Served February 3, 1999
FEDERAL MARITIME COMMISSION
DOCKET NO. 96-06
RIVER PARISHES COMPANY, INC.
V.
ORMET PRIMARY ALUMINUM CORPORATION
The Commission generally must reach jurisdiction before addressing the merits of a case, particularly when the jurisdictional question is raised and evidence is submitted, and the analyses of jurisdiction and the merits are not intertwined.
The Commission has jurisdiction, under section 3(15) of the Shipping Act of 1984, over a marine terminal operator that serves common carriers.
Complainant has failed to meet its initial burden of persuasion that the sole provider system initiated by Ormet at the Burnside Terminal is unduly or unreasonably preferential or prejudicial to Complainant in violation of sections 10(b)(11) and (b)(12) of the Shipping Act of 1984, and further that it is an unreasonable practice in violation of 10(d)(1) of the Shipping Act of 1984.
Bruce D. Burglass, Jr. and Christopher K. Tankersley for Complainant River Parishes Company, Inc.
Richard B. Foster and Edward J. Sheppard for Respondent Ormet Primary Aluminum Corporation.
REPORT AND ORDER
BY THE COMMISSION:
This proceeding was initiated by a Complaint filed by River Parishes Company, Inc. ("RIVCO") against Ormet Primary Aluminum Corporation ("Ormet"). RIVCO alleges that Ormet violated sections 10(b)(11), (b)(12), (d)(1) and (d)(3) of the Shipping Act of 1984 ("1984 Act"), 46 U.S.C. app. §§ 1709(b)(11), (b)(12), (d)(1) and (d)(3), by granting an exclusive contract to Bisso Towboat Company ("Bisso") for tugboat services at the Burnside Terminal ("Burnside") in the Baton Rouge, Louisiana port area.(1) RIVCO claims to have been damaged by Ormet's action in choosing one tug company to serve all vessels calling at Burnside, and seeks a cease and desist order against Ormet and money damages for its alleged loss of business. Chief Administrative Law Judge Norman D. Kline ("ALJ") issued an Initial Decision ("I.D.")(2) finding jurisdiction over Ormet, but also finding that RIVCO failed to meet its burden of proof on the merits. The proceeding is before the Commission upon the Exceptions filed by both RIVCO and Ormet and their replies thereto. Oral argument was held on October 28, 1998.
BACKGROUND
A. The Parties
RIVCO is a tug company incorporated in the State of Louisiana engaged in the towing business along a stretch of the lower Mississippi River from New Orleans to Baton Rouge, including the furnishing of tugs for the docking and undocking of all types of oceangoing vessels.
Ormet is the operator of a marine terminal, Burnside, under lease from the Greater Baton Rouge Port Commission.
B. Factual Background
Burnside is a public marine terminal operated by Ormet that uses "assist tugs" to help vessels maneuver into position at its two berths, one of which is located at the dock and the other at mid-stream. Historically, four companies provided assist tug services to vessels calling at Burnside through free and open competition: Crescent Towing & Salvage Company, Inc., E.N. Bisso & Son, Inc., Bisso, and RIVCO. All four companies served vessels calling at Burnside until May 1, 1995, when Burnside implemented a new assist tug policy and practice pursuant to a contract with Bisso through which Bisso would provide all assist tug services at Burnside exclusively.
C. Procedural Background
In its Answer to the Complaint, Ormet alleged as an affirmative defense that the Commission lacked jurisdiction, arguing that it is not a "marine terminal operator" as defined by section 3(15) of the 1984 Act, 46 U.S.C. app. § 1702(15),(3) because it provides services and facilities in connection with vessels other than common carriers. As a result, the ALJ decided that RIVCO should have been allowed a reasonable opportunity to obtain shipping records to determine if vessels calling at Burnside were in fact common carriers.
During this discovery, Ormet submitted a Motion for Dismissal in Part to limit the proceeding to matters over which the Commission has jurisdiction, and specifically argued that RIVCO should not be entitled to any relief with respect to activities furnished in conjunction with vessels other than common carriers if the Commission were to find that Ormet is a marine terminal operator. RIVCO submitted a Reply in Opposition to Motion for Dismissal in Part and Ormet filed a Rebuttal in response. The ALJ granted Ormet's motion for preliminary rulings. RIVCO appealed the ALJ's rulings to the Commission, whereupon the Commission vacated the ALJ's rulings as premature. 27 S.R.R. 823 (1996). The ALJ then ruled that the issue of damages would be deferred pending decision on the issues of jurisdiction and violations. Subsequently, the ALJ held evidentiary and expert witness hearings in New Orleans and Washington, D.C. The record includes both oral testimony of the witnesses examined at these hearings and their written testimony, as well as documents obtained through discovery.
D. The Positions of the Parties Below
1. RIVCO
a. Jurisdiction
RIVCO argued below that Ormet is a marine terminal operator that served and continues to serve common carriers at Burnside, and, thus, is subject to Commission jurisdiction. RIVCO averred that many of the vessels that have called at Burnside are common carriers under the definition of "common carrier" in section 3(6) of the 1984 Act, 46 U.S.C. app. § 1702(6).(4) RIVCO Opening Brief at 44.
RIVCO maintained that Ormet's position that carriage of bulk cargo is exempt from the jurisdiction of the Commission is incorrect. Id. at 45. RIVCO averred that the exemption from section 8 of the 1984 Act, 46 U.S.C. app. § 1707, applies only to the filing of tariffs and does not exempt carriage of bulk cargo from the entire scope of the 1984 Act. Id. at 45-46. Furthermore, RIVCO argued that the exemption of chemical parcel tankers in section 3(6)(B) from Commission jurisdiction applies only to vessels that carry bulk chemicals and not bulk cargo generally. Id. at 46-49.
Commission case law, RIVCO contended, further supports its argument that many vessels that called at Ormet were in common carriage because they held themselves out to carry cargo for all persons indiscriminately. Id. at 49. RIVCO referred to a line of cases, particularly Activities, Tariff Filing Practices and Carrier Status of Containerships, Inc., 9 F.M.C. 56 (1965) ("Containerships"), which have delineated the indicia of common carriage. Id. at 49-50. Such indicia of common carriage include, RIVCO averred, the number of shippers, whether cargo was carried under special contract, advertisement of sailings, solicitation of freight, issuance of bills of lading, and regularity of service; however, no single indicium is determinative of common carriage status. Id. at 50. Furthermore, RIVCO contended that it is how the carrier operates which will determine whether or not it is in common carriage, not how the carrier identifies itself. Id.
RIVCO additionally argued that the exemption of ocean tramps from Commission jurisdiction under section 3(6)(B) should only extend to those vessels which carry one cargo load for one shipper. Id. at 57-65. Based on this definition, RIVCO claimed the evidence shows that many of the vessels that called and continue to call at Burnside are not ocean tramps, but rather common carriers. Id. at 65.
RIVCO claimed that pursuant to a stipulation of the parties, at least one common carrier vessel had been served at Burnside since the commencement of the exclusive contract with Bisso. Id. at 8. RIVCO further averred that a large number of vessels which called at Burnside were operated by or chartered to well known ocean common carriers. Id. at 9. In addition, many of the vessels that called and continue to call at Burnside, RIVCO argued, carried for multiple shippers and consignees, carried multiple lots of cargo, had multiple bills of lading, and had multiple ports of call on the same voyage. Id. at 9-10. RIVCO argued that this is sufficient to prove that certain vessels that called at Burnside were holding themselves out to carry for the public. Id. at 51.
Furthermore, RIVCO argued that the Commission held in Prudential Lines, Inc. v. Continental Grain Co., 21 S.R.R. 1172, 1175 n.10 (1982)("Prudential"), that jurisdiction attaches to a marine terminal operator as soon as it serves one common carrier, including vessels sent by a known common carrier even if those particular vessels were not operating in common carriage. Id. at 43, 66. Therefore, RIVCO contended, based upon the stipulation in the record and the findings of fact, which demonstrated that many common carriers have called and continue to call at Burnside, there is sufficient evidence to prove that the Commission has jurisdiction over Ormet. Id. at 43.
Moreover, RIVCO argued that neither Burnside nor the vessel agents knew or could have known whether a vessel calling at Burnside would be a "common carrier" under the 1984 Act. Id. at 67-69. Thus, the policy of asking vessel agents to certify that the vessels are not common carriers, RIVCO argued, is not adequate to prevent common carriers from actually calling at Burnside. Id. RIVCO further averred that Commission case law supports the argument that if the marine terminal operator in fact had served common carriers, it would be subject to the jurisdiction of the Commission under the 1984 Act. Id. (citing New Orleans Steamship Assoc. v. Bunge Corp. & S. Stevedoring Co., Inc., 8 F.M.C. 687 (1965) ("Bunge") and McAllister Bros., Inc. v. Norfolk W. Ry. Co., 20 F.M.C. 63 (1977) ("McAllister")). RIVCO contended that Ormet's only method of determining whether a vessel calling at Burnside was a common carrier was by reviewing the berth application filed by the agent of the vessel owner or operator. Id. at 33. Only two people, the terminal manager and the terminal services administrator, reviewed the berth application, argued RIVCO, and neither was an expert in common carriage. Id. at 34. Furthermore, averred RIVCO, neither reviewer attempted to verify the information on the berth application. Id. While Burnside may deny a vessel permission to berth at Burnside if it fails to file a berth application or files an incorrect application, RIVCO contended that Burnside had never denied a vessel access to Burnside even though it only received berth applications from approximately eighty percent (80%) of the vessels that called at Burnside. Id.
b. Merits
RIVCO argued below that the exclusive arrangement for assist tug services between Ormet and Bisso was a prima facie violation of the 1984 Act, because it subjected RIVCO to an undue and unreasonable disadvantage, granted an undue and unreasonable preference to Bisso, and was an unjust and unreasonable practice. Id. at 70. RIVCO contended that the Commission's decision in A.P. St. Philip, Inc. v. The Atlantic Land & Improvement Co. and Seaboard Coast Line RR Co., 13 F.M.C. 166 (1969) ("A.P. St. Philip"), supports its argument because the facts in the instant case were "exactly like the facts and contract in A.P. St. Philip."(5) Id. Because the exclusive arrangement was a prima facie violation of the 1984 Act, RIVCO averred, Ormet must justify the practice to prove it was a reasonable practice. Id. at 72. The reasons Ormet set forth to justify its practice, RIVCO contended, were efficiency, safety and profit, which were insufficient on their face and unsubstantiated by adequate record evidence. Id. at 73-80.
Finally, RIVCO argued that the exclusive arrangement for assist tug services was an unjust and unreasonable tying arrangement, because it ties the use of Bisso tugs at Ormet's rates to the use of the other terminal services at Burnside. Id. at 80-84.
2. Ormet
a. Jurisdiction
Ormet argued in its Answering Brief that RIVCO "bears the burden of proving that the vessels serving the Burnside Terminal were in common carriage voyages when they called at Burnside." Ormet Answering Brief at 32. Ormet contended RIVCO has not met this burden because it relies on the testimony of witnesses whose credibility Ormet averred was questionable, and documentary evidence which Ormet argued was confusing and unpersuasive. Id. at 25-29, 32-33. Ormet contended that its expert witnesses were much more credible and have had greater experience and expertise. Id. at 32-33. Ormet also submitted proposed findings of fact disputing the 25 vessels identified by RIVCO's expert witness Richard Stagg as common carriers, and offered specific analyses of each of the voyages in question. Id. at 16-25.
Ormet argued that, under Commission jurisprudence enunciated in Bunge, a terminal operator may ensure that it is not subject to the jurisdiction of the Commission if it "tell[s] the trade that it does not accept common carriers," and makes a good faith effort to prevent such service. Id. at 36. Ormet furthermore averred it would not be feasible for a loading terminal such as Burnside, in response to RIVCO's suggestion, to do more to exclude common carriers by ensuring that vessels that call at Burnside are carrying only single shipper cargo. Id.
Ormet argued that, as it involves the parcel bulk trade, this is a case of first impression. Id. Unlike common carriage shippers, Ormet contended, shippers in the bulk trades dominate the vessel interests: they frequently move commodities when and where they choose; select the stevedores; and accept substantial responsibility for the safety of the cargo at either end of the voyage. Id. at 37. Therefore, shippers in the parcel bulk trade, Ormet claimed, do not need the protection from carrier excesses that extending the jurisdiction of the Commission over them would effect. Id. at 38.
Moreover, Ormet warned that the parcel bulk trade would be seriously disrupted if the Commission finds that the vessels in question are common carriers. Id. at 39. First, Ormet pointed out, none of the vessel interests have been heard on the matter. Id. Second, such an imposition of regulatory authority, Ormet contended, is proper only after all interested parties have had an opportunity to be heard in a rulemaking proceeding. Id.
Using the Containerships analysis, Ormet contended that the vessels calling at Burnside are not common carriers. Id. Ormet averred that its expert, Tim Jilek, adopted the Containerships analysis and used that analysis when he testified that the vessels calling at Burnside were not in common carriage. Id. at 40.
