New England Motor Rate Bureau, Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATIER OF NEW ENGLAD MOTOR RATE BUREAU, INC.

final ORDER, OPINION, ETC., IN REGARD TO ALGED VIOLATION OF SEC. 5 OF THE FEDERA TRADE Commission ACT Docket 9170. Complaint, Oct. 24, 1983-Final Orrk, Aug. , 1989 This final order reuires, among other things, the respondent to halt its collective ratemaking activities in certin states and to cancel, within six months, all tarffs it has filed in those states.

Appearancs For the Commission: Michael E. Antalics, Robert J. Schroeder Harold F. Moody and John H. Seesel. For the respondent: Bryce Rea, Jr., Rea, Cross Auchimcloss Washington, D. C. and Curtis Wood, New England Motor Rate Bureau, Inc. Burlingtn, Ma.

COMPLANT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that The New England Motor Rate Bureau, Inc. , a corporation, hereinaftr sometimes referred to as "respondent " has violated the provisions of said Act and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges as follows:

For purposes of this complaint the term carr" means a common carrer of property by motor vehicle.

Intrastate transportation means the pickup or receipt, transportation and delivery, wholly within any state of the United States, of property for compensation by a carrer authorized by that state to engage therein.

Member means any carrer or other person which pays dues or belongs to The New England Motor Rate Bureau, Inc. , or to any successor corporation.

Tariff' means the publication stating the rates of a carrer for the 200 Complaint intrastate transportation of property, excluding general rules and regulations.

Rate" means a charge, payment or fixed price according to a ratio scale or standard for direct or indirect transportation servce. Collective rate" means any rate or charge established under any contract, agreement, understanding, plan, program, combination or conspiracy between two or more competing carrers, or between any carrer and respondent.

PARGRAPH 1. Respondent, The New England Motor Rate Bureau Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Massachusetts, with its offce and principal place of business located at 14 New England Executive Park, Burlingtn, Massachusetts. Respondent publishes and issues tariffs and supplements thereto containing intrastate rates for the transportation of property on behalf of member carrers. PAR. 2. Common carrers by motor vehicle engaged in intrastate transportation of property within each of the states of Massachusetts New Hampshire, Rhode Island and Vermont do so under certificates of public convenience and necessity granted by state regulatory agencies in the respective states. Such motor carrers are subject to rate regulation by a state agency and are required to charge just and reasonable rates. Motor common carrers in these states are not permittd to change the rates filed once they have been accepted by the state regulatory agencies in the respective states. PAR. 3. The statutes which provide for regulation of common carriers engaged in the transportation of property within the states of Massachusetts, New Hampshire, Rhode Island and Vermont do not command, authorize or otherwse provide for the establishment operation or regulation of rate agreements containing collective rates among such common carrers or motor carrer rate-making bureaus. PAR. 4. Except to the extent that competition has been restrained as herein alleged, respondent's members have been and are now in competition among themselves and with other common carrers. PAR. 5. Respondent' s membership consists of approximately 900 common carrers of property by motor vehicle. Respondent' s members are entitled to and do, among other things, vote for and elect the offcers and directors of respondent. The control, direction and management of respondent is vested in the members of the Board of Directors, who employ a general manager who acts as chief 202 FEDERA TRADE COMMISSION DECISIONS Complaint 112 F.

administrative offcer of the corporation with direct charge of and supervsion over the affairs of respondent.

PAR. 6. The acts and practices of respondent set forth in paragraph eight have been and are now in or affecting commerce as "commerce is defined in the Federal Trade Commission Act, as amended, and respondent is subject to the jurisdiction of the Federal Trade Commission. Among other things, the aforesaid acts and practices: (A) Affect the flow of substantial sums of money from businesses and other private parties to respondent's members for rendering intrastate transportation servces, which money flows across state lines;

(B) Affect the purchase and use of equipment and other goods and servces by respondent's members which are shipped in interstate commerce; and (C) Are supportd by the receipt of dues and fees for services from out-of-state members and others.

PAR. 7. Shippers use intrastate transportation servces of carrers within the states of Massachusetts, New Hampshire, Rhode Island and Vermont to move general commodities from warehouses and distribution centers to customers located in the same state as the warehouse or distribution center. These general commodities are transportd from out-of-state origin points to such warehouses and distribution centers for distribution within these states. For intrastate deliveries of general commodities from warehouses and distribution centers, carrers charge shippers or shippers' customers the intrastate rates published by respondent. These intrastate shipping charges are factors which influence the prices of such general commodities. The intrastate delivery servces of these carrers are an essential and integral part of the interstate business transactions of such shippers. Thus, the activities of these carriers have a substantial and direct effect upon interstate commerce.

PAR. 8. For many years and continuing up to and including the date of the issuance of this complaint, respondent, its members, offcers and directors and others have agreed to engage, and have engaged, in a combination and conspiracy, agreement, concerted action or unfair and unlawful acts, policies and practices, the purpose or effect of which is, was, or may be to unlawflly hinder, restrain, restrict suppress or eliminate competition among carrers engaged in the intrastate transportation of property within the states of Massachusetts, New Hampshire, Rhode Island and Vermont. ..

u....

200 Complaint Pursuant to and in furtherance of said agreement and concert of action, respondent, its members and others have engaged and continue to engage in the following acts, policies and practices, among others:

(A) Initiating, preparing, developing, disseminating, and taking other actions to establish and maintain collective rates, which have the purpose or effect of fixing, establishing, stabilizing or otherwise tampering with rates charged for the intrastate transportation of property within the states of Massachusetts, New Hampshire, Rhode Island and Vermont;

(B) Participating in and continuing to participate in the collective rates; and (C) Filing collective rates with the state regulatory agencies in Massachusetts, New Hampshire, Rhode Island and Vermont. PAR. 9. The acts and practices of respondent, its members and others as alleged in paragraph eight have been and are now having the effects, among others, of:

(A) Raising, fixing, stabilizing, pegging, maintaining, or otherwse interfering or tampering with the rates charged by carrers for the intrastate transportation of property within the states of Massachusetts, New Hampshire, Rhode Island and Vermont; (B) Restricting, restraining, hindering, preventing or frustrating rate competition among carrers in the intrastate transportation of property within the states of Massachusetts, New Hampshire, Rhode Island and Vermont;

(C) Depriving shippers patronizing carriers for intrastate transportation of property within the states of Massachusetts, New Hampshire, Rhode Island and Vermont of the benefits of free and open competition in the provision of said servces; and (D) Depriving consumers in the states of Massachusetts, New Hampshire, Rhode Island and Vermont of the benefits of free and open competition in the intrastate transportation of property within said states.

PAR. 10. The acts, policies and practices of respondent, its members and others, as herein alleged, were and are to the prejudice and injury of the public and constituted and constitute unfair methods of competition in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act, as amended. The acts and practices as herein alleged, are continuing and wil continue in the absence of the relief herein requested.

204 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

INIIA DECISION BY ERNEST G. BARNES, ADMINISTRATIVE LAw JUDGE DECEMBER 12, 1986 PREUMINARY STATEMENT The complaint herein issued on October 24, 1983. It charges (3) respondent, its members, offcers and directors, and others with a continuing combination and conspiracy to fix rates charged for the intrastate transportation of property within the states of Massachusetts, New Hampshire, Rhode Island and Vermont. The complaint alleges that respondent's membership consists of approximately 900 common carrers of property by motor vehicle, and that respondent, its members and others, have taken action to establish and maintain collective rates, which have the purpose of fixing, stabilizing or otherwse tampering with rates charged for the intrastate transportation of property within the states of Massachusetts, New Hampshire Rhode Island and Vermont, and that these collective rates have been filed with the state regulatory agencies in such states. This action is alleged to have deprived shippers and consumers of the benefits of I The delay in concluding this matter hag ocurr for several reasons. A prehearng conference was held on Januar 16, 1984, at which time the pares contemplate prepartion and submission of a stipulation of fac. On Marh 23, 1984, the paries filed a stipulation of fac, and reserved the right to present further evidence into the reord. Subponas duc tem were issued at the reuest of complaint counsel to several of respondent' s carer members. By order date May 25, 1984, the undersigned denied a motion to quash these subponas. The member caers thereafr refuse to comply with the subponas and by order of August 23 1984 court enforcement of the subponas was dire by the Commission. Enforcement of the subpoena was ordered by the court on December 5 , 1984. FT v. Th New England Moto Rate Bureau, 11U. , et al. Misc. No. 84-0268 (D. C. 1984) Subseuent to the court's order, on Januar , 1985, respondent and complaint could1l entered into a stpulation concerning the mattrs covered by the subponas.

Complaint counsel, on April 29, 1985, filed a motion for paral summar decision pursuant to Secion 3. of the Commssion s Rules of Prce. Respondent's answer to this motion was made in the fonn of a crossmotion for sunar decision (see Cross Motion For Summar Deision, July 1 , 1985), and complaint counsel' response to respondent' s cross-motion was filed July 19, 1985. Rulings on complaint counsel' s motion for parial summar decision, and respondent's cross-motion for summar decision, were made on Marh 7, 1986. The delay in ruling on counsls' motions was ocioned by awaiting the Firs Circuit Court of Appeal's decision inMassachusetts Furniture Pirw Mooer Ass n Inc. v. FT, 773 F.2d 391 (1986), reh. deie November 21, 1985, and the Commission s decision in the matter afr the Firs Circuit's remand of the proeeing to the Commission. The Commssion dismiss the Mass. Mavs cas by order dat Marh 19, 1986.

A preheanng conference was held April 29, 1986, and an order was issued to prepar for a tral to commence no later than mid-July 1986. On July 8, 1986 counsel advise the administtive law judge that a facual stipulation would be submitt which would expeite the completion of this matter. Such a stipulation was filed on August 28, 1986, and the rerd for reption of evidence was close on September 26, 1986. Briefing of this matter followed and, afr one extension of time for briefing purpses, was concluded on NEW ENGLAD MOTOR RATE BUREAU, INC. 205 200 Initial Decision free and open competition in the intrastate transportation of property within those states. Such acts, policies and practices are alleged to be to the prejudice and injury of the public and constitute unfair methods of competition in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act.

Respondent' s answer, dated November 30, 1983 , denied the charging allegations of the complaint, and sets forth thirteen defenses to the complaint. These defenses include contentions that the complaint fails to state a claim on which relief can be granted; that respondent' s members are subject to the Interstate Commerce Act, 49 C. 10101 et seq., and exempt from regulation by the Federal Trade Commission; that respondent' s member carriers are the real parties in interest and are indispensable parties to this proceeding; that regulation of the activities challenged in the complaint is within the exclusive jurisdiction of the several states; that the challenged activities are subject to a special regulatory scheme and because of the clear repugnancy between that regulatory scheme and the Federal Trade Commission Act, the latter is impliedly repealed; that the activities alleged in the complaint are exempt from the Federal Trade Commission Act under the doctrines of Parker v. Brown and Noer- Pennington; that the activities alleged in the complaint are exempt from the provisions of the Federal Trade Commission Act by virtue of Section 10706(b) of the Interstate Commerce Act, 49 V. 10706(b); that because of pervasive state regulation it would be unfair to hold respondent responsible for conduct implementing state regulation; that all matters raised by the complaint are within the primary jurisdiction of federal or state transportation regulatory agencies charged with the exclusive right and duty to regulate such matters and the Federal Trade Commission has failed to exhaust these administrative remedies; and that this proceeding is barred by doctrines of laches, estoppel and/or waiver. On March 23, 1984 counsel for the parties fied a stipulation of facts and reserved the right to present further evidence into (4) the record. Complaint counsel then sought subpoenas duces tecum to be issued to respondent's carrer members. Subpoenas were issued but the member carriers refused to comply. Court enforcement was sought and compliance was ordered by the Vnited States District Court for the District of Columbia. FTC v. The New England Motor Rate Bureau, Inc. , et al. Misc. No. 84-0268 (December 5, 1984) Thereaftr, on January 14, 1985, the parties fied a stipulation which covered the matters sought by the subpoenas. 206 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

Complaint counsel, on April 29 , 1985 , fied a motion for partial summary decision pursuant to Section 3.24 of the Commission s Rules of Practice. Respondent's answer to this motion was in the form of a cross-motion for summary decision. (See Cross Motion For Summary Decision, dated July 1 , 1985) Rulings were entered on March 7 1986 granting in part complaint counsel's motion and denying respondent' motion. Since the rulings of March 7, 1986, granting in part complaint counsel' s motion and denying respondent's motion, contained substantial findings of fact and conclusions and disposed of all of the issues in this proceeding except for respondent's Parker v. Brown (317 V. 341 (1942)) state action defense, the findings of fact, conclusions, and orders contained therein are made a part of this Initial Decision and are attached hereto as Attachments I and II. 2 and (5) the Having reviewed the entire record of this proceeding, proposed findings of fact and legal memoranda submitted by the parties, including the memorandum filed by the National Association of Regulatory Utility Commissioners ' the following findings of fact and conclusions are made and an appropriate order is entered. FINDINGS OF FACT NEW ENGLAD MOTOR RATE BUREAU , INC.

