Air Transport Association ata

BY HAND

The Honorable Edward F. Kennedy
Chairman

Senate Committee on Judiciary
Room 2226

Dirksen Senate Office Building
Washington, D.C. 20510

Dear Mr. Chairman:

46-5050

May 29, 1979

70

1709 New York Avenue, N.W.
Washington, D. C. 20006
Phone (202) 872-4000

10

OF AMERICA

The Air Transport Association of America (ATA), which represents virtually all federally certificated United States scheduled airlines, appreciates the opportunity to comment upon S.382, the Competition Improvement Act of 1979 (Competition Act). We believe that the application of the Competition Act to federal action taken pursuant to the Federal Aviation Act of 1958, as amended by the Airline Deregulation Act of 1978 (Deregulation Act), will interfere with the carefully balanced and finely tuned Congressional program for airline deregulation.

MAY 30

For more than four years, Congress engaged in a thorough investigation of governmental regulation of the domestic airline industry. Countless hearings were conducted, points debated, and compromises reached. The end product, the Deregulation Act, signed by the President on October 24, 1978, contained the statutory policy guidance, standards, and procedures which Congress believed could best accommodate the shift away from pervasive regulation with the preservation of an integrated national air transport system. The highly detailed and clearly interdependent provisions of the Deregulation Act were designed to resolve problems which some foresaw for government and industry during the transition period.

ร

The standards for approving airline agreements and conferring antitrust immunity exemplify the very specific attention Congress gave to the deregulation program. Section 28 of the Deregulation Act provided, for example, that domestic airline agreements which would substantially reduce or eliminate competition could not be approved by the Civil Aeronautics Board unless

"it finds that

agreement

is necessary

to meet a serious transportation need or to
secure important public benefits and it does not
find that such need can be met or such benefits
can be secured by reasonably available alternative

invite litigation on a broad range of

factual issues concerning possible alternative approaches the agency might have, but did not

adopt.

if they are necessary or appropriate in furtherance of
intheycare necessary on appropriate in-furtherance of
the purposes of the Secretstes Exchange ict)." 4/ the purposes.
[the Securities Exchange
Act],"

of

The current Securities Exchange Act standard reflects the need for a regulatory consideration of competitive impacts more appropriately than does S. 382. Having identified a competitive burden, the Commission must evaluate the extent to which the proposed action would nevertheless foster other statutory purposes and determine whether, in light of that analysis, the burden should be tolerated as a necessary or appropriate result of achieving the other goals. That balancing test requires the Commission to give appropriate consideration to the need for competition, but it avoids elevating that public policy over other equally important, and possibly competing goals.

S. 382 appears to be designed to achieve some semblance of the balance the Congress struck in the Securities Acts Amendments of 1975, but the statutory test S. 382 would impose is more cumbersome and less well suited to the regulatory process. ile we do not believe that the bill

statue

Vicevotion be

requirement in S. 382 that an agency determine its actions
to be the least anticompetitive alternative legally and
practicably available to achieve statutory goals. be

elevate the need for com

While we do not believe that the bill is intended to restrict agency discretion to such an extent, the

may be interpreted to elevate. the need for Competition beyond the status the Congress determined it should have in

did not

We believe that the standard now found
in the Securities Exchange Act better satisfies the ob-
jective of maximizing the role of competition in industries the recent
subject to the Commission's regulatory activities insofar
as is consistent with the goals of regulation established
by the Congress or by the agency acting pursuant to its
statutory authority.

securities Low

And, even though an agency might reasonably conclude that a proposed action did not burden competition in any inappropriate way, the restrictive language that S. 382 would impose could nevertheless

broad

4/ See Section 23(a)(1) of the Exchange Act; see also Sec-
tions 6(b) (8), 15(b)(9), 158(b)(2)(C) and 17A(b)(2) (1)
of the Exchange Act.

securities law' amendments.

means having materially less anticompetitive
effects.`.