RIVCO's proof is weak, Ormet contended, in that it consisted only of (1) a limited number of documents discovered from Ormet and (2) the testimony of discredited experts. Id. at 41-43. Ormet claimed it relied on Agreement No. 203-010633, 23 S.R.R. 581 (1985), discontinued, 23 S.R.R. 1408 (1986), and Brown & Williamson Tobacco Corp. v. The S.S. Anghyra, 157 F. Supp. 737 (E.D. Va. 1957), rev'd in part on other grounds sub nom., Hellenic Lines Ltd. v. Brown & Williamson Tobacco Corp., 277 F.2d 9 (4th Cir. 1960) ("Brown & Williamson"), to stand for the proposition that multiple consignees and consignors do not automatically make a vessel a common carrier. Ormet pointed out that both these cases, as well as United States v. Stephen Brothers Line, 384 F.2d 118 (5th Cir. 1967) ("Stephen Brothers"), held that the vessels in question were tramps and as such were specifically outside the Commission's jurisdiction. Id. at 45. Having claimed that it found little guidance from Commission cases for the definition of tramp, Ormet invoked several treatises on shipping to elaborate on that definition. Id. at 46-47. Tramps, Ormet argued, are vessels which move bulk cargo and which seek cargo where it may be found instead of operating on a fixed route. Ormet averred that all the non-proprietary and multiple shipper vessels which called at Burnside were tramps. Id. at 46. Finally, Ormet maintained that the Lykes vessels that called at Burnside in 1995 in particular were not common carriers because none of them ever made a second call there. Id. at 47.
b. Merits
Ormet argued that the sole provider system used at Burnside is indeed a reasonable way to provide service to the vessels calling there. Id. at 48. The Commission, Ormet contended, previously has found exclusive arrangements similar to the Burnside sole provider system not to be unreasonable; Ormet cited several Commission cases to support this contention, including All Marine Moorings v. ITO Corp. of Baltimore, 27 S.R.R. 539 (1996) ("All Marine Moorings"). Id.
In its arguments in reply to the merits of the complaint, Ormet began with the proposition that it has full authority to make sole provider contracts derived from its lease from the Port Commission of Baton Rouge, under which it operates the Burnside Terminal. Id. at 50. Second, Ormet outlined the benefits of the sole provider system: greater safety, increased productivity and efficiency, and reduced costs to the vessels calling at Burnside which need assist-tug services. Id. at 14-16, 51-52. Ormet further argued that these benefits are achieved by the terms of the exclusive contract between Ormet and Bisso, which provide for monetary incentives for efficiency and penalties for delays, the requirement that Bisso provide tugs in seaworthy condition, the requirement that Bisso carry environmental damage insurance, the proximity of Bisso's base of operations, and the familiarity of Bisso's personnel with the operations of the Burnside facility. Id. at 52.
Ormet contended that RIVCO has not shown that the sole provider system has caused anything more than immaterial damage to its business operations. Id. at 5-10, 61. Ormet averred that RIVCO's operations at Burnside made up very little of its business, and, therefore, RIVCO's inability to serve vessels there has had correspondingly small impact on it. Id. at 10-12, 61.
Ormet also countered RIVCO's argument that the sole provider system violates sections 10(b)(11) and (b)(12) of the 1984 Act by unduly preferring Ormet and unreasonably prejudicing RIVCO. Ormet argued, citing Puerto Rico Ports Auth. v. Federal Maritime Comm'n, 642 F.2d 471 (D.C. Cir. 1980) ("Puerto Rico Ports"), that in order to find such a violation, there must be a competitive relationship between the adversarial parties, and that such a relationship did not exist between Ormet and RIVCO. Id. at 63.
Ormet also refuted RIVCO's other arguments. First, Ormet rebutted RIVCO's assertion that the sole provider system is likely to "spread up and down the Mississippi River" by pointing out that the 150 marine terminals on this stretch of the River have very different characteristics and are unlikely to develop identically. Id. at 64. Ormet referred the Commission to the IMT Terminal which adopted the sole provider system ten years ago, while Ormet has been only the second terminal on the River to do so and has only done so recently. Id. Second, Ormet distinguished RIVCO's reference to cases which involved exclusive stevedoring practices, or those in which a single towage company was given a monopoly in a port, because, unlike those cases, in the instant case there is little adverse impact to the complaining party and, thus, little justification on behalf of Ormet is required. Id. In fact, Ormet contended, RIVCO has not actually made a prima facie case of unreasonableness, but Ormet has provided a strong justification nevertheless. Id. at 65. Third, RIVCO, according to Ormet, has made unsubstantiated claims about the profit that the sole provider system has generated for Ormet. Id. Fourth, Ormet criticized the quality of the evidence RIVCO put forth at the hearings in New Orleans. Id. at 66. Furthermore, Ormet claimed, there is no support for RIVCO's allegation that the sole provider system has caused expense to the vessel interests involved. Id. at 67. Rather, Ormet averred, as a result of that system, the vessel owners and operators have saved approximately $40,000 each month, and have had access to swift emergency tug services and more efficient and safer services when docking at Burnside. Id.
Finally, with regard to the question of damages, Ormet urged the ALJ to incorporate in his decision, if he were to find there was a basis for granting RIVCO the requested relief, his earlier finding that such relief be limited to common carriage vessels. Id. at 67-68.
3. RIVCO Reply Brief
a. Jurisdiction
In its Brief in Reply to Ormet, RIVCO first disputed Ormet's reliance on several cases. RIVCO contended that Agreement 203-010633 has no precedential value; Brown & Williamson has a unique fact situation; and Stephen Brothers was misread by Ormet. RIVCO Reply Brief at 2-4. RIVCO also dismissed Ormet's reliance on business treatises rather than legal texts. Id. However, RIVCO noted, one of these business treatises actually contradicts Ormet's arguments as it implies that while the vessels themselves may be tramps, the bulk parcel firms which handle shipments for multiple shippers for multiple commodities between the same geographical area several times a year might be common carriers. Id. at 4-5.
RIVCO then rebutted Ormet's assertion that Ormet's good faith attempt to prevent common carriers from calling at Burnside is adequate to avoid jurisdiction because to be subject to Commission jurisdiction a terminal must "knowingly" serve common carriers. Id. at 5-8. Rather, RIVCO contended, Bunge stands for the proposition that there is no exemption from jurisdiction for a good faith attempt to exclude common carriers if in fact common carriers are served at the terminal in question. Id. Further to the issue of knowledge, RIVCO argued, citing a cargo misdescription case, the berth application procedures instituted by Ormet at Burnside are insufficient and "may constitute a wanton disregard of duty." Id. at 8 (citing Misclassification and Misbilling of Glass Tumblers and Other Manufactured Glassware Items as Jars, 6 F.M.B. 155 (1960)). RIVCO contended that Ormet is required to take greater steps to ensure that no common carriers call at Burnside if it wishes to exclude itself from the jurisdiction of the Commission. Id. at 8-11.
RIVCO next attacked Ormet's reliance on Ship's Overseas Servs. v. Federal Maritime Comm'n, 670 F.2d 304 (D.C. Cir. 1981) ("Ship's Overseas"), to support its argument that the "one-shot" voyages of several Lykes vessels do not make them common carriers and further maintained that in any event, reliance on that carrier case is inapposite to the instant case, which concerns a terminal. Id. at 11-12. A similar attack is made on Ormet's analysis that Ship's Overseas stands in direct opposition to the holding in Prudential. Id. at 12. Rather, RIVCO contended, as the cases concern a carrier and a terminal, respectively, they do not oppose each other. Id. RIVCO argued that it is Prudential that controls the case before the Commission because that case concerned jurisdiction over a terminal, as this case does, and is very similar on the facts. Id. RIVCO then rebutted Ormet's assertion that the evidence and experts which RIVCO presented were inadequate. Id. at 14-19.
RIVCO also discounted Ormet's reliance on All Marine Moorings, arguing that tug services are not "incidental services" nor is their provision expressly authorized by the Burnside lease, nor are RIVCO and Ormet competitors. Id. at 20-22.
b. Merits
RIVCO asserted that Ormet has not adequately justified the reasonableness of the sole provider system at Burnside, and claimed that Ormet's evidence regarding reasonableness (such as increase in safety and efficiency) was insufficient and its characterization of the contract with Bisso was incorrect. Id. at 22-23. Furthermore, RIVCO averred that there was no need to show that it suffered injury to find a violation of the 1984 Act, citing Puerto Rico Ports, 642 F.2d 471. RIVCO further argued, however, that there has been harm to the assist tug industry in Louisiana because there may be increased rates at other terminals to compensate for the low rates at Burnside. Id. at 24-25.
RIVCO contended that there is a heavy burden to justify an exclusive practice, such as the Bisso contract, and that Ormet has not borne that burden. Id. at 25. Citing Petchem, Inc. v. Canaveral Port Auth., 16 S.R.R. 480, aff'd sub nom., Petchem, Inc. v. Federal Maritime Comm'n, 853 F.2d 958 (D.C. Cir. 1988) ("Petchem"), RIVCO argued that altering the status quo increases the burden of justification for an exclusive practice. Id. Furthermore, contrary to Ormet's position, RIVCO maintained that an antitrust analysis is applicable here, and claimed that the Bisso contract is a type of arrangement the Commission has found to be unreasonable in the past. Id. at 25-29.
Similarly, RIVCO claimed that Ormet has misread case law on the need for competition and a triangular relationship in order to find a violation of sections 10(b)(11) and (12) of the 1984 Act. Id. at 29. In any event, RIVCO asserted, there is a triangular relationship between two competitors, Bisso and RIVCO, and the author of the preference, Ormet. Id. at 30. As such, they argued, the Commission should find Ormet's award of an exclusive contract violative of the Act. Id.
Finally, RIVCO dismissed as unfounded Ormet's assertion that the issues raised by the complaint could have widespread impact on the parcel bulk trade, whose industry members deserve to be heard, and therefore the Commission should undertake a rulemaking to address the issue and not do so in a complaint proceeding. Id. at 31.
INITIAL DECISION
The ALJ identifies two issues in this proceeding: (1) whether the Commission has jurisdiction over Ormet as a marine terminal operator under section 3(15), specifically, whether Ormet does or did serve common carriers; and (2) if the Commission does have jurisdiction, whether Ormet, by granting Bisso an exclusive arrangement to provide assist tug services at Burnside, violated sections 10(b)(11), (b)(12), (d)(1) and (d)(3) of the 1984 Act. I.D. at 37-38. The ALJ finds that the Commission does in fact have jurisdiction over Ormet because it serves common carriers, but holds that RIVCO failed to meet its burden of proof on the merits.
A. Jurisdiction
At the outset, the ALJ finds that it is proper to first determine whether there is jurisdiction before deciding the merits of the case; however, he further identifies the doctrine that a court or agency is not required to decide a difficult jurisdictional issue if there is no merit to a complaint. The ALJ holds that this doctrine is only used in extreme cases and is not the standard rule. I.D. at 45-46. The ALJ further finds that the burden of establishing jurisdiction over Ormet is on RIVCO as the complainant. I.D. at 46.
For the Commission to determine whether it has jurisdiction over Ormet, the ALJ asserts, it has to decide "whether the various ships calling at the Burnside Terminal were common carrier ships intended to be regulated under the 1984 Act or were tramp ships sent by common carriers or non-common carriers" and thus not intended to be regulated under the 1984 Act. I.D. at 48. The ALJ makes this determination by relying on Prudential, 21 S.R.R. 133 (I.D.), adopted, 21 S.R.R. 1172 (1982), and, in the alternative, by relying on principles of statutory construction and agency interpretation. I.D. at 49-50.
In Prudential, the ALJ states, the Commission based its finding of jurisdiction over a grain elevator and marine terminal operator on the fact that it served four acknowledged common carriers, "which carriers remained common carriers notwithstanding lack of advertising, regularity of sailings, absence of filed tariff rates, or holding out as regards the particular ships that the carrier had offered to carry grain in bulk at rates available to all." I.D. at 50. Furthermore, the ALJ reads Prudential as holding that "a common-carrier-owned ship did not have to be operating as a common-carrier ship when it called at the Norfolk terminal because 'the Shipping Act regulates carriers, not types of carriage.'" I.D. at 51 (quoting Prudential, 21 S.R.R. at 1174). The ALJ then finds that the holding in Prudential, that "it is the type of carrier calling at a terminal, not the type of carriage on a particular ship, that determines whether a marine terminal operator fits the definition in the statute," has been approved by the Commission in subsequent cases.(6) I.D. at 51.
At least twelve known common carriers, the ALJ concludes, have sent or continue to send vessels to Burnside, many of which carry part loads of cargo with space remaining available for other cargoes, and carry multiple lots for multiple shippers. I.D. at 14, 51, 51 n.13, 77-78. Furthermore, the ALJ asserts that at least one common carrier has sent vessels to Burnside since Ormet canceled its terminal tariff and initiated its policy of not serving common carrier vessels. I.D. at 78. Ormet argued that a common carrier could have a non-common carrier division; however, the ALJ holds that under the Prudential test, "even if the common-carrier company sent a ship in its non-common carrier bulk division, jurisdiction would attach to the marine terminal operator." I.D. at 80. Therefore, the ALJ determines that in accordance with the Commission precedent set forth in Prudential, since at least one common carrier has called at Burnside, jurisdiction attaches to Ormet. I.D. at 52.
If the Commission finds, however, that Prudential is an inadequate basis upon which to find jurisdiction, the ALJ declares that jurisdiction could be based on principles of statutory construction and agency interpretation of the term "ocean tramp." I.D. at 52-53. Although Congress never defined ocean tramp, it is exempt from the statutory definition of common carrier, and thus not subject to Commission jurisdiction. Id. RIVCO and Ormet, the ALJ determines, advocated different readings of the term; RIVCO argued that a tramp could only be a vessel operating under charter to one shipper for one full shipload of cargo, while Ormet contended that criteria such as regularity of itineraries, similarity in cargoes, and whether a carrier sought out cargoes must be used in analyzing such a matter. I.D. at 53-54.