1. The New England Motor Rate Bureau, Inc. (NEMRB) is regulated by the Interstate Commerce Commission (ICC). See 40 C. 10706(b); Motor Carrer Rate Bureaus-Implementation of L. 96-296, 364 I.C.C. 464, 921 (1980). (Stip. August 28, 1986 The ICC's Boston Regional Offce is sent notice of NEMRB's Annual Board of Directors, General Rate Committee and Docket meetings and an ICC agent from that office has attended those meetings on a 2 The reord of this proeeing consists of the following: (1) Stipulation, date March 23 , 1984 (2) Complaint Counsel's First Reuest fof Admissions, dated April 24, 1984'" (3) Respondent's Answer To Complaint Counsel's First Reuest For Admissions, dated April 30, 1984. (4) Stipulation, date January 14 , 1985 (5) Complaint Counsel's Second Reuest For Admissions, dated March 6, 1985" (6) Respondent's Answer To Complaint Counsel's Second Reuest For Admissions, dated March 15 1985* (7) Order Granting In Par Complaint Counsel's Motion For Parial Summary Decision, dated March 7 1986 (Atthment I here) (8) Order Denying Respondent's Cross-Motion For Summary Decision dated March 7, 1986 (Atthment II hereto) (9) Stipulation, dated August 28, 1986 . See Appendix to Complaint Counsel's Motion For Partial Summary Decision, dated April 29, 1985. See Order Granting Motion Of The National Association of Regulatory Utility Commissioners For Leave To Intervene For Limited Purpse Of Filing Memorandum, date December 10, 1986. NEW ENGLAND MOTOR RATE BUREAU, INC.

200 Initial Decision spot check basis. Notices of these meetings are also sent to the States of New Hampshire and Rhode Island and the Commonwealth of Massachusetts. (Stip. August 28, 1986 3) The ICC last did a complete audit of NEMRB in late 1983 and early 1984. At that time a three-person investigating team from the ICC examined the records of NEMRB in depth and questioned its personnel at length regarding the operations of the Bureau. (Stip. August 28, 1986 2. Effective July 1, 1986, motor common carriers of freight (except parcel express carrers) are no longer required to file tariffs with the State of Vermont. Accordingly, NEMRB no longer formulates rates applicable to intrastate transportation of property in Vermont, nor does it file tariffs or supplements published by it with any agent in Vermont. (Stip. August 28, 1986 4) (6) STATE OF NEW HAPSHIRE 3. Exhibit A attached to Stipulation dated August 28, 1986 is a true copy of New Hampshire s motor carrer statute. N.H. Rev. Stat. Ann. S 21-L; S 375-A&B et seq. (Stip. August 28, 1986 5) Exhibit B attached to Stipulation dated August 28, 1986 is a true copy of New Hampshire s rules and regulations governing motor carrers of property. N. H. Admin. Code Puc 800 et seq. 900 et seq. (Stip. August , 1986 4. The New Hampshire Department of Transportation (NHDOT) was created by statute in 1985 and it assumed responsibility for regulating intrastate transportation from the New Hampshire Public Utilities Commission, which formerly held such responsibilities. (Stip. August 28, 1986 6) A Commissioner heads NHDOT and is responsible for regulating motor common carrers. N.H. Rev. Stat. Ann. S 21-L:2; S 375-A:14, S 375-B:17(I). The Commissioner may adopt rules regulating the form of tariff schedules and the manner of their filing. (Stip. August 28, 1986 5. The Bureau of Common Carrers (BCC) is a branch of NHDOT' Division of Public Works. BCC is primarily responsible for regulating intrastate motor carrers that transport property for hire. The Administrator of BCC reports to the Director of Public Works and Transportation, who is nominated by the Commissioner and appointed by the Governor. N.H. Rev. Stat. Ann. S 21-L:3 (II). (Stip. August 28 6. A motor carrer of property for hire must obtain from NHDOT a certificate, if a common carrer, or a permit, if a contract carrier 208 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

before providing servce within the state. N. H. Rev. Stat. Ann. 375- B:4. A certificate or permit is usually issued only aftr a public hearing where a determination is made that the applicant is fit, willng and able and that the servce is needed. However, hearings are not held on applications for dump truck motor carrer authority. (Stip. August 28, 1986 10) After a determination is made on a carrer application, the Administrator of the BCC issues a written order on behalf of NHDOT's Director of Public Works and Transportation. A right of appeal exists as to applicants that desire to contest the order. (Stip. August 28 , 1986 11) 7. Entry into motor freight carrer operations is strictly controlled in New Hampshire. Only one application for a certificate of public convenience and necessity seeking to transport general commodities was filed in the past two years, and it was denied after a hearing. (Stip. August 28 , 1986 12) 8. Authority granted to motor carriers of property is transferable to other carriers who are found to be fit, wiling and able to perform the transportation servce, provided the authority is found not to be dormant. If authority is allowed to become dormant for a period of six months it is subject to (7) automatic revocation. N.H. Admin. Code Puc 802. 14. The transfer method of entry is easier than de novo entry because it usually does not generate opposition from present motor freight carriers when the purchaser is fit to assume the authority. In a transfer proceeding the issue of whether the servce is needed is not present. Oftn the most diffcult burden for a de noo entrant to overcome is showing that the servce is needed. (Stip. August 28 1986 13) 9. About 60 or 70 of New Hampshire s approximate 2 000 registered motor carriers have bus operating authority. Another 60 to 75 have household goods transportation authority. The remainder are common or contract carriers of property other than household goods. About 35 major general freight common carrers are members of NEMRB or the New Hampshire Motor Transport Association. The remaining carriers are small one-truck operators who work on an hourly basis. These include dump truck, rubbish, towing, heavy equipment, and boat carrers. There are also 50 to 75 general freight carriers who fie individual commodity rate tariffs. (Stip. August 28 1985 14) 10. BCC has seven field inspectors. This number increased from four to seven after the creation of NHDOT. (Stip. August 28, 1986 200 Initial Decision 16) Field inspectors have police power to enforce New Hampshire motor carrer statutes: N. H. Rev. Stat. Ann. S 376 et seg. (regulating buses); N.H. Rev. Stat. Ann. S 375- et seg. (regulating household goods carrers); and N.H. Rev Stat. Ann. sl 375- et seg. (regulating common and contract property carrers). Field inspectors have the power of a deputy sheriff in any county in New Hampshire. When requested to do so, motor carrers are required to stop and submit their vehicles to inspection to determine the condition of the vehicle and the servce being performed. N.H. Rev. Stat. Ann. S 375-B:18. The primary function of field inspectors is to monitor motor carrers to ensure that they are properly certified and are complying with safety regulations. (Stip. August 28, 1986 , 17) 11. New Hampshire law requires each motor common carrer of property to print, fie with the BCC, and keep open for public inspection schedules of rates and charges governing the transportation servces it performs. N.H. Rev. Stat. Ann. S 375-B:13. (Stip. August 28, 1986 18) Unless otherwise authorized by NHDOT rates filed by motor common carrers of property become effective thirty (30) days aftr filing. N.H. Admin. Code Puc 802. 1l(b). (Stip. August 28, 1986 20) 12. Motor common carrers of property are prohibited from making, giving or causing any undue or unreasonable preference or advantage to any particular person or locality or from subjecting any particular person or locality to any unjust discrimination or any undue or unreasonable prejudice or disadvantage. N.H. Rev. Stat. Ann. S 375- B:14. (Stip. August 28, 1986 19) NHDOT lacks statutory authority to reject or suspend any tariff filed by a common carrer of property for being unjust or (8) unreasonable. (Stip. August 28, 1986 , '\ 21) The New Hampshire superior courts have equity jurisdiction to restrain the violation of any statutory provision, any rule or order issued or adopted by the NHDOT, or any provision of any certificate or permit. N.H. Rev. Stat. Ann. S 375-B:24a. 13. BCC has an administrator and one tariff investigator or rate analyst. The rate analyst' s duties include contacting, visiting and investigating motor carrers of property suspected of not complying with their filed tariffs; assisting carrers in filing their tariffs in the format required by state regulations; providing the public and motor carrers with copies of carrer tariffs; investigating other complaints against carrers; and reviewing fied tariffs of New Hampshire approximate 2 000 registered motor carrers of property to determine Initial Decision 112 F.

whether the tariffs are discriminatory. In determining whether the carrers are adhering to their fied tariffs, the rate analyst uses inspection forms developed by the agency for this purpose. If any discrepancies are found, they are pointed out in detail to the carrers. The carrers are further required to refund overcharges or submit new bilings for undercharges to correct the errors. The BCC has suspended the certificates of carrers for failure to adhere to their fied rates. It has power to revoke permanently such certificates should such action be warranted. N.H. Rev. Stat. Ann. 375-B:9. (Stip. August 28, 1986 22) 14. The tariff investigator examines tariffs only to ensure that they conform to the format prescribed in the state s regulations and that they do not discriminate among shippers. (Stip. August 28 , 1986 23) A discriminatory rate is one that specifically names a shipper for preferential treatment. A hearing may be held to investigate rates that appear discriminatory. (Stip. August 28 , 1986 24) 15. It is the opinion of the rate analyst that whenever tariffs become effective that decision results from a determination that the proposed rates meet the regulatory criteria of the statute, orders, rules and regulations pertaining to motor carrers. (Stip. August 28, 1986 25) Once the rates are established the carriers must strictly adhere to them and no carrer may refund or remit in any manner or by any device, any portion of the rates or charges specified in the tariffs. N. Rev. Stat. Ann. 375-B:15. (Stip. August 28 , 1986 26) 16. Motor common carriers of property may not discriminate by giving undue preference or advantage to any particular person or locality. Therefore, motor common carrers of property must charge the same rate to all people seeking to ship to and from the points designated in the tariff. A contract carrier can transport the goods of a shipper that is party to an agreement with the carrier at a rate different from the common carrier rate as long as such rate is not less than that which the contract carrier was required to fie with the BCC. See N.H. Rev. Stat. (9) Ann. 375-B:16 (II). About half of New Hampshire s carriers have both contract and common carrier authority. (Stip. August 28, 1986 27) 17. It is the responsibility of each motor carrer of property to determine and fie its own rates. New Hampshire permits, but does not require, a carrer to give authority to an agent to issue and fie for the carrier tariffs and supplements thereto. A carrier does so by executing a power of attorney and fiing it with the BCC. (Stip. , 200 Initial Decision August 28, 1986, '1 28) The BCC has a long history of working with agents, such as NEMRB, which file collective rate proposals on behalf of their members. (Stip. August 28 , 1986 , '1 29) 18. In New Hampshire, NEMRB files general rate restructures general rate increases and supplements thereto which have previously been filed with the ICC. NEMRB accompanies such filings with the justification statement that has been filed with the ICC. If the ICC suspends the proposal, NEMRB requests the BCC to postpone the effective date of the proposal in New Hampshire pending the outcome of the ICC investigation. At the conclusion of the ICC investigation NEMRB requests the BCC to take the same action with respect to the intrastate New Hampshire proposal as the ICC has taken with respect to the interstate proposal. Examples of such requests and the orders of the NHDOT authorizing such action are identified as Exhibit C to the Stipulation dated August 28 1986. (Stip. August 28 1986, '1 30) Only NEMRB members are allowed to participate in its tariff. NEMRB' s tariff includes a list of its members participating in the tariff. (Stip. August 28, 1986 , '1 31) 19. NHDOT has no involvement in the initiation or development of NEMRB' s intrastate tariffs or supplements thereto which NEMRB files with the NHDOT, except in connection with NHDOT's review of the fied tariffs. (Stip. August 28 , 1986, '1 32) NHDOT does not engage in an effort to monitor the prefiling, fiing or post-filing activities of NEMRB except as prescribed in the attached statutes and regulations or as set out herein in Findings 13- , 17- 18 and 20-23. No NHDOT employee has ever attended a NEMRB meeting. (Stip. August 28, 1986 , '1 35) 20. NHDOT has neither authority nor a mechanism to process complaints by members against NEMRB. However, if a complaint alleges a violation of the statute or the orders, rules or regulations of the NHDOT, it wil be investigated and appropriate action taken if warranted. Otherwise, a member s complaint against NEMRB must be filed with the attorney general' s offce and be processed like any private citizen s complaint. (Stip. August 28, 1986 , '1 34) 21. Aside from its role in reviewing proposed rates, NHDOT does not monitor economic conditions in the intrastate trucking industry of New Hampshire. (Stip. August 28, 1986, '1 36) NHDOT has never conducted a study of the intrastate trucking industry (10) with regard to economic regulation or of the effects of state regulatory policy on the intrastate trucking industry of New Hampshire. (Stip. August 28 1986 , '1 37) 212 FEDERAL TRAE COMMISSION DECISIONS Initial Decision 112 F.

