[Senate Report 110-252]
[From the U.S. Government Publishing Office]
Calendar No. 551
110th Congress Report
SENATE
1st Session 110-252
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THE RAILROAD ANTITRUST ENFORCEMENT ACT
_______
December 19, 2007.--Ordered to be printed
_______
Mr. Leahy, from the Committee on Judiciary, submitted the following
R E P O R T
[To accompany S. 772]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to which was referred the
bill (S. 772) to amend the Federal antitrust laws to provide
expanded coverage and to eliminate exemptions from such laws
that are contrary to the public interest with respect to
railroads, having considered the same, reports favorably
thereon with amendments and recommends that the bill, as
amended, do pass.
CONTENTS
Page
I. Background and Purpose of the Railroad Antitrust Enforcement Act.1
II. History of the Bill and Committee Consideration..................9
III. Section-by-Section Summary of the Bill...........................9
IV. Congressional Budget Office Cost Estimate.......................12
V. Regulatory Impact Evaluation....................................13
VI. Conclusion......................................................13
VII. Changes to Existing Law Made by the Bill, as Reported...........13
I. Background and Purpose of the Railroad Antitrust Enforcement Act
A. SUMMARY
The purpose of S. 772, the Railroad Antitrust Enforcement
Act of 2007, is to remove current exemptions and subject the
American freight railroad industry to all the provisions of the
Nation's antitrust laws. This legislation will ensure that
interested parties suffering from anti-competitive railroad
practices that would otherwise be actionable under U.S.
antitrust law will have access to those causes of action in
federal district court. In addition, government enforcement
agencies, including the United States Department of Justice and
the Federal Trade Commission, as well as state attorneys
general acting on behalf of their citizens, will be able to
fully enforce the antitrust laws to prevent anti-competitive
mergers and anti-competitive business practices.
Under current law, the railroad industry is exempted from
antitrust law in most respects. Virtually no other industry--
with the possible exception of the insurance industry--enjoys
such a broad exemption from the antitrust laws. There is no
basis for this broad antitrust immunity, especially since the
railroad industry has been largely deregulated since the
passage of the Staggers Rail Act in 1980.
The bill is prospective, but will apply to any current
anti-competitive practices that continue after one hundred and
eighty days following the date of enactment of this Act. The
bill will allow the Justice Department and the Federal Trade
Commission (FTC) to sue to enjoin any future railroad merger or
acquisition, whether or not approved by the Surface
Transportation Board (STB), if the Justice Department or FTC
believes that merger or acquisition violates the antitrust
laws. After the enactment of S. 772, anti-competitive business
practices engaged in by railroads will be subject to antitrust
scrutiny and could be subject to civil actions for treble
damages and injunctive relief. Among these are two current
practices that rail customers believe to be anti-competitive--
so-called ``paper barriers'' and so-called ``bottlenecks,'' as
explained below.
B. NEED FOR LEGISLATION
1. The Staggers Rail Act of 1980
This legislation is needed because there is a lack of
competition in the national freight rail system today.\1\ In
1980, Congress passed the Staggers Rail Act, the purpose of
which was to deregulate partially the Nation's railroads and
replace government regulation with market competition to the
extent possible. When the legislation was passed, Congress did
not remove the antitrust exemptions protecting the railroad
industry. These antitrust exemptions had been extended to the
Nation's railroads when they were subject to a pervasive
regulatory system in which prior approval by the Interstate
Commerce Commission (ICC) was required for most of their
actions and transactions, a regulatory system that was no
longer in place after the 1980 legislation.
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\1\This legislation addresses freight railroads, and is not
intended to have any effect on the passenger operations of Amtrak.
While Amtrak is deemed a ``railroad'' for the purpose of certain
federal laws, most of the provisions of subtitle IV of title 49 do not
apply to Amtrak. See 49 U.S.C. Sec. 24301(c). Specifically, the bill
does not affect 49 U.S.C. Sec. 24301(j) (Section 306(e) of Pub. L. No.
91-518 (1970), recodified without substantive change by Pub. L. No.
103-272 (1994)), which provides that agreements entered into by Amtrak
for the joint use or operation of facilities and equipment necessary
for the provision of expeditious and efficient passenger service are
exempt from the antitrust laws.
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The new regulatory system provided by Congress in the
Staggers Rail Act of 1980 recognized that some customers who
require railroad service would continue to have access to
service by a single freight railroad and that these ``captive''
customers could be subject to railroad monopoly power. The ICC,
which was replaced by the STB of the United States Department
of Transportation through the ICC Termination Act of 1995, was
directed by Congress to ensure rail customer access to
competition where possible and protect rail customers from
unreasonable rates and practices where competition is not
available. The directions to the ICC, now the STB, for
implementing the Staggers Rail Act of 1980 are contained in 49
USC Sec. 10101 and stress the pro-competitive policy that was
to guide implementation of the Act.
2. Lack of competition in the national rail system
Despite the directive of Congress in 1980, the United
States Senate Committee on the Judiciary received significant
evidence that there is a lack of competition in the national
rail system today. An October 2006 Government Accountability
Office (GAO) report reviewing the effectiveness of the Staggers
Rail Act of 1980 found that there remains a lack of competition
in the freight rail industry resulting in the continued
existence of captive rail customers. That report found that
shippers in many geographic areas ``may be paying excessive
rates due to a lack of competition in these markets.'' These
unjustified cost increases cause harm throughout the economy.
Consumers suffer higher electricity bills because a utility
must pay for the high cost of transporting coal; manufacturers
who rely on railroads to transport raw materials charge a
higher price for their goods; and American farmers who ship
their products by rail pass on these cost increases in the form
of higher food prices. The GAO also found that the STB is not
exercising its powers effectively to ensure rail customer
access to competition.
The GAO's findings were echoed by the Attorneys General of
17 states and the District of Columbia. In an August 2006
letter to Congress calling for an abolition of the railroad
antitrust exemption, the Attorneys General wrote that ``rail
customers in our states in a variety of industries are
suffering from the classic symptoms of unrestrained monopoly
power: unreasonably high and arbitrary rates and poor
service.''
The severe consolidation in the railroad industry has
greatly exacerbated this lack of competition. In 1976, there
were 30 independent Class I railroad systems operating in the
Nation, consisting of 63 Class I railroads. There are currently
only seven Class I railroads operating in the nation, only four
of which carry 90% of all freight railroad traffic in the
United States. The evidence received by the Committee indicates
that the current lack of competition in the national freight
rail system is the result of this drastic consolidation as well
as several rulings by the ICC and the STB that have allowed a
number of anti-competitive practices to exist.
3. Disparate treatment of the railroad industry from other regulated
industries
One important purpose of S. 772 is to have the railroad
industry treated the same as other regulated industries,
including transportation industries. Many industries in our
economy are subject to regulation--including notably the
telecommunications sector, extensively regulated by the Federal
Communications Commission--yet enjoy no antitrust exemption.
Telecommunications mergers, for example, are reviewed by the
FCC under a public interest standard, yet are fully subject to
antitrust law and also reviewed by the Justice Department under
the Clayton Act.
Importantly, even transportation industries similarly
situated to the railroad industry enjoy no antitrust exemption.
