Edgerton, Senior Circuit Judge, and Washington and Danaher, Circuit Judges.
UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
AKTIEBOLAGET SVENSKA AMERIKA LINIEN
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WASHINGTON
This is a petition by steamship lines, which are members of the Trans-Atlantic Passenger Steamship Conference and the Atlantic Passenger Steamship Conference , to review a final order of the Federal Maritime Commission in a proceeding begun on petition of the American Society of Travel Agents, Inc. . Insofar as relevant here, that order disapproved under Section 15 of the Shipping Act of 1916, as amended, 46 U.S.C. § 814 (Supp. V, 1959-63), two provisions of the steamship conference agreements, namely: (1) the provision which requires unanimous action of Conference members (the petitioning steamship companies) to fix or alter the maximum commission payable to travel agents appointed by the Conferences to sell passenger bookings on Conference ships (hereinafter referred to as the "unanimity rule"); and (2) the provision which prohibits travel agents so appointed from selling passenger bookings on competing non-conference steamship lines without prior permission from the Conferences (hereinafter referred to as the "tieing rule").
Three United States steamship lines and twenty-three foreign-flag steamship lines comprise the membership of the steamship conferences before us. *fn1 We note that our country has adopted a policy, in the international transportation field, of encouraging, or at least allowing, United States carriers to participate in the steamship conferences, and to be governed by unanimity in respect of matters covered by conference agreements, barring disapproval under the standards prescribed by 46 U.S.C. § 814. Congress has recognized that, without such agreements, competition could become so destructive as to wreck the carriers. See S.Rep.No. 860, 87th Cong., 1st Sess. 4, 8-9, and passim (1961), issued with respect to an investigation of the shipping industry, *fn2 and the "Alexander Report," H.Doc.No. 805, 63d Cong., 2d Sess. 46-47, 295 (1914), the study leading to the Shipping Act of 1916. And cf. Boyd [the then Chairman of the Civil Aeronautics Board], The Future of the International Carrier, FLIGHT FORUM 7 (Sept. 1964). *fn3 To this end, Congress has provided in 46 U.S.C. § 814 that such steamship conference agreements are exempt from the provisions of the United States antitrust laws when approved by the Federal Maritime Commission, that the Commission may disapprove an agreement only if it finds the agreement to be
"unjustly discriminatory or unfair as between carriers . . ., or to operate to the detriment of the commerce of the United States, or to be contrary to the public interest, or to be in violation of this chapter,"
and that it shall approve all other agreements. *fn4
In his Initial Decision the Hearing Examiner, appointed by the Commission, concluded that the unanimity rule should be approved. Upon review the Commission (by vote of three members, with two members dissenting) disagreed, finding that the unanimity rule as applied to agents' commissions operates to the detriment of the commerce of the United States and hence must be disapproved under Section 15 of the Shipping Act. *fn5 The Commission based its factual conclusion on the following considerations:
"It [the unanimity rule] is a regulation which prevents travel agents in the United States from rendering complete and effective service both to passengers and to ocean carriers. It has in some cases prevented the principals from even considering the question of commission levels and in others has defeated, or at least delayed or watered down the desires of the majority of the lines to raise commission levels, thus placing the steamship lines at a competitive disadvantage vis-a-vis the airlines."
As to the first point, we cannot agree that the unanimity rule prevents complete and effective service by travel agents. The commission rate of 7% which was being paid at the time of the hearing below was arrived at by unanimous agreement and was the same as that paid by the transatlantic airlines. It was found, however, that appointed agents tend to push air rather than sea travel, because, as the Commission stated, it "takes approximately three or four times as much of an agent's time to sell sea as compared with air space, and several years of experience are required to produce a really competent steamship passage salesman." *fn6 On the basis of the Commission's own statement, therefore, it is not the unanimity rule, but economic factors which prevent agents "from rendering complete and effective service both to passengers and to ocean carriers" -- if by that the Commission meant the "pushing" of air over sea travel. *fn7 And the Commission's opinion suggests no other way in which complete and effective service by appointed agents is prevented. *fn8
In this connection it is to be noted that the Hearing Examiner pointed out that, because of the economic advantage to the agent in selling air transportation over steamship transportation, the practice by appointed agents of diverting a prospective passenger from sea to air transportation "is prevalent enough to constitute a substantial competitive disadvantage for the shiplines and an interference with a free and objective choice between the two modes of transportation by potential travelers, such interference being based on the self-serving interest of the travel agents." He found that this practice is not in "the best interest of the traveler"; "is not in the best interest of commerce and is adverse to the public interest." But he noted that the conferences might amend their rules to prohibit such diversion, with appropriate penalties for violations (though we do not pass on this conclusion as a matter of law); and that it was not the unanimity rule on commissions which had caused the evil. We find this reasoning persuasive.
As to the second reason or ground given by the Commission for disapproval of the unanimity rule as applied to agents' commissions -- that the desires of the majority of the steamship lines are frustrated, thus placing steamship lines at a competitive disadvantage -- we find nothing in the Commission's findings to indicate that frustration of the desires of the majority is the factor which places steamship lines at a competitive disadvantage. As the Examiner stated, the record does not show that a majority would decide now to raise the commission level above 7% or would have raised it to that figure at any time before the conference voted unanimously to do so in 1956. Indeed, the Commission itself said that for economic reasons, it perhaps is not feasible ...