22. NHDOT does not initiate changes in rates unless they have been shown to be in violation of the statute, or the orders, rules or regulations of the NHDOT. Changes in rates are initiated by carrers either independently, through rate bureaus, including NEMRB , or through other agents. (Stip. August 28 , 1986 , '\ 38) 23. It is the view of the BCC employees charged with the duty of initially determining the lawfulness of tariffs that without the help of agents and tariff bureaus such as NEMRB, the BCC would be hindered in its abilty to regulate rates of motor carriers in New Hampshire. They also believe that if all carrers were required to fie rate proposals individually rather than collectively, the BCC could not meet its regulatory responsibilties with its present staff. (Stip. August 28, 1986, '\ 39) COMMONWALTH OF MASSACHUSETTS 24. Exhibit D attached to Stipulation dated August 28, 1986 is a true copy of Massachusetts' motor carrer statute. Mass. Gen. Laws Ann. ch. 159B (Law. Co-op. 1979) (hereinafter ch. 159B) (Stip. August 28, 1986 , '\ 40) 25. The Massachusetts Department of Public Utilities (MDPU) is responsible for regulating electric, gas, telephone, and water utilties as well as bus companies and commercial motor vehicles. (Stip. August 28, 1986, '\ 41) Exhibit E attached to Stipulation dated August 28, 1986 is a true copy of MDPU' s rules and regulations governing motor carrers of property. (Stip. August 28, 1986 , '\ 53) 26. The Commercial Motor Vehicle Division (CMVD), created by statute to be a semi-autonomous body within MDPU, has as its primary function the regulation of motor vehicle carrers which transport property for hire. (Stip. August 28, 1986, '\ 42) CMVD' current staff or approximately 16 or 17 employees includes about 12 field inspectors, as well as several hearing offcers and clerical staff. The MDPU Commissioners determine the responsibilties of the CMVD. (Stip. August 28, 1986 , '\ 43) 27. The Assistant Director of Rates and Research of CMVD is the only rate analyst for CMVD and is responsible for processing motor carrer rates fied with CMVD. The rate analyst reports directly to MDPU on rate issues. (Stip. August 28 1986, '\ 44) The present rate analyst assumed the position six years ago. At that time he was assisted by three clerks. Today there is only one to assist him. (Stip. August 28 , 1986 , '\ 45) (11) .. ........ ............. ""n"-.u..u... ........u, u.... 200 Initial Decision 28. A motor common carrer of property must obtain a certificate from the MDPU before providing servces within Massachusetts. ch. 159B 3. A certificate or permit is issued only aftr a public hearing where a determination is made that the petitioner is fit, willng, and able and that the servce is needed. (Stip. August 28, 1986, 46) Aftr a determination is made on a carrer s petition, MDPU issues a wrtten order. (Stip. August 28, 1986 47) 29. Hundreds of motor carrers of property have applied for intrastate carrer authority in Massachusetts during the past several years, most of which were dump truck and courier operators. Only a few motor common carrers of general commodities have applied for operating authority. (Stip. August 28, 1986 48) 30. Intrastate operating authority granted to motor carrers of property is transferable with the approval and consent of the MDPU aftr a public hearing. Mass. Admin. Code tit. 220 260.01(3). The MDPU applies a standard similar to that used in granting authority in the first instance. Generally, transfer of operating authority does not generate much opposition from present motor carrers of property. (Stip. August 28 , 1986 50) 31. Once authority has been granted, a motor carrer of property must publish, file, and keep open for public inspection a tariff containing its charges for transportation servces. ch. 159B , 2. A carrer has the right to seek whatever rate it desires. No one at the MDPU looks behind the fied rates to determine whether they accurately reflect a carrer s profits and costs. The rate analyst has never requested financial information to support a tariff nor has he rejected a rate because of the price to be charged. However, if confronted with a tariff containing rates that in his judgment are out of line with the average rates that have been established in the involved pricing zone, or seem extraordinarily high, such as a 20% to 50% increase, he would recommend suspension and investigation of the tariff by the MDPU Commissioners. Likewise, if a tariff appeared to contain discriminatory provisions, such as being applicable only for the account of a named shipper or shippers rather than being available to the general public, the CMVD would recommend suspension and investigation. (Stip. August 28, 1986 51) 32. It is the policy of Massachusetts to promote economical and efficient servce at reasonable rates. ch. 159B 1 Every carrer must establish, observe and enforce reasonable rates. The DPU may determine and prescribe lawfl rates. ch. 159B 6 Although MDPU 214 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 r.

has the authority to establish maximum and minimum rates, ch. 159B, 11 6 '1 5 , it has not done so as to motor carrers of property, except a minimum rate order was entered many years ago with respect to dump trucks and petroleum tank truck carrers. CF. Mass. Admin. Code tit. 220 , 11 272 et seq. (12) Rates for the Towing of Motor Vehicles. (Stip. August 28, 1986 , '1 52) 33. There is a 30-day waiting period before a rate filing may become effective. ch. 159B, S 6'1 2. The MDPU will grant permission to establish rates on less than statutory notice only when real need is shown. Mass. Admin. Code tit. 220 , S 260.03 (hereinafter MDPU Rules) MDPU Rule 11. Petitions complaining of and seeking suspension of a tariff may be filed with the MDPU no later than 10 days prior to the effective date of the tariff. MDPU Rule 12. The purpose of the 30-day statutory notice period is to permit the MDPU to review rate filings and to permit public comment. (Stip. August 28, 1986, '1 54) Once the rates are established, the carrers must strictly adhere to them and no carrer may refund or remit in any manner or by any device, any portion of the rates or charges specified in the tariffs. ch. 159B, S 6A, '1 1. (Stip. August 28 , 1986 , '1 63) 34. The MDPU is authorized to reject or suspend proposed rates which are not consistent with the statute or the MDPU's orders, rules and regulations. ch. 159B, S 6 '1'1 , 2. (Stip. August 18, 1986 '1 53) Regulations pertaining to filing formats are promulgated by MDPU under the authority of ch. 159B, S 6, '1 3. The rate analyst reviews fied tariffs to ensure that they comply with the filing format of the statute (Stip. August 28, 1986, '1 56), and to ensure that the tariffs accurately reflect the rates that carriers intend to charge. (Stip. August 28 , 1986, '1 57) He rejects only fied tariffs that do not comply with the filng requirements of the regulations. See, e. Exhibit F attached to Stipulation dated August 28, 1986. (Stip. August 28 1986, '1 57) He does not audit carriers ' records because of the lack of time to do so. (Stip. August 28 , 1986 , '1 59) 35. It is the opinion of the rate analyst that whenever tariffs become effective without rejection, suspension or hearing, that action results from a determination that the proposed rates meet the regulatory criteria of the statute, orders, rules and regulations pertaining to motor carriers of property. (Stip. August 28, 1986 , '1 62) 36. Massachusetts is divided into pricing zones. These zones were not established by state authority but were developed by carrier pricing practices. (Stip. August 28 , 1986 , '1 60) NEW ENGLAD MOTUK reju.r DUHJ':UH-' , u, 200 Initial Decision 37. The MDPU, upon complaint of any motor common carrer of property or any other person, or upon its own motion, aftr hearing, may allow or disallow any filed or existing rates and may alter or prescribe rates in accordance with the legal standards provided. ch. 159B, S 6, '1 5. (Stip. August 28 , 1986, '1 61) During the past six years MDPU has not held a public hearing either to investigate or , 1986, '1 68) (13)suspend a motor carrer s rate. (Stip. August 28 38. It is the responsibilty of each carrer to determine and fie its own rates. The MDPU has authorized, but does not require, motor common carrers of property to give authority to an agent to issue and file tariffs and supplements thereto in their stead. A carrer does so by executing a power of attorney and fiing it with the MDPU. The power of attorney may be revoked by the carrier or agent on not less than sixty days' notice to the MDPU. MDPU Rule 6. (Stip. August 28 1986, '1 64) The MDPU has a long history of working with agents such as NEMRB, which fie collective rate proposals on behalf of their members. (Stip. August 28 , 1986 , '1 65) 39. In Massachusetts, NEMRB files general rate restructures general rate increases, and supplements thereto that have previously been fied with the ICC. Although not required to do so, NEMRB accompanies such filings with a justification statement that has been fied with the ICC. (Stip. August 28, 1986 '1'1 , 66) If the ICC suspends the proposal, NEMRB requests the MDPU to postpone the effective date of the proposal in Massachusetts pending the outcome of the ICC investigation. At the conclusion of the ICC investigation NEMRB requests the MDPU to take the same action with respect to the intrastate Massachusetts proposal as does the ICC with the interstate proposal. Generally, the MDPU relies on the fact that the ICC has already conducted an investigation and reached a conclusion as to the justness and reasonableness of the NEMRB proposals. (Stip. August 28, 1986, '1 66) Carrers who are not members of NEMRB or of any other rate bureau do not regularly provide similar ICC data. (Stip. August 28, 1986 , '1 58) 40. Massachusetts does not have a posting requirement for filed tarffs other than carriers posting their rates at their place of business. (Stip. August 28, 1986 , '1 67) 41. The NEMRB fies tariffs on behalf of its members that are intrastate carriers. (Stip. August 28, 1986, '1 69) Only members of the NEMRB are allowed to participate in its tariffs. The NEMRB' tariff includes a list of all carriers participating in the tariff. (Stip. August 28, 1986 , '1 70) 216 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