While this approach is very similar to that of the Competition Act, and establishes the same pro-competitive sensitivity, it does differ. And the difference is highlighted by the very precise burdens of proof that supporters and opponents of agreements must carry. See $28 (c) (2) (B) of the Deregulation Act, 49 U.S.C. $1382 (c) (2) (b).

With respect to the antitrust exemption provision, section 30 of the Deregulation Act, the standard therein set forth provided that the Board cannot grant antitrust immunity unless to do so is "required by the public interest", measured by a very pro-competitive public interest standard. It is noteworthy that this test received no adverse comment from the National Commission for the Review of Antitrust Laws and Procedures. It provides another example of how the general goals of the Competition Act have already been addressed in a very specific way by the Deregulation Act.

The Competition Act presents an approach to federal action so generalized that it applies across the board to essentially all federal regulatory bodies. ATA submits that the airline deregulation process, which was developed after so much analysis and was crafted with so much precision, should not be unbalanced or confused by the application of a very broad statute. The Competition Act simply cannot embody an appreciation for the intricacies and interdependence of a deregulation process so recently initiated by Act of Congress.

CC:

In summary, the Deregulation Act seeks to achieve the same results as the Competition Act, but does so in harmony with the entirety of the deregulation process. Seven months' experience with that process supports the view that new tests for domestic air transportation are neither necessary nor desirable. Accordingly, federal action taken pursuant to the provisions of the Federal Aviation Act of 1958, as amended by the Deregulation Act, should be exempted from the Competition Act. This could be accomplished by adding a new subsection (c) to section 7, which would provide:

"(c) This section shall not apply to federal action
taken pursuant to the provisions of the Federal
Aviation Act of 1958, as amended."

All members of Senate
Committee on Judiciary

Sincerely,

&

James E. Landry
Senior Vice President
and General Counsel

April 23, 1979

STATEMENT OF

AMERICAN TRUCKING ASSOCIATIONS, INC.

BEFORE THE

SENATE COMMITTEE ON THE JUDICIARY
ON S. 382, THE PROPOSED
COMPETITION IMPROVEMENTS ACT OF 1979

The American Trucking Associations, Inc., 1616 P Street, N.W., Washington, D.C., 20036, is the national trade association of the motor carrier industry. It represents all types of motor carriers, and has affiliated associations in every State and the District of Columbia.

We are pleased to have this opportunity to express our views on S. 382, the proposed Competition Improvements Act.

We are concerned that the bill would require the Interstate Commerce Commission (ICC) to concern itself to a much greater extent than at present with the provisions of the Sherman Antitrust Act and restrict its freedom to arrive at decisions in general rulemaking proceedings, in proceedings involving applications for motor carrier operating authority, and, as suggested by some, even in ratemaking proceedings, without specific reference to the Sherman Antitrust Act.

Furthermore, under Section 7 of the Clayton Act, a corporation engaged in commerce is prohibited from acquiring another such corporation where the effect "may be substantially to lessen competition, or tend to create a monopoly." This

same section contains a paragraph exempting transactions authorized by the ICC and other agencies. The exemption would be repealed by S. 382. Yet, the exemption permits the ICC to regulate and effectively oversee consolidations and mergers of carriers under its jurisdiction at the present time and there is no need for removal of the exemption.

At the outset, it should be noted that federal regulation of railroads preceded federal antitrust statutes by a few years. No doubt, because regulation of competition in transportation historically has been handled by the ICC, an agency specially created to do just that, Congress has chosen to exclude carriers regulated by that agency from most of the various provisions of the antitrust statutes as they have been amended and broadened down through the years.

Thus, a well-recognized separation of jurisdiction has resulted. In the case of business generally, the general laws such as the antitrust statutes are relied upon to assure fair and proper pricing of goods and services for the purpose of safeguarding against unfair destruction of competition and the monopolistic abuses which inevitably flow from an abnormal concentration of control in any area of the economy.

:

Application of the principles of the antitrust statutes is no less important in the field of transportation. Congress long since recognized that such safeguards were doubly important in a field such as transportation, which touches virtually