For example, the aviation industry comes under the regulatory
supervision of the Transportation Department and Federal
Aviation Administration. The Transportation Department is
empowered under the Transportation Act to take action to
prevent an ``unfair method of competition'' in aviation.\2\
Yet, the aviation industry is generally subject to antitrust
law and aviation mergers are reviewed by the Justice Department
under the Clayton Act. Other transportation industries that are
subject to the supervision of the Surface Transportation
Board--such as trucking and domestic marine shipping--do not
enjoy the same broad antitrust exemption as that enjoyed by the
railroad industry. Removal of the special railroad antitrust
exemption will result in the railroad industry being treated in
the same manner under antitrust law as other industries subject
to regulatory oversight.
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\2\49 U.S.C. Sec. 41712.
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4. Mergers and acquisitions
Under current law, railroad mergers and acquisitions are
exempt from the Nation's antitrust laws. The railroad industry
is exempted from section 7 of the Clayton Act, which bans
mergers which may substantially ``lessen competition'' or
``tend to create a monopoly'' does not apply to mergers in the
railroad industry. Instead, the Surface Transportation Board
decides whether and under what conditions mergers and
acquisitions of railroads may occur pursuant to a ``public
interest'' test. The Justice Department's role is limited to
filing comments with the STB, which are not binding in any
respect and which the STB is free to ignore. On at least one
occasion since 1980, the Justice Department filed comments with
the STB against a proposed merger, but the comments were
ignored and the merger approved (the 1996 merger of the Union
Pacific Railroad and the Southern Pacific Railroad). On a
number of other occasions, the Justice Department filed
comments with the STB recommending certain conditions on
proposed mergers that were not adopted by the STB. In all of
these cases, neither the Justice Department nor the Federal
Trade Commission was empowered to sue in federal district court
to ensure that the merger or acquisition was consistent with
the Nation's antitrust laws.
The Railroad Antitrust Enforcement Act of 2007 will bring
railroad mergers inside the ambit of section 7 of the Clayton
Act and empower the antitrust enforcement agencies (likely the
Justice Department)\3\ to file suit to block anti-competitive
mergers and acquisitions. It will therefore ensure that future
railroad mergers and acquisitions will not only meet the
``public interest'' test implemented by the STB but also meet
the merger standard of the Nation's antitrust laws. The STB
will continue to approve mergers and acquisitions pursuant to
its ``public interest'' test. However, the merger also will
have to satisfy antitrust law, and will be subject to antitrust
enforcement in federal court by the Justice Department,
regardless of what the STB determines under its public interest
test. In this regard, mergers and acquisitions in the railroad
industry will be treated in an identical manner as mergers and
acquisitions in many other industries subject to federal
regulatory review. For example, mergers and acquisitions in the
telecommunications industry are reviewed under a public
interest test by the Federal Communications Commission, while
also being subject to antitrust law and challenge by the
Justice Department under the Clayton Act. There is no reason
for the railroad industry to be treated any differently.
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\3\Although both the Justice Department and the Federal Trade
Commission have the authority to enforce the antitrust laws,
traditionally the Justice Department reviews mergers in the
transportation sector.
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5. Bottlenecks or refusal to quote rates
Many rail customers are served by a single railroad at
either the origin or the destination of their rail shipment,
the so-called ``captive shippers.'' These customers do not have
the benefit of competition and often face very high rail rates.
Even though they are ``captive'' to a single railroad at origin
or destination, often a competing railroad is available for at
least part of the distance between origin and destination
through an interconnection with the railroad that holds the
customer captive. In the mid-1990s the question arose before
the STB of whether the railroad that holds the customer captive
at origin or destination must provide a rate for moving the
customer's freight to the competing railroad. Stated simply,
does a railroad have an obligation to allow its captive
customer to have access to the competing railroad or can a
railroad hold the customer captive for the entire length of the
shipment?
This question was decided by the STB on December 27, 1996,
in a case referred to as the ``bottleneck'' decision.\4\ In
this case, the STB ruled that the rail carrier providing single
line service to the customer was not required to provide a rate
that would allow the customer to reach a competing rail line.
Such conduct would be subject to antitrust scrutiny, were it
not for the railroad antitrust exemption.
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\4\The decision was made in case No. 41242, Central Power and Light
Company v. Southern Pacific Transportation Company and covered two
other cases with which it was consolidated: No. 41295, Pennsylvania
Power and Light Company v. Consolidated Rail Corporation, and No.
41626, MidAmerican Energy Company v. Union Pacific Railroad Company and
Chicago and North Western Railway Company.
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In 2004, the then-Chairman of the House Judiciary
Committee, Congressman F. James Sensenbrenner, Jr., asked the
Justice Department to comment on whether the practice of
refusing to provide rates to points of competition would
violate the Nation's antitrust laws if the railroad industry
exemption from those laws did not exist. On September 27, 2004,
Assistant Attorney General William E. Moschella responded as
follows:
The first practice is the refusal by a railroad that
controls one segment of a freight movement to quote
rates separately for that ``bottleneck'' segment,
instead quoting rates only for the entire freight
movement. You note that this practice denies shippers
the benefits of competition on segments of the move
where an alternative carrier might compete for the
business. Because of the Surface Transportation Board's
involvement in approving these rates, and its
acceptance of this practice, relief may not be
available under the antitrust laws. If this practice
were subject to the antitrust laws, it could be
evaluated as a refusal to deal in possible violation of
section 2 of the Sherman Act, or as a tying arrangement
in possible violation of section 1 of the Sherman Act.
Whether it would constitute an antitrust violation
would depend on the particular facts.
The Committee believes that this conduct should properly be
subject to scrutiny under the antitrust laws. The Railroad
Antitrust Enforcement Act of 2007 will remove the freight
railroad industry's exemption from the antitrust law and allow
a plaintiff to bring an antitrust lawsuit to seek to enjoin
this practice in federal district court as a violation of the
Sherman Act.
6. Paper barriers or tying agreements
One of the objectives of the Staggers Rail Act of 1980 was
to allow the Class I railroads--that is, large railroads with
extensive route structures--increased flexibility to
``rationalize'' their systems by discarding under-utilized and
excess rail capacity. The railroad industry responded by
petitioning the ICC, later the STB, to allow the abandonment of
tens of thousands of miles of track. In addition, the Class I
railroads began to transfer the operating rights of other track
to ``short line'' railroads, many of which were created to
operate track formerly operated by a major railroad. Each of
these transactions required approval of the ICC, later the STB,
but the agreements between the major railroad and the short-
line railroad were kept confidential as part of the public
review of the transaction. In many cases, the short-line
railroad involved had the physical ability to deliver freight
to more than one Class I railroad.
Often long after the transaction was approved by the ICC or
the STB, customers of the short-line railroad found that there
were provisions in the agreement between the Class I and short-
line railroad that prevented the short line from delivering or
receiving a meaningful amount of freight from any Class I
railroad except the Class I railroad with which it has the
operating agreement. Thus, even though the short line has the
physical ability to deliver or receive freight from more than
one Class I railroad, a ``paper barrier'' or ``tying
agreement'' prevents access to a competing railroad.