42. MDPU currently employs 12 field inspectors who have police power to enforce Massachusetts' motor carrer statute. The primary function of field inspectors is to monitor carrers to ensure that they are properly certified and that they are complying with safety regulations. Field inspectors also spot check carrers to investigate complaints that they are not charging the rates that they have filed. (Stip. August 28, 1986 72) 43. MDPU has no involvement in the initiation or development of NEMRB' s intrastate tariffs or supplements thereto which NEMRB fies with MDPU, except in connection with its review of the fied tariffs. (Stip. August 28, 1986 73) MDPU does not engage in an effort to monitor the prefiling, filing or post-filing (14) activities of NEMRB except as prescribed in the statutes and regulations or as set out herein in Findings 31- , 37- , and 42-45. (Stip. August 28 1986 74) No MDPU employee has ever attended a NEMRB meeting. (Stip. August 28, 1986 77) MDPU has neither authority nor a mechanism to process complaints by members against NEMRB. However, if a complaint alleges a violation of Chapter 159B or any order, rule or regulation adopted thereunder, it will be investigated and appropriate action taken if warranted. (Stip. August 28, 1986 75) 44. Violations of Chapter 159B or any order, rule or regulation adopted thereunder are punishable by fine; and, in addition, the Supreme Judicial and superior courts severally have jurisdiction in equity to restrain any such violation upon petition of MDPU, or of any person affected by such violation. Any person also may fie with the MDPU a complaint of any violation and the MDPU is required to investigate such complaint within seven days, and within 14 days issue an order for remedial action if warranted, or order hearings to be conducted within 21 days from the date of the MDPU order. The MDPU is required to render a decision on the complaint no later than 90 days from the date of hearing. ch. 159B 21. (Stip. August 28 1986 76) 45. The MDPU does not initiate changes in rates unless they have been shown to be in violation of the statute or the orders, rules or regulations of the MDPU. Changes in rates are initiated by carrers either independently or through rate bureaus, including NEMRB, or through other agents. (Stip. August 28, 1986 80) Aside from its role in reviewing proposed rates, MDPU does not monitor economic conditions in the intrastate trucking industry of Massachusetts. (Stip. 200 Initial Decision August 28, 1986 78) MDPU has never conducted a study of the intrastate trucking industry or of the ffects of state regulatory policy on the intrastate trucking industry of Massachusetts. (Stip. August , 1986 79) 46. Approximately 20 000 motor carrers operate in Massachusetts and about 10 percent of these are motor common carrers of general commodities. (Stip. August 28 , 1986 71) It is the view of the MDPU employees charged with the duty of initially determining the lawflness of tariffs, that without the help of agents and tariff bureaus such as NEMRB, the MDPU would be hindered in its ability to regulate rates of motor carrers in Massachusetts. They also believe that if all carrers were required to file rate proposals individually rather than collectively, the MDPU could not meet its regulatory responsibilities with its present staff. (Stip. August 28, 1986 81) STATE OF RHODE ISLAND 47. Exhibit G attached to Stipulation dated August 28, 1986 is a true copy of Rhode Island's motor carrer statute. R.I. 1151 Gen. Laws et seq. (1985). (Stip. August 28 , 1986 45)!i 39-12- 48. Violations of Rhode Island' s motor carrier statute are punishable by fine and if the offense for which a person is convicted is an unlawful discrimination in rates or charges for the transportation of property, such person shall, in addition to the fine, be subject to imprisonment for a term not exceeding one year. R.I. Gen. Laws , 1986 88) !i 39-12-36. (Stip. August 28 49. The Rhode Island Public Utilties Commission (RIPUC) regulates motor common carrers of property through the Division of Public Utilities and Carrers (DPUC). (Stip. August 28, 1986 83) Rhode Island law requires that the Chairman of the RIPUC also serve as the Administrator of DPUC. (Stip. August 28, 1986 84) The Administrator heads DPUC and is responsible for regulating motor carrers of property. (Stip. August 28 , 1986 85) One of the Administrator s duties is to prescribe rules regulating motor carrers of property. (Stip. August 28, 1986 86) Exhibit H attached to Stipulation dated August 28, 1986 is a true copy of DPUC's rules and regulations governing motor carrers of property. (Stip. August 28 1986 87) 50. DPUC staff consists of three field investigators, two clerks, a rate analyst, an attorney, and an associate administrator. (Stip. August 28, 1986 89) The field investigators conduct road checks of 218 FEDERA TRAE COMMISSION DECISIONS Initial Decision 112 F.

motor carrers of property to determine whether the carrers have registered their vehicles; whether the vehicles are in safe operating condition; and whether the carrers are charging shippers in accordance with the carrer s established tariff. The field investigators report to the Associate Administrator. (Stip. August 28 , 1986 90) 51. A motor carrer of property must obtain from DPUC a certificate if a common carrer, or a permit if a contract carrer, before providing service with Rhode Island. DPUC holds a public hearing to determine whether the applicant is fit, willng and able to perform properly the proposed servce. In addition, DPUC must determine whether the public convenience requires a common carrer s servce or whether a contract carrer s proposed servce is consistent with the public interest. R. I. Gen. Laws 39-12- 6; 39- 12-9. (Stip. August , 1986 91) To establish that the public convenience requires its servce, a motor carrer of property must demonstrate to DPUC that its servces are necessary. A carrer can accomplish this by showing the absence of any servce or the inferior quality of existing servce. An applicant cannot satisfy the public convenience element of the certification standard merely by showing that its rates wil be lower than those of incumbent carrers. (Stip. August 28 , 1986 92) 52. The Associate Administrator or an attorney presides at rate and new carrer hearings. The presiding offcer drafts decisions and final orders for the signature of both the (16) Administrator and the Associate Administrator. (Stip. August 28, 1986 93) Last year DPUC held between 30 and 50 hearings on applications from motor carrers of property for operating authority. (Stip. August 28, 1986 95) Presently, there are approximately 700 motor carrers of property authorized to engage in intrastate transportation of property within Rhode Island. (Stip. August 28, 1986 96) 53. DPUC permits motor carrers of property to transfer their active operating authority to another carrer aftr DPUC determines the fitness of the transferee to assume the operating authority. The public convenience and necessity for the transferee s servce is not an issue in transfer hearings since DPUC made that determination prior to the issuance of the certificate to the original holder. (Stip. August 28 1986 94) 54. Rhode Island law requires every motor common carrer of property to print, file with the Administrator, and keep open for public inspection tariffs showing all of the rates governing the transportation it performs. R.I. Gen. Laws 39-12-11. (Stip. August 28 , 1986 200 Initial Decision '\ 98) Rates of motor common carrers of property are required to be just and reasonable and reasonably compensatory. R.I. Gen. Laws 39-12-12. Carrers are prohibited from charging rates that are unjustly discriminatory, unduly preferential or unduly prejudicial. R.I. Gen. Laws 39-12-13. (Stip. August 28, 1986 , '\ 99) 55. There is a 30-day waiting period before a rate filing may become effective. R.I. Gen Laws 39-12-12. The DPUC will grant permission to establish rates on less than statutory notice only in cases where actual emergency or real merit is shown. DPUC Rule 12. Petitions seeking suspension of a tariff may be fied with the DPUC no later than 10 days prior to the effective date of the tariff. DPUC Rule 13. The purpose of the 30-day statutory notice period is to permit the DPUC to review rate filings and to take whatever action may be deemed necessary prior to the tariff becoming effective. (Stip. August , 1986, '\ 100) During the interim between the filing of a tariff and its effective date, the rate analyst reviews the tariff to determine whether it complies with DPUC's regulations governing the format of tariffs. (Stip. August 28, 1986, '\ 101) 56. The rate analyst has the authority to reject tariffs whose formats do not conform to the regulations. (Stip. August 28, 1986 '\ 102) The rate analyst also examines tariffs to ascertain whether the rates are within a "zone of reasonableness." (Stip. August 28 1986, '\ 103) The " zone of reasonableness " which is a measure developed by the rate analyst, consists of a range between the maximum and minimum industry averages of previously approved rates for each category of motor carrer. (Stip. August 28 , 1986 '\ 104) Those rates that fall within the " zone of reasonableness" are approved without a hearing. (Stip. August 28, 1986 , '\ 105) In (17) determining the reasonableness of a proposed tariff, the rate analyst may also consider the percentage of the rate increase as well as the date of the carrier s last request for a price increase. (Stip. August 28 1986, '\ 106) When the rate analyst cannot complete his tariff review within the 30-day period before a newly filed tariff wil become effective, DPUC suspends the tariff. (Stip. August 28, 1986 , '\ 109) 57. DPUC requires carrers to submit cost information or other financial data to justify proposed tariff changes only if the tariff is suspended and the matter is set for hearing. (Stip. August 28, 1986 '\ 107) 58. The tariff filings by NEMRB are handled as follows: NEMRB files general rate restructures, general increases in rates and 220 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

supplements thereto that have previously been filed with the ICC. NEMRB accompanies such filings with justification statements that analyzes thosehave ben filed with the ICC. The DPUC staff statements and makes use of the information contained therein to make its initial determination of the lawflness of the NEMRB proposals. Aftr making its initial determination on an individual or NEMRB proposal, the staff drafts an order, which may be accompanied by a memorandum, recommending that the Administrator either approve the proposal or suspend it and conduct a hearing. In either case, the Administrator, who has the final authority in such matters issues an order. Exhibit I attached to Stipulation dated August 28 1986 is a copy of an order suspending an increase filed by NEMRB on behalf of its members. Following the issuance of that suspension informalorder, the DPUC requested the NEMRB to attend an conference at the DPUC' s offces to answer certain questions the DPUC had about the proposal. Following the informal conference, the DPUC conducted a formal public hearing on the proposal at its offces on July 9, 1986. Exhibit J attached to Stipulation dated August 28, 1986 is the Notice of the Public Hearing. Exhibit K attached to Stipulation dated Augnst 28, 1986 is a true copy of the transcript of the hearing held on July 9 by the DPUC. (Stip. August 28, 1986 '1 108) 59. The DPUC is authorized to reject or suspend and investigate proposed rates which are not consistent with the statute or the DPUC' s orders, rules and regulations. R.I. Gen. Laws 39-12-11; 39-12-12. (Stip. August 28, 1986, '1 111) 60. Similarly, DPUC suspends unjust or unreasonable tariffs pending a public hearing during which the tariffs proponent must justify the suspended rates. (Stip. August 28, 1986, '1 110) Upon finding that the evidence adduced at the hearing does not justify a proposed rate, DPUC will deny the tariff proponent' s request for rate approval and establish a rate that the evidence supports. In determining the appropriate rate, DPUC does not use a precise formula, but rather sets a rate that win afford the carrer a good living and that will allow for increased expenses. (Stip. August 28, 1986 , '1 112) DPUC does not permit (18) rate increases based solely on inflation unless a hearing is held and it is determined that the increase warranted. (Stip. August 28, 1986 , '1 113) At the conclusion of a hearing, the hearing offcer drafts an order and decision, which the Administrator approves by signing. (Stip. August 28, 1986, '1 114) 200 Initial Decision 61. DPUC authorizes motor common carrers of property to give authority to an agent to issue and file tariffs and supplements thereto in their stead. A carrer does so by executing a power of attorney and filing it with the DPUC. The power of attorney may be revoked by the carrer or agent on not less than sixty days' notice to the DPUC. DPUC Rule 20. (Stip. August 28 , 1986 , '\ 115) 62. The DPUC. upon complaint of any motor common carrer of property or any person, or upon its own motion, aftr hearing, may allow or disallow any filed or existing rates and may alter or prescribe rates of carrers in accordance with the legal standards provided. R.I. Gen. Laws 39-12-13. (Stip. August 28 , 1986, '\ 116) 63. It is the view of the DPUC employees charged with the duty of initially determining the lawfulness of tariffs that whenever tariffs are permitted to come effective without rejection, suspension or hearing, that action results from a determination that the proposed rates meet the regulatory criteria of the statute, orders, rules and regulations of the DPUC. (Stip. August 28, 1986, '\ 117) 64. Once the rates are established carrers must strictly adhere to them and no carrier may refund or remit in any manner or by any device, any portion of the rates or charges specified in the tariffs. R. Gen. Laws 39-12-12. DPUC currntly employs three field investigators whose duties include investigating complaints that carrers are not adhering to their approved rates. (Stip. August 28, 1986 , '\ 118) 65. DPUC employees do not attend NEMRB meetings at which NEMRB formulates tariffs, nor does DPUC receive any NEMRB publications other than tariffs or supplements thereto to be filed and the accompanying justification statements. (Stip. Augnst 28, 1986 '\ 119) DPUC has no involvement in the initiation or development of NEMRB' s intrastate tariffs or supplements thereto, which NEMRB fies with DPUC, except in connection with its review of the filed tariffs. (Stip. August 28, 1986, '\ 122) DPUC does not engage in any effort to monitor the prefiling, filing or post-filing activities of NEMRB, except as prescribed in the attached statutes and regulations or as set out herein in Findings 52-64. (Stip. August 28, 1986, '\ 124) DPUC has neither authority nor a mechanism to process complaints by members against NEMRB. However, if a complaint alleges a violation of the statute, or the orders, rules or regulations of (19) the DPUC, it will be investigated and appropriate action taken if warranted. (Stip. August 28, 1986, '\ 125) 66. Aside from its role in reviewing proposed rates, DPUC does not 222 FEDERA TRADE Commission DECISIONS Initial Decision 112 F.

monitor economic conditions in the intrastate trucking industry of Rhode Island. (Stip. August 28 , 1986, 'I 120) DPUC has never conducted a study of the intrastate trucking industry with regard to economic regulation or of the effects of state regulatory policy on the intrastate trucking industry of Rhode Island. (Stip. August 28, 1986 'I 123) 67. It is the view of the DPUC employees charged with the duty of initially determining the lawflness of tariffs, that without the help of agents and tariff bureaus such as NEMRB, DPUC would be hindered in its ability to regulate rates of motor carrers in Rhode Island. They also believe that if all carrers were required to file rate proposals individually rather than collectively, DPUC could not meet its regulatory responsibilties with its present staff. (Stip. August 28 1986, 'I 121) CONCLUSIONS Complaint counsel, on April 29, 1985, filed a motion for partial summary decision pursuant to Section 3.24 of the Commission s Rules of Practice. Respondent, on July 1 , 1985 , fied a cross-motion for summary decision. By orders dated March 7, 1986, the undersigned granted in part complaint counsel's motion and denied respondent' motion. 4 In these rulings all issues in this proceeding were decided except for respondent' s state action (Parker v. Brow) defense. Thus the issue remaining is whether the Commonwealth of Massachusetts and the States of New Hampshire and Rhode Island' in their regulation of intrastate motor common carrer rates meet the twopronged (20) test set forth by the Supreme Court in Califoria Retail Liquo Dealers Ass n v. Midcal Aluminum, Inc. 445 U. S. 97 (1980)6 , and thus are exempt from the federal antitrust laws. The Midal test requires that (1) there be a "clearly articulated and affrmatively expressed state policy" to displace competition in the 4 Se Atthments I and II hereto.

