but the kind of competition that would ensue if the present generation-old system were discarded, would certainly result in disadvantage to the small business shippers. F. A. VIRKUS, Chairman, Conference of American Small Business Organizations. Hon. CHARLES A. WOLVERTON, AMERICAN FARM BUREAU FEDERATION, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. MY DEAR CHAIRMAN WOLVERTON: During the Seventy-ninth Congress extensive hearings were conducted by the House and Senate Committees on Interstate Commerce on bills which provided for statutory recognition and approval of the right of railroads and other common carriers to observe under proper safeguards cooperative procedures in respect to rates and other matters. At that time the American Farm Bureau Federation went on record favoring the principles of the proposed legislation and urged that the following amendments recommended by the board of directors of the American Farm Bureau Federation be included: "1. That agreements affecting procedures to establish rates and services be so restricted as to apply only between carriers of the same type, except insofar as the subject matter involves joint consideration, such as through rates, routes and joint rates for transportation partly by railroad and partly by truck or vessel or other carrier. "2. That freedom of action be assured on the part of individual carriers where matters of services and facilities are involved. "3. That approval of proposed agreements be conditioned upon the finding by the Interstate Commerce Commission that the object of the agreement is appropriate for the proper performance by the carriers of service to the public and consistent with the public interest and the national transportation policy and that the arrangement will not unduly restrain competition. "4. That associations or organizations maintained by or in the interest of any group of carriers or freight forwarders subject to the Interstate Commerce Act be made subject to the provisions of such act requiring reports and the inspection of books and records.' The objectives of these recommendations were incorporated substantially in the bill as passed by the House of Representatives on December 10, 1945 and subsequently reported by the Senate Committee on Interstate Commerce. Early this year bills H. R. 221 and S. 110 were introduced proposing to amend the Interstate Commerce Act with respect to certain agreements between carriers. On June 18, 1947, the Senate passed S. 110 and it is now before your committee for consideration along with H. R. 221. Both bills contain the suggested amendments of the American Farm Bureau Federation. However, the bill as passed the Senate contains provisions which express in greater detail the recommendations of our board of directors. We, therefore, favor the enactment of legislation containing our recommendations as incorporated in S. 110. I would appreciate it very much if you will incorporate this statement in the record of the hearings on the bills before your committee. Sincerely yours, EDW. A. O'NEAL, President. DEPARTMENT OF JUSTICE, OFFICE OF THE ASSISTANT TO THE ATTORNEY GENERAL, Hon. CHARLES A. WOLVERTON, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of Justice relative to a bill (H. R. 221) to amend the Interstate Commerce Act with respect to certain agreements among carriers. The bill under consideration would add a new section to the Interstate Commerce Act, designated 5a, which would immunize from the operation of the antitrust laws the "carrying out" of agreements, approved by the Commission after notice and hearing other than "for a pooling, division, consolidation, merger, purchase, lease, acquisition, or other transaction to which section 5 of this act is applicable," between or among common carriers subject to part I, II, or III, or freight forwarders subject to part IV, of the Interstate Commerce Act. The immunity would apply to the carriers which are parties to the agreement "and other persons" upon approval of the agreements by the Interstate Commerce Commission. The bill would provide that upon application and after "reasonable opportunity for hearing" the Commission shall by order approve any such agreement if it finds that, by reason of furtherance of the national transportation policy declared in the Interstate Commerce Act, relief from the operation of the antitrust laws should apply with respect to the making and carrying out of the agreement; that approval be granted only upon such terms and conditions as the Commission may prescribe as necessary to enable it to grant its approval in accordance with the standard set forth; that the Commission shall terminate its approval, modify any terms and conditions upon which approval was granted, if if finds such action necessary in order that the standard set forth may be complied with; and that in case approval is terminated or modified, the effective date of any order terminating or modifying approval, or modifying terms and conditions would be postponed for such period as the Commission determines to be reasonably necessary to avoid undue hardship. The bill provides that an agreement establishing a procedure for the determination of any matter through joint consideration shall not be approved by the Commission unless it finds that under the agreement opportunity to act contrary to the determination arrived at through such procedure is afforded to each party to the agreement which did not concur in such determination. The bill provides further that any action of the Commission in approving, denying approval or in terminating its approval of an agreement, or in prescribing or modifying the terms and conditions upon which approval is granted, shall be construed as having effect solely with reference to the relief from the operation of the antitrust laws. The bill is not limited to carriers' rate conferences, bureaus or associations. It applies also to all agreements not covered by section 5 of the Interstate Commerce Act. The bill would permit rail carriers, highway carriers, water carriers, pipe lines, and freight forwarders, with approval of the Commission, to enter into an agreement, to organize into combinations, and by joint action to make determinations as to the rates to be charged, services to be performed, facilities to be installed, and other matters vital in carrying on and developing the transportation industry. While the bill provides that such an agreement could not be approved between or among carriers of different classes unless it is limited to matters relating to transportation under joint rates or over through routes, and although the bill