Thereafter, the ALJ engages in a lengthy discussion of legislative history, case law, maritime authorities, and principles of statutory construction. The ALJ reviews the various Congressional reports and old Commission case law which attempted to interpret the meaning of ocean tramp as it applied to the Shipping Act, 1916 ("1916 Act"). I.D. at 53-60, 65-67. The ALJ then looks to various treatises and scholars of maritime law who have opined on the definition of ocean tramp. I.D. at 60-65. After discussion of the two schools of thought enunciated by RIVCO and Ormet, the ALJ concludes that the Commission has had difficulty in interpreting the term ocean tramp and has construed the exemption both broadly and narrowly. I.D. at 66. The ALJ notes that Congress did little to resolve this problem when it passed the 1984 Act and again left the term "ocean tramp," under section 3(6), undefined.
Finally, the ALJ examines principles of statutory construction. I.D. at 67. He finds that because the Commission has held that the 1984 Act is a remedial statute, it should be broadly construed when entities seek to avoid jurisdiction. I.D. at 68-73. Conversely, exemptions from remedial statutes, the ALJ holds, must be narrowly construed with the burden of proof on the party that claims such an exemption. I.D. at 73-74. Lastly, the ALJ finds, when legislative history and statutory language are inconclusive, agencies are entrusted with interpreting their statutes, and such interpretations are to be given deference by reviewing courts if reasonable. I.D. at 74-76.
The ALJ ultimately concludes that in accordance with legislative history, case law, maritime authorities, and principles of statutory construction, a vessel that carries multiple lots for more than one shipper is not an ocean tramp. I.D. at 78. Finding a rebuttable presumption that a vessel that carries for two shippers is not an ocean tramp, the ALJ holds that it is especially difficult to rebut that presumption when three or more shippers are served by a carrier on one vessel. I.D. at 78. The ALJ finds that of all the vessels that have been served at Burnside after May 1, 1995, thirteen percent (13%) carried for two shippers and nine percent (9%) carried for three or more shippers, thus crossing the line from ocean tramp to common carriage. I.D. at 78-80.(7)
In addition, the ALJ rejects Ormet's argument that the Commission does not have jurisdiction because Ormet canceled its terminal tariff and made a good faith effort to avoid serving common carrier vessels at Burnside by having vessels or their agents certify that they are not common carrier vessels. I.D. at 85-89. The ALJ holds that Ormet has an ineffective policy of ensuring that common carrier vessels do not call at Burnside and that many common carriers have in fact called at Burnside. I.D. at 88-89.
B. Merits
The ALJ holds that RIVCO failed to prove that Ormet's practice of providing assist tug services at Burnside through one company constitutes undue and unreasonable conduct prohibited by sections 10(b)(11), (b)(12), and (d)(1) of the 1984 Act. I.D. at 97. The ALJ recognizes that the cases addressing restrictive anticompetitive practices at marine terminals have found such practices lawful or unlawful depending on the factual circumstances of each case. I.D. 98-99. Furthermore, the ALJ holds that RIVCO must prove that the practice constitutes "something akin to a monopoly" and that competition is inadequate in the relevant market; otherwise, Ormet need not justify its practices or, at the very least, such a burden of justification is minimal. I.D. at 99. The ALJ finds the relevant market to be the 200-plus mile stretch of the Mississippi River from New Orleans to Baton Rouge, only 2.5 percent of which is controlled by Ormet. I.D. at 102. Furthermore, the ALJ concludes that RIVCO only earned a minimal amount of its profit from Burnside and RIVCO has actually increased its revenues since the implementation of the sole provider system at Burnside. I.D. at 102. Therefore, since RIVCO has failed to demonstrate "something akin to a monopoly" or the existence of inadequate competition, the ALJ holds that Ormet need not justify its decision to grant an exclusive assist tug service contract to Bisso. I.D. at 102.
After reaching this conclusion, however, the ALJ further opines that if the Commission finds that there is a need for Ormet to justify its practices, then only a minimal justification is required. I.D. at 102. Ormet's justification, the ALJ concludes, that the sole-provider system has increased efficiency, increased safety, reduced costs, and improved its profits, is sufficient to prove that its practice is neither unduly nor unreasonably preferential or prejudicial. I.D. at 102-111. Therefore, Ormet's practice of granting Bisso an exclusive assist tug contract at Burnside, the ALJ holds, is not a violation of sections 10(b)(11), (b)(12) or (d)(1) of the 1984 Act.
EXCEPTIONS
RIVCO and Ormet each filed Exceptions to the Initial Decision and corresponding Replies to its opponent's Exceptions. Generally, the parties excepted to the ALJ's holdings that were contrary to their respective positions.
A. Exceptions on Jurisdiction
1. Ormet's Exceptions
Ormet filed Exceptions to the Initial Decision which urge, on three alternate grounds, that the Commission reverse the Initial Decision. First, Ormet contends, Prudential should be overruled because it "flies in the face of modern views on minimizing regulations." Ormet Exceptions at 5. Furthermore, Ormet argues, Prudential's holding that a marine terminal operator is subject to Commission jurisdiction if only one vessel operated by a common carrier is served at the terminal is contrary to two relevant existing court decisions (Fall River Line Pier, Inc. v. International Trading Corp. of Virginia, 399 F.2d 413 (1st Cir. 1968) ("Fall River"), and Ship's Overseas). Id. at 5-6. Ormet also claims Prudential should be overruled because its holding that a vessel is automatically considered a common carrier under section 3(6) of the 1984 Act if it is owned or operated by a company that is a known common carrier "lacks a logical basis." Id. at 6. In regard to this last argument, Ormet contends that the proper inquiry should be whether the vessels themselves are being operated in common carriage. Id.
Second, Ormet reiterates its argument that no regulatory purpose is served by asserting Commission jurisdiction in the parcel bulk trades, which the Burnside Terminal primarily serves. Id. at 6-8. This is so, Ormet contends, because the shippers of parcel bulk are large and powerful concerns which do not need the protection of the Commission. Id. Furthermore, the fact that the Commission's jurisdiction over marine terminal operators is merely derived from the carriers they serve, Ormet argues, should limit Commission jurisdiction solely to trades in which those carriers need Commission protection. Id. at 7.
Third, and finally, Ormet argues, referring to Government of the Territory of Guam v. Sea-Land Serv., Inc., 28 S.R.R. 252, 265 (1998) ("GovGuam"), and Boston Shippers Ass'n v. Federal Maritime Comm'n, 706 F.2d 1231 (1st Cir. 1983) ("Boston Shippers"), there is no need to decide jurisdiction because the merits of the case before the Commission are very straightforward while the jurisdictional questions are complex. Id. at 9-10.
2. RIVCO's Reply to Ormet's Exceptions
RIVCO responds to Ormet's Exceptions with the argument that the Initial Decision relies not on two theories, but rather on three: Prudential, statutory construction, and the principle of statutory construction that exemptions from remedial statutes should be construed narrowly. RIVCO Reply to Exceptions at 5.
RIVCO attacks Ormet's reliance on Fall River,(8) arguing that the Fall River "sufficient consequences" test has not been followed by the Commission and has, in fact, been discredited, citing Petchem, Prudential, and Bethlehem Steel Corp. v. Indiana Port Comm'n, 12 S.R.R. 1059 (1972) (denial of motion to dismiss), aff'd, 13 S.R.R. 22 (1972) ("Bethlehem Steel"). Id. at 7. Furthermore, even if the Commission were to rely on the "sufficient consequences" test of Fall River, RIVCO contends that the facts before the Commission in this case would satisfy that test. Id. at 8-9. RIVCO disputes Ormet's reference to Ship's Overseas as inapposite, as that case concerned the status of a carrier, not a terminal, and points out again that the Commission's jurisdiction covers carriers, not types of carriage. Id. at 8.
Furthermore, RIVCO opposes Ormet's characterization of the Prudential holding that a vessel is automatically considered a common carrier under section 3(6) of the 1984 Act if it is operated by a company that is a known common carrier. Id. RIVCO argues in response that this characterization is incorrect because Ormet muddles the "issue of the vessel operator's status with the vessel itself." Id. RIVCO avers that the Commission regulates the "operators," not the type of carriage. Id. Furthermore, RIVCO argues that Ormet's assertion that the proper inquiry should be whether the vessels themselves are being operated in common carriage, is "[c]ontrary to the [Commission's] clear precedent." Id.
RIVCO also rejects Ormet's argument that there is no regulatory purpose in extending jurisdiction over the bulk trades because the trade involves sophisticated shippers who do not need the Commission's protection. Id. at 9, 14. RIVCO points out that the 1984 Act does not determine what is in common carriage based on the type of cargo carried, i.e., container, general cargo, or bulk. Id. Furthermore, RIVCO argues that shippers are not the only entities who need protection here. Id. at 10. Rather, in the instant case, RIVCO avers, it is the tug operators excluded from operating at Burnside who require protection, and, therefore, Ormet's argument that there is no one in need of the Commission's protection is faulty. Id. at 10-11.
In addition, RIVCO contends that the ALJ properly decided to reach jurisdiction before addressing the merits of the complaint. Id. at 13-14. Ormet incorrectly argues, RIVCO avers, that since the jurisdictional issue is complex and the merits are so straightforward, the exception to the general rule should be applied and, thus, the Commission should decide the merits without reaching jurisdiction. Id. at 14. Rather, RIVCO contends, the jurisdictional issue, whether common carriers have called at Burnside, is simple and one which "the Commission has dealt with for nearly a century." Id. at 14-15. Moreover, RIVCO argues that Ormet's reliance on GovGuam and Boston Shippers is misplaced: in GovGuam the Commission found that it must reach jurisdiction first; and in Boston Shippers, while the Commission held that it could address the merits without reaching jurisdiction, the Commission faced a completely different jurisdictional issue, i.e., the overlap of shipping and labor laws. Id. at 17.
3. RIVCO's Exceptions
Included in RIVCO's Exceptions to the Initial Decision are several complaints about the ALJ's findings on the jurisdictional question. First, RIVCO complains that the ALJ misdescribed its position with respect to the single-shipper voyages. RIVCO Exceptions at 11-12. Primarily, RIVCO argues, the evidence heard by the ALJ on the matter was extracted from only a few terminal tonnage reports; therefore, the numbers of single- and two-shipper vessels were necessarily understated. Id. Second, RIVCO complains that the ALJ's references to non-legal treatises are inappropriate. Id. at 12. Finally, RIVCO excepts to the Initial Decision's finding that "the ships of at least one common carrier" called at Burnside. Id. at 13. Rather, RIVCO points out, certainly more than one common carrier sent vessels to Burnside terminal after May, 1996. Id.
B. Exceptions on the Merits
1. RIVCO's Exceptions
RIVCO filed broad and lengthy Exceptions to the Initial Decision, which except "to those parts of the Initial Decision in which the presiding Judge committed error in fact, law or conclusions." RIVCO Exceptions at 1. First, RIVCO excepts to numerous findings of fact, which follow here, and which can generally be organized into two subject matter groupings, namely findings of harm and benefits of the sole provider system, and the antitrust/relevant market analysis.
a. Exceptions to Findings of Fact and Law Regarding Harm and the Benefits of the Sole Provider System
RIVCO excepts to a number of the ALJ's findings of fact which, RIVCO alleges, mistakenly portray the level of harm RIVCO has suffered due to the sole provider system, i.e. how its (and allegedly other tug companies') business has been affected, as well as the harm done to other "affected interests," namely the vessel operators and their agents.(9) Id. at 3-10. Further, RIVCO argues, the Initial Decision fails to recognize that the rates being charged by Bisso at other terminals are actually higher than the rates charged by Bisso under the sole provider system. Id. at 16. This rate disparity, RIVCO argues, demonstrates that the low Burnside rates are being subsidized by higher rates elsewhere. Id. Also, RIVCO complains, there is no guarantee that the rates charged at Burnside will remain so low. Id. The implication of both of these statements is that carriers in their operations as a whole are being harmed. Id.
RIVCO excepts to the ALJ's findings of fact which characterize Bisso tugs as "dedicated" to the Burnside Terminal and the benefits of the sole provider system which flow from this "dedication."(10) Id. at 8.
RIVCO argues that the ALJ is wrong in characterizing RIVCO's business as having grown in 1994, and thus the characterization that there has been no harm to RIVCO is erroneous. Id. at 9-10. RIVCO also excepts to the finding that assist-tug services constitute terminal services, citing A.P. St. Philip, because it is only due to such an exclusive tug arrangement that assist-tug services become terminal services. Id. at 14.
RIVCO argues that the ALJ committed error in finding that the sole provider system benefits other affected interests and in failing to consider the harm done to the two other assist-tug companies that were excluded from working the Burnside Terminal. Id. at 14-15. RIVCO also argues that the ALJ failed to consider complaints "by agents for the vessel owners/operators as well as a complaint by a vessel operator." Id. at 27. Further, RIVCO points out, the Burnside sole provider system deprives vessel operators of the right to choose their own tug service. Id. at 26.
RIVCO complains that the ALJ erred in finding no compensable injury to RIVCO. RIVCO contends in its Exceptions that it made no effort to present evidence of damages because that was an issue to be litigated after the decision on the merits was made. Accordingly, RIVCO points out, no evidence was submitted on specific damages. Id. at 15.