5 The complaint contained allegations concerning respondent' s filing of rates in Vennont. Counsel have Btipulate that motor cummon carrers of fright ar no longer reuire to fie taffs with the State of Vermont, and that respondent no longer formulates rates applicable to intrtate transporttion of property in Vermont; nor does it file taffs published by it with any agent in Vermont. (F. 2) Complaint counse! has determined not to pursue chars concerning respondent's allege acivities in the State of Vermont, and has moved to dismiss the complaint allegations as they relate to the State of Vermont.(See Complaint Counsel' Motion To Dismiss As To Respondent's Collecive Activities In The State Of Vermont, date November 17 Complaint.1986.) counsel's motion to dismiss in this respe 6 Complaint counsel made a decision not to pursue a challenge is granted.to respondent's collectively develope commodity clasifications. (See Complaint Counsel's Memorandum On How We Intend To Pree iI18 1986, pp. 11-12)) 200 Initial Decision relevant market and (2) the policy must be "activeiy supervsed. Midal 445 U.S. at 105.

The Court has made clear that as long as the State as sovereign clearly intends to displace competition in a particular field with a regulatory structure, the first prong of the Midal test is satisfied. " clearly articulated permissive policy wil satisfy the first prong of the Inc. v.Midcal test. Southern Motor Carrs Rate Conference, United States 105 S. Ct. 1721 , 1729, n. 23 (1985) However, the regulatory agencies, acting alone, cannot immunize private anticompetitive conduct. (Ibid. The second prong of the test prevents states from thwarting the national policy in favor of competition by "casting ... a gauzy cloak of state involvement over what is essentially a private price-fixing arrangement. Midal 445 U.S. at 106 "This active supervsion requirement ensures that a state s actions will immunize the anticompetitive conduct of private parties only when the 'state has demonstrated its commitment to a program through its exercise of regulatory oversight.''' Souther Motor Carrrs 105 S. Ct. at 1729 n. 23 The tests set forth in Midcal underscore the fundamental premise that it is the state, not private parties, that must exercise complete control over restraints on competition. The Parker v. Brown doctrine is an implied exemption to the antitrust laws. The Parker decision was premised on the assumption that Congress, in enacting the Sherman Act, did not intend to compromise the States' ability to regulate their domestic commerce. However, implied antitrust immunities are disfavored National Germedical Hospital and Gerontology Center v. Blue Cross of Kansas City, 452 U. S. 378, 388- 389 (1981); United States v. Nationl Ass n of Securities Dealers, Inc. 422 U.S. 694, 719-720 (1975), and any exemptions from the antitrust laws are to be strictly construed. Group Life Health Insurance Co. v. Royal Drg Co. 440 U.S. 205 , 231 (1979); Abbott Laborators v. Portland Retail Drggists Ass, Inc. 425 U. S. 1 , 11 (1976) These canons of construction reflect the indispensable role of antitrust policy in the maintenance of a free economy. United States v. Philadelphia National Bank 374 U. S. 321 , 348 (1963). (21) CLEARLY ARTICULATED AND AFFRMATIVLY EXPRESSED STATE POUCY In Southern Motor Carrs the court stated that the Public Servce Commissions of North Carolina, Georgia, Tennessee, and 224 FEDBRA TRADE COMMISSION DECISIONS Initial Decision 112 F.

Mississippi permit collective ratemaking. However, acting alone, these agencies could not immunize private anticompetitive conduct. Parker immunity is available only when the challenged activity is undertaken pursuant to a clearly articulated policy of the State itself. North Carolina, Georgia, and Tennessee have statutes that explicitly permit collective ratemaking by common carrers. Thus, the rate bureaus actions in those States were taken pursuant to an express and clearly articulated state policy. Mississippi's legislature had not specifically addressed collective ratemaking. In considering the collective ratemaking activity of the rate bureau in Mississippi, the court stated: The Mississippi Motor Carrer Regulatory Law of 1938, .. gives the State Public Servce Commission authority to regulate common carrers. The statute provides that the commission is to prescribe 'just and reasonable' rates for the intrastate transportation of general commodities. '.. The legislature thus made clear its intent that intrastate rates would be detennined by a regulatory agency. rather than by the market. The details of the inherently anticompetitive rate-setting process, however are left to the agency s discretion. The state commission has exercised its discretion by actively encouraging collective ratemaking among common carrers. ... We do not believe that the. actions petitioners took pursuant to this regulatory program should be deprived of Parker immunity.

A private party acting pursuant to an anticompetitive regulatory program need not point to a specific, detailed legislative authorization' for its challenged conduct. .. As long as the State as sovereign clearly intends to displace competition in a particular field with a regulatory structure, the first prong of the MUkai test is satisfied. ... If more detail than a clear intent to displace competition were reuired of the legislature, States would find it diffcult to implement through regulatory agencies their anticompetitive policies. Agencies are created because they are able to deal with problems unforeseeable to, or outside the competence of, the legislature. Requiring express authorization for every action that an agency might find necessar to effectuate state policy would diminish, if not destroy, its usefulness. ... Therefore, we hold that if the State' s intent to establish an anticompetitive regulatory program is clear, as it is in Mississippi, the State's failure to (22) describe the implementation of its policy in detail will not subject the program to the restraints of the federa antitrust laws. (Footnotes omittd) Souther Motor Carrs 105 S. Ct. at 1731-1732. MASSACHUSETTS The First Circuit Court of Appeals, in Massachusetts FUrniture & Piano Movers Ass, Inc. v. FTC 773 F.2d 391 (1985), held that Massachusetts General Laws Annotated, ch. 159B, with language comparable to that of the Mississippi statute referred to by the Supreme Court in Souther Motor Carrrs. clearlv establishes the .......... ..........

H""" ""H""""'',,, ""U.. ...nU """V. 200 Initial Decision State' s intent to countenance collective ratemaking among motor carrers, notwithstanding Massachusetts ' claims in its amic brief to the contrary. Mass. Movers 773 F.2d at 396 The Federal Trade Commission did not seek Supreme Court review of this decision. Thus Massachusetts has satisfied the first prong of the Midal holding. NEW HAMPSHIRE New Hampshire has established a Department of Transportation under the executive direction of a Commissioner. N.H. Rev. Stat. Ann. Ch. 21-L:2 The Department is responsible for planning, developing, and maintaining a state transportation network which will provide for safe and convenient movement of people and goods throughout the State. N. R.S.A. 21-L:2 n(a) It has responsibilty for regulating motor common carrers of property and it may adopt rules relative to reasonable and adequate service, and safety of operation and equipment. N. R.S.A. Ch. 375-B:17 The Department may also adopt rules relating to the form and content of schedules of rates and charges. N.H.R.S.A. Ch. 375-B:13n The statutes provide for criminal penalties for any violation of the statutes or rules, and the superior courts (23) of New Hampshire have jurisdiction to restrain any such violations. N. R.S.A. Ch. 375-B:24, 24-a New Hampshire statutes require every motor common carrer of property to file a schedule of rates and charges with the Department and keep filed schedules available for public inspection. N. R.S. Ch. 375-B:13 Unless otherwise authorized by the Department, filed rates become effective thirty (30) days aftr filing. N.H. Admin. Code Puc 802. ll(b) Motor common carrers are prohibited from discriminating or giving unreasonable preference or advantage to any person or locality. N.H.R.S.A. Ch. 375-B:14 Once rates are established carrers must adhere to them and may not refund or remit any portion of the rates specified in the tariffs. N. A. Ch. 375-B:15 Motor common carrers must obtain a certificate before providing servce within the state. A certificate will be issued upon a determination that the public interest and public convenience wil be 1 The court speifically referr to the language of Mass. Gen. Laws Ann. ch. 159B and 6. The court considered that pursuant to the Massachusett statute there is a state regulatory agncy in Massachusett which sets motor common carers' rates for the intrate transporttion of gos, and that agncy exercises ultimate authority and control over all intratate rates. Common carers ar reuire to submit propose rates to the relevant commission for approval; propose rates beome effecive if the state agncy takes no action within a speifed period of time, or afr a hearng, upon afrmative agncy approval; and, while every common caer remains fr to submit individual rate proposas to the regulatory agncy, common carers allowed to ag on rate proposals, and to jointly submit their proposals to the regulatory agncy. , .. .

226 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F. served thereby. N. A. Ch. 375-B:4 , 375-B:5 , 375-B:7 The criteria for determining "public convenience" and "public interest" are set out in the New Hampshire Code of Administrative Rules-Puc 801.02, 801.03. The criteria emphasize a need for the service and the effect the new applicant wil have on existing carriers. Nowhere is consideration given to lower rates, or to competition in rates. The Department lacks statutory authority to reject or suspend any tariff fied by a motor common carrer of property for being unjust or unreasonable. (F. 12)8 Tariffs are reviewed only to ensure that they conform to the prescribed format and that they do not discriminate among shippers. (F. 14) New Hampshire permits, but does not require, a carrier to give authority to an agent to issue and file tariffs on its behalf. New Hampshire has a long history of working with agents which fie collective rate proposals on behalf of their members. (F. 17) New Hampshire statutes do not set forth a clearly articulated and affrmatively expressed policy to displace competition in motor common carrier rates and charges. The State is concerned primarily with safety and with ensuring adequate, not wasteful (24) duplication of service. 9 There is no policy declaration, or even an admonition, that rates be "just and reasonable." The settng of rates and charges is not supervsed by the State but is left open to competition. There is no statutory policy of permitting collective ratemaking. While the Department of Transportation has permitted collective ratemaking over the years, this does not meet the Midcal standard. The Supreme Court has stated: "Acting alone, however, these agencies (Public Servce Commissions J could not immunize private anticompetitive conduct. Southern Motor Carrers 105 S. Ct. at 1729 Respondent contends that the New Hampshire statutory scheme is comparable to the Mississippi statutes, which the Supreme Court held to satisfy the first prong of Midcal and the Massachusetts statute which the First Circuit Court of Appeals held to satisfy the first prong of Midcal. (Respondent' s Reply Memorandum, pp. 1-5) On the contrary, there are significant differences in the statutes of these States. As the Supreme Court noted, in Mississippi the statute 8 F. followed by a number refers to a finding of fact herein. 9 "The rapid increas in the number of vehicles so operate (transporting property for hire), and the fact that they are not sufficiently regulated, have increasd the dangers and hazards on public highways, and regulation of common carrers and contract carrers as hereafr defined is necessary to the end that highways may be rendered safer for the use of the general public; that the use of the highways for the transporttion property for hire may be restricted to the extnt reuired by the necessity and convenience of the shippers and reeivers of fright " N. A. Ch. 375-B:l Dedaratia of Policy. ....

