Mr. HEMPHILL. Where would a competing shipper go that felt that the rates given to some other shipper were unreasonable or discriminatory to him? Would he come to the Antitrust Division? Mr. LOEVINGER. In other words, if shipper A were being charged a higher rate for the shipment of his goods to New York where they are sold than shipper B, and this difference in rate was handicapping shipper A, shipper A could go to the Antitrust Division or could go simply to his own lawyer and immediately institute a suit in Federal court. Mr. ROGERS of Texas. Would the gentleman yield there? Mr. HEMPHILL. Yes, certainly. Mr. ROGERS of Texas. Would that be in effect an amendment of the Clayton Act by this act? Mr. HEMPHILL. No, sir. I think that these are established principles. I believe that the existing laws are ample to prevent such discrimination. Section 5 of the Interstate Commerce Act, title 49, United States Code, section 3, prohibits discrimination or preference, and there is nothing in the proposed bill, H.R. 11583, that I see that would in any way suspend the effect of section 3. As a matter of fact, it occurs to me that the shipper could also go to the Interstate Commerce Commission under section 3 of the act, because all that this bill does is say that the Commerce Commission shall not set a floor below which minimum rates cannot go. However, as I read it, the Commission still retains the power to prevent discrimination or preference, but in addition the shipper that is injured by such acts may have a private right of action under the antitrust laws, so that it would probably increase the remedies available to shippers who might be discriminated against. Mr. ROGERS of Texas. If the gentleman would yield further. Then, Judge, you are saying that he loses no right that he presently has under the Interstate Commerce Act by the passage of this act and would retain his rights under the Clayton Act and perhaps underwould it be the Robinson-Patman Act under the antitrust laws? Mr. LOEVINGER. The applicability of the Robinson-Patman Act, in all candor, is questionable at the present time. That arises from the fact that the Robinson-Patman Act refers to discrimination in the sale of a commodity. The Seventh Circuit Court of Appeals has held that the word "commodity" does not include advertising. I think that the rationale of that decision would suggest that "commodity” likewise does not include transportation. However, I am not suggesting that the Department of Justice necessarily acquiesces in that decision, nor, for that matter, am I saying we reject it. We haven't taken a position, and I think that whether or not "commodity" includes services is an open question with the decisions that have been rendered against it. Mr. ROGERS of Texas. Would you yield for just one more question? Mr. HEMPHILL. Be happy to, sir. Mr. ROGERS of Texas. I don't like to belabor the point. Then you are saying that actually under the Clayton Act you are going to need to extend "commodities" to include services? You are going to cover this with the Clayton Act as the bill specifies, because, as I understand it, the Clayton Act has to do with conspiracies in restraint of trade? Mr. LOEVINGER. The Sherman Act, sir. Mr. ROGERS of Texas. I mean the Sherman Act. Mr. LOEVINGER. Yes, sir; has to do with conspiracy in restraint of trade and monopolizing. If discrimination is of a monopolistic sort it would be actionable. However, it appears to me also that, once you have eliminated the regulatory authority to set minimum rates so that the minimum rates are being set by the carrier, you are also reinstating the common law, and if I understand the common law of common carriers correctly this prohibits discrimination, so that I think that you have a common law action in the courts, you have an action under the antitrust laws, and you retain your action under the Interstate Commerce Act in order to prevent discrimination or preference. Mr. ROGERS of Texas. Thank you. Mr. Hemphill? Mr. HEMPHILL. Let me ask you this: If competing carrier A complains that the rate was unreasonable, then he would be to the Interstate Commerce Commission, is that not correct? For unreasonableness? Mr. LOEVINGER. The complaint was what, sir? Mr. HEMPHILL. If the complaint is unreasonableness, the avenue is through the Interstate Commerce Commission, is that not right? Mr. LOEVINGER. No. Mr. HEMPHILL. But if the complaint is discrimination it is through the Antitrust Division? Mr. LOEVINGER. No, sir; no, sir. If the complaint is that of discrimination, in my judgment, the complaint can be made, if this law is passed, to the Interstate Commerce Commission under section 3 of the Interstate Commerce Act. If I remember my sections correctly, I believe it is 49 United States Code, section 3, that prohibits undue preference or discrimination. I believe there is a common law action in the Federal courts. If the discriminatory rate is of a monopolistic character there is also an action under the antitrust laws and if there is action under the antitrust laws this may be brought either by the Department of Justice or by the injured party pursuant to his right of private action. If the complaint is merely that the rate is unreasonably low, I don't believe there is any recourse under this act to the Interstate Commerce Commission. I believe that this is the power that is wiped out, that you can't go and say "Well, it is just too low." It has to be monopolistic or