RIVCO argues that the Initial Decision mistakenly finds that the Commission should not interfere with Ormet's business decision to initiate the sole provider system. RIVCO contends that the error is the ALJ's reliance on the "minimum of government intervention" clause of the 1984 Act's purpose section. This approach, RIVCO argues, ignores other interests, namely those of vessel operators and tug companies. Id. at 15-16.
RIVCO contends that there is already available to Ormet a reasonable alternative practice for Burnside to use as a method to avoid delays: demurrage and detention. Id. at 24. The use of demurrage and detention, RIVCO argues, has been found by the Commission to be a reasonable practice and it is already available to Ormet in its tariff, but it has not been considered by Ormet. Id. at 25.
RIVCO argues that the cases cited by the Initial Decision in which port authorities were respondents are inapposite because the Commission gives those municipal authorities more deference in making business decisions than it does to private marine terminal operators. Id. at 22.
Finally, RIVCO complains that the Initial Decision mistakenly characterizes as "too speculative" its concern over the potential for the spread of the sole provider system to other terminals in the lower Mississippi and the damage to competition which would accompany such a spread. Id. at 34.
b. Exceptions to Findings Regarding Relevant Market and Antitrust Analysis
RIVCO makes a lengthy argument in its Exceptions that there is no need for the ALJ to determine the relevant market in this case. Rather, RIVCO argues, such an analysis is not pertinent to a "tying arrangement" analysis. Id. at 18-20. Under Fortner Enterprises v. U.S. Steel, 394 U.S. 495 (1969) ("Fortner"), and other federal court jurisprudence, RIVCO argues, the antitrust prohibition on tying arrangements was meant to address restraint of trade generally, not simply monopolies. Id. at 19. Furthermore, RIVCO argues that it has demonstrated that the sole provider system used at Burnside is a tying arrangement, illegal under antitrust law, "that establishes sufficient anti-competitiveness for the practice to be found unreasonable under the 1984 Act." Id. at 27-8.
RIVCO argues that, under antitrust law, tying arrangements are per se illegal even absent monopoly power in the tying products. Id. at 28. RIVCO presents in its Exceptions the three elements needed for a tie-in to be per se illegal: (1) a tying arrangement between two distinct services; (2) the amount of commerce affected must be "not insubstantial;" and (3) the defendant must have sufficient economic power in the tying market to appreciably restrain competition in the tied market. Id. at 28-29 (citing Fortner, 394 U.S. 495, and Northern Pac. Rwy. v. United States, 356 U.S. 1 (1958)). RIVCO argues that it has met all three criteria: the sole provider system is a tying arrangement; the amount of commerce affected -- according to RIVCO, the sales lost to the four carriers left out of the sole provider system would amount to $1,761,580 (RIVCO Exceptions at 23) -- was not insignificant; and finally the Burnside Terminal has "sufficient economic power" in the tying market to appreciably restrain competition in the tied market. Id. at 29.
RIVCO also complains that the "presiding Judge did not discuss the relevant market and his considerations or analysis which led him to the conclusion that the relevant market was the entire lower reach of the Mississippi River." Id. at 19. RIVCO makes an alternative argument that "if the Commission were to conclude that any relevant market [analysis] were necessary" that "there is clearly evidence of record for a much smaller market." Id. at 20.
RIVCO excepts to what it portrays as the ALJ's inapposite application of the precedent in All Marine Moorings to the instant case. Id. at 21-28. The logic of All Marine Moorings does not apply, RIVCO argues, because there the complainant controlled a much greater portion (70%) of the business in question at the port while RIVCO does not "have 70% of the trade anywhere." Id. at 21. Further, RIVCO argues that, unlike the complainant in All Marine Moorings, RIVCO has felt a greater impact on its business as a result of the subject practices. Id. at 21-22. Also unlike All Marine Moorings, RIVCO complains, is the fact that RIVCO and Ormet are not competitors. Id. at 22.
2. Ormet's Reply to RIVCO's Exceptions
Ormet argues in its Reply to Exceptions first that RIVCO bears the burden of proof on the merits and has made little attempt to offer evidence on the merits of the Complaint after the threshold issue of jurisdiction. Ormet Reply to Exceptions at 2-3. Ormet points out that the bulk of the Initial Decision concerned the jurisdiction question because virtually all the evidence RIVCO presented was aimed at jurisdiction. Id. at 3.
Second, Ormet's reply to RIVCO's tying arrangement argument is that the Commission does not enforce antitrust laws. Id. at 4. Rather, Ormet contends, antitrust laws have limited applicability in this case. Id. The Commission need not make findings regarding the amount of commerce put in question by the practice at issue, Ormet argues, as there is no "substantiality" test which the Commission must make before finding a practice violates the 1984 Act. Id. at 5-6.
Third, Ormet complains that RIVCO attempts to make a new argument in its Exceptions which it did not raise before the ALJ, and which is highly improper: that there has been subsidization of low rates at Burnside by higher rates elsewhere. Id. at 7. Ormet argues that there is nothing in the record to support such an argument. Id. at 8.
Fourth, Ormet replies, it is RIVCO which must suffer the burden of an inadequate record. Id. at 9. RIVCO's Exceptions to the ALJ's findings based on lack of "independent evidence to corroborate," Ormet argues, are without merit. Id. Rather, those findings are based on the testimony of witnesses whom RIVCO failed to cross-examine. Id. at 9-10.
Finally, Ormet characterizes several of RIVCO's Exceptions as trivial. Ormet argues that the ALJ's findings regarding the relevant market, which are now excepted to by RIVCO, were in fact confirmed by RIVCO's own witness. Id. at 14. Ormet replies to RIVCO's exception that the ALJ did not consider harm to the other tug companies' business by pointing out that they did not intervene or provide witnesses in support of RIVCO's claim. Id. at 15. Ormet argues that it is hypocritical for RIVCO to attack Ormet's use of exclusive contracts when RIVCO uses the same and values its ability to do so, regardless of whether RIVCO chooses to enforce the terms of those contracts. Id. at 15-16.(11)
DISCUSSION
There are two issues for the Commission to address in this proceeding: first, whether the Commission has jurisdiction over Ormet under section 3(15) of the 1984 Act as a marine terminal operator serving common carriers; and, second, whether by granting Bisso an exclusive arrangement to provide assist tug services, Ormet has violated sections 10(b)(11) and (12) of the 1984 Act by giving an undue and unreasonable preference or advantage to Bisso and subjecting RIVCO to undue and unreasonable prejudice or disadvantage, and section 10(d)(1) by engaging in an unjust and unreasonable practice. As an initial matter, the Commission has considered all of the evidence and finds that the ALJ's Findings of Fact are fully supported by the record, and, thus, adopts them in full. A. Jurisdiction
The ALJ initially finds that it is proper to determine whether there is jurisdiction in the instant case even though RIVCO might fail to meet its burden of proof on the merits. I.D. at 45-46. RIVCO agrees with this determination, which it reiterated at oral argument. RIVCO Reply to Exceptions at 13-18; Oral Argument Transcript at 91. The ALJ relies on the general rule that an agency must generally reach jurisdictional issues before addressing the merits. I.D. at 45-46. See GovGuam, 28 S.R.R. 252 (1998); but see James J. Flanagan Shipping Corp. v. Lake Charles Harbor and Terminal Dist., 27 S.R.R. 1123 (1997). Ormet excepts to the ALJ's finding, arguing that an exception to the rule is applicable here: where the merits are so straightforward as they are in the instant case, and the jurisdictional issue is complex, particularly where the ALJ devoted eighty-nine (89) pages to "non-merits issues," it is unnecessary to reach jurisdiction. Ormet Exceptions at 9-10 (citing GovGuam, 28 S.R.R. at 265, and Boston Shippers, 706 F.2d at 1236); Oral Argument Transcript at 49, 84.
Ormet initiated the dispute over jurisdiction when it raised the Commission's alleged lack of jurisdiction over its operations as an affirmative defense in its Answer to the Complaint. As a result of this claim, the ALJ decided that RIVCO should be allowed discovery on the issue of jurisdiction. During discovery, Ormet submitted a Motion for Dismissal in Part to limit the proceeding to matters over which the Commission has jurisdiction. Ormet specifically argued that it did not serve common carriers and, therefore, the Commission did not have jurisdiction over its operations. However, Ormet further argued that if the Commission found that jurisdiction exists, RIVCO should be entitled to relief only with respect to services furnished in conjunction with common carriers. Thus, any relief provided to RIVCO would be confined to the portion of Ormet's business serving common carriers, and not Ormet's entire operation as a marine terminal operator. The ALJ granted Ormet's motion, which RIVCO appealed to the Commission. The Commission vacated the ruling, holding that it was "premature to prescribe the limits of the Commission's jurisdiction with respect to the activities of an entity when the parties are still in the process of establishing whether the entity is, in fact, subject to Commission jurisdiction." 27 S.R.R. 823, 824 (1996). The ALJ subsequently ruled that the issue of the extent of available damages, which was the primary aim of the motion, would be deferred pending a decision on the issues of jurisdiction and violations.
The parties conducted discovery on the issue of jurisdiction and extensive evidence was submitted before the ALJ. As the ALJ correctly held, an agency must reach jurisdictional issues before addressing the merits of a case. GovGuam, 28 S.R.R. at 265; see also Osborn v. United States, 918 F.2d 724 (8th Cir. 1990). There are two exceptions to this rule: (1) where a determination on the merits is essential to the determination of jurisdiction because their analyses are intertwined; and (2) where the merits are so straightforward that the better use of administrative resources warrants a disposition on the merits without a finding of jurisdiction.(12) GovGuam, 28 S.R.R. at 263-64. However, it is well established that once a jurisdictional question is raised and evidence is submitted, a court or agency "must decide the jurisdictional issue, not simply rule that there is or is not enough evidence" to decide the issue. Osborn, 918 F.2d at 730; see also Barnett v. Brown, 83 F.3d 1380, 1383 (Fed. Cir. 1996). In such a situation only the first exception (intertwined facts) would enable the adjudicatory body to proceed directly to the merits. Osborn, 918 F.2d at 730.
Given the extent to which the jurisdictional issues in this proceeding have been addressed thus far, the ALJ was obligated to decide jurisdiction. The first exception (intertwined facts) does not embrace the situation presented here. Rather, the jurisdiction and merits issues in the instant case are completely distinct and separate. Determining the reasonableness of Ormet's actions under sections 10(b)(11), (b)(12), or (d)(1), does not require an analysis of whether common carriers were served by Ormet, which is the only analysis required to determine whether the Commission has jurisdiction over Ormet. Furthermore, there is no basis for concluding, even if an exception could be justified, that failure to take an administrative "shortcut" (i.e., forgoing a determination on jurisdiction and directly proceeding to the merits) is harmful and reversible error. Finally, efficiency is not served by vacating the ALJ's findings on jurisdiction once those findings have already been made. The Commission adopts the ALJ's finding that the Commission must reach jurisdiction before addressing the merits of the case.
The Commission has jurisdiction under section 3(15) of the 1984 Act over marine terminal operators who furnish their facilities "in connection with a common carrier." Therefore, to find jurisdiction over Ormet, the Commission must determine whether the vessels that call at Burnside are common carriers under section 3(6).(13)
The ALJ holds that the Commission does have jurisdiction over Ormet. The ALJ relies on Prudential, 21 S.R.R. 133 (1981) (Initial Decision), adopted, 21 S.R.R. 1172 (1982), which he describes as holding that "if a common carrier company sends one ship to a terminal, whether or not the ship is in common carriage, that fact suffices for Commission jurisdiction to attach." I.D. at 80. Therefore, the ALJ holds, because Ormet served at least twelve known common carriers (many of which carried part loads of cargo with space remaining available for other cargoes, and carried multiple lots for multiple shippers) and served at least one known common carrier since it canceled its terminal tariff and initiated its policy not to serve common carriers, there is sufficient evidence to prove that the Commission has jurisdiction. I.D. at 14, 51, 51 n.13, 77-78.
Ormet excepts to the ALJ's finding of jurisdiction, arguing that Prudential should be overturned and that regulation over the carriers calling at Ormet and regulation over Ormet as a marine terminal operator is unwarranted because of policy concerns. Ormet Exceptions at 1-2.
1. Overturning Prudential
Specifically, Ormet objects to the ALJ's reliance on Prudential in two respects: first, for the assertion that a vessel is automatically considered a common carrier under section 3(6) of the 1984 Act if it is owned or operated by a company that is a known common carrier, arguing instead that the proper inquiry should be whether the vessels themselves are being operated in common carriage; and second, for the proposition that a marine terminal operator is subject to Commission jurisdiction if only one vessel operated by a common carrier is served at the terminal. Ormet Exceptions at 5-6. In response, RIVCO argues that Prudential is good law and, in any event, that Ormet misstates the holding of the case. RIVCO Reply to Exceptions at 6, 8-9 (discussed, supra, at 29-30); see also I.D. at 51, 80.
a. The Prudential Decision
In the initial decision of Prudential, 21 S.R.R. 133, 172 (1981), the ALJ(14) held that the marine terminal operator in question served four common carriers, and therefore was subject to the jurisdiction of the Commission. The ALJ found, among other things, that the four carriers filed tariffs, held themselves out to transport general commodities for the general public, and operated under advertised schedules and specifically advertised calls at the terminal. Id. at 154. These facts were sufficient, the ALJ found, to establish that the carriers were "common carriers" under numerous Commission decisions, including Containerships, which the Commission continues to rely on today. Id. (citing Containerships, 9 F.M.C. at 63-65).