N1!W 1!NtiLAU MUTUK KAT.t J:U1U!';AU , INli. Gtd 200 Initial Decision requires the Mississippi Public Servce Commission to prescribe "just and reasonable rates" for the intrastate transportation of property. (Miss. Code Ann. 77- 221 (1972)) In Massachusetts, the policy of the Commonwealth is to " (PJromote adequate, economical and effcient servce by motor carrers, and reasonable charges therefor .... (Ann. Laws of Mass. ch. 157B 1) In Massachusetts every common carrer shall establish, observe and enforce "just and reasonable rates." (Ann. Laws of Mass. ch. 157B 6) The Department of Public Utilties "may allow or disallow any filed or existing rates and may alter or prescribe the rates of common carrers (Ibid) Whenever the Department shall be of the opinion that any rate is "unjust or prejudicial " the Department "shall determine and prescribe the lawful rate of charge ... (Ibid) There is no indication in the New Hampshire statutes that the policy is to have just and reasonable rates. The Department lacks statutory authority to reject or suspend any tariff filed by a motor common carrer for being unjust or unreasonable. The stated policy of the State is to improve safety; fatally absent is statutory authority over setting of rates. The State neither establishes the rates nor reviews the reasonableness of the filed (25) rates. The State merely enforces the rates filed by private parties. Thus, the rates in New Hampshire cannot be said to be those of the State; it is the private parties that set the rates. Since New Hampshire does not have a clearly articulated and affrmatively expressed state policy to replace competition in the setting of rates, respondent's activities in collective ratemaking constitutes price-fixing in violation of the antitrust laws. RHODE ISLAD Rhode Island has a statutory policy of regulating the transportation of property by motor vehicles within the State. The stated policy includes the promotion of adequate, economical, and efficient servce at reasonable charges without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices. Gen. Laws of R. , Ch. 12 39-12. 1 Motor common carrers of property are regulated by the Rhode Island Public Utilities Commission through the Division of Public Utilties ("DPU"). DPU is headed by an Administrator with authority to make all rules and regulations necessary for such regulation, and to investigate whether motor carrers are complying with the statutes and rules. Gen. Laws of R.I. Ch. 12 39-12- 39-12-3 and 4 228 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

Motor common carrers must file rates with the Administrator and it is the duty of every such carrer to establish, observe, and enforce just reasonable, and reasonably compensatory rates and charges. Gen. Laws of RI. Ch. 12 39-12-12 The Administrator may reject any filed tariff not consistent with the regulations concerning filing of tariffs. Gen. Laws of R.I. Ch. 12 39-12-11 Filed rates become effective within thirty (30) days unless suspended by the Administrator. Gen. Laws of RI. Ch. 12 39-12-12 The Administrator, upon complaint of any common carrer or of any person, or on his own motion, may disallow any filed or existing rate and may alter or prescribe rates of motor common carrers. If the Administrator, aftr hearing, determines that any rate is or will be unjust or unreasonable or unjustly discriminatory, or unduly preferential, or unduly prejudicial, he may determine and prescribe the rate to be charged thereaftr. Gen. Laws of RI. Ch. 12 39-12-13 Statutory factors to be considered in determining just and reasonable rates include the need, in the public interest, of adequate and efficient transportation servce at the lowest cost consistent with the furnishing of servce, and the need of revenues suffcient to enable carrers under honest economical, and effcient management to provide servce. The burden of proof in any hearing involving a change in rates shall be upon the reasonable. Gen.carrer to show that the changed rate is just and Laws of RI. Ch. 12 39-12-14 The rules of practice and procedure issued pursuant to the Rhode Island motor carrer statute specifically provides for collective rate filings by agents of carrers. Rules No. , 20 Rule No. 18 provides (26) that rates prescribed by the Administrator shall be duly promulgated by the carrier to which such order applies.

From the above it is clear that the State of Rhode Island has articulated a policy to replace competition in the motor common carrer of property market with a detailed program of rate setting pursuant to statute. Rates are required to be just, reasonable, and reasonably compensatory. The Administrator may disallow filed rates and he may, aftr a hearing, prescribe rates to be charged. He is provided with statutory guidelines to be utilzed in determining what is a just and reasonable rate. (See Morgan v. Division of Liquo Control 664 F.2d 353 (2nd Cir. 1981) Thus, Rhode Island has met the requirements of the first prong of Midal. SUPERVISION The second Dronll of Midcal is the reouirement that tnprp np " oct.ivp Ha:" .LHU.u,OJ UVJ.V Ud'1.J.J. J.v u':. J."'\.. 200 Initial Decision supervsion" by the state to warrant an antitrust exemption. Midal 445 U. S. at 105 In Midal the California legislative policy was to permit resale price maintenance. The State authorized price setting by private parties and enforced the prices filed by the parties. The State neither established the prices nor reviewed the reasonableness of the filed price schedules. The State did not regulate the fair trade contracts, and did not engage in any "pointed reexamination" of the program. Midal 445 U.S. at 105-106 The Court held that the State of California could not thwart the national policy in favor of competition by "casting such a gauzy cloak of state involvement over what is essentially a private price-fixing arrangement. Id. at 106 In Souther Motor Carrrs the issue of "active supervsion" by the States was stipulated so that the Court did not provide guidelines as to what may constitute active supervsion under the Parker v. Brown doctrine. 10 The Court did observe that the legislatures did not have to disclose the details of the rate-setting process but could leave to the discretion of the regulatory commissions the implementation of the anticompetitive policies. This indicates a general deference by the Court to the States and their regulatory agencies. If a State establishes a commission to regulate motor common carrers, including rates, should the manner in which they exercise their discretion and the rigor with which they supervse (27) the ratemaking be reviewed by the Federal Trade Commission? There are few guidelines to follow in this area. 11 One authoritative source has highlighted the problems with court review of a regulatory commission s supervisory activities:

When state agencies act within their authority, should the manner in which they exercise their discretion ordinarily be reviewed by the antitrust court? Should the court scrutinize the rigor with which the state supervses the challenged activity to ensure that supervsion is more than pro fonna? We answer in the negative, with the proviso that an outright attmpt by a state to simply evade the antitrust laws should not. be countenanced. We recognize that our approach may make such evasion easier but we see no suitable way around this.

The federalism concerns at the heart of Parker cannot be reconciled with federal court probing of the "true" motives of state legislatures and agencies ... There simply 10 In U.S. v. South Moto Carrs Rate Con!. Inc. 702 F.2d 532, 539 n. 12 (with Cir. 1983)(en banc) the Court stte: "The government points out that the district court conduct no fac finding as to this iSlue (acive supervsion). The reord, however, reveals that the stte commissions conduct hearngs to review the reasnableness of propose carrer tas and routinely suspend their effecivene8B. 11 In Massachusetts Furniture Pino Moves Ass n v. FT. 773 F.2d 391 (1985), the First Circuit remanded the proeeing to the Commission for "definitive facual findings on the acive supervsion requirement." Mass. Movers 773 F.2d at 397 By order date March 19, 1986 , the Commssion dismissed the Mass. Movers proeeing for lack of public interest, offering no guidance on the acive supervsion issue. , .

230 FEDERA TRAE COMMISSION DECISIONS Initial Decision 112 F.

is no way to tell if the state has "looked" hard enough at the data, and there certinly are no manageable judicial standards by which a court may weigh the various elements of a "public interest" judgment in order to determine whether the legislature or agency decision was corrt. Those are political judgments and ought to be made by the legislature and its delegate Morever, it can hardly be said that this position leaves state agencies any frr than their federal counterpart. Charges of "rubber stamping" industry proposals are as common in the federal field as in the state. There sems little reason to hold state agencies to a higher standard, particularly when Congrss has ben silent on the matter. Thus, we conclude that an allegation that state offcials customarily "rubber stamp" the self-interested decisions or recommendations of the private parties involved should not ordinarily oust Parker immunity. We must confess, however, that the law on this point is very uncertain. The problem is compounded beause court may easily hide judgments about the rigor of (28) supervsion bebind general conclusions that "no supervsion" was present. P. Areeda & D. Turner, I Antitrut Law 213c (footnotes omitted) While the Court in Souther Motor Carrs seemed to defer to the states in finding a clearly articulated state policy to replace competition with regulation, the Court has stated that there must be "active supervsion; that states cannot cast a "gauzy cloak" over what is essentially a private price-fixing arrangement. Midal makes clear that the state must have authority and control over prices and must engage in a "pointed reexamination" of its regulatory program. Where prices are filed by private parties and the state does not review the reasonableness of the filed prices, as in Midal active supervsion is lacking and there can be no antitrust exemption. This conclusion is in accord with the accepted view that any inferred antitrust exemption must be narrowly construed.

Respondent contends that the courts rely solely on the language of the state statute in determining whether there is regulatory oversight (Respondent' s Proposed Findings, p. 42), citing several court proceedings, including New Motor Vehicle Board v. Orn W. Fox Co., 439 S. 96 (1978); Capital Telephon Co. v. N.Y Telephon Co. , 750 2d 1154 (2nd Cir. 1984); Morgan v. Divisio of Liquo Control 664 F. 2d 353 (2nd Cir. 1981); Fisher Foods, Inc. v. Ohio Dept. of Liquo Control 555 F. Supp. 641 (D. D. Ohio 1982); and Euster '2 Inv. Eagle Down Racng Ass 677 F.2d 992 (3rd Cir. 1982). these proceedings the court found active supervision from the regulatory scheme set forth in the statute. On the other hand Cf Mass. Moof!, where the Firs Circuit Court of Appeals found a clearly ariculate stte policy to replace competition with regulation bas on the sttutory language, but remanded the proeeing to the Commssion for "definitive factual findings on the acive supervsion requirement." 773 F.2d at 397 . . .

200 Initial Decision respondent refers to decisions where the court held there was no active supervision based on the absence of a statutory mechanism for active supervsion; , North Carolina v. P.IA. Asheville, Inc. 740 2d 274 (4th Cir. 1984); and Miller v. Oregon Liquo Control Com 688 F.2d 1222 (9th Cir. 1982).

In New Motor Vehicle Board the statute required notice and a hearing when any protest was filed which activated the statute. In Capital Telephon Co., the Public Servce Commission was given general supervsion" of all telephone corporations, with authority to examine "all books, contracts, records, documents and papers. " 750 2d at 1163 In Morgan the statute had structured "a detailed mechanism for determining prices of alcoholic beverages. " 664 F. at 356 In Fisher Foods formulas 129) for determining prices had been established, and the Department had power to inspect books, records accounts, and places of business. Also, the Department is required to hold four public hearings annually for the purpose of hearing complaints as to its policies. 555 F. Supp. at 647 In Euster the Pennsylvania Horse Racing Commission set the jockey fees pursuant to formal notice and hearing procedures. The challenge there was not to an alleged need for more supervsion, but a claim that the supervsion was biased in favor of the jockeys. 677 F.2d at 995. In contrast to the above proceedings where the statutes set out the details to be followed by the regulatory agencies, in I.A. Asheville the court found that once a certificate of need was issued there was a total absence of supervsion provided for by North Carolina. 740 F. at 278- 279 In Miller the court stated: Oregon mandates the posting of prices to be charged by each wholesaler, but does not in any way review the reasonableness of the prices set. While the commission may reject any price posting which is in violation of any of its rules,' the effect of that rule is simply to effectuate the price posting and the prohibitions on quantity discounts and transportation allowances. It does not provide for government establishment of the prices themselves.

688 F.2d at 1226-1227 The above court decisions support a general proposition; namely, that where the state statute clearly sets forth requirements to be followed in carrng out the statutory mandate; a requirement for a hearing, a formula for establishing prices, broad powers to support general supervsion over all activities, active supervsion can be inferred from the statutory mandate. It is presumed that public 232 FEDERA TRAE COMMISSION DECISIONS Initial Decision 112 F.

offcials carr out their statutory responsibilities, especially where there is no showing that supervsion is, in fact, absent. When there is a challenge to the state action exemption and the statute does not provide clearly the details to be followed in supervsion of the marketplace, courts must look beyond the statutory language and explore the supervsion that has been provided by the regulatory agencies.

