It may be of particular interest to the chairman, and to the members of the committee, that I was a trial counsel for the plaintiff trucking company in Riss & Company v. The Association of American Railroads, et al., a private treble damage antitrust case in the District of Columbia.

One of the principal charges in the Riss case was that the railroads had used rate cuts as a means to eliminate competition and to obtain a monopoly in transportation of Government ammunition and explosives.

The Riss case consumed almost 8 years from filing of the complaint, in 1954, through the last appeal, in 1962. It involved a jury trial

that lasted 10 months.

Judgment was entered on the jury verdict for the plaintiff, but was reversed on appeal.

I believe, therefore, that I am generally familiar with the problems and procedures involved in the application of antitrust statutes in the transportation field.

I should like to make three points with respect to the proposal that is now before the committee in the form of H.R. 11583 with respect to the substitution of the Sherman Act remedies for the minimum rate regulation of the Interstate Commerce Commission.

In the first place, I think, as undoubtedly the committee and its chairman are aware, this proposal to substitute the Sherman Antitrust Act for the Interstate Commerce Commission's regulated competition, represents a very substantial, a revolutionary shift in the policy toward transportation agencies in the United States.

The Interstate Commerce Act has, in the national transportation policy and also in the various sections of the act relating to its regulation of carriers, the overriding premise, among others, of the elimination of unfair and destructive competitive practices among carriers themselves; that is, for example, among railroads themselves, one railroad with another, and between railroads, on the one hand, and other forms of transportation, on the other.

The Sherman Antitrust Act, on the other hand, dictates the policy of competition between every form of transportation or between every unit until it hurts; competition, until it may be destructive, or until one of the weaker competitors, at least, may be driven from the field, unless it results in a monopoly.

Under the policy of the Sherman Act, and under the kind of competition that is dictated by the Sherman Act's elimination of restraints on competition, price cutting would be a normal competitive activity.

Loss leaders price cutting is a normal aspect of everyday competitive activity in the business world. Accordingly, therefore, when you look at this legislation presently proposed, rate cutting would be, under the Sherman Act, a normal consequence of competition.

It may not be a normal consequence under the Interstate Commerce Act's definition of unfair and destructive practice or the desire to maintain reasonable rates as between the carriers themselves, but it certainly is a normal regular competitive kind of practice.

Accordingly, under the Sherman Act, if you are applying the Sherman Act, to rate-cutting activities of carriers, whatever their kinds or modes of carriage may be, the cost involved in the transportation is not the controlling factor.

The controlling factor, under the Sherman Act, is whether or not in a price-cutting or a rate-cutting case, the rate cuts were taken for a nongood business purpose, whether they were taken as a part of a conspiracy to drive the competitor out of the field, whether they were taken as a part of an attempt to monopolize, as the Sherman Act uses that form or that term, or whether they, in fact, resulted in a monopoly, as the courts have defined "monopoly."

Therefore, under the application of this theory to the transportation field, the fact that a rate was cut below the cost to the carrier quoting the rate to perform the service, would not make out a Sherman Act violation.

That might be relevant evidence of a conspiracy, but it certainly, of itself, would not make out the violation.

The fact that a rate was quoted below the water carrier's ability to meet that rate would not make out a case of Sherman Act liability. The Sherman Act does not protect against that kind of rate cutting. It protects it only to the extent that it is a product of a conspiracy among two or more competitors.

And in a joint cost field, with high fixed costs, such as the transportation field and particularly the railroad industry, it is not difficult to find a number of good business reasons for the reduction of a rate below the out-of-pocket, for example, cost as a good business purpose in railroad operation.

Now, yesterday, Mr. Chairman, there was some reference to the 1920's and the situation before 1920, and the fact that the Interstate Commerce Act in 1920 was amended to give the Interstate Commerce Commission, for the first time, power over the minimum reasonable rates of carriers.

Now, I think that the 1920 act is relevant to your consideration and important to your consideration of the legislation before you for two

reasons.