discriminatory or have a harmful effect in some way. You can't simply set a floor on minimum rates. Mr. HEMPHILL. And by monopolistic or discriminatory you include a situation in which one shipper is charged one price and one another? Mr. LOEVINGER. Yes, sir. Mr. HEMPHILL. I believe, though, if they make joint rates applicable to through routes, then the antitrust laws do not apply? Mr. LOEVINGER. That is correct, sir; but let me point out that essentially what you are talking about here is differentiated from the situation where they do apply in two respects. First, there is a physical difference, but, second, what you have are essentially end-to-end carriers. In other words you ship this from point A to point B over carriers 1 and then from point B to point C over carrier 2. Carrier 1 and 2 are not essentially in competition for this carriage. They must cooperate in order to carry the commodity over the entire route, so that this is a different situation than when you have carrier 1 and carrier 2 both having lines between points A and B, and competing for the traffic. Mr. HEMPHILL. I want to thank you, sir. I think you have helped us and I appreciate it. Mr. LOEVINGER. Thank you. Mr. ROGERS of Texas. Mr. Younger. Mr. YOUNGER. Just one question, Mr. Loevinger. Do you know why in this legislation the air cirriers are not exempt from the minimum rates and all the other modes of transportation are? Mr. LOEVINGER. It would be pretty presumptuous of me to answer that question with Mr. Boyd sitting here in the room. My guess is that this probably has to do with the fact that when you are carrying passengers, which is the overwhelming majority in air traffic, that you are in a slightly different situation than when you are carrying bulk grain, or oil, or something else, and that the necessity for maintaining very high safety standards in air transportation is thought to be related to the maintenance of certain minimum rates. Mr. YOUNGER. Aren't the passenger minimum rates on the rails exempt under this legislation? Mr. LOEVINGER. Yes, sir; but there is a difference between having a crack train from Chicago to Minneapolis break down on the tracks and delay the passengers and having an airplane carrying passengers break down half way between Chicago and Minneapolis. It does a little more than delay the passengers ordinarily. Mr. YOUNGER. Trains run off the track once in a while, too. The Northern Pacific had some experience with that the other day. Mr. LOEVINGER. I guess it is a matter of weighing the risks, sir. Mr. YOUNGER. To your knowledge, then, you would say that it is on account of the safety factors? Mr. LOEVINGER. I would believe so, sir. Let me say this: What this bill is is part of the plan to implement the President's message on transportation. The President has said, and has said quite properly in my judgment, that we should move toward greater competition in this field. On the other hand, it has been a highly regulated field. The President does not propose, nor does anyone propose that I know of, that we simply wipe out regulation altogether. It is a question of moving rather cautiously and carefully by well-considered steps in the direction of greater competition. It was thought that in abolishing minimum-rate regulation it was prudent to go only as far as this bill proposes to go and to maintain CAB authority over minimum rates for passengers in air traffic. It is altogether possible that a few years' experience may convince us that we can abolish that regulation. There is nothing final, as I understand it, about this proposed legislation. Presumably Congress will continue to observe its effects if it is enacted and in a few years the judgment may be it went too far or not far enough, but it seems like a well-thought-out, careful, prudent step in the direction that the President quite properly said we should attempt to move. Mr. YOUNGER. Do you think that eliminating the rail transportation from minimum passenger rates might permit them to recapture some of the passenger business? Mr. LOEVINGER. I assume that this is hoped for. Mr. YOUNGER. That is all, Mr. Chairman. Mr. ROGERS of Texas. Mr. Loevinger, to get me cleared up on one or two matters here, of course antitrust laws are a sort of specialized business and no matter what kind of law you practice usually you don't get into it very much, so it is more or less hearsay to most of us as to what actually transpires. The thing that has disturbed me is this situation in title 15 of the United States Code, as I read it. The proviso there is that nothing contained in sections 12, 13, 14-21, and 22-27 of this title shall be construed to entitle any person, firm, corporation, or association except the United States, to bring suit in equity nor injunctive relief against any common carrier subject to the provisions of chapters 8, 12, 13, and 19 of title 49 in respect to any matter subject to the relation, supervision, or other jurisdiction of the Interstate Commerce Commission. Mr. Loevinger, the thought in my mind is, does not an aggrieved party go through the United States to obtain relief if he thinks he needs relief? Mr. LOEVINGER. No, sir. I believe that what this says is that an aggrieved party may not sue for anything that is subject to the regulation of the ICC. As to minimum rates, these are deregulated and therefore subjected to the antitrust acts, under which an aggrieved party has the right to bring his own suit. Mr. ROGERS of