The ALJ discussed the importance of the fact that the four common carriers were owned by "known" common carriers. Id. He rebutted the carriers' arguments that particular vessels that called at the terminal were actually operating in contract carriage and thus were not subject to the 1916 Act. Id. at 154-159. The ALJ asserted that the 1916 Act "[was] concerned with regulation over carriers, not with the type of carriage." Id. at 154. Therefore, the ALJ opined, "[t]he prevailing view of the Commission . . . appears to be that Shipping Act jurisdiction will not be renounced merely because . . . particular vessels calling at the terminal are not themselves operating in common carriage although they are owned by common carriers." Id. at 159.
The Commission, in affirming the ALJ's decision in Prudential, specifically adopted the ALJ's finding that the four carriers were "common carriers" because of their holding out, consistent with the rule of Containerships:
Evidence of record supports the finding that the four named carriers whose vessels loaded grain at the N&W Elevator held themselves out by a course of conduct to perform common carrier services and accept goods for carriage on their vessels, from whomever offered, to the extent of their ability to carry.
Prudential, 21 S.R.R. at 1174. Furthermore, the Commission found evidence that the carriers filed tariffs with the Commission which listed specific ports of loading and discharge, advertised sailing schedules and listed the dates on which vessels would call at specific ports, including the port where the respondent marine terminal operator was located. Id. In addition, one of the carriers characterized two of its vessels as "liners," and some vessels were only partially loaded with grain, leaving space available for other types of cargo. Id. Thus, the Commission based its adoption of the ALJ's decision on the fact that the four carriers were "common carriers" under the analysis of Containerships. However, the Commission did not adopt the ALJ's determination that the carriers were "common carriers" under the 1916 Act, even if they operated an entire vessel under contract carriage, simply because they were "known" common carriers. Therefore, the Commission denies Ormet's request to overturn Prudential; the Commission's finding in Prudential that the carriers that called at the terminal were "common carriers" was in fact based on the Containerships analysis.
b. Case Before the Commission
There is sufficient evidence to find that the carriers are "holding out," as required by section 3(6) of the 1984 Act, under the analysis in Containerships. In Containerships, the Commission found that no single factor of a carrier's operation is determinative of its status as a common carrier. 9 F.M.C. at 62-65. Rather, the Commission must evaluate the indicia of common carriage on a case by case basis. Id. The most essential factor is whether the carrier "holds himself out to accept goods from whomever offered to the extent of his ability to carry." Id. at 62; see also 46 U.S.C. app. § 1702(6). Other factors include the variety and type of cargo carried, number of shippers, type of solicitation utilized, regularity of service and port coverage, responsibility of the carrier towards the cargo, issuance of bills of lading or other standardized contracts of carriage, and method of establishing and charging rates. Id. at 65.
In the present case, the Findings of Fact show that a significant number of vessels which have called and continue to call at Burnside carry cargo for multiple shippers, carry multiple cargo, have multiple ports of call, use bills of lading, have space available on the vessel for additional cargo, and hold out generally for the carriage of cargo. I.D. at 14-27. RIVCO agrees with these findings. RIVCO Reply to Exceptions at 8-9. At oral argument, Ormet argued that the majority of the vessels that call at Burnside are single-shipper, single-cargo vessels. Ormet further argued that while the vessels that carried cargo for more than one shipper did offer any available space to the shipping public generally, those vessels were not operating in common carriage because no vessel operators were offering either an open route or the same service in the future. Oral Argument Transcript at 50-55. RIVCO argued in rebuttal that regularity of routes is not necessary to establishing common carrier status and that 25-30% of the vessels were common carriers. Id. at 90.
Furthermore, Ormet excepts to these findings because they are based solely on information supplied by RIVCO and no vessel interest has provided evidence on this issue. Ormet Exceptions at 8. RIVCO argues, however, that all of the evidence of common carriage comes from Ormet's own files, the files of the vessel agents, or the carrier itself. RIVCO Reply to Exceptions at 13. As the trier of fact, the ALJ analyzed and weighed the evidence and decided what is credible in making his Findings of Fact, which, after full consideration, the Commission here adopts in full. In addition, the parties stipulated that one unspecified common carrier did in fact call at Burnside since implementation of the sole provider system. While it is irrelevant whether Ormet did so only to avoid discovery, as Ormet contended at oral argument (Oral Argument Transcript at 56-58, 61-63), it is ultimately unnecessary to decide whether the stipulation is determinative of whether common carriers called at Burnside. There are ample grounds for the Commission to make such a determination by using the Containerships criteria in analyzing the evidence. The Commission fully considered the evidence presented by the parties and set forth in the Findings of Fact. The evidence details numerous vessels which have carried cargo for multiple shippers, carried multiple cargo, had multiple ports of call, used bills of lading, had space available on the vessel for additional cargo, and held out generally for the carriage of cargo, and thus, in accordance with Containerships, have operated in common carriage. See I.D. at 14-27 (ALJ's Findings of Fact 25-55 detailing the particular vessels that called at Burnside). Thus, the Commission finds that a number of vessels that have called and continue to call at Burnside are operating in common carriage and thus are "common carriers" under the 1984 Act.
It is not necessary, therefore, for the Commission to adopt that portion of the ALJ's holding which states that merely because a vessel is owned by a "known" common carrier it must be operating in common carriage. Moreover, in light of the Commission's finding that vessels that called at Burnside were operating in common carriage under the Containerships analysis, it is not necessary for the Commission to adopt the ALJ's analysis of the term "ocean tramp" vis-a-vis legislative history, case law, maritime authorities, and principles of statutory construction. The ALJ offered this analysis only as an alternative argument for holding that vessels operating in common carriage did in fact call at Burnside.
Ormet also excepts to the ALJ's reliance on Prudential for the proposition that a marine terminal operator is subject to Commission jurisdiction if only one vessel operated by a common carrier is served at the terminal. Ormet Exceptions at 5-6; Oral Argument Transcript at 62-63. Prudential should be overturned, Ormet argues, because federal case law contradicts this holding. Ormet Exceptions at 5-6 (citing Fall River, 399 F.2d 413 (holding that Commission jurisdiction does not attach to a marine terminal operator that has served common carriers on only a few occasions), and Ship's Overseas, 670 F.2d 304 (overturning the Commission's decision that a corporation engaged in the lighterage and brokerage business is a common carrier under the 1916 Act by reason of its conduct on a single occasion when it arranged for ocean transportation, but holding instead that such an entity must engage in a course of business that would warrant its characterization as a common carrier)). In reply, RIVCO correctly argues that neither case supports Ormet's argument because the Commission has not followed Fall River, a First Circuit case, and Ship's Overseas is inapposite to the issue in the present case, i.e. whether a marine terminal operator is subject to Commission jurisdiction, not whether an act of a carrier makes it a "common carrier" under the 1984 Act. RIVCO Reply to Exceptions at 6-8; see also Prudential, 21 S.R.R. at 157-158, n.5.(15) The Commission has never subscribed to the First Circuit's finding in Fall River, a case to which the Commission was not a party and in which the Commission did not otherwise participate. The Commission agrees with the ALJ's reasoning in Prudential in refusing to follow Fall River: "[t]here is some doubt as to the validity of a court's reversing a Commission decision unless the court reviews that decision under the so-called Hobbs Act [928 U.S.C. § 2341 et seq.] instead of by means of reviewing a district court's order of enforcement of a Commission order." 21 S.R.R. at 157-158, n.5 (citing Port of Boston Marine Terminal Ass'n v. Rederiaktiebolaget Transatlantic, 400 U.S. 62 (1970), and Sanrio Co., Ltd. v. Maersk Line, 19 S.R.R. 1627, 1657-58 (I.D.), adopted, 20 S.R.R. 375 (1980). Furthermore, the First Circuit's jurisdiction does not extend over the parties in the instant case, and the holding in Fall River has not been followed in either the Fifth Circuit or the District of Columbia Circuit. Therefore, the Commission denies Ormet's request to overturn Prudential based on the federal case law cited by Ormet.
Moreover, RIVCO contends Ormet's characterization of the Prudential holding is misstated. RIVCO Reply to Exceptions at 6. RIVCO maintains that the language in Prudential cited by Ormet that if only one common carrier vessel calls at the terminal then jurisdiction attaches to the terminal, was "simply noted in passing" as a possible reading of the 1916 Act. Id. Rather, argues RIVCO, Prudential holds that jurisdiction attaches to a terminal if common carriers are served by the terminal, without regard to number. Id. The ALJ's ruling on a motion to dismiss in Bethlehem Steel specifically rejected a "counting" theory of jurisdiction over marine terminal operators.
The concept advocated . . . which relates jurisdiction to the number of times a common carrier is served [by a marine terminal operator] is rejected. It would be anomalous with the Commission's duty to regulate terminals serving common carriers by water to exempt a terminal from the duties and prohibitions imposed upon an "other person" in even one incident.
Bethlehem Steel, 12 S.R.R. at 1061. Furthermore, in the instant case, the evidence shows that Ormet has served many common carriers. I.D. at 14-27. Therefore, it is unnecessary to address either Ormet's or RIVCO's arguments relating to the number of common carriers served at a terminal.
In addition, the ALJ finds that Ormet has an ineffective policy of insuring that common carrier vessels do not call at Burnside, and finds that many common carriers have in fact called there. I.D. at 88-89. As neither Ormet nor RIVCO excepts to this finding, the Commission adopts this portion of the ALJ's decision.
Thus, the Commission finds that common carriers have been served and continue to be served by Ormet and, therefore, it has jurisdiction over Ormet as a marine terminal operator under section 3(15) of the 1984 Act.
2. Arguments on Lack of Regulatory Purpose
Finally, Ormet sets forth three policy arguments as a basis for overturning the ALJ's finding of jurisdiction over Ormet: first, there is no economic benefit or regulatory purpose in extending jurisdiction over the dry and parcel bulk trade; second, the vessels calling at Burnside are ocean tramps exempt from Commission jurisdiction; and third, marine terminal operators should not be subject to Commission jurisdiction because of the derivative nature by which such jurisdiction is reached. Ormet Exceptions at 1-2, 6-8.
Ormet contends that because the parcel bulk trade is controlled by shippers, those shippers do not need the protection of the Commission, and, therefore, no regulatory goal is served by asserting jurisdiction over Burnside and the vessels that call there. Id. at 7-8.(16) The Commission, however, is persuaded by RIVCO's rebuttal. RIVCO avers that this argument is incorrect because the 1984 Act does not define common carriage based on the type of cargo carried. RIVCO Reply to Exceptions at 9. Furthermore, it is not the shippers who need protection in the instant case, argues RIVCO, but rather the tug operators who have been excluded from Burnside. Id. at 10. As RIVCO correctly contends, there is a valid regulatory purpose in asserting jurisdiction over Ormet. Id. RIVCO points out that many entities other than shippers could be harmed by activities in the parcel bulk trades and the Commission has a duty to address any violation of the 1984 Act. Id. RIVCO further pointed out at oral argument that the 1984 Act does not exclude the bulk trade from Commission jurisdiction. Oral Argument Transcript at 88. The Commission further notes that this is not the proper proceeding in which to address whether the bulk trade should be exempted from jurisdiction. If Ormet seeks an exemption, its only recourse is to file an application for such an exemption under section 16 of the 1984 Act, 46 U.S.C. app. § 1715.
Ormet further contends that the ALJ admits that the term "ocean tramp" can be read both narrowly and broadly. Ormet Exceptions at 8. Relying on its first policy argument for support, Ormet avers that a broad reading of ocean tramp is warranted and the exemption in section 3(6) should include the vessels served at Burnside. Id. RIVCO argues this is a mischaracterization of the Initial Decision, which holds that even under a broader reading of the term ocean tramp the vessels that are served by Ormet are common carriers. RIVCO Reply to Exceptions at 11. As discussed, supra, it is unnecessary for the Commission to reach this issue because the Commission finds that vessels served by Ormet are common carriers under the Containerships analysis.
Finally, Ormet contends that due to the derivative nature of jurisdiction over marine terminal operators, the Commission must first find that there is a connection between the marine terminal operator and a common carrier before it can find jurisdiction. Ormet Exceptions at 8. The Commission should not adopt the ALJ's finding that the vessels calling at Burnside are common carriers, Ormet argues, because no vessel interest has provided any evidence nor filed a complaint about the sole provider system. Id. RIVCO disagrees with this contention, arguing that at least six vessel interests complained about the sole provider system and the fact that no vessel interests are before the Commission is irrelevant for resolution of this matter. RIVCO Reply to Exceptions at 12-13. It is unnecessary for the Commission to consider these arguments, because, however relevant it may be to the determination of the merits, whether vessel interests have complained is inapposite to the Commission's determination of jurisdiction over Ormet.
The Commission adopts the ALJ's ultimate finding that Ormet is a marine terminal operator under section 3(15) of the 1984 Act over which the Commission has jurisdiction.
B. Merits
We agree with the ALJ that RIVCO has not made a prima facie case that Ormet's implementation of the sole provider system for assist tugs at the Burnside Terminal violates either sections 10(b)(11) and (b)(12) or section 10(d)(1) of the 1984 Act. Therefore, we adopt the ALJ's ultimate conclusion with the following supplementary explanation.
