Federal Maritime Commission v. Seatrain Lines, Inc.

PETITIONER: Federal Maritime Commission
RESPONDENT: Seatrain Lines, Inc.
LOCATION: Allegheny County District Court

DOCKET NO.: 71-1647
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 411 US 726 (1973)
ARGUED: Mar 21, 1973
DECIDED: May 14, 1973

ADVOCATES:
Edward G. Gruis - for petitioner
Irwin A. Seibel - for respondents

Facts of the case

Question

Media for Federal Maritime Commission v. Seatrain Lines, Inc.

Audio Transcription for Oral Argument - March 21, 1973 in Federal Maritime Commission v. Seatrain Lines, Inc.

Warren E. Burger:

Mr. Gruis, you may proceed whenever you’re ready.

Edward G. Gruis:

Mr. Chief Justice, and may it please the Court.

The practical question here before this Court is whether or not that the Federal Maritime Commission is going to be able to continue under its present statutory authority to effectively regulate and supervise America’s Maritime industry.

The matter here this morning comes by way of a writ of certiorari to the D.C. Court of Appeals which vacated the Federal Maritime Commission order approving the merger of assets of one shipping company to that of another shipping company.

In overruling the Commission's order, the D.C. Court of Appeals found that the Commission had no authority under Section 15 of the Shipping Act, authorizing it to approve such sales thereby giving such transactions' immunity under the antitrust laws.

So that we’re real certain as to what the facts of the situation is.

In this particular case along about 1970 Pacific Far East lines entered into in a contract with one of Matson's subsidiaries, Oceanic Steamship Company, to sale of four ships then in operation, two ships that were under construction and associated facilities like personnel and so on that along with those ships.

There was a protest on this matter at Commission level.

The Commission finding this protest without substance and upon the briefs submitted by the parties, approved the transaction, it was immediately appealed by the protestants to the D.C. Court of Appeals.

In the D.C. Court of Appeals, the question was raised for the first time as to the Commission's Section 15 jurisdiction over this type of transaction.

Since the language of Section 15 is so critical to our understanding this morning, I would like to direct your attention to page two of our brief or to the language of Section 15 itself, in the first or second paragraph I believe, wherein, the third clause or category says “that agreements between carriers shall be committed to Commission which are controlling, regulating, preventing, or destroying competition.”

Now, in addition to that this paragraph goes on to indicate that agreements also include understandings, conferences and other arrangements.

Section 15 also makes specific provision for an antitrust exemption, for agreements that have come before the Commission and are lawfully approved.

Now, the Commission has operated with this law for over two decades approving some transactions formally, others informally, and even rejecting some transactions that had been presented to it.

The question presented here today was really not raised in the judicial setting until 1968, some time after the Commission had been operating with this law and approving merger and acquisition, consolidation transactions when before the Commission and subsequently in the Ninth Circuit Court of Appeals, the question was raised as to whether or not the last clause of the first paragraph in Section 15 which is a sort of a catch-all clause at the end of that paragraph and reads “or in any manner providing for an exclusive preferential or cooperative working arrangement whether or not that clause limits the foregoing six categories under the Shipping Act, they are to be presented to the Commission.”

Now, this clause was originally rejected in the Ninth Circuit Court, and met by Matson in the Ninth Circuit Court case, on the basis of Justice Stewart’s decision in Volkswagen wherein, he indicted that Section 15 and the language used in that part of the statute is very broad and is very expansive and probably would not be circumscribed by these other – this one category at the end of Section 15.

Now, I think it's important here for us to understand the type of industry that we’re operating in and I think it should be immediately apparent that we’re really having problems reconciling two conflicting statutes or perhaps three conflicting statutes, namely the Shipping Act, the Sherman Act and the Clayton Act.

But we submit first of all that the initial purpose and concept behind enactment of the Shipping Act back in 1916 was to create a specialized and expert agency to regulate Maritime affairs.

Now, if this was the goal or the objective behind the original Shipping Act then Maritime Commission would not be able to accomplish this if it has one arm tied behind its back so to speak, being unable to act or to oversee transactions that may involve mergers or consolidations or acquisitions between shipping companies.

Harry A. Blackmun:

Mr. Guris, in this connection, perhaps you can explain, did the Maritime Commission exercised jurisdiction over any merger prior to 1940?

Edward G. Gruis:

Not that I know off, no sir.

There is no recorded, what I mean by that is that it well might have been that the papers had been submitted to it, but we have no reference of any recorded transaction, that it had acted unofficially, no sir.

Harry A. Blackmun:

Is what you just said or was what you have just said equally applicable to those earlier years as to the later ones?

Edward G. Gruis:

Yes sir, yes sir.

In this connection if may Mr. Justice Blackmun, suggest that there was a change in the structure of the Maritime agency back in 1960 when the regulatory arm was split off from the promotion arm of the Maritime industry insofar as government regulation was concerned.

It was when this regulatory arm, namely the Federal Maritime Commission was setup for the purpose of effectively regulating the Shipping Act statutes it became much more concerned and interested in the various transactions that were going on in the Maritime industry insofar as acquisitions and mergers were concerned.

I suggest gentlemen that with these two conflicting statutory goals, namely the goal of the antitrust law to preserve a competitive environment and the goal of the Shipping Act which uses antitrust standards as only one of the criterion.

The Commission has looked upon these transactions in the past, endeavored to balance both of these conflicting public policy aims.

I suggest that in treating this question for example if Justice for example were to prevail, the Department of Justice on this, we would have two different types of transactions very closely related, but entirely judged by different standards.

It's been suggested in the brief for example that a single ship sale to an area where service may be needed could by Justice Department's move or the Federal Trade Commission for that matter of fact enjoin that if it had the -- if it met the tests of Section 7 of the Clayton Act and the transaction was viewed only as limiting competition or tending towards monopoly.