In his 2004 letter, then-House Judiciary Committee Chairman
Sensenbrenner asked the Justice Department about these ``paper
barriers.'' The September 27, 2004 response by Assistant
Attorney General Moschella states:
The second industry practice you describe is ``paper
barriers.'' Paper barriers are created when Class I
railroads spin off segments of their trackage to short-
line or low-density carriers with contractual terms
that prohibit the acquiring carriers from competing
with the Class I railroads for business. Since these
contractual terms are part of an underlying sale
transaction that is reviewed and approved by the
Surface Transportation Board, they may be exempted from
the reach of the antitrust laws, depending on the scope
of the approval language in each of the Board's
relevant orders. If paper barriers were subject to the
antitrust laws, they would be evaluated under section 1
of the Sherman Act. The Department would examine
whether the restraint is ancillary to the sale of the
trackage--i.e., whether the restraint is reasonably
necessary to achieve the pro-competitive benefits of
the sale.
The Committee believes that that these ``paper barriers''
should be subject to scrutiny under the antitrust laws. The
Railroad Antitrust Enforcement Act of 2007 will remove the
railroad industry's antitrust exemption, allowing a plaintiff
to bring an antitrust action to seek to enjoin these
restrictive provisions--or obtain treble damages for losses
caused by these provisions--in a federal district court.
7. Removal of STB primary jurisdiction
The Railroad Antitrust Enforcement Act of 2007 also removes
any requirement that a district court defer to the primary
jurisdiction doctrine of the STB in railroad antitrust cases.
Without this provision, parties may be able to avoid antitrust
scrutiny by convincing a court it is required to defer to the
STB. Clarifying the law in this area is necessary to ensure
that the elimination of the antitrust exemptions is
effective.\5\
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\5\Without Congressional action, the primary jurisdiction doctrine
would apply in the antitrust cases made possible by S. 772. First, the
lead case on the general primary jurisdiction doctrine involved the
ICC: United States v. W. Pac. R.R. Co., 352 U.S. 59, 64-65, 65-66
(1956) (mandating suspension of judicial proceedings pending referral
to the ICC). Second, the doctrine is applicable in antitrust cases.
See, e.g., Ricci v. Chicago Mercantile Exch., 409 U.S. 289 (1973). The
Ricci case tries to reconcile cases in which the Supreme Court has held
that the doctrine does not apply in some antitrust cases (e.g.,
California v. Federal Power Comm'n, 369 U.S. 482 (1962); Silver v. New
York Stock Exch., 373 U.S. 341 (1963)), but does apply in others. Thus,
the primary jurisdiction doctrine has become a substantial obstacle for
the application of antitrust law in regulated industries.
Moreover, the need for an express statement that the courts need
not defer to the administrative agency would seem even more necessary
in light of recent Supreme Court decisions involving the role of
antitrust law in regulated industries, including its 2007 ruling that
antitrust law was preempted by a regulatory scheme when the law was
silent regarding a conflict between antitrust law and the regulation of
the securities industry. See Credit Suisse Sec v. Billing, 127 S. Ct.
2383 (2007); see also Verizon Commc'n v. Trinko, 540 U.S. 398 (2004).
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The Committee believes that the STB's shortcomings in
failing to protect consumers from anti-competitive actions by
regulated railroads, including mergers and acquisitions,
warrants making the federal courts, applying antitrust law, the
primary protectors of competition in all aspects of the rail
freight industry. If courts were required to defer to the STB
under the primary jurisdiction doctrine, then the whole purpose
of S. 772 would be undermined because antitrust scrutiny may be
avoided. Railroads would be able to use the STB's primary
jurisdiction as a kind of ``stealth preemption'' of the
antitrust courts' newly-restored role. The STB has no
experience in applying antitrust law and many of its decisions
reach results contrary to antitrust principles. For this
reason, section 4 of S. 772 provides that in any antitrust
action, a federal district court is not required to defer to
the primary jurisdiction of the STB.
C. EFFECT OF LEGISLATION
The elimination of the railroad antitrust exemption will
change the law in several respects. First, private plaintiffs
(such as rail customers) will be able to bring complaints in
federal district court for treble damages and/or injunctive
relief that specific actions of the railroads violate the
antitrust laws. Unlike under current law, whether or not the
Surface Transportation Board has reviewed or approved railroad
conduct will be irrelevant to the application of antitrust law.
The fact that railroad conduct is approved by the STB will no
longer divest courts from jurisdiction over the application of
antitrust law to that conduct.
Conduct subject to such private antitrust litigation will
include (but not be limited to) actions challenging:
arrangements where major railroads spin off or lease segments
of their tracks to short line carriers with contractual terms
that prohibit the acquiring carrier from competing with the
major railroads (known as ``paper barriers,'' as described
above); situations where there is competition for a portion,
but not all, of the journey, and railroads refuse to quote
rates for the ``bottleneck'' portion of the trip (the
``bottleneck'' situation, as described above); and the practice
of railroads publicly disclosing tentative prospective shipping
rates, which could facilitate collusion among competing
railroads and result in increased prices.\6\
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\6\However, one type of railroad industry practice, if reviewed and
approved by the STB, will continue to be exempt from the application of
antitrust law--specifically, any transaction relating the pooling of
railroad cars approved by the STB pursuant to 49 U.S.C. Sec. 11322.
Railroad car pooling arrangements are generally efficiency enhancing
because they integrate economic activity in a way that promotes
competition.
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The federal antitrust enforcement agencies (the Justice
Department and Federal Trade Commission) will also be empowered
to bring antitrust lawsuits in federal court to enjoin conduct
by railroads that violates the antitrust laws. The legislation
removes the railroad common carrier exemption prohibiting the
Federal Trade Commission from bringing antitrust lawsuits
against the railroads, so both the FTC and Justice Department
will have full authority to enforce the antitrust laws with
respect to the railroad industry. In addition, state attorneys
general could bring actions in federal court on behalf of their
citizens challenging allegedly anti-competitive railroad
practices as violative of antitrust law.
Second, the legislation will allow the Justice
Department,\7\ state attorneys general, and private citizens to
challenge under antitrust law in federal district court
railroad mergers and acquisitions, regardless of whether they
are approved by the STB. This is a substantial change from
current law under which only the STB may take action to block
or modify a railroad merger or acquisition, and which divests
authority from the Justice Department to file suit under the
Clayton Act to enjoin a railroad merger or acquisition.
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\7\Because of the bill's removal of the railroad common carrier
exemption that currently prevents the FTC from enforcing antitrust law
against railroad common carriers, the FTC would also have jurisdiction
to review railroad mergers and acquisitions. See supra note 3.
Traditionally, however, the Justice Department is the agency that
reviews mergers and acquisitions in transportation industries (for
example, the aviation industry). Which agency ultimately assumed this
responsibility would be decided by the Justice Department and FTC.
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The bill is intended to apply prospectively, including to
any on-going conduct previously immunized from antitrust law
that is still in place six months after enactment of the
legislation. The bill provides in section 8 that no antitrust
action may be brought with respect to any on-going conduct
exempted from antitrust law by the STB, or its predecessor the
ICC, unless the conduct is still ongoing 180 days after
enactment of the legislation. This provision is intended to
give those affected by the termination of the railroad
antitrust exemption six months to bring their conduct into
compliance with antitrust law.