Complaint counsel contends that the procedures suggested by Professors Areeda and Turner in their treatise are necessary to ensure that adequate state supervision is being exercised. Complaint counsel insists that to qualify for the state action exemption procedures are required which will (1) accord opponents the opportunity to present facts and arguments against the challenged act, (2) assure conscious consideration by those particular state offcials charged with the power and responsibility for approval, and (3) allow judicial review of the agency record. See P. Areeda & D. Turner, I Antitrust Law fI 213 (30) (1978) Complaint counsel points out that giving opponents and members of the public notice and an opportunity to comment may allow state regulators to become aware of alternatives, problems and possible inaccuracies in the joint rate filings. Unless state offcials consciously consider the rates they are supposed to regulate, there are actually no constraints on private proposals. Finally, unless the state agency articulates a reasoned basis for its decision-making that is susceptible to judicial review, there can be no assurance that conscious consideration, rather than inaction, is behind offcial decisions. (See Complaint Counsel's Proposed Findings of Fact, pp. 52-53) The requirements which Professors Areeda and Turner and complaint counsel suggest, would permit not only judicial review of agency decisions, but would compel the agencies to scrutinize more closely the basis for their decisions. Thus, much can be said for their adoption and implementation by the states. However, where the state by statute has granted the regulatory commission clear oversight authority to review rates for reasonableness, to suspend rates found to be unreasonable, and to establish just and reasonable rates when necessary, the existence of this latent oversight authority 13 Respondent notes that its collecive Iitemaking acivities ar cared out pursuant to an agment approved by the Interstate Commerce Commssion under Seion l0706(b) of the Interstate Commerce Act, 49 C. 10706(b), and that notice to interest parties and an open hearng is provided. The Interste Commerce Commssion pursuant to federa reuirements lIuperv8es respondent' intestate rnternakng proedures. There is no state involvement in respondent' inlratate acivities, and the acive supervion requirement for antitrust immunity for intratate collective ratemaking has not ben delegate to the Interstate Commerce Commission by the sttes. 200 Initial Decision and the presumption of offcial regularity should shift the burden to the party challenging the ratemaking process to demonstrate that the regnlatory commission in fact has never engaged in any active supervsion of the ratemaking process. A mere showing that a state supervsory agency has not followed the Areeda- Turner suggested procedures is not suffcient to establish a lack of active supervsion. The agency must be given some discretion as to its method and manner of supervsion. Instead of concentrating on an agency s failure to follow theoretical and desirable procedures, the record must concentrate on what the agency actually did. In this proceeding we have a stipulated record of the supervsion exercised by the regulatory agencies. (31) MASSACHUSETIS In Massachusetts the Department of Public Utilties ("MDPU") has and to conductstatutory authority to suspend or reject filed rates, thehearings and establish just and reasonable rates. However, stipulated record shows that the MDPU does not look behind filed rates to determine carrer profits and costs; has never requested financial information from a carrer; has never rejectd a filed tariff because of the rate (F. 31); has never established reasonable maximum or minimum rates for motor common carrers of property although charged by statute to do so annually (ch. 159B 9 6 par. 5, 6; F. 32); has not held a hearing on rates for at least the past six years (F. 37); 14 has a long history of dealing with motor common carrer agents who fie collective rates; does not monitor the ratemaking process utilized by the respondent in this proceeding; and has never conducted an economic study of the intrastate trucking industry nor of the effects of its regulatory policy on the intrastate trucking industry within the state. 15 Further, the commission does not have a staff adequate to monitor the reasonableness of filed rates; any review is only. (See August 28, 1986 Stip. Ex. I, p. 11 limited to form (Transcript of Hearing by Rhode Island Division of Public utilities and Carrers); F. 27 , 34) Given the record facts summarized above, it is concluded that Massachusetts has not engaged in active supervsion of the intrastate motor common carrer rates which are filed by the industry and permitted to become effective, and there has been no "pointed 14 See August 28, 1986 Stip. Ex. K, pp. 42-43 (Transcript of Heanng Before Rhode Island Division of Public Utilities and Carrers) 15 Masachusett is divided into pricing 7.nes which were established by the carers, not the State. (F. 36) 234 FEDERA TRAE COMMISSION DECISIONS Initial Decision 112 F.

reexamination" of its regulatory program. Since there is no State commitment to a program of regulatory oversight of intrastate motor common carrer rates, there is no immunity from the antitrust laws. NE HAPSHIRE It has been determined that New Hampshire does not have a clearly articulated policy to replace competition in the establishing of intrastate motor common carrer rates. (See pp. 22- infra) Further the record makes clear that new Hampshire does not actively supervse the intrastate ratemaking process. Rates fied by carrers with the New Hampshire Department of Transportation become effective thirty days aftr filing. (F. 11) The Department lacks statutory authority to reject or 1321 suspend any tariff filed by a motor common carrer for being unjust or unreasonable. (F. 12) Filed tariffs are reviewed only for conformance with proper format and to ensure that they are not discriminatory. (F. 14) Certificates of carrers have been suspended for failure to adhere to their filed rates. (F. 13) The Department has a long history of working with agents which fie collective rates on behalf of their member carrers. (F. 17) the Department does not involve itself in the prefiling determination of rates by agents, nor does it monitor the activities of the agents. (F. 19) The Department does not monitor economic conditions in the intrastate motor common carrer industry and has never conducted a study of the industry nor the effects of state regulatory policy on the industry. (F. 21) The Department does not have a staff adequate to monitor the reasonableness of fied rates. (See August 28, 1986 Stip. Ex. K, p. 11 (Transcript of Hearing by Rhode Island Division of Public Utilties and CarrersJ; F. 13, 23) Apparently no hearings have been held in recent years concerning rates filed by the respondent herein. (See August 28, 1986 Stip. Ex. , pp. 42-43 (Transcript of Hearing by Rhode Island Division of Utilities and Carrers J) The lack of statutory authority to determine rates, or to suspend or reject rates, and the failure to examine rates for reasonableness contrasts sharply with the extensive procedures available and utilized to investigate and correct rates that appear discriminatory. (F. 13) Given the record facts summarized above, New Hampshire has not engaged in active supervsion of the intrastate motor common carrer rates which are filed by industry and permitted to become effective and there has been no "pointed reexamination" of its regulatory NEW ENGLA MOTOR RATE BUREAU, INC. 235 200 Initial Decision program. Since there is no State commitment to a program of regulatory oversight of intrastate motor common carrer rates, there is no immunity from the antitrust laws.

RHODE ISLAD The Rhode Island Public Utilties Commission regulates motor common carrers of property through the Division of Public Utilities and Carrers (DPUC), which is headed by an Administrator. DPUC prescribes rules regulating motor common carrers of property. (F. 49) Presently there are approximately 700 motor common carrers of property within Rhode Island. (F. 52) The DPUC staff consists of three field investigators (who check vehicles for registration, safe operating conditions, and to determine if carrers are adhering to filed tariffs), two clerks, a rate analyst, an attorney and an associate administrator. (F. 50) Motor common carrers of property are required to file rates with the DPUC, which rates are required to be just and reasonable and reasonably compensatory. (F. 54) Rates become effective thirty days aftr fiing. (F. 55) Rates are examined to ascertain whether they conform to the required format and are (33) within a "zone of reasonableness " which is a measure developed by the DPUC rate analyst and consists of a range between the maximum and minimum industry averages of previously approved rates. (F. 56) Rates fallng within the "zone of reasonableness" are approved without a hearing. (Ibid. In determining the reasonableness of a proposed tariff, the rate analyst also may consider the percentage of the rate increase as well as the date of the carrer s last request for an increase. If the rate analyst cannot complete his review of a newly fied tariff within the thirty day period before the tariff becomes effective, DPUC suspends the tariff. (F. 56) DPUC requires carrers to submit cost information or other financial data to justify proposed tariff changes only if the tariff is suspended and the matter is set for hearing. (F. 57) Upon finding that the evidence adduced at the hearing does not justify a proposed rate, DPUC will deny the tariff proponent' s request for rate approval and establish a rate that the evidence supports. In determining the appropriate rate, DPUC does not use a precise formula, but rather sets a rate that wil afford the carrier a good living and that wil allow for increased expenses. DPUC does not permit rate increases based solely on inflation unless a hearing is held and it is determined that the increase is warranted. At the conclusion of a 236 FEDERA TRE COMMISSION DECISIONS Initial Decision 112 F.

hearing, the hearing offcer draft an order and decision, which the Administrator approves by signing. (F. 60) Apparently Rhode Island did not conduct any hearings in recent years concerning respondent' filings for rate increases, until a hearing held on July 9 , 1986. (See August 28, 1986 Stip. Ex. K, pp. 42-43 (Transcript of Hearing before Rhode Island Division of Public Utilties and Carrers J) The tariffs filed by respondent are accompanied with justification statements that have been filed with the ICC. (F. 58) DPUC analyzes those statements, makes use of the information contained therein to make its initial determination of the lawflness of respondent' proposals, but does not place complete reliance on the ICC justification statements. (See August 28, 1986 Stip. Ex. K, pp. 12-13 (Transcript of Hearing by Rhode Island Division of Public Utilties and Carrers J) Aftr making its initial determination, the staff drafts an order, which may be accompanied by a memorandum, recommending that the Administrator either approve the proposal or suspend it and conduct a hearing. In either case, the Administrator, who has the final authority in such matters, issues an order. (F. 58) DPUC authorizes motor common carrers of property to give authority to an agent to issue and file tariffs and supplements thereto in their stead. (F. 61) A carrer does so by executing a power of attorney and filing it with the DPUC. DPUC does not engage in any effort to monitor the prefiling, filing or postfiling activities of respondent. (F. 65) DPUC does not monitor economic conditions in the intrastate trucking industry in Rhode Island.. DPUC has never conducted a study of the intrastate trucking industry with regard to economic (34) regulation or of the effects of the state regulatory policy on the intrastate trucking industry in Rhode Island. (F. 66) Complaint counsel contends that the filing of rates with the Commission and the posting of rates at each offce or station of the carrer at which it receives freight or maintains records does not provide effective notice to parties who might be interested in commenting on proposed tariffs. Record evidence is silent on the lctual effectiveness of notice within Rhode Island. Complaint counsel llso contends that the "zone of reasonableness" established by the ate analyst in reviewing tariffs is an informal, unpublished measure hat even shippers may not be aware of. Record evidence on the easonableness or unreasonableness of the rate analyst's " zone of easonableness" is lacking. Complaint counsel also complains that the NEW ENGLA MOTOR RATE BUREAU, INC. 237 200 Initial Decision wrtten orders of the DPUC administrator fail to provide an explanation of why the tariffs meet, or fail to meet, the state regulatory and statutory criteria.

However, the record does contain evidence of one hearing conducted by the DPUC. This hearing was held on July 9, 1986 to review a tariff fied by respondent on April 17, 1986. (F. 58) It is true that this hearing was held almost three years aftr the issuance of the Commission s complaint herein, and may have been brought about by the issuance of the Commission s complaint. The record is silent as to any previous hearings that may have been held over the years, and from a reading of the transcript of hearing (see Ex. K to Stip. of August 28, 1986) it appears that this may be the first and only formal hearing on any tariff filed by respondent or any other carrer or carrer s agent. Again, the record is unclear on this point. Respondent has attached to its Proposed Findings Of Fact Conclusions Of Law, Order, And Supporting Memorandum a copy of the Report And Order issued on October 24, 1986 by the DPUC , 16 which is a ruling on respondent' s tariff filed on April 17, 1986. This Report And Order constitutes a review of the evidence of record before the agency, including the hearing held on July 8, 1986, and it grants respondent's application for a general rate increase. The opinion discusses the evidence of record and gives reasons for accepting the proposed rate increase. This Report And Order appears adequate to permit a review by a court.

From the above summary it is concluded that the Rhode Island Public Utilties Commission has engaged in and is now engaging in an active program of supervsion over intrastate motor common carrier rates within Rhode Island. Rates are reviewed, suspended, hearings are held, decisions are written, and rates (35) are established by the Commission. (F. 60) The record does not reveal the details of this program of active supervsion nor when it began. Further, the record does not demonstrate the rigor with which rates are reviewed nor the effectiveness of the regulatory program in ensuring a competitive ratemaking program. Although the DPUC has a very small staff to review carrer rates (F. 50, 52, 67), the evidence amply demonstrates something more that mere pro fora fiing of rates and acceptance of those rates by the DPUC. The record does not demonstrate that the State' s regulatory program is a sham. Accordingly, the regulatory 16 It is proper to take official notice of this foma! governmental action. 238 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

program of Rhode Island meets the Midcal criteria and an exemption from federal antitrust laws is warranted.

PUBLIC INTEREST Respondent argues that Commission precedent requires dismissal of this complaint. Respondent refers to three Commission proceedings which have been dismissed for lack of public interest. Massachusetts Furniture and Piano Movers Ass, Inc. Docket 9137 (Commission Order March 19 , 1986); Tristate Household Goods TariffConjerence Inc Docket 9184 (Commission Order July 5, 1985, 106 FTC 1); Middle Atlantic Conference Docket 9185 (Commission Order June Tristate and, 1985 105 FTC 406). Commission orders in the Middle Atlantic matters specifically reference the fact that complaint counsel represented that all the elements of a state action defense as articulated by the Supreme Court in Southern Motor Carrrs are available to the respondents. Thus, these two proceedings are not precedents for dismissal of this proceeding, since there has been no stipulation that all the elements of a state action defense are available to respondent. In Mass. Movers the Commission did not indicate the reasons for its determination that there was a lack of public interest in Mass. Movers does not articulate acontinuing that proceeding. Thus Commission policy or establish a precedent that can be applied to other rating bureau matters. Further, it must be assumed that the Commission is aware of its own docket of outstanding complaints which includes this proceeding and one other rating bureau matter Motor Transport Association of Connectict, Inc. Docket 9186. No order has been forthcoming to withdraw these matters from adjudication. Accordingly, there is no precedent available to the administrative law judge warranting dismissal of this proceeding. The ultimate determination of public interest in continuing this proceeding is for the Commission to make.