One of them is that the present bill proposes to return the transportation industry, in terms both of the antitrust laws and the Interstate Commerce Act, to precisely the position it occupied prior to 1920. Prior to 1920 the Sherman Act which was enacted in 1890, applied to the transportation industry in its full force. Prior to 1920 there was no minimum rate regulation.

The philosophy of the Interstate Commerce Act was that they were regulating a monopoly, and when you have a monopoly you do not necessarily or, at least, theoretically have to regulate the minimum rates of the monopolists.

Accordingly, this bill would return, in general, the transportation industry to that era.

Now, there have been a number of statements made to this committee some of which, or, a number of which have been, before the committee, in which they summarized the history of the use of rate cutting during the period 1890 to 1920 as a means of eliminating competition between the railroads and water carriers.

There are a number of congressional hearings, congressional reports, Presidential commissions, and others who reported the use of that kind of a device as a part of the competitive pattern between railroads and water carriers.

I think what I regard as important in that, and perhaps it may be of interest to you, is that during the period 1890 to 1920 there was only one Sherman Act case brought that had any relation to rate practices used by railroads to, as the committee found in 1920 and as the Interstate Commerce Commission found, drive the water carriers off of the inland waterways. And the one case that I refer to is the case that involved joint water-rail rates between points in the United States and points in Alaska.

Now, I think there is nothing in the present conditions to suggest that the Sherman Act would be more effective today, in the protection of water carriers against rate-cutting activities, that would drive them off the inland waterways of the United States.

It say this despite the fact that I recognize that between the early adoption of the Interstate Commerce Act and the present time there has been a change in the number of, and character of, competition among transportation agencies. But minimum rate regulations are not designed, and do not come in the Act, for the purpose of regulating a railroad monopoly.

It came into the act in order to put a limit on the competition between carriers, both between railroads and other railroads, and between railroads and the other forms of competition.

The fact that there exists today heightened competition in the transportation field is, in fact, under the antitrust law, the reason for the minium rate regulation and the application of a limit on competition, a limit that is not found in the Sherman Act.

So that, really, the issue before the committee in that respect is for you determine whether or not the greater public interest lies, if you apply only the Sherman Act, whether the greater public interest lies in having the competition effect whatever changes, whatever eliminations in the industry that may come about as a result of it; whether or not water carriers continue to exist, whether or not railroads continue to exist, whether or not trucklines continue to exist or whatever may happen, or, for you to determine that you think that the railroads now do not have the economic power to be effective in eliminating water carriers from inland waterways.

And it would be pretty difficult, in the light of the concentration of power, economic power, revealed by the figures here, to conclude that a railroad, even large individual railroads, could not, if they wanted to, reduce the rate to a point to make in uneconomic for individual water carriers to operate.

Secondly or the second point I should like to make is that the procedures and relief under the Sherman Act are entirely different and considerably more burdensome and expensive than rate proceedings before the Interstate Commerce Commission.

This is necessarily so because the Sherman Act prosecutions are cases looking for the proof of entirely different facts than rate proceedings before the Interstate Commerce Commission. For example, the U.S. Department of Justice, in the year of 1961, filed 60 cases, civil and criminal, under the Sherman Antitrust Act. In the fiscal year 1961 the Interstate Commerce Commission processed 224 investigation and suspension rate cases involving rates which did not include any motor carrier rates.

Within that 224 number, therefore, were all the cases and most of those were cases involving minimum rates of railroads and were cases in which the rate was charged as being below a reasonable level.

Now, if, as I think sometimes witnesses have erroneously assumed, all of these cases were turned into antitrust cases by the Department of Justice, you would have something like four times as many antitrust cases brought.

Now, further, I think that would impose a very substantial problem both in the courts and on the Department of Justice if they were treated in that fashion.

Secondly, under the Sherman Act you have entirely different kinds of problems of burden of proof than you have in the Interstate Commerce Commission rate proceedings. For example, if you are a plaintiff under the Sherman Antitrust Act, complaining of a rate cut as a means of destroying your business, if the cost of the railroads becomes important, or the cost of the carrier making the rate becomes important to your case, you, the plaintiff, have the burden of establishing that kind of proof.