D. SUMMARY
The objective of the Railroad Antitrust Enforcement Act is
simply to remove the antitrust exemption protecting the
railroad industry and allow antitrust enforcement of railroad
industry practices. The current antitrust exemption enjoyed by
the railroad industry is unwarranted due to the substantial de-
regulation of the railroad industry in recent decades, and has
resulted in anti-competitive behavior harming railroad
customers and consumers. The bill will remove this outmoded
exemption so that the railroad industry is treated for purposes
of antitrust law like virtually every other industry in the
economy.
By requiring railroads to comply with the antitrust laws
like other major industries operating service networks, S. 772
will restore to railroad customers the benefits of open
competition that prevail elsewhere in the economy, resulting in
lower prices and more efficient and more economical rail
transportation of grain, coal, chemicals and other products
essential to the Nation's domestic and foreign commerce.
II. History of the Bill and Committee Consideration
The Railroad Antitrust Enforcement Act was first introduced
in the 109th Congress by Senator Kohl on June 29, 2006 (S.
3612).\8\ The bill had one co-sponsor (Senator Feingold). It
was referred to the Committee on the Judiciary. No further
action was taken on S. 3612 in the 109th Congress.
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\8\The bill S. 3612 in 109th Congress was identical to S. 772 as
introduced in the 110th Congress, with the sole exception that the
version introduced in the 109th Congress did not include section 8 of
the current legislation (``Effective Date'').
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On March 6, 2007, Senator Kohl introduced the Railroad
Antitrust Enforcement Act in the 110th Congress (S. 772). The
legislation now has nine co-sponsors (Senators Feingold,
Coleman, Rockefeller, Vitter, Leahy, Harkin, Dorgan, Biden, and
Schumer). The Committee on the Judiciary voted to report the
bill favorably, with an amendment, by voice vote on September
20, 2007.
The amendment, proposed by Senator Kohl, was mainly
technical in nature. Its two non-technical provisions (i)
clarified language to make clear that standard of review for
reviewing mergers and acquisitions by the Justice Department
would not be changed by the bill; and (ii) amended the bill so
that railroad car pooling arrangements approved by the Surface
Transportation Board currently exempt under antitrust law under
49 U.S.C. Sec. 11321(a) would continue to be exempt. It was
adopted by unanimous consent.
A hearing on the bill titled ``An Examination of S. 772,
the Railroad Antitrust Enforcement Act'' was held at the
Committee on the Judiciary's Subcommittee on Antitrust,
Competition Policy and Consumer Rights on October 3, 2007.
III. Section-by-Section Summary of the Bill
Section 1. Short title
Title: ``Railroad Antitrust Enforcement Act.''
Section 2. Injunctions against railroad common carriers
Section 2 of the bill amends Section 16 of the Clayton Act
of 1914 (15 U.S.C. Sec. 26), which sets forth the principal
remedies available for violations of the federal antitrust
laws. Section 16 permits private parties threatened with loss
or damage by a violation of the federal antitrust laws to sue
for injunctive relief against such violations by a civil action
in the courts of the United States. Section 16, however,
presently contains a proviso that this fundamental antitrust
remedy is not available against common carriers subject to
regulation by the Surface Transportation Board (``STB''),
successor to the functions of the former Interstate Commerce
Commission under subtitle IV of Title 49 of the United States
Code. Section 2 of the bill revises this proviso so that it
will apply only to non-railroad common carriers subject to STB
jurisdiction. It thereby makes injunctive relief available to
parties threatened with economic injury by antitrust violations
of railroad common carriers.
Section 3. Mergers and acquisitions of railroads
Section 3 amends section 7 of the Clayton Act of 1914,
which incorporates the Cellar-Kefauver Antimerger Act of 1950
(15 U.S.C. Sec. 18), to make railroad combinations subject to
its provisions. Section 7 bars anticompetitive mergers,
consolidations and acquisitions. It declares unlawful
acquisitions of the stock or assets of persons engaged in or
affecting interstate commerce ``where in any line of commerce
in any section of the country, the effect of such acquisition
may be substantially to lessen competition, or to tend to a
monopoly.'' Proposed or consummated transactions that are
unlawful under section 7 can be enjoined by federal courts in
civil actions by federal antitrust authorities or private
parties. The fifth paragraph in section 7, however, provides
that nothing contained in that section shall apply to
transactions duly approved by a number of federal agencies
acting under other statutes authorizing such approvals. Among
the agencies listed in the fifth paragraph is the STB, which
has statutory authority to approve railroad combinations under
49 U.S.C. Sec. Sec. 11322 (combinations relating to the pooling
or division of traffic and earnings) and 11323 (consolidations,
mergers, and acquisitions of control). Section 3 creates an
exception to the fifth paragraph that eliminates this exemption
with respect to STB-approved transactions described in 49
U.S.C. Sec. 11321, i.e. STB-approved rate agreements or
combinations subject to Sec. Sec. 11322 and 11323.
Section 4. Limitation of primary jurisdiction
Section 4 removes any requirement that a federal district
court defer to the primary jurisdiction of the STB in any civil
antitrust action against a common carrier railroad (1) by a
private party seeking treble damages (15 U.S.C. Sec. 15); (2)
by the United States seeking an injunction (15 U.S.C. Sec. 25);
or (3) by a private party seeking an injunction (15 U.S.C.
Sec. 26).
Section 5. Federal Trade Commission enforcement
Section 5 changes existing law so that the Federal Trade
Commission (``FTC'') may enforce the antimerger and other
provisions of the Clayton Act against railroad common carriers.
Section 11(a) of the Clayton Act, 15 U.S.C. Sec. 21(a),
presently vests such authority in the STB. Section 5 of the
bill amends this provision to create an exception to the STB's
enforcement jurisdiction under the Clayton Act with respect to
two categories of transactions: STB-approved agreements among
two or more rail carriers relating to rates subject to 49
U.S.C. Sec. 10706; and transactions described in 49 U.S.C.
Sec. 11321, i.e. STB-approved agreements or combinations
subject to Sec. Sec. 11322 and 11323. Since section 11(a) of
the Clayton Act vests in the FTC authority to enforce its
provisions where enforcement authority is not assigned to other
agencies, the exceptions from the STB's authority enacted by
section 5 will fall within the jurisdiction of the FTC.
Section 6. Expansion of treble damages to rail common carriers
Section 6 eliminates the judicially-created barrier against
recovery of private antitrust damages from railroad carriers
under the ``Keogh Doctrine,'' which holds that shippers injured
by a railroad's antitrust violations are limited to the
railroad's filed rate. Keogh v. Chicago & Northwestern Railway,
260 U.S. 152 (1922). Section 6 of the bill adds a new
subsection to the treble damage provision in section 4 of the
Clayton Act. It provides that treble damages shall be available
in civil antitrust suits to parties injured by railroad
antitrust violations without regard to whether such railroads
have filed rates or whether a complaint challenging rates has
been filed.