Texas. Primarily because of the deregulation of the rates? Mr. LOEVINGER. Yes, sir. Mr. ROGERS of Texas. That clears that up. Would you be in position, Mr. Loevinger, to give us a sort of documented breakdown on the application of the Clayton Act, the Sherman Act, and the Robinson-Patman Act as related to the situations which are at issue in this bill? Is that too broad? Mr. LOEVINGER. I am not quite sure what it is that you are asking, sir. Mr. ROGERS of Texas. The thing that I am thinking about is this: The manner in which the present antitrust laws would apply and the relief that would be available to the aggrieved party, both as to substance and as to procedure. Mr. LOEVINGER. Well, an aggrieved party would have the right to complain to the Department of Justice which might institute a Government suit, and would also have the right, on the basis of precisely the same complaint, to institute a private action. These are always parallel remedies under the antitrust laws. The remedies could be based upon either conspiracy or collusion between carriers with the effect of injuring a shipper or a competitive carrier either in the same mode or another mode of transportation. Mr. ROGERS of Texas. Suppose that just one carrier was involved on either side. Mr. LOEVINGER. If there is one carrier involved on either side, it would be necessary to establish either that there was cooperative action between the carrier and a shipper or group of shippers, or somebody else, or that there was a practice that constituted monopolization or attempt to monopolize, which, in the interpretation given it by the Supreme Court in a number of fairly old decisions, would involve practices which had the effect either of controlling prices or eliminating competitors from the field. Mr. HEMPHILL. Would the gentleman yield? Mr. ROGERS of Texas. Yes, I would be happy to. Mr. HEMPHILL. I do not know whether it is possible or not, Judge Loevinger, but the thought occurs to me if we are going to sell this legislation to the House of Representatives they are going to ask the question-first, "What antitrust laws are you substituting"; second, "What are your avenues of procedure"; and "What statutes will you rely upon to substantiate that course of procedure?" I realize that you people are overworked up there, but we have to answer the questions in general debate to people who are going to want to know why we did not print the statutes in the report, which I assume will follow the consideration in executive session. Mr. Chairman, I don't know whether that question is in order or not, but if it would be possible for you people to give us some outline without burdening your Department too much then it would certainly help. Mr. LOEVINGER. Surely. Mr. HEMPHILL. I would ask, Mr. Chairman, that whatever procedures and information is furnished be placed in the hearing record at this point. Mr. ROGERS of Texas. Without objection, it is so ordered. Hon. OREN HARRIS, U.S. DEPARTMENT OF JUSTICE, Chairman, Committee on Interstate and Foreign Commerce, DEAR CHAIRMAN HARRIS: During the hearings on H.R. 11583 before the Interstate and Foreign Commerce Committee of the House of Representatives on June 29, 1962, the Department of Justice was requested to supply, for the record, a statement indicating specifically which laws are referred to in the term "antitrust laws" contained in section 1 of the bill. We were also requested to indicate what procedures would be available to deal with collusive or monopolistic rate practices. H.R. 11583 provides that the "antitrust laws," as defined in section 1 of the Clayton Act (15 U.S.C. 12), would govern the ratemaking activities of carriers with respect to the traffic freed from minimum rate regulation under the bill. The one exception to this antitrust coverage would be joint action between carriers limited solely to the establishment of rates, fares, classifications, divisions or allowances applicable to reasonable through routes. The specific statutes referred to in section 1 of the Clayton Act are those popularly known as the Sherman Act (15 U.S.C. 1-7), Wilson Tariff Act (15 U.S.C. 8-11) and Clayton Act (15 U.S.C. 12–27). The procedures which would be available to deal with acts and practices violative of the substantive provisions of the foregoing statutes are several. First, the Attorney General would be able to prosecute such practices as criminal violations, the penalties for which are fines up to a maximum of $50,000 and imprisonment not exceeding 1 year, or both. Second, the Attorney General could institute a suit in equity to prevent and enjoin monopolistic rate practices or collusive rate agreements. Third, private persons, such as an aggrieved competitor of a carrier allegedly engaging in unlawful practices, or a shipper, could institute a suit for an injunction against the unlawful practices. Such an action may be commenced by a private party without leave of the Government, so that, as Assistant Attorney General Judge Loevinger remarked during his testimony, this is a remedy promptly available to any aggrieved person. The fourth remedy is the right to institute an action for damages accruing to a person injured by a violation of the antitrust laws. A private party may obtain treble damages if successful in proving the alleged violation. We trust this supplies the information requested by the committee. If we can be of further assistance, please call upon us. Sincerely, NICHOLAS DEB. KATZENBACH, |