Before the Interstate Commerce Commission the burden of proof is on the party that has the information in his possession and particularly on the carrier that proposes the change in the rate.

You have venue problems under the Sherman Act. You may not be able to sue all of the railroads or all of the associations or all of the groups that are necessary to be sued in the judicial district. All of these are problems which relate to the kind of application of judicial process, to a judicially determined fact, that is, the existence of a conspiracy or an intentional attempt to monopolize.

Now, furthermore, there has been, I think, sometimes a suggestion that the procedures in antitrust cases, because they are before courts, would be more expedited than the procedures before the Interstate Commerce Commission in the determination of the competitive rates relationships.

That is just not the fact.

I have obtained, from the Administrative Office of the United States Courts, their records on the length of time it took to complete all of the civil cases completed in antitrust cases, brought by the United States or by private parties, that were ended in the year 1961.

Those figures show that to complete a case through the district court procedure, a civil case, it took more than 4 years. It took the Department of Justice more than 4 years and 3 months to complete civil antitrust cases that went to trial in district courts.

It took the Department of Justice, through the court procedures, in antitrust cases 2 years and 9 months, according to these statistics, to handle all civil cases through the district courts, including those that were dismissed, those that were never tried, those that were for some other reason disposed of without any procedures in the district

courts.

Now, I have also obtained, from a study of the Interstate Commerce. Commission's rate processes, prepared for the Administrative Conference of the United States, some statistics regarding their disposition of rate controversies.

I refer to the 224 rate controversies that involved nonmotor rates; that is, that involved rates other than motor carrier rates.

They involved the investigation and suspension proceedings where the railroad rates were attacked as unreasonably low. Those statisties show that the Interstate Commerce Commission disposed of those 224 cases in an average time of 9 months, and that they disposed on an average of the cases, the investigation and suspension cases involving these rates, nonmotor rates, in an average of 14 months even where a hearing was had and where they went through the entire procedure of the final report of the Interstate Commerce Commission.

Now, I think that would demonstrate that there is some difference in not only the scope of the problem in an antitrust case but also in the flexibility of procedure, in the ability to handle the problem as compared to the courts and the Interstate Commerce Commission.

Now, finally, with respect to antitrust procedures, there is a substantial difference in the terms of relief that are available to a plaintiff under the antitrust laws than there is under the Interstate Commerce Act.

There is available to a party before the Interstate Commerce Commission one substantial difference, and that is the Interstate Commerce Commission has the power, without bond and without security for costs, to restrain a rate proposal for a period of 7 months.

Under the court procedure you would have to obtain, and they are only very rarely issued, a temporary injunction and then if you are a private party you have to post a bond to secure the defendants for any losses that they might obtain.

Permanent injunctions, moreover, do not go to individual rates. They would go to the general proposition of conspiracy.

Finally, one further point, Mr. Chairman, I would like to make in connection with this proposal:

This proposal, H.R. 11583, proposes that the whip and spur of competition will be applied not only between railroads, but in competition between the railroads, on the one hand, and water carriers, on the other.

The assumption underlying the bill, and the language of the bill would impose competition among the railroads in the establishment of the rates themselves.

Now, this committee knows that the railroads have, along with the other carriers, repeatedly maintained that it is impossible, without exemption from the antitrust laws, to publish and have in effect a national rate structure with all of the complexities and multiplicity of rates necessary to interstate commerce.

The railroads and other carriers have been before this committee on two occasions. One was mentioned yesterday, the Reed-Bulwinkle Act, in which Congress gave the railroads an exemption from the antitrust laws for their joint activities in the establishment of all rates; local competitive and connecting-line rates.

I do not know that this has as yet been mentioned before the committe, but here at a later time, in 1957, the railroads, with the support of the U.S. Government at that time, asked the committee and the Congress for an exemption from the application of the antitrust laws to their quotation of section 22 quotations for the Government.

Rates quoted to the Government are not under minimum rate regulation and never have been under minimum rate regulation.