Section 7. Termination of antitrust exemptions in Title 49
Section 7 eliminates certain exemptions from the antitrust
laws presently enjoyed by railroad common carriers under
subchapter IV of Title 49. First, 49 U.S.C.
Sec. 10706(a)(2)(A), (4) and (5) currently exempt from the
antitrust laws ratemaking agreements among railroads that are
approved by the STB. Section 7(a)(1) of the bill amends this
provision by striking the exemption. Second, 49 U.S.C.
Sec. 10706(e) currently provides for a periodic report by the
FTC and the Antitrust Division of the Department of Justice on
possible anti-competitive features of railroad rate agreements
approved by or submitted to the STB. Section 7(a)(2) of the
bill strikes this provision and substitutes a command that
nothing in section 10706 exempts proposed agreements described
in section 10706 from the antitrust laws, and a requirement
that the STB and any other reviewing agency consider the impact
of the proposed agreement on shippers and on affected
communities. Third, 49 U.S.C. Sec. 11321 currently exempts from
the antitrust laws transactions described therein, i.e. STB-
approved railroad agreements or combinations subject to 49
U.S.C. Sec. Sec. 11322 (combinations relating to the pooling or
division of traffic and earnings), or to 49 U.S.C. Sec. 11323
(consolidations, mergers, and acquisitions of control). Section
7(b)(1) strikes this exemption. However, pursuant to an
amendment adopted during Committee consideration of the bill,
any transaction relating the pooling of railroad cars approved
by the STB pursuant to 49 U.S.C. Sec. 11322 is excluded from
this language; such railroad car pooling arrangements will
continue to be exempt from antitrust law. Section 7(b)(2) adds
to 49 U.S.C. Sec. 11321 a new subsection (c) commanding that
nothing in section 10706 exempts proposed agreements described
in section 10706 from the antitrust laws, and requiring that
the STB consider the impact of the proposed agreement on
shippers and on affected communities.
Section 8. Effective date
Section 8 provides that a civil action under Sections 4,
15, or 16 of the Clayton Act, or Section 5 of the Federal Trade
Commission Act (the antitrust laws revived with respect to
railroads by this bill) may not be filed with respect to
conduct exempted from the antitrust laws by the Surface
Transportation Board or Interstate Commerce Commission.
However, under subsection (b) of section 8, such an action may
be brought with respect to previously exempted conduct or
activity that is continued subsequent to the date of enactment
of this Act when such a civil action is filed 180 days after
the date of enactment of the Act.
IV. Congressional Budget Office Cost Estimate
The Committee sets forth, with respect to the bill, S. 772,
the following estimate and comparison prepared by the Director
of the Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, November 21, 2007.
Hon. Patrick J. Leahy,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 772, the Railroad
Antitrust Enforcement Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Leigh Angres.
Sincerely,
Peter R. Orszag.
Enclosure.
S. 772--Railroad Antitrust Enforcement Act of 2007
S. 772 would amend certain federal antitrust laws that
exempt the railroad industry from regulations governing
mergers, acquisitions, pooling arrangements, and rate-setting.
Currently, the Surface Transportation Board (STB) has the
authority to regulate these transactions under the Interstate
Commerce Act; the bill would not change this authority. Under
the bill, however, the Department of Justice (DOJ) and the
Federal Trade Commission (FTC) also would be able to prosecute
antitrust violations relating to mergers under the Sherman and
Clayton Acts.
CBO estimates that implementing S. 772 would have no
significant effect on the federal budget because CBO expects
that DOJ's workload would not increase substantially under the
bill. Because DOJ's attorneys currently advise STB on railroad
mergers, they already perform investigations similar to those
that they would have to perform under the bill. (CBO also
expects that DOJ, rather than FTC, would handle antitrust
enforcement matters specified under the bill; thus, we do not
anticipate that FTC would incur significant additional
enforcement costs.) Convicted offenders of antitrust violations
specified in the bill would be subject to criminal fines, which
are recorded as revenues, deposited in the Crime Victims Fund,
and later spent. Thus, enacting S. 772 could increase revenues
and direct spending, but CBO estimates that any such effects
would be insignificant given the small number of cases
involved.
S. 772 contains no intergovernmental mandates as defined in
the Unfunded Mandates Reform Act (UMRA) and would impose no
costs on state, local, or tribal governments.
S. 772 would impose a private-sector mandate, as defined in
UMRA, on railroad carriers by eliminating the statute that
exempts railroad carriers from certain antitrust laws. That
change would make railroads subject to provisions of antitrust
statutes to which they are not now generally subject. However,
it is uncertain how the new standards would affect current
business practices, if at all. It is also uncertain the extent
to which railroad carriers would have to forgo business
opportunities and what the value of those lost opportunities
would be. CBO has no basis for estimating the cost to railroad
carriers and whether that cost would exceed the annual
threshold established in UMRA for private-sector mandates ($131
million in 2007, adjusted annually for inflation).
The CBO staff contacts for this estimate are Leigh Angres
(for federal costs) and Jacob Kuipers (for the private-sector
impact). This estimate was approved by Peter H. Fontaine,
Assistant Director for Budget Analysis.
V. Regulatory Impact Evaluation
In compliance with rule XXVI of the Standing Rules of the
Senate, the Committee finds that no significant regulatory
impact will result from the enactment of S. 772.
VI. Conclusion
The Railroad Antitrust Enforcement Act of 2007, S. 772,
will remove current exemptions and subject the freight railroad
industry to the provisions of the Nation's antitrust laws. By
requiring railroads to comply with the antitrust laws like
other major industries operating service networks, S. 772 will
restore to railroad customers the benefits of open competition
that prevail elsewhere in the economy.
VII. Changes to Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 772, as reported, are shown as follows (existing law
proposed to be omitted is shown in black brackets, new matter
is printed in italic, and existing law in which no change is
proposed is shown in roman type):
CLAYTON ACT (15 U.S.C. Sec. Sec. 12, ET SEQ.)
* * * * * * *
SEC. 4. SUITS BY PERSONS INJURED (15 U.S.C. Sec. 15).
(a) Amount of Recovery; Prejudgment Interest.--Except as
provided in subsection (b) of this section, any person who
shall be injured in his business or property by reason of
anything forbidden in the antitrust laws may sue therefor in
any district court of the United States in the district in
which the defendant resides or is found or has an agent,
without respect to the amount in controversy, and shall recover
threefold the damages by him sustained, and the cost of suit,
including a reasonable attorney's fee. The court may award
under this section, pursuant to a motion by such person
promptly made, simple interest on actual damages for the period
beginning on the date of service of such person's pleading
setting forth a claim under the antitrust laws and ending on
the date of judgment, or for any shorter period therein, if the
court finds that the award of such interest for such period is
just in the circumstances. In determining whether an award of
interest under this section for any period is just in the
circumstances, the court shall consider only--
(1) whether such person or the opposing party, or
either party's representative, made motions or asserted
claims or defenses so lacking in merit as to show that
such party or representative acted intentionally for
delay, or otherwise acted in bad faith;
(2) whether, in the course of the action involved,
such person or the opposing party, or either party's
representative, violated any applicable rule, statute,
or court order providing for sanctions for dilatory
behavior or otherwise providing for expeditious
proceedings; and
(3) whether such person or the opposing party, or
either party's representative, engaged in conduct
primarily for the purpose of delaying the litigation or
increasing the cost thereof.