First, we point out that as a complainant, RIVCO bears the burden of persuading the Commission that the practice of awarding an exclusive contract to an assist tug company is unreasonable, and that it similarly constitutes an unreasonable preference or prejudice. All Marine Moorings, 27 S.R.R. at 547. If RIVCO makes out a prima facie case, the burden of refuting that case would then shift to Ormet. Id. at 545. However, because RIVCO has failed to establish a prima facie case, there is no shift of the burden and no corresponding need for Ormet to justify the practice in question. Id. at 547. See also, 5 U.S.C. § 556 (d) and 46 C.F.R. § 502.144 (Administrative Procedure Act provision and Commission regulation which specify that the burden of proof lies with the proponent of a rule or order); Petition of South Carolina State Ports Authority for Declaratory Order, 27 S.R.R. 1137, 1161 (1997)("SCSPA").
1. The Applicable Standards
On Exceptions to the Initial Decision and again at oral argument before the Commission, the parties primarily disagreed on the test the Commission should use when analyzing an exclusive arrangement for reasonableness under the 1984 Act. RIVCO asserts that all exclusive contracts are prima facie unreasonable unless they can be justified by public interest needs, such as a need to protect the assets of the public. Oral Argument Transcript at 14, 25, 37. Further, RIVCO argues, because the practice in question is a tying arrangement which is per se unreasonable, relevant market analysis is unnecessary. Id. at 19. RIVCO asserts that a relevant market analysis would be pointless here because none of the terminals on the Mississippi River enjoys an anti-competitive level of market share. Moreover, RIVCO contends, engaging in such market share analysis would put the Commission in the untenable position of deciding at what point such control became unreasonable. Id. at 20.
Ormet, on the other hand, asserts that the Commission's analysis should be two-pronged: (1) whether the exclusive arrangement is harmful; and (2) whether the practice is justified. Ormet Answering Brief at 60; Ormet Reply to Exceptions at 5-6; Oral Argument Transcript at 64. If it is not harmful in the first instance, there is no need to justify the arrangement. Ormet claims that the Commission can stop at the first step because there is no harm to any of the affected parties: the vessels, the shippers, the port, the terminal or RIVCO. Id. at 65.
Neither of the parties' arguments, however, adequately reflects the Commission's analysis of an exclusive practice. The general test for reasonableness of a practice under the Shipping Act of 1916 (and was announced previously in West Gulf Maritime Ass'n v. Port of Houston Auth., 21 F.M.C. 244, 18 S.R.R. 783 (1978), aff'd without opinion sub nom. West Gulf Maritime Ass'n v. Federal Maritime Comm'n, 610 F.2d 100 (D.C. Cir.), cert. denied, 449 U.S. 822 (1980), namely that "[t]he test of reasonableness as applied to terminal practices is that the practice must be otherwise lawful, not excessive, and reasonably related, fit and appropriate to the ends in view" (hereinafter "WGMA test").(17) RIVCO based its allegations of unreasonableness on this test in its opening brief.(18) However, RIVCO failed to recognize that before this general test is to be applied to an exclusive arrangement such as the sole provider system at Burnside, it must reach a prima facie hurdle of harm. We agree with the ALJ's interpretation and application of All Marine Moorings, namely that before requiring a terminal operator to justify its business decision, there must be a showing of something more than an effect on a "relatively tiny portion of the relevant market occupied by the respondent terminal operator and the minimal impact on the complaining [competitor] resulting from its exclusion from the one terminal in the entire Port." I.D. at 101.
The Commission has not embraced the idea that all exclusive contracts are prima facie unreasonable, and it declines to do so today. To analyze whether an exclusive arrangement is prima facie unreasonable under the 1984 Act, the Commission must first determine the market relevant to the practice in question,(19) and then must determine the degree of actual harm(20) or harm likely to be caused(21) by the practice within that market. All Marine Moorings, 27 S.R.R. at 546. Such analyses consider the particular commercial, physical, and competitive factors which together may make a practice unreasonable. Id. at 545. In this connection, analogies to antitrust terminology and analysis help the Commission determine if the degree of harm created by the sole provider system rises to a significant level.
As the Commission has previously recognized, it [is] not necessary to show that a practice would constitute a violation of the antitrust laws in order to establish that it was sufficiently anti-competitive to be found unreasonable under the Shipping Acts. The case [referring to Gulf Container Line, see infra at 68] did not, however, hold that the antitrust laws or antitrust analysis of relevant market or competitive effects are irrelevant to the reasonableness standard.
Id. at 546.
2. Relevant Market and Harm to Competition
The ALJ first determines that the "huge relevant market" in the instant case is the entire reach of the lower Mississippi, which is the market in which RIVCO and the three other tug companies which had served Burnside compete, and that Ormet controls only one terminal out of 150 on the over 200 mile stretch of the River and serves only 2.5% of the vessels in that market. I.D. at 102. Second, the ALJ finds that the effect of the sole provider system at Burnside is negligible on that market as a whole. I.D. at 109, 111. Thus, because RIVCO has not shown either that the sole provider system instituted by Ormet at Burnside was "a monopoly or something akin to a monopoly" or that competition was otherwise inadequate in the relevant market, and there was no other persuasive evidence or argument outside the competition analysis, the ALJ finds that RIVCO has not made a prima facie case for a 10(b)(11), (b)(12) or (d)(1) violation. I.D. at 99. We agree with this analysis.
RIVCO complains that the ALJ committed error first in making findings on a market at all,(22) and further in the holding that the relevant market was the entire lower Mississippi River. RIVCO surmised that the relevant market should be the Burnside Terminal itself, or should be Burnside and the two or three large terminals with which it directly competes. RIVCO Exceptions at 20. In its brief before the ALJ and in its Exceptions to the Initial Decision, RIVCO relied heavily on the argument that such a market analysis was completely irrelevant.
In analyzing the relevant market in the instant case, we find the Commission's decision in All Marine Moorings especially instructive. All Marine Moorings involved a line handling company (the complainant) which wished to operate at respondent's terminal. Respondent ITO, a marine terminal operator, operated one terminal at the Port of Baltimore, and wished to offer line handling as part of a "package" of marine terminal services to carriers calling at its terminal. 27 S.R.R. at 540. Complainant All Marine Moorings controlled approximately 70% of the line handling business throughout the entire Port of Baltimore; ITO controlled approximately 20% of the line handling business at the Port. Id. at 541.
The initial decision in All Marine Moorings, unlike the ALJ's Initial Decision in the instant case, specifically discussed the number of marine terminals in the Port of Baltimore, the degree of competition for line handling there, the market share of each of the providers and the total impact of the practice on competition at the Port. 27 S.R.R. at 345-47. Thus, RIVCO's argument has some merit because the ALJ fails to explain fully how he arrived at the conclusion that the relevant market to be considered should be the entire lower Mississippi River, where both RIVCO competes with other tugs and Ormet competes with other terminals.(23) In defense of this shortcoming, however, it should be noted that neither RIVCO nor Ormet made much argument before the ALJ over how the relevant market should be defined. Similarly, while RIVCO is correct in asserting that the market with primary importance to the Commission's analysis is the market in which Burnside competes, the market in which RIVCO competes is not completely irrelevant as it might demonstrate that there has been further foreclosure to RIVCO and its competitors.
In the case before us, Ormet operates a "dry bulk discharge terminal" and there are several other terminals with which it competes. RIVCO asserts that "only two to three terminals [are Ormet's] biggest and most significant competitors, IMT, Cooper/T.Smith and Electro-Coal." RIVCO Exceptions at 20. RIVCO argues that the market should be Burnside itself (a market of which Ormet has 100% control) or the terminal market in which Burnside competes (Burnside, IMT, Cooper, and several other small dry bulk terminals in the area). Id. RIVCO makes no argument about precisely why the relevant market should be limited to Burnside only, and the latter analysis, according to RIVCO, "may give" Burnside only a 25-33% share of that market, but RIVCO makes no further allegation of how the market share is allocated among the terminals. Id. at 21. Aside from these conclusory statements, RIVCO offers no other showing of Ormet's actual market power.(24)
In All Marine Moorings, the respondent had inadequate power to impose its "will" on vessels wishing to call at its terminal: there was no showing that it could force vessels who wanted to use another line handling company to call there. 27 S.R.R. at 547. ITO had neither adequate power in the terminal market (control of one terminal among the thirty-six at the Port of Baltimore), nor in the line handling market (approximately 20% of that business).(25) Moreover, there were apparently only three other operators in the Port which did line handling (complainant and two others). Id. at 540. In that case, both operators competed directly for line handling business in the entire Port of Baltimore. Id. at 547. While the Commission in All Marine Moorings did not engage in an explicit analysis of the share of the terminal market which ITO occupied, it specifically rejected the argument that the relevant market should be limited to the respondent's one facility and agreed with the ALJ's finding that the relevant market was the entire Port of Baltimore. Id. at 546-47.
Even if we were to assume all of RIVCO's relevant market arguments are valid, admittedly no one tug operator controls a significant amount of the assist tug market in the relevant market where tugs compete for business; furthermore, no one terminal appears to control more than a third of the market. Moreover, as in All Marine Moorings, there has been no showing in this case that Burnside Terminal occupies some unique geographical or service area which would require vessels to call there and foreclose vessel choice of terminal. See 27 S.R.R. at 547. Nor has there been a showing of anything which would otherwise imply that there is a lack of competition in either the tug or the terminal markets. RIVCO simply has not presented enough evidence or arguments to the Commission to support its definition of the market. However, even if we were to accept arguendo RIVCO's allegations about Burnside's control of the market in which it competes, RIVCO has produced insufficient evidence for us to conclude that the sole provider system occasions harm to competition within that market.
The Commission analyzed the harm to competition done by "exclusive arrangements" in the relevant market in All Marine Moorings, discussed supra, and Seacon Terminals, Inc. v. Port of Seattle, 26 S.R.R. 886 (1993) ("Seacon"). In both cases, the Commission, in findings which expressly analyzed harm and potential harm, held that the complainants had not made a prima facie case of unreasonable practice.
Seacon concerned a complaint of a marine terminal operator, which had failed to secure a renewal of its lease from the Port of Seattle, and to which the port refused to lease any other terminal. 26 S.R.R. at 887-88. Seacon argued that the port had granted an exclusive franchise to another marine terminal operator, and that constituted a monopoly which would shift to the port the burden of going forward to justify its practices. Id. at 898. The ALJ found, and the Commission agreed, that there was no monopoly or anticompetitive condition created at the port by Seacon's departure and that, therefore, it had failed to establish a prima facie case. Id. "[T]here is an adequate level of competition at the Port. Moreover, Seacon had produced no evidence of poorer service, higher prices, or other complaints which would signal a decline in competition at the Port since Seacon's departure." Id. at 898 n.28.
RIVCO equates its case to several cases which find exclusive arrangements unreasonable: California Stevedore & Ballast Co. v. Stockton Port Dist., 7 F.M.C. 75 (1962) ("Stockton"), A.P. St. Philip, 13 F.M.C. 166, and Gulf Container Line v. Port of Houston Auth., 25 S.R.R. 1454 (1991) ("Gulf Container Line"). However, we agree with the ALJ's determination that All Marine Moorings and Seacon are more relevant, because not all exclusive arrangements give rise to the degree of harm which would make a prima facie case for unreasonableness (under 10(b)(11),(b)(12) or (d)(1)).(26)
Cases finding that complainants had met their prima facie burden involved indications of monopoly or another anticompetitive arrangements beyond the exclusivity of the arrangements themselves. See Stockton, 7 F.M.C. at 75, 77, 82-83(27) (respondent port authority given monopoly by marine terminal operator over all grain terminal facilities at the port; respondent had exercised its ability to institute price increases and numerous vessel operators made complaints); Agreement-Port Canaveral and Luckenbach S.S., 17 F.M.C. 286 (1974) (also known as Agreement No. T-2598) (concerned an exclusive contract for all terminal operations at Port Canaveral); Petchem, 23 S.R.R. 974 (1986) (concerned an exclusive contract for all tug service at Port Canaveral).
Furthermore, RIVCO asserts that the facts here are "virtually identical" to the facts and contract in A.P. St. Philip, a case which held that such an "arrangement . . . also eliminates competition and is prima facie unjust and unreasonable." RIVCO Exceptions at 17. While the question of law before the Commission in A.P. St. Philip was significantly similar to the case before the Commission, we agree with the ALJ's conclusion that Commission jurisprudence on the practices of terminal operations is heavily fact-dependent. I.D. at 99-100. The factual backdrop of A.P. St. Philip is distinguishable from the instant case. Like the instant case, A.P. St. Philip was a complaint case brought by a tug company against a terminal which had made an exclusive arrangement with one tug company. 13 F.M.C. at 167-68. Again, like the instant case, another tug operator wished to serve vessels at the terminal, but was prohibited from doing so because of the exclusive contract. Id. at 169. However, unlike the case here, the commodity handled by the terminal (phosphate rock) comprised over half of all the export cargo from the entire Port of Tampa, and at that time there were only two principal terminals which handled that commodity, one of which was controlled by the respondent. Id. at 166 n.2-3, 167.
RIVCO's reliance on A.P. St. Philip is therefore of limited instruction for an analysis of the extent to which the exclusive arrangement is monopolistic or otherwise harmful to competition in the relevant market. See RIVCO Exceptions at 17; RIVCO Reply to Exceptions at 16. Furthermore, RIVCO's assertion that the analysis ends here because the facts are "on all fours" with the A.P. St. Philip decision fails, not only because that case is distinguishable factually, but also because such an assertion does not recognize that Commission jurisprudence has been further developed by cases such as All Marine Moorings. In that case, and in Seacon, the Commission found that an exclusive arrangement did not rise to a prima facie showing of unreasonableness because a competitive business environment existed. Seacon, 26 S.R.R. at 898; All Marine Moorings, 27 S.R.R. at 544.
