U.S. Supreme Court Seaboard Air Line R. Co. v. United States, 382 U.S. 154 (1965)
Seaboard Air Line Railroad Co. v. United States
Decided November 22, 1965
382 U.S. 154
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
The Interstate Commerce Commission (ICC), after administrative proceedings, approved a merger between the Atlantic Coast Line Railroad Company and the Seaboard Air Line Railroad Company. Though recognizing that the merger would eliminate competition in parts of Florida, the ICC found that the benefits of the merger outweighed its potential disadvantages. On the ground that the ICC failed to determine whether the merger violated § 7 of the Clayton Act by reference to the relevant product and geographic markets, a three-judge District Court set aside the ICC's order.
Held: The ICC is authorized to approve a merger notwithstanding what would otherwise be violative of the antitrust laws if it makes adequate findings, after weighing the effects of the curtailment of competition against the advantages of improved service, that the merger would be "consistent with the public interest" under §5(2)(b) of the Interstate Commerce Act, and further the overall transportation policy. McLean Trucking Co. v. United States, 321 U. S. 67 ; Minneapolis & St. Louis R. Co. v. United States, 361 U. S. 173 , followed.
242 F.Supp. 14, vacated and remanded.
Atlantic Coast Line Railroad Company and Seaboard Air Line Railroad Company filed with the Interstate Commerce Commission an application for authority to merge. In the administrative proceedings, the applicants contended that the merger would enable them to lower operating costs, improve service, and eliminate duplicate facilities; other carriers opposed the merger on the ground that it would have adverse competitive effects, and the Department of Justice contended that the merger would create a rail monopoly in central and western Florida.
The Commission approved the merger, subject to routing and gateway conditions to protect competing railroads. It recognized that the merger would eliminate competition and create a rail monopoly in parts of Florida. But it found that the merged lines carried only a small part of the total traffic in the area involved; that ample rail competition would remain therein; and that the reduction in competition would "have no appreciably injurious effect upon shippers and communities." Seaboard Air Line Railroad Co., 320 I.C.C. 122, 167. In addition, the Commission noted that the need to preserve intramodal rail competition had diminished due to the fact that railroads were increasingly losing traffic to truck, water, and other modes of competition.
A three-judge District Court set aside the order and remanded the case to the Commission for further proceedings. It concluded that the Commission's analysis of the competitive effects of the merger was fatally defective because the Commission had not determined whether
the merger violated § 7 of the Clayton Act, 38 Stat. 731, 15 U.S.C. § 18 (1964 ed.), by reference to the relevant product and geographic markets. By thus disposing of the case, the District Court did not reach the ultimate question whether the merger would be consistent with the public interest despite the foreseeable injury to competition.
We believe that the District Court erred in its interpretation of the directions this Court set forth in McLean Trucking Co. v. United States, 321 U. S. 67 (1944), and Minneapolis & St. Louis R. Co. v. United States, 361 U. S. 173 (1959). As we said in Minneapolis at 361 U. S. 186 :
"Although § 5(11) does not authorize the Commission to 'ignore' the antitrust laws, McLean Trucking Co. v. United States, 321 U. S. 67 , 321 U. S. 80 , there can be 'little doubt that the Commission is not to measure proposals for [acquisitions] by the standards of the antitrust laws.' 321 U.S. at 321 U. S. 85 -86. The problem is one of accommodation of § 5(2) and the antitrust legislation. The Commission remains obligated to"
"estimate the scope and appraise the effects of the curtailment of competition which will result from the proposed [acquisition] and consider them along with the advantages of improved service [and other matters in the public interest] to determine whether the [acquisition] will assist in effectuating the over-all transportation policy."
"321 U.S. at 321 U. S. 87 ."
The same criteria should be applied here to the proposed merger. It matters not that the merger might
otherwise violate the antitrust laws; the Commission has been authorized by the Congress to approve the merger of railroads if it makes adequate findings in accordance with the criteria quoted above that such a merger would be "consistent with the public interest." 54 Stat. 906, 49 U.S.C. § 5(2)(b) (1964 ed.).
Whether the Commission has confined itself within the statutory limits upon its discretion and has based its findings on substantial evidence are questions for the trial court in the first instance, United States v. Great Northern R. Co., 343 U. S. 562 , 343 U. S. 578 (1952), and we indicate no opinion on the same. We therefore vacate the judgment of the District Court and remand the case to it for a full review of the administrative order and findings pursuant to the standards enunciated by this Court.
Vacated and remanded.
MR. JUSTICE FORTAS took no part in the consideration or decision of these cases.
* Together with No. 555, Interstate Commerce Commission v. Florida East Coast Railway Co. et al., also on appeal from the same court.
** It expressly declined to consider two further issues,
whether the Commission's labor protection conditions were adequate and whether control of the merged company by the Mercantile Safe Deposit and Trust Company would be consistent with the public interest.