(b) Subsection (a) shall apply to a common carrier by
railroad subject to the jurisdiction of the Surface
Transportation Board under subtitle IV of title 49, United
States Code, without regard to whether such railroads have
filed rates or whether a complaint challenging a rate has been
filed.
[(b)](c) Amount of Damages Payable to Foreign States and
Instrumentalities of Foreign States.--
(1) Except as provided in paragraph (2), any person
who is a foreign state may not recover under subsection
(a) of this section an amount in excess of the actual
damages sustained by it and the cost of suit, including
a reasonable attorney's fee.
(2) Paragraph (1) shall not apply to a foreign state
if--
(A) such foreign state would be denied, under
section 1605(a)(2) of title 28, immunity in a
case in which the action is based upon a
commercial activity, or an act, that is the
subject matter of its claim under this section;
(B) such foreign state waives all defenses
based upon or arising out of its status as a
foreign state, to any claims brought against it
in the same action;
(C) such foreign state engages primarily in
commercial activities; and
(D) such foreign state does not function,
with respect to the commercial activity, or the
act, that is the subject matter of its claim
under this section as a procurement entity for
itself or for another foreign state.
[(c)](d) Definitions.--For purposes of this section--
(1) the term ``commercial activity'' shall have the
meaning given it in section 1603(d) of title 28, and
(2) the term ``foreign state'' shall have the meaning
given it in section 1603(a) of title 28.
* * * * * * *
SEC. 7. ACQUISITION BY ONE CORPORATION OF STOCK OF ANOTHER (15 U.S.C.
Sec. 18).
No person engaged in commerce or in any activity affecting
commerce shall acquire, directly or indirectly, the whole or
any part of the stock or other share capital and no person
subject to the jurisdiction of the Federal Trade Commission
shall acquire the whole or any part of the assets of another
person engaged also in commerce or in any activity affecting
commerce, where in any line of commerce or in any activity
affecting commerce in any section of the country, the effect of
such acquisition may be substantially to lessen competition, or
to tend to create a monopoly.
No person shall acquire, directly or indirectly, the whole
or any part of the stock or other share capital and no person
subject to the jurisdiction of the Federal Trade Commission
shall acquire the whole or any part of the assets of one or
more persons engaged in commerce or in any activity affecting
commerce, where in any line of commerce or in any activity
affecting commerce in any section of the country, the effect of
such acquisition, of such stocks or assets, or of the use of
such stock by the voting or granting of proxies or otherwise,
may be substantially to lessen competition, or to tend to
create a monopoly.
This section shall not apply to persons purchasing such
stock solely for investment and not using the same by voting or
otherwise to bring about, or in attempting to bring about, the
substantial lessening of competition. Nor shall anything
contained in this section prevent a corporation engaged in
commerce or in any activity affecting commerce from causing the
formation of subsidiary corporations for the actual carrying on
of their immediate lawful business, or the natural and
legitimate branches or extensions thereof, or from owning and
holding all or a part of the stock of such subsidiary
corporations, when the effect of such formation is not to
substantially lessen competition.
Nor shall anything herein contained be construed to
prohibit any common carrier subject to the laws to regulate
commerce from aiding in the construction of branches or short
lines so located as to become feeders to the main line of the
company so aiding in such construction or from acquiring or
owning all or any part of the stock of such branch lines, nor
to prevent any such common carrier from acquiring and owning
all or any part of the stock of a branch or short line
constructed by an independent company where there is no
substantial competition between the company owning the branch
line so constructed and the company owning the main line
acquiring the property or an interest therein, nor to prevent
such common carrier from extending any of its lines through the
medium of the acquisition of stock or otherwise of any other
common carrier where there is no substantial competition
between the company extending its lines and the company whose
stock, property, or an interest therein is so acquired.
Nothing contained in this section shall be held to affect
or impair any right heretofore legally acquired: Provided, That
nothing in this section shall be held or construed to authorize
or make lawful anything heretofore prohibited or made illegal
by the antitrust laws, nor to exempt any person from the penal
provisions thereof or the civil remedies therein provided.
Nothing contained in this section shall apply to
transactions duly consummated pursuant to authority given by
the Secretary of Transportation, Federal Power Commission,
Surface Transportation Board (except for transactions described
in section 11321 of title 49, United States Code), the
Securities and Exchange Commission in the exercise of its
jurisdiction under section 79j of this title, the United States
Maritime Commission, or the Secretary of Agriculture under any
statutory provision vesting such power in such Commission,
Board, or Secretary.
* * * * * * *
SEC. 11. ENFORCEMENT PROVISIONS (15 U.S.C. Sec. 21).
(a) Commission, Board, or Secretary Authorized To Enforce
Compliance.--Authority to enforce compliance with sections 13,
14, 18, and 19 of this title by the persons respectively
subject thereto is vested in the Surface Transportation Board
where applicable to common carriers subject to jurisdiction
under subtitle IV of title 49 (except for agreements described
in section 10706 of that title and transactions described in
section 11321 of that title); in the Federal Communications
Commission where applicable to common carriers engaged in wire
or radio communication or radio transmission of energy; in the
Secretary of Transportation where applicable to air carriers
and foreign air carriers subject to part A of subtitle VII of
title 49; in the Board of Governors of the Federal Reserve
System where applicable to banks, banking associations, and
trust companies; and in the Federal Trade Commission where
applicable to all other character of commerce to be exercised
as follows:
* * *
* * * * * * *
SEC. 16. INJUNCTIVE RELIEF FOR PRIVATE PARTIES; EXCEPTION; COSTS (15
U.S.C. Sec. 26).
Any person, firm, corporation, or association shall be
entitled to sue for and have injunctive relief, in any court of
the United States having jurisdiction over the parties, against
threatened loss or damage by a violation of the antitrust laws,
including sections 13, 14, 18, and 19 of this title, when and
under the same conditions and principles as injunctive relief
against threatened conduct that will cause loss or damage is
granted by courts of equity, under the rules governing such
proceedings, and upon the execution of proper bond against
damages for an injunction improvidently granted and a showing
that the danger of irreparable loss or damage is immediate, a
preliminary injunction may issue: Provided, That nothing herein
contained shall be construed to entitle any person, firm,
corporation, or association, except the United States, to bring
suit for injunctive relief against any common carrier that is
not a railroad subject to the jurisdiction of the Surface
Transportation Board under subtitle IV of title 49. In any
action under this section in which the plaintiff substantially
prevails, the court shall award the cost of suit, including a
reasonable attorney's fee, to such plaintiff.
* * * * * * *
SEC. 29
In any civil action against a common carrier railroad under
section 4, 4C, 15, or 16 of this Act, the district court shall
not be required to defer to the primary jurisdiction of the
Surface Transportation Board.
FEDERAL TRADE COMMISSION ACT (15 U.S.C. Sec. 41 et seq.)
* * * * * * *
SEC. 5. UNFAIR METHODS OF COMPETITION UNLAWFUL; PREVENTION BY
COMMISSION (15 U.S.C. Sec. 45).