We do not find persuasive RIVCO's argument that because no one tug operator controls 70% of the market in the lower Mississippi, the analysis of All Marine Moorings is inapplicable. RIVCO Exceptions at 21-23. Moreover, even if the Commission were to find that the relevant market were smaller in scope, comprised only of deep water dry bulk discharge terminals in a small area of the Mississippi, as RIVCO suggests, there has been absolutely no evidence presented either on Ormet's power in that terminal market, or on its acquired power in that tug market. While it may be that such a market is highly concentrated,(28) its long-term condition appears stable; competition seems healthy and no one terminal seems to dominate, either in absolute size or market share. Furthermore, the business environment appears competitive, not only because the tug and terminal markets are so, but also because the exclusive contract itself was awarded to some extent on a competitive basis. I.D. at 97.
Since the sole provider system was instituted at Burnside, no vessel interests have made any specific complaints, either about their inability to request particular tugs, poorer service or higher cost. I.D. at 110. We recognize that complaining vessel interests did indeed express concern, before the sole provider system was put into effect, that such a system would interfere with the rates that they had already negotiated with tug companies, and that there would be an increase in cost to them as a result. I.D. at 29-30 (Finding of Fact 63). However, the vessels calling at Burnside under the sole provider system have actually paid less for assist tug services than they do at other terminals, and have expressed no further concern about the arrangement. I.D. at 30 (Finding of Fact 65). We agree with the ALJ's assessment that the lack of meaningful complaints is a good indication that the potential for harm is speculative. I.D. at 110.
The competition between assist tugs is healthy, according to RIVCO itself. In fact, RIVCO proposed such as a finding of fact which the ALJ specifically, and verbatim, adopted. The Initial Decision's Finding of Fact 12 states: "The four tug companies engage in free and open competition on the River with each other for the opportunity to serve the vessels calling at the River's many terminals." I.D. at 11. Similarly, the ALJ adopted verbatim RIVCO's proposed Finding of Fact 13 that for assist tug service, "competition is based upon a number of factors, one of which is price." I.D. at 11. RIVCO's pleadings fail to show where a danger to competition may lie which might reduce customer choice, increase prices and diminish the levels of service, safety or efficiency. These dangers are precisely those with which the Commission is concerned in these exclusive arrangement cases. Therefore, RIVCO has not met its initial burden as described above.
3. Tying Arrangements
Contrary to RIVCO's assertion, the Commission has never accepted the proposition RIVCO offers in its Exceptions: that a corollary to the assertion that a practice need not be shown contrary to the antitrust laws to be unreasonable under the 1984 Act, is that if a practice is shown to be unlawful under the antitrust laws, it is therefore unreasonable under the 1984 Act. RIVCO Exceptions at 27-28. It appears that it is solely on the basis of this corollary theory that RIVCO offers its tying arrangement theories. RIVCO asserted at oral argument that a tying arrangement is per se an unreasonable practice. Oral Argument Transcript at 29. "There have been decisions by the Commission where exclusionary contracts have been found to be reasonable, but they haven't been tying arrangements." Id. at 30. We agree with the ALJ that the exclusive practice in question is not an anticompetitive tying arrangement.
A tying arrangement is one in which the seller of one product requires that customers wishing to buy that product also buy another product. See Areeda, Antitrust Law at ¶ 1726. Tying arrangements which foreclose customer choice and a significant portion of a market are anticompetitive and illegal under the antitrust laws.(29) However, the Supreme Court has held that not all these types of arrangements are necessarily anticompetitive. In Jefferson Parish Hosp. Dist. v. Hyde, 466 U.S. 2, 27 (1984) (the alleged violation of the Sherman Act was the hospital's requirement that all patients use certain anesthesiologists), the Court pointed out that "[t]ying arrangements need only be condemned if they restrain competition on the merits by forcing purchases that would not otherwise be made." See also Gulf Container Line, 25 S.R.R. 1454.
RIVCO also argues that it is the shipper, not the vessel interest, which chooses the terminal, and that the vessel must "pay whatever Burnside Terminal assesses." RIVCO Exceptions at 3. RIVCO argues that the vessel operator's choice of tug is not only foreclosed by Ormet's institution of the sole provider system, but by the fact that most vessels calling at Burnside call there at the direction of the charter party to which they are subject. Oral Argument Transcript at 31. The extent to which Ormet has taken advantage of this bifurcation of choice is unclear, as the customers which are most affected, the vessel operators who would be seemingly "held hostage" by their charter parties, have not complained in a meaningful way about the foreclosure of this choice. We again agree with the ALJ's finding that vessel operators which are ordered to call at Burnside by their charter party are not concerned with which tug assists them there, as long as the prices are low and the service is good.
We find fault with RIVCO's argument that the practice under scrutiny here is a tying arrangement and that there is no need to make a relevant market analysis. The case in which the Commission employed antitrust analogies to an illegal tying arrangement differs substantially on its facts from this case. Gulf Container Line concerned a port's requirement that all carriers calling at its terminal pay for the port-provided refrigerated container monitoring service, whether or not they used it, needed it, or wanted it. The complainant was a carrier which did not like the service, did not use it, and did not want to pay for it, but which the port was still billing. 25 S.R.R. at 1455. The port required that carriers who wished to purchase electricity at the terminal also purchase the reefer monitoring service from the port, rather than allowing the carriers to choose their monitoring agent or monitor the reefers themselves. Id. Unlike in the instant case, rather than being a competitor who wished to serve the terminal in question, complainant was a terminal user (carrier) who was not satisfied with the port's reefer monitoring and determined that it would do the reefer monitoring itself. Id. The port also continued to charge for the reefer service that complainant neither wanted nor needed, and would not provide electricity unless the carrier paid for the service. Id. at 1455-56. The administrative law judge in that proceeding found that the port controlled a significant enough portion of the relevant market to have the power to tie the purchase of a necessary service at the terminal (electricity) to an unneeded and undesired service (reefer monitoring), and this type of tying arrangement was unreasonable under Shipping Act standards, as well as contrary to antitrust prohibitions. Id. at 1459. The Commission, however, found that while there was insufficient evidence to properly determine the antitrust aspects of the carrier's allegations, such an analysis was not necessary to find the practice unreasonable under the 1984 Act. Id.
Again, the factual situation presented by the instant case differs markedly from Gulf Container Lines. First, the vessels calling at Burnside do indeed require assist tug service, and they appear satisfied with the service they are receiving. While in Gulf Container Lines the complainant was a customer of the terminal, here the complainant is an erstwhile competitor with the terminal's service in question, and it is difficult at best to assess what the customers (of both tug and terminal) have to complain about the sole provider system if the cost to them is lower and the service the same. In Gulf Container Lines, the complainant argued that the services being forced upon it were unwanted, unneeded and of very poor quality. Id. at 1458 n.8. Here customers are not complaining about the service. It is therefore unnecessary for us to speculate about the concerns of vessel interests if they do not register any complaints.
RIVCO's analysis of the arrangement at Burnside as a per se anti-competitive tying arrangement is faulty because it fails to establish one important aspect which makes such an arrangement anathema to the competitive tradition in the United States: that the alleged offender has adequate power in the tying service (the terminal services at Burnside) to force the customer (the vessels calling at Burnside) to buy the tied service (the assist-tug services of Bisso). RIVCO has made no showing that Burnside occupies a significant enough portion of the market or some other unique feature that would give Ormet the power to force vessels to call there. On the contrary, it appears that competition among the terminals (even those within the very limited market of the nearby dry bulk terminals) is very healthy. Indeed, it is likely that this healthy competition will continue since Ormet seeks to attract vessels to Burnside by lowering the cost of calling there. It thus appears that RIVCO's complete and sole reliance on the Supreme Court's decision in Fortner is misplaced. As the Commission finds that the practice in question is not an anticompetitive tying arrangement, we need not reach the question of whether a tying arrangement is per se an unreasonable practice under the 1984 Act.
4. RIVCO's Other Exceptions
RIVCO argues that the cases in which the Commission has found a violation of sections 10(b)(11), (b)(12) and (d)(1) can be distinguished because they involved some type of deference by the Commission to the port. RIVCO Exceptions at 22. We disagree. The Commission has specifically held that it will not blindly defer to a decision of a port authority merely because of its alleged "public interest" role. See Flanagan, 27 S.R.R. at 1133.
RIVCO argues that there are other ways for Ormet to achieve its goals of safety, efficiency, lower costs, and reliability. RIVCO asserts that "[w]hen viable alternatives exist . . . it is unreasonable for a terminal to ban competitors who have historically served that terminal" and that "such foreclosure from a business is excessive and thus, unreasonable." RIVCO Exceptions at 17. Again, we need not reach the excessiveness of the practice, as discussed above, because RIVCO has failed to show that the extent of the harm justified progression to the WGMA test. Ormet's market power appears inadequate to influence prices or service levels and Burnside does not occupy a geographic or other service niche which would make it unique. As no prima facie case for unreasonableness has been made by RIVCO, Ormet need not justify its practice, and it need not respond to possibilities for "less excessive" practices.
RIVCO relies on A.P. St. Philip for the proposition that "vessel owners and operators have a vital interest at stake in choosing the tugs to handle their vessels." RIVCO Exceptions at 30. RIVCO argues that there is no requirement that the vessel operators register such interest by intervening or otherwise furnishing evidence in this proceeding. Id. While we agree that there is no requirement that vessel interests formally intervene for the Commission to find harm or potential harm, we also agree with the ALJ that the silence of the very parties who RIVCO claims will suffer the greatest harm is relevant to such findings.
Alternatively, RIVCO argues that vessel interests have complained about the elimination of their choice of assist tugs, and disputes the ALJ's Finding of Fact that the complaints of the vessel interests were insignificant. RIVCO Exceptions at 5; I.D. at 29 (Finding of Fact 63). However, RIVCO does not contest that the complaints were made only at the point of initiation of the sole provider system. Moreover, as there is no significant discrepancy between the record and the Findings of Fact, there is no basis for a re-examination of the facts de novo. See RIVCO Exceptions at 3-10. RIVCO has failed to present the ALJ with any other evidence or argument regarding the vessel interests' view of their privilege or right to select assist tugs. In the absence of such evidence, the Commission agrees with the ALJ that while RIVCO may have standing to file a complaint alleging violations of the 1984 Act, it has not proven that Ormet's practice violates sections 10(b)(11), (b)(12) or 10(d)(1) of the 1984 Act.(30) I.D. at 96-97.
RIVCO also argued that implementation of the sole provider system was a departure from the long-established custom along the river for vessels to select the tugs they use, and that this deviation from established custom alone was adequate to shift the burden to Ormet to justify the practice, which burden Ormet could not carry. RIVCO Exceptions at 17. However, even if the Commission were to agree with RIVCO's argument that tug services are not traditionally provided by terminal operators, there is no rule that they should therefore undergo a different level of scrutiny than other activities which fall under the Commission's jurisdiction. See Petchem, 23 S.R.R. at 990 ("[Commission precedent] does not advocate a harsher standard for non-traditional terminal activities"). The complainant in All Marine Moorings also had asserted that the "exclusion of All Marine removed from ITO's carrier customers the right to choose those services, and thus rendered the practice unreasonable." 27 S.R.R. at 543. The Commission, however, held that there must be more than the simple removal of a "traditional" choice of the vessel customers to constitute unreasonableness. Id.
RIVCO also argues that the low rates at Burnside are "probably" subsidized by higher rates at other terminals. RIVCO Exceptions at 6. We disagree with RIVCO's assertion that the future low level of rates at Burnside is not secure. As the ALJ held, if future practices indicate that there is a monopoly or something akin to a monopoly that enables the tug companies or the terminals to implement monopolistic "evils" such as higher prices or worse service, the Commission will have the power to review the matter at that time.
The Commission has faced many of the arguments RIVCO makes here before, and has rejected them. The Commission in All Marine Moorings assigned particular importance to competition at the port and the degree to which the respondent dominated that market. 27 S.R.R. at 543. The Commission found that the carrier's choice of terminal was not based on which provider did the line handling, but on quality of service and pricing. Id. As pointed out above, no corresponding findings were made in the case before the Commission now as to the basis on which shippers select terminals or vessels select tugs.
The particular evils monopolies and their anticompetitive kin tend to cause include the ability to raise prices unreasonably above costs and the ability to provide poor service without harm to their position in the marketplace. These conditions do not appear to exist in the case before the Commission. In sum, RIVCO simply has not adequately demonstrated that the sole provider system for assist tugs at Burnside Terminal is an exclusive arrangement which forecloses competition in the relevant market to a degree that it causes or would cause other harmful effects and, therefore, does not reach the threshold for the application of the WGMA test.
C. Other Issues
The Commission has considered all of the parties' exceptions to the Initial Decision. Any exceptions not expressly referred to herein have been fully considered and are denied.
CONCLUSION
For the reasons set forth above, the Commission adopts the Initial Decision to the extent it is consistent with this Order. The Commission holds that it has jurisdiction over the activities of Ormet practiced at the Burnside Terminal as a marine terminal operator under section 3(15) of the 1984 Act. The Commission further holds that RIVCO has not adequately shown that Ormet violated sections 10(b)(11) or 10(b)(12) of the 1984 Act by the implementation of the sole provider system for assist tugs at the Burnside Terminal. In addition, we hold that RIVCO has not adequately demonstrated that Ormet violated section 10(d)(1) of the 1984 Act by the implementation of the sole provider system for assist tugs at the Burnside Terminal.