classifies carriers into five classes (section (B) (3)), the language used is sufficiently broad to permit agreements under which services to be performed, facilities to be installed, and the class or kind of equipment to be used, could be curtailed and technological improvements suppressed. It would seem clear that services, equipment and facilities could be classed as matters relating to transportation under joint rates and over through routes, since these matters are included in the definition of "transportation" in the Interstate Commerce Act. As there defined, the term includes "locomotives, cars, and other vehicles, vessels, and all instrumentalities and facilities of shipment or carriage, irrespective of ownership or of any contract, express or implied, for the use thereof, and all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and handling of property transported.' (49 U. S. C. 1 (3) (a).) The bill therefore presents an important question of policy to which the attention of the Congress is respectfully invited. Another important policy question is presented in that the enactment of the bill would render all carrier and freight forwarder agreements, entered into with the approval of the Interstate Commerce Commission, exempt from the antitrust laws. Under section 5 of the Interstate Commerce Act, carriers are already relieved from the operation of the antitrust laws with respect to agreements for pooling, divisions, mergers, acquisitions, etc., if approved by the Commission. The measure under consideration is framed in such broad terms as to permit the extension, under agreements approved by the Commission, of the immunity with respect to the making and carrying out of all other agreements. And such immunity under such approved agreements, would apply not only to the carriers, parties to the agreements, but also to undefined "other persons.' The policy question, therefore, arising under the bill is whether to afford the railroad, motor carrier, water carrier, pipe line, and freight forwarder industries such an opportunity for obtaining exemption from the antitrust laws. The question of establishing a precedent, inviting other groups to demand machinery for immunity is also presented. The Department of Justice has made an extensive investigation of rate conferences, rate bureaus, associations, and other combinations in the transportation industry. This investigation discloses that through numerous rate bureaus and associations a Nation-wide system of private rate making has developed in the transportation industry resulting, the Department believes, in the absence of competition among competing carriers. There have been, the Department believes, numerous violations of the antitrust laws. As a result of this investigation, the Department has instituted an action (United States v. The Association of American Railroads et al., in the District Court of the United States for the District of Nebraska) to enjoin the combinations, alleged to consist of railroads, associations, and bankers, from violating the antitrust laws through preventing rate reductions and in coercively imposing higher rates and fares for the Western District than for comparable services in the Eastern District, in preventing individual carriers from improving the railroad service, in suppressing technological improvements, and in hindering and preventing the development of motor-vehicle and other modes of transportation competitive with the railroads. The trial of this case is now in progress. The State of Georgia, in the decision of the Supreme Court (State of Georgia v. The Pennsylvania R. R. Co. et al., 324 U. S. 439, 65 S. Ct. 716) has obtained leave to file a suit in that Court, seeking to enjoin private combinations in the industry from fixing noncompetitive rates, charged in the bill of complaint to be discriminatory against the State of Georgia, its ports and its people, resulting in holding Georgia's "economy in a state of arrested development." Hearings before the master appointed by the Court have been completed. It is suggested that the bill should be carefully considered by the Congress in relation to these suits. In addition the bill provides that the Commission shall approve any agreement if it finds that, by reason of furtherance of the national transportation policy declared in the Interstate Commerce Act, the carriers, parties to the agreement, "and other persons" should be relieved from the operation of the antitrust laws. These tests or standards for determining what acts are to receive immunity are quite vague; and they have a bearing on the question as to whether the bill adequately preserves a carrier's right of independent action. The use of the phase "and other persons" in connection with the extension of immunity causes further vagueness in that such persons are not identified by class or otherwise. The national transportation policy declares that it is the "policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act, so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate, economical and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; to cooperate with the several States and the duly authorized officials thereof; and to encourage fair wages and equitable working conditions-all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the postal service, and of the national defense. All of the provisions of this act shall be administered and enforced with a view to carrying out the above declaration of policy." (49 U. S. C., notes preceding sec. 1.) Section 5 of the Interstate Commerce Act provides for immunity in certain cases; but there the relief from the operation of the antitrust laws is for specific acts when found necessary in the public interest and, in the case of agreements for the pooling or division of traffic, where the acts would not unduly restrain competition. The failure to specify the acts or classes of acts to be approved or to state the purposes to be accomplished, and the inadequacy of the tests upon which to base a determination for granting the immunity, leave the bill in such form as to merit the closest scrutiny by the Congress. This Department believes that passage of the bill would tend to reverse the established policy of the Congress of preserving a broad area for the play of competitive factors in the determination of transportation charges. For the reasons outlined herein this Department is unable to recommend the enactment of the bill. This Department has been advised by the Director of the Bureau of the Budget that there is no objection to the submission of this report. Sincerely yours, DOUGLAS W. MCGREGOR, |