(a) Declaration of Unlawfulness; Power To Prohibit Unfair
Practices; Inapplicability to Foreign Trade.--
(1) Unfair methods of competition in or affecting
commerce, and unfair or deceptive acts or practices in
or affecting commerce, are hereby declared unlawful.
(2) The Commission is hereby empowered and directed
to prevent persons, partnerships, or corporations,
except banks, savings and loan institutions described
in section 57a(f)(3) of this title, Federal credit
unions described in section 57a(f)(4) of this title,
common carriers, except for railroads, subject to the
Acts to regulate commerce, air carriers and foreign air
carriers subject to part A of subtitle VII of title 49,
and persons, partnerships, or corporations insofar as
they are subject to the Packers and Stockyards Act,
1921, as amended (7 U.S.C. 181 et seq.), except as
provided in section 406(b) of said Act (7 U.S.C.
227(b)), from using unfair methods of competition in or
affecting commerce and unfair or deceptive acts or
practices in or affecting commerce.
(3) This subsection shall not apply to unfair methods
of competition involving commerce with foreign nations
(other than import commerce) unless--
(A) such methods of competition have a
direct, substantial, and reasonably foreseeable
effect--
(i) on commerce which is not commerce
with foreign nations, or on import
commerce with foreign nations; or
(ii) on export commerce with foreign
nations, of a person engaged in such
commerce in the United States; and
(B) such effect gives rise to a claim under
the provisions of this subsection, other than
this paragraph.
If this subsection applies to such methods of competition
only because of the operation of subparagraph (A)(ii), this
subsection shall apply to such conduct only for injury to
export business in the United States.
* * *
* * * * * * *
TITLE 49, UNITED STATES CODE--TRANSPORTATION
* * * * * * *
SUBTITLE IV--INTERSTATE TRANSPORTATION
PART A--RAIL
* * * * * * *
CHAPTER 107--RATES
SUBCHAPTER I--GENERAL AUTHORITY
* * * * * * *
SEC. 10706. [RATE AGREEMENTS: EXEMPTION FROM ANTITRUST LAWS] RATE
AGREEMENTS.
(a)(1) In this subsection--
(A) the term ``affiliate'' means a person
controlling, controlled by, or under common control or
ownership with another person and ``ownership'' refers
to equity holdings in a business entity of at least 5
percent;
(B) the term ``single-line rate'' refers to a rate or
allowance proposed by a single rail carrier that is
applicable only over its line and for which the
transportation (exclusive of terminal services by
switching, drayage or other terminal carriers or
agencies) can be provided by that carrier; and
(C) the term ``practicably participates in the
movement'' shall have such meaning as the Board shall
by regulation prescribe.
(2)(A) A rail carrier providing transportation subject to
the jurisdiction of the Board under this part that is a party
to an agreement of at least 2 rail carriers that relates to
rates (including charges between rail carriers and compensation
paid or received for the use of facilities and equipment),
classifications, divisions, or rules related to them, or
procedures for joint consideration, initiation, publication, or
establishment of them, shall apply to the Board for approval of
that agreement under this subsection. The Board shall approve
the agreement only when it finds that the making and carrying
out of the agreement will further the transportation policy of
section 10101 of this title and may require compliance with
conditions necessary to make the agreement further that policy
as a condition of its approval. If the Board approves the
agreement, it may be made and carried out under its terms and
under the conditions required by the Board [, and the Sherman
Act (15 U.S.C. 1, et seq.), the Clayton Act (15 U.S.C. 12, et
seq.), the Federal Trade Commission Act (15 U.S.C. 41, et
seq.), sections 73 and 74 of the Wilson Tariff Act (15 U.S.C. 8
and 9), and the Act of June 19, 1936 (15 U.S.C. 13, 13a, 13b,
21a) do not apply to parties and other persons with respect to
making or carrying out the agreement]. However, the Board may
not approve or continue approval of an agreement when the
conditions required by it are not met or if it does not receive
a verified statement under subparagraph (B) of this paragraph.
(B) The Board may approve an agreement under subparagraph
(A) of this paragraph only when the rail carriers applying for
approval file a verified statement with the Board. Each
statement must specify for each rail carrier that is a party to
the agreement--
(i) the name of the carrier;
(ii) the mailing address and telephone number of its
headquarter's office; and
(iii) the names of each of its affiliates and the
names, addresses, and affiliates of each of its
officers and directors and of each person, together
with an affiliate, owning or controlling any debt,
equity, or security interest in it having a value of at
least $1,000,000.
(3)(A) An organization established or continued under an
agreement approved under this subsection shall make a final
disposition of a rule or rate docketed with it by the 120th day
after the proposal is docketed. Such an organization may not--
(i) permit a rail carrier to discuss, to participate
in agreements related to, or to vote on single-line
rates proposed by another rail carrier, except that for
purposes of general rate increases and broad changes in
rates, classifications, rules, and practices only, if
the Board finds at any time that the implementation of
this clause is not feasible, it may delay or suspend
such implementation in whole or in part;
(ii) permit a rail carrier to discuss, to participate
in agreements related to, or to vote on rates related
to a particular interline movement unless that rail
carrier practicably participates in the movement; or
(iii) if there are interline movements over two or
more routes between the same end points, permit a
carrier to discuss, to participate in agreements
related to, or to vote on rates except with a carrier
which forms part of a particular single route. If the
Board finds at any time that the implementation of this
clause is not feasible, it may delay or suspend such
implementation in whole or in part.
(B)(i) In any proceeding in which a party alleges that a
rail carrier voted or agreed on a rate or allowance in
violation of this subsection, that party has the burden of
showing that the vote or agreement occurred. A showing of
parallel behavior does not satisfy that burden by itself.
(ii) In any proceeding in which it is alleged that a
carrier was a party to an agreement, conspiracy, or combination
in violation of a Federal law cited in subsection (a)(2)(A) of
this section or of any similar State law, proof of an
agreement, conspiracy, or combination may not be inferred from
evidence that two or more rail carriers acted together with
respect to an interline rate or related matter and that a party
to such action took similar action with respect to a rate or
related matter on another route or traffic. In any proceeding
in which such a violation is alleged, evidence of a discussion
or agreement between or among such rail carrier and one or more
other rail carriers, or of any rate or other action resulting
from such discussion or agreement, shall not be admissible if
the discussion or agreement--
(I) was in accordance with an agreement approved
under paragraph (2) of this subsection; or
(II) concerned an interline movement of the rail
carrier, and the discussion or agreement would not,
considered by itself, violate the laws referred to in
the first sentence of this clause.
In any proceeding before a jury, the court shall determine
whether the requirements of subclause (I) or (II) are satisfied
before allowing the introduction of any such evidence.
(C) An organization described in subparagraph (A) of this
paragraph shall provide that transcripts or sound recordings be
made of all meetings, that records of votes be made, and that
such transcripts or recordings and voting records be submitted
to the Board and made available to other Federal agencies in
connection with their statutory responsibilities over rate
bureaus, except that such material shall be kept confidential
and shall not be subject to disclosure under section 552 of
title 5, United States Code.