THEREFORE, IT IS ORDERED, That the Initial Decision is adopted to the extent that it is consistent with the Commission's decision; and
IT IS FURTHER ORDERED, That this proceeding is discontinued.
By the Commission.
Bryant L. VanBrakle
Secretary
ENDNOTES
1. Sections 10(b)(11) and (12) provide that
No common carrier, either alone or in conjunction with any other person, directly or indirectly, may-
(11) except for service contracts, make or give any undue or unreasonable preference or advantage to any particular person, locality, or description of traffic in any respect whatsoever;
(12) subject any particular person, locality, or description of traffic to an unreasonable refusal to deal or any undue or unreasonable prejudice or disadvantage in any respect whatsoever.
Sections 10(d)(1) and (3) provide that
(1) No common carrier, ocean freight forwarder, or marine terminal operator may fail to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property.
* * *
(3) The prohibitions in subsection (b)(11), (12) . . . of this section apply to marine terminal operators.
2. The Initial Decision is set forth at 28 S.R.R. 188 (1998).
3. Section 3(15) provides:
"marine terminal operator" means a person engaged in the United States in the business of furnishing wharfage, dock, warehouse, or other terminal facilities in connection with a common carrier.
4. Section 3(6) provides
"common carrier" means a person holding itself out to the general public to provide transportation by water of passengers or cargo between the United States and a foreign country for compensation that-
(A) assumes responsibility for the transportation from the port or point of receipt to the port or point of destination, and
(B) utilizes, for all or part of that transportation, a vessel operating on the high seas or the Great Lakes between a port in the United States and a port in a foreign country, except that the term does not include a common carrier engaged in ocean transportation by ferry boat, ocean tramp, or chemical parcel-tanker.
5. RIVCO asserted, first, that the Commission held in A.P. St. Philip that tug services were a terminal function when the terminal operator has made access to the terminal facility dependent upon a commitment to a specific tug company; second, the contract for exclusive tug services between the respondent marine terminal operator and tug company was prima facie unjust and unreasonable; and third, Ormet failed to justify the activity. RIVCO Opening Brief at 70-72.
6. The ALJ cites Pate Stevedoring Co. of Alabama v. Alabama State Docks Dept., 24 S.R.R. 1221, 1229 n.14 (1988), adopting 24 S.R.R. at 670, with the following parenthetical as a description of the Commission's approval: "the test for determining jurisdiction, namely, whether common carriers have been served at a terminal, not whether the terminal holds out to serve common carriers, is a 'long established test.'"
7. The ALJ addresses the matter of the two expert witnesses, Richard Stagg and Tim E. Jilek, who testified on behalf of RIVCO and Ormet, respectively, on the issue of common carriage versus ocean tramps. I.D. 81-85. The ALJ eventually concludes that he need not rely on their testimony because an agency can reject an expert's opinion based upon its own knowledge and judgment. I.D. at 84.
8. The First Circuit held in Fall River, contrary to Commission precedent, that to find jurisdiction over a marine terminal operator there must be a finding that the common carriage served by the terminal was of "sufficient consequence" to be affected by the contract carriage served by the terminal. 399 F.2d at 416. That is, evidence showing that merely one common carrier called at the terminal would be an insufficient basis for jurisdiction to attach.
9. Specifically, RIVCO excepts to these findings of fact: the description of RIVCO and other assist-tug companies' business; the description of operations at Burnside; the finding discussing price lists; the presumption that the vessel interests did not know that the rates under the exclusive contract would be lower than the prevailing rate on the river; that RIVCO raised its rates twice in the period in question; that savings to vessels have been sizeable; the description of RIVCO's increased revenues; that RIVCO showed no harm to its business; the characterization of RIVCO's exclusive contracts; and findings of fact which focus on the wrong market, "if in fact any market is relevant to this proceeding." RIVCO Exceptions at 9.
10. Specifically, RIVCO excepts to findings of fact holding that: tugs are dedicated exclusively to Burnside; the sole provider system reduces damage to dock facilities during docking and undocking; tug crews are dedicated to Burnside; vessel delay was a problem before and that the benefits of demurrage and dispatch agreements are dubious; improved security and safety at Burnside have risen directly as a result of the sole provider system (as opposed to resulting solely from the nearby location of Bisso's base); and RIVCO's ability to serve Burnside is diminished because its dock is 20 miles away. RIVCO Exceptions at 8.
11. The Commission heard oral argument on October 28, 1998. The parties largely reiterated the positions set forth in their memoranda of law, Exceptions, and Replies. In addition, both parties waived any objection to Commissioner Moran's participation in the case due to his status as former vice president for legislative affairs of the American Waterways Operators, the national trade association for the inland and coastal tugboat, towboat and barge industry of which RIVCO is a member. Oral Argument Transcript at 3-5.
12. This exception has been abrogated by the Supreme Court in the context of Article III court proceedings. Steel Co. v. Citizens for a Better Environment, ___ U.S. ___, 118 S.Ct. 1003, 1012 (1998).
13. See n.4, supra.
14. The initial decision of Prudential was written by the same ALJ as in the instant case.
15. Because the Commission does not adhere to the holding in Fall River, it is unnecessary to reach RIVCO's contention that if the holding were followed by the Commission the facts in the instant case would satisfy the test set forth by the First Circuit. RIVCO Reply to Exceptions at 8.
16. Ormet also pointed out at oral argument that the Commission's internet web page stated that "it has no jurisdiction over the bulk trades." Oral Argument Transcript at 75. This statement, which may have been meant to refer to bulk cargoes being statutorily excepted from tariff filing requirements under section 8(a) of the 1984 Act, 46 U.S.C. app. § 1707(a), is not binding on the Commission and has since been corrected.
17. Section 17 of the Shipping Act of 1916 was adopted without substantial change as section 10(d)(1) of the 1984 Act, to which the Commission has continued to apply the WGMA test. See e.g., SCSPA, 27 S.R.R. at 1165.
18. RIVCO alleged that the sole provider system was unlawful because it was an unjust deprivation of choice and because it was contrary to sections 10(b)(11) and (b)(12); that it was excessive because it eliminated all competition at Burnside in a manner which creates profit for Ormet; and that it was not reasonably related, fit and appropriate to the alleged ends of safety and efficiency because those could be achieved in a less anticompetitive way. RIVCO Opening Brief at 83.
19. The purpose for market definition in an antitrust analysis is to see whether the alleged monopolist has power to maintain a price substantially higher than costs; whether a firm can do this turns on whether buyers have alternatives to which they can turn when the seller raises prices above the competitive level of cost plus a reasonable return. Lawrence A. Sullivan, Handbook of the Law of Antitrust (West 1977) at 56. First, a definition of the relevant market in which power is to be measured must be made, and then an evaluation is made of the extent to which power is wielded in that market. These two analyses are open to broad variation. As one commentator has observed, "[p]ower is always a matter of degree, and market definition always is a matter of judgment." Sullivan at 42.
The Commission has also found it useful in an anticompetition analysis to examine the degree of intrusiveness of the practice into competition. All Marine Moorings, 27 S.R.R. at 547. This includes estimating the firm's strength. The "principal underpinning for antitrust has been a belief that competition makes a substantial contribution to economic performance in two important respects: (1) efficiency in the use and allocation of economic resources and (2) progressiveness in the development of more efficient techniques and new and improved products and services." Philip E. Areeda, Antitrust Law: An Analysis of Antitrust Principles and Their Application, ¶401 (Little, Brown 1995). Generally, estimating a firm's market share is done by measuring the percentage of all transactions controlled in the relevant market by that firm. See Sullivan at 33.
20. Harm or likely harm is not measured in absolute terms. For example, in All Marine Moorings, the complainant alleged that it had lost significant revenue ($116,420) because the respondent would not allow it to serve its terminal. Id. at 539. However, the Commission there measured harm in relative terms, i.e. the percentage of the business lost to the non-selected competitors, and the overall impact or likely impact of the practice on the market for those services in general. Id. at 547.
21. We agree with RIVCO that the level of harm can also be satisfied by a showing of potential harm. See, e.g. California Stevedore and Ballast Co. v. Stockton Port Dist., 7 F.M.C. 75, 83 n.4 ("It is not significant that these evils [those which are likely to accompany monopoly, such as poor service and excessive costs] have not been proved to actually exist yet . . . . Healthy competition for business which is the best known insurance against such evils has been destroyed.") According to RIVCO, the spread of the sole provider system for assist tugs would cause terminals to choose the tug company closest to their docks, resulting in inefficiencies, such as more downtime for tugs waiting to serve only the terminals to which they were assigned and the need to invest in more equipment to serve the terminals. RIVCO's Opening Brief at 79; Oral Argument Transcript at 42. The potential for harm must, however, be more than purely speculative. The ALJ finds that, "[w]hether the 'single provider' system at the Burnside Terminal will spread along the River . . . and whether such spread could have a 'very deleterious' effect . . . are entirely speculative questions." I.D. at 111. RIVCO has identified nothing in the record which would indicate that the effects it fears are anything more than speculative; RIVCO has presented the Commission with no evidence that a market division which may cause harmful inefficiencies is likely to occur. On the other hand, Ormet pointed out that the IMT terminal initiated the sole provider system ten years ago, and this system has not as yet caused such market division or other harm. See I.D. at 110.
22. RIVCO argues that there may be no need to define the relevant market because of its tying arrangement analysis. RIVCO Exceptions at 28-9.
23. Initial Decision Findings of Fact 80-85 were relevant to the market in which RIVCO competes.
24. RIVCO's reliance on A.P. St. Philip is of limited instruction for a relevant market analysis. See RIVCO Exceptions at 17; RIVCO Reply to Exceptions at 16. In A.P. St. Philip, the terminal in question was one of only two principal phosphate facilities at the entire Port of Tampa. 13 F.M.C. at 166 n.2,3. However, it is unclear whether, had there been more competition between phosphate terminals in the Port, the Commission's analysis would have differed.
25. We also note that RIVCO did not seek to distinguish the Commission's holding in All Marine Moorings by the determination that the Commission would not require ITO to allow a competitor to compete at its own terminal (it was in the line handling business itself) from the instant case in which Respondent is merely subcontracting out the service rather than entering into the service itself. Oral Argument Transcript at 26.
26. There are several other Commission cases which address exclusive arrangements which for the sake of brevity are not discussed fully here, but which the Commission discusses at some length in All Marine Moorings, 27 S.R.R. at 544-48: Roach, Inc. v. Albany Port Dist., 5 F.M.B. 333 (1957); Agreement No. 8225 and 8225-1, 5 F.M.B. 648, aff'd sub nom., Greater Baton Rouge Port Comm'n v. United States, 287 F.2d 86 (5th Cir. 1961); Perry's Crane Serv. v. Port of Houston Auth., 16 S.R.R. 1459, adopted with modifications, 19 F.M.C. 548 (1978); Agreements T-3310 and T-3311, 23 F.M.C. 590 (1981); Petchem, Inc. v. Canaveral Port Auth., 23 S.R.R. 987, aff'd sub nom., Petchem, Inc. v. Federal Maritime Comm'n, 853 F.2d 958 (D.C. Cir. 1988).
27. Stockton involved an agreement between the respondents, a grain elevator and a port, granting the port the exclusive right to perform all stevedoring services at the grain elevator's terminal. 7 F.M.C. at 76. Complainants, several other stevedoring companies, challenged the exclusive arrangement. Many vessel operators and charterers had requested the services of the various complainants. Id. at 78. The Commission there held:
Such a practice runs counter to the anti-monopoly tradition of the United States, upsets the long-established custom by which carriers pick their own stevedoring companies, deprives complainants and other stevedoring companies of an opportunity to contract for stevedoring work on ships using elevators' facilities and opens the door to evils which are likely to accompany monopoly, such as poor service and excessive costs.
Id. at 82-83. The Commission found the practice prima facie unjust and unreasonable. Id. at 83.
28. An examination of the apparent competition levels for excluded operators in cases that found prima facie violations is instructive. A.P. St. Philip involved a market in which there were only competing tug operators and respondent appeared to have enjoyed market dominance; in Petchem, similarly, there were only two tug companies competing in the market. In All Marine Moorings, the Commission found that respondent's control of 20% of the market did not give rise to a prima facie unreasonable exclusive contract. Of course, there may be other factors present besides market dominance which would convince the Commission that an exclusive arrangement is prima facie unreasonable. Other indications that a competitive business environment does not exist may include complaints from shippers and carriers or a showing of higher prices and poorer service. Seacon, 26 S.R.R. at 828 n.28.
29. RIVCO claims that there is no requirement that the product be unwanted or unneeded. That may indeed be true for per se illegal tying arrangements under the antitrust laws. However, the very case RIVCO cites for that proposition also observes that "[s]ince in a freely competitive situation buyers would not accept a tying arrangement obligating them to buy a tied product at a price higher than the going market rate, this substantial price differential with respect to the tied product . . . in itself may suggest that respondents had some special economic power in the . . . market." Fortner, 394 U.S. at 504.
30. In Stockton, for example, the Commission had found that the choice of stevedore services was the unassailable right of the vessel interests. Stockton, at 83. However, by the time the All Marine Moorings decision was issued, it appeared that stevedoring performed by a terminal operator (a sole provider system) was acceptable to vessel operators. Consistent with All Marine Moorings, the Commission may find here, contrary to A.P. St. Philip, that the protection of the vessel interest is no longer paramount, especially when no vessel interests have meaningfully registered their displeasure with the elimination of that choice.