(4) Notwithstanding any other provision of this subsection,
one or more rail carriers may enter into an agreement, without
obtaining prior Board approval, that provides solely for
compilation, publication, and other distribution of rates in
effect or to become effective. [The Sherman Act (15 U.S.C. 1 et
seq.), the Clayton Act (15 U.S.C. 12 et seq.), the Federal
Trade Commission Act (15 U.S.C. 41 et seq.), sections 73 and 74
of the Wilson Tariff Act (15 U.S.C. 8 and 9), and the Act of
June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a) shall not apply to
parties and other persons with respect to making or carrying
out such agreement. However, the] The Board may, upon
application or on its own initiative, investigate whether the
parties to such an agreement have exceeded its scope, and upon
a finding that they have, the Board may issue such orders as
are necessary, including an order dissolving the agreement, to
ensure that actions taken pursuant to the agreement are limited
as provided in this paragraph.
(5)(A) Whenever two or more shippers enter into an
agreement to discuss among themselves that relates to the
amount of compensation such shippers propose to be paid by rail
carriers providing transportation subject to the jurisdiction
of the Board under this part, for use by such rail carriers of
rolling stock owned or leased by such shippers, the shippers
shall apply to the Board for approval of that agreement under
this paragraph. The Board shall approve the agreement only when
it finds that the making and carrying out of the agreement will
further the transportation policy set forth in section 10101 of
this title and may require compliance with conditions necessary
to make the agreement further that policy as a condition of
approval. If the Board approves the agreement, it may be made
and carried out under its terms and under the terms required by
the Board[, and the antitrust laws set forth in paragraph (2)
of this subsection do not apply to parties and other persons
with respect to making or carrying out the agreement]. The
Board shall approve or disapprove an agreement under this
paragraph within one year after the date application for
approval of such agreement is made.
(B) If the Board approves an agreement described in
subparagraph (A) of this paragraph and the shippers entering
into such agreement and the rail carriers proposing to use
rolling stock owned or leased by such shippers, under payment
by such carriers or under a published allowance, are unable to
agree upon the amount of compensation to be paid for the use of
such rolling stock, any party directly involved in the
negotiations may require that the matter be settled by
submitting the issues in dispute to the Board. The Board shall
render a binding decision, based upon a standard of
reasonableness and after taking into consideration any past
precedents on the subject matter of the negotiations, no later
than 90 days after the date of the submission of the dispute to
the Board.
(C) Nothing in this paragraph shall be construed to change
the law in effect prior to October 1, 1980, with respect to the
obligation of rail carriers to utilize rolling stock owned or
leased by shippers.
(b) The Board may require an organization established or
continued under an agreement approved under this section to
maintain records and submit reports. The Board may inspect a
record maintained under this section.
(c) The Board may review an agreement approved under
subsection (a) of this section and shall change the conditions
of approval or terminate it when necessary to comply with the
public interest and subsection (a). The Board shall postpone
the effective date of a change of an agreement under this
subsection for whatever period it determines to be reasonably
necessary to avoid unreasonable hardship.
(d) The Board may begin a proceeding under this section on
its own initiative or on application. Action of the Board under
this section--
(1) approving an agreement;
(2) denying, ending, or changing approval;
(3) prescribing the conditions on which approval is
granted; or
(4) changing those conditions, has effect only as
related to application of the antitrust laws referred
to in subsection (a) of this section.
[(e)(1) The Federal Trade Commission, in consultation with
the Antitrust Division of the Department of Justice, shall
prepare periodically an assessment of, and shall report to the
Board on--
(A) possible anticompetitive features of--
(i) agreements approved or submitted for
approval under subsection (a) of this section;
and
(ii) an organization operating under those
agreements; and
(B) possible ways to alleviate or end an
anticompetitive feature, effect, or aspect in a manner
that will further the goals of this part and of the
transportation policy of section 10101 of this title.
(2) Reports received by the Board under this subsection
shall be published and made available to the public under
section 552(a) of title 5.]
(e) Application of Antitrust Laws.--
(1) In general.--Nothing in this section exempts a
proposed agreement described in subsection (a) from the
application of the Sherman Act (15 U.S.C. 1 et seq.),
the Clayton Act (15 U.S.C. 12, 14 et seq.), the Federal
Trade Commission Act (15 U.S.C. 41 et seq.), section 73
or 74 of the Wilson Tariff Act (15 U.S.C. 8 and 9), or
the Act of June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a).
(2) Antitrust analysis to consider impact.--In
reviewing any such proposed agreement for the purpose
of any provision of law described in paragraph (1), the
Board shall take into account, among other
considerations, the impact of the proposed agreement on
shippers, on consumers, and on affected communities.
* * * * * * *
CHAPTER 113--FINANCE
* * * * * * *
SUBCHAPTER II--COMBINATIONS
* * * * * * *
SEC. 11321. SCOPE OF AUTHORITY.
(a) [The authority] Except as provided in sections 4 (15
U.S.C. 15), 4C (15 U.S.C. 15c), and section 16 (15 U.S.C. 26)
of the Clayton Act (15 U.S.C. 21(a)), the authority of the
Board under this subchapter is exclusive. A rail carrier or
corporation participating in or resulting from a transaction
approved by or exempted by the Board under this subchapter may
carry out the transaction, own and operate property, and
exercise control or franchises acquired through the transaction
without the approval of a State authority. A rail carrier,
corporation, or person participating in that approved or
exempted transaction [is exempt from the antitrust laws and
from all other law,] is exempt from all other law (except the
antitrust laws referred to in subsection (c)), including State
and municipal law, as necessary to let that rail carrier,
corporation, or person carry out the transaction, hold,
maintain, and operate property, and exercise control or
franchises acquired through the transaction. However, if a
purchase and sale, a lease, or a corporate consolidation or
merger is involved in the transaction, the carrier or
corporation may carry out the transaction only with the assent
of a majority, or the number required under applicable State
law, of the votes of the holders of the capital stock of that
corporation entitled to vote. The vote must occur at a regular
meeting, or special meeting called for that purpose, of those
stockholders and the notice of the meeting must indicate its
purpose.
(b) A power granted under this subchapter to a carrier or
corporation is in addition to and changes its powers under its
corporate charter and under State law. Action under this
subchapter does not establish or provide for establishing a
corporation under the laws of the United States.
(c) Application of Antitrust Laws.--
(1) In general.--Nothing in this section exempts a
proposed agreement described in subsection (a) from the
application of the Sherman Act (15 U.S.C. 1 et seq.),
the Clayton Act (15 U.S.C. 12, 14 et seq.), the Federal
Trade Commission Act (15 U.S.C. 41 et seq.), section 73
or 74 of the Wilson Tariff Act (15 U.S.C. 8 and 9), or
the Act of June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a).
The preceding sentence shall not apply to any
transaction relating to the pooling of railroad cars
approved by the Surface Transportation Board or its
predecessor agency pursuant to section 11322 of Title
49, United States Code.
(2) Antitrust analysis to consider impact.--In
reviewing any such proposed agreement for the purpose
of any provision of law described in paragraph (1), the
Board shall take into account, among other
considerations, the impact of the proposed agreement on
shippers, on consumers, and on affected communities.