REMEDY It was determined in my Order Granting In Part Complaint Counsel' s Motion For Partial Summary Decision (Attachment I hereto) that respondent's collective ratemaking activities constitute price-fixing and as such is a per se violation of the Federal Trade Commission Act, absent a valid state action (36) defense. (Attachment , pp. 23- 25) Since it has been concluded herein that respondent' filing of collective freight rates in Massachusetts and New Hampshire 200 Initial Decision is not entitled to a state action exemption from the antitrust laws, a remedy must be entered.

The Commission has wide latitude in selecting the relief to remedy the practices found to be unlawful Jacob Siegel Co., v. FTC 327 U. 608 611 (1946), and it need not confine the relief to the narrow path of the transgressor but "must be allowed to effectively close all roads to the prohibited goal so that its order may not be by-passed with impunity. FTCv. Ruberoid Co. 343 U.S. 470, 473 (1952) Under this broad authority to select a remedy, complaint counsel has proposed an order that would prohibit respondent's collective ratemaking activities throughout its entire operating area, which includes Vermont, where respondent no longer formulates rates for its member carrers, and the States of Connecticut, Maine, and certain parts of new Jersey and New York, States not mentioned in the complaint. Complaint counsel justifies the territorial coverage of the proposed order by the inclusion of a proviso in the order which would permit respondent to engage in collective ratemaking in any state which has a policy clearly articulated by the state to displace competition with respect to ratemaking and which policy is actively supervsed by the state. Complaint counsel goes further and would require that the active supervsion in such state consist of (1) notice reasonably calculated to notify the public, (2) affording members of the public an opportunity to provide written or oral comments on any joint tariff and (3) issuing written explanations as to why the joint tariffs meet or fail to meet the statutory and regulatory criteria. Complaint counsel' s proposed remedy is not warranted by the record of this proceeding. As this record demonstrates, respondent' activities in Rhode Island are lawful under the state action exemption. Vermont has been stipulated out of this proceeding. The record is silent as to the availability to respondent of the state action defense in Connecticut, Maine, New Jersey and New York. The Commission has previously dismissed proceedings challenging collective rate formulation in Pennsylvania because of the availability of the state action defense in that state (see dismissals in Tritate and Middle Atlantic supra ). Presumably, each state where respondent files collectively formulated rates authorizes such joint activity. Accordingly, it appears appropriate to limit the remedy in this proceeding to those states where there is record evidence to support a conclusion that the state action defense is not available. Rather than place the burden on respondent to act at its peril in complying with state-authorized 240 FEDERA TRAE COMMISSION DECISIONS Initial Decision 112 F.

activities, in an area of the law as uncertain as is the state action doctrine the burden should be on government to challenge respondent's activities where there is reason to believe there is a violation of the federal antitrust laws. (37) Further, the proviso, which is included in complaint counsel' proposed order, is not in accord with my understanding of the present state of the law respecting the state action doctrine. Complaint counsel's proviso would limit respondent's filing of collectively determined rates to those states which follow the Areeda- Turner supervisory proposals; reasonable notice, an opportunity for public comment, and a written opinion justifyng the determination of the agency with respect to filed rates. As the Supreme Court has stated active supervsion should be left to the discretion of the state regulatory agencies; federal mandating of required procedures for state regulatory agencies to utilze in the course of their supervisory activities should be avoided, especially in an across-the-board order such as complaint counsel proposes.

The memorandum filed by the National Association Of Regulatory Utilty Commissioners expresses concern that state regulatory agencies be left fre to accept collective rates; that states be allowed to choose their own regulatory schemes; that federal antitrust laws not be used an as instrument for reformation of state regulatory policies. The concern of the Association is real and has been considered in the remedy to be entered. The order entered herein does not mandate the supervsory procedures which complaint counsel has proposed; regulatory agencies are left free to exercise their discretion in developing a regulatory policy. However, state regulatory policy and procedures must meet the requirements which the Supreme Court set forth in Midal and other decisions. There must be a clearly articulated state policy to replace competition with a regulatory structure, and there must be active supervsion of the anticompetitive conduct. The remedy entered herein goes no farther than this existing precedent. In Mass. Movers 102 FTC 1176, 1225-1226 (1983), the Commission included some "fencing- " provisions to prevent activities which facilitated price-fixing and which were used to exhort member carrers to match published rates. No such activity appears in this record; all of respondent' s activities were open and above-board and undertaken in accordance with state authorization. Also, in the Commission Mass. Movers proceeding, all of the respondent' collective rate activities were within Massachusetts where there was 200 Initial Decision held to be no state action defense available; in this proceeding respondent' s activities in Rhode Island were found to be exempt from the federal antitrust laws, and activities in other states were not challenged. Therefore, some of the provisions of the Mass. Movers order have not ben utilzed in the order entered herein. Except as mentioned, the order in Mass. Movers has been used as a guideline in drafting an appropriate order in this proceeding. (38) CONCLUSIONS OF LAw 1. The Federal Trade Commission has jurisdiction over the subjec matter of this proceeding and over respondent herein. 2. The acts and practices charged in the complaint took place in or affecting commerce within the meaning of the Federal Trade Commission Act, as amended.

3. Respondent, its members, offcers and directors, and others have ben, and now are engaged in a continuing combination and conspiracy to fix rates charged by motor common carrers for the intrastate transportation of property within the Commonwealth of Massachusetts, and the States of New Hampshire and Rhode Island. 4. The acts and practices of respondent in the Commonwealth of Massachusetts and the State of New Hampshire, as set forth in paragraph 3 above, are to the prejudice and injury of the public and constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act, as amended. 5. Respondent's activities in the Commonwealth of Massachusetts and the State of New Hampshire, as set forth in paragraphs 3 and 4 above, are not exempt from Section 5 of the Federal Trade Commission Act by reason of the Parker v. Brow state action doctrine.

6. Respondent's activities in the State of Rhode Island, as set forth in paragraph 3 above, are exempt frm the prohibitions of the Federal Trade Commission act under the " state action" doctrine. 7. The order entered hereinaftr is appropriate and warranted to remedy respondent's unlawful activities.

ORDER It is ordeed That New England Motor Rate Bureau, Inc. , a 242 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

corporation, its successors and assigns, and its offcers, agents (39) through anyrepresentatives, directors and employees directly or corporation, subsidiary, division or other device shall forthwith cease and desist from:

1. Entering into, adhering to or maintaining, directly or indirectly, any contract, agreement, understanding, plan, program, combination or conspiracy to fix, stabilze, raise, maintain or otherwise interfere or tamper with the rates charged by carrers that compete for the intrastate transportation of property or related servces, goods or equipment within the Commonwealth of Massachusetts and the State of New Hampshire.

2. Knowingly preparing, developing, disseminating or filing a proposed or existing tariff provision which contains collective rates for the intrastate transportation of property or other related servces goods or equipment within the Commonwealth of Massachusetts and the State of New Hampshire.

3. Providing information to any carrer about rate changes applicable to the intrastate transportation of property within the Commonwealth of Massachusetts and the State of New Hampshire ordered by any other carrier employing the publishing services of the respondent prior to the time at which such rate change becomes a matte of public record.

including 4. Inviting, coordinating or providing a forum for, publication of an information bulletin, any discussion or agreement between or among competing carrers (40) concerning intrastate rates charged or proposed to be charged by carriers for the intrastate transportation of property or related services, goods or equipment within the Commonwealth of Massachusetts and the State of New Hampshire.

5. Suggesting, urging, encouraging, persuading or influencing in any way members to charge, fie or adhere to any existing or proposed tariff provision which affects rates within the Commonwealth of Massachusetts and the State of New Hampshire, or otherwise to charge or refrain from charging any particular price for any services rendered or goods or equipment provided.

6. Agreeing with any carrier to institute automatic changes to rates on fie for said carrier with the Commonwealth of Massachusetts and the State of New Hampshire.

. .

200 Initial Decision II.

It is furthe ordered That New England Motor Rate Bureau, Inc. it of this order:shall, within six (6) months aftr servce upon 1. Take such action as may be necessary to effectuate cancellation and withdrawal of all tariffs and any supplements thereto on file with the Commonwealth of Massachusetts and the State of New Hampshire that establish rates for the intrastate (41) transportation of property or related servces, goods or equipment by common carrers in Massachusetts and New Hampshire.

2. Terminate all previously executed powers of attorney and rate and tariff servce agreements, between it and any carrer utilizing its servces, authorizing the publication and/or filing of intrastate collective rates within the Commonwealth of Massachusetts and the State of New Hampshire.

It is further ordeed That respondent shall within thirty (30) days aftr servce upon it of this order, mail or deliver a copy of this order under cover of the letter attached hereto as "Appendix " to each current member of respondent, and for a period of three (3) years from the date of servce of this order, to each new member within ten (10) days of each such member s acceptance by respondent. IV.

It is That respondent notify the Commission at further ordered least thirty (30) days prior to any proposed change in the respondent such as dissolution, assignment or sale resulting in the emergence of a successor corporation, or any other proposed change in the corporation which may affect compliance obligations arising out of the order. (42) It is further ordered That respondent shall file a written report within six (6) months of the date of service of this order, and annually on the anniversary date of the original report for each of the five years thereaftr, and at such other times as the Commission may require by written notice to respondent, setting forth in detail the manner and form in which it has complied with this order. 244 FEDERA TRAE COMMISSION DECISIONS Initial Decision 112 F.

APPENDIX (Lettrhead of The New England Motor Rate Bureau, Inc. Dear Member.

The Federal Trade Commission has ordered The New England Motor Rate Bureau Inc. to ceas and desist its tariff and collective rate-making activities in the Commonwealth of Massachusetts and the State of New Hampshire. A copy of the Commission Opinion and Order is enclosed.

In order that you may readily understand the terms of the Order, we have set forth its essential provisions, although you must realize that the Order itself is controllng, rather than the following explanation of its provisions: (1) The Bureau is prohibite from engaging in any collecive rate-making activities including the proposal, development or fiing of tariffs which contain any collectively formulate rates for intrastate transporttion servces in the Commonwealth of Massachusett and the State of New Hampshire. Each member carrer must independently set its own rates for intrastate transporttion of property or relate servces, goods or equipment within these States but may use the Association as a tariff publishing agent. (43) (2) The Bureau is prohibited from providing a forum for its members for the purpse of discussing rates for the intrastate transportation of property within Massachusett and New Hampshire.

(3) The Bureau may not provide non-public information to any carrer about intrastate rate changes in Massachusetts and New Hampshire ordered by another carrer.

(4) The Bureau is given six months to cancel all tariffs and tariff supplements currntly in effect and on file in Massachusett and New Hampshire referrng to rates for the intrastate transporttion of property or related services, goods or equipment within those states which were prepared, develope or filed by the Association. (5) The Bureau is reuired to amend its by laws to reuire its members to observe the provisions of the order as a condition of membership in the Association. Sincerely yours General Manager Enclosure ATTACHMENT I ORDER GRAG IN PART COMPLAIN COUNSEL MOTION FOR PARTI SUMMARY DECISION By motion dated April 29, 1985, complaint counsel has requested a summary decision on all the issues for decision in this matter with the exception of respondent' NGLAU MOTOR RAT BUREAU, INC. 2411 200 Initial Decision state action" defense. 1 Since complaint counsel's motion is being granted in substantial part, this order sets forth those facts which are without substantial controversy. and the legal conclusions reached from such facts. An order direting further proeedings also is included. 2 Preliminary Statement The complaint herein issued on October 24, 1983. It charges respondent, its members, offcers and dirers, and others with a continuing combination and conspiracy to fix rates charge for the intrastate transportation of property within the states of Massachusetts, New Hampshire, Rhode Island and Vermont. The complaint alleges that respondent's membership consists of approximately 900 common carrers of property by motor vehicle, and that respondent, its members and others, have taken action to establish and maintain collective rates, which have the purpse of fixing, stabilzing or otherwise tampering with rates charged for the intrastate transporttion of property (2) within the states of Massachusetts, New Hampshire Rhode Island and Vermont, and that these collective rates have ben filed with the state regulatory agencies in such states. This action is alleged to have deprived shippers and consumers of the benefits of fr and open competition in the intrastate transportation of property within those states. Such acts, policies and pracices are alleged to be to the prejudice and injury of the public and constitute unfair methods of competition in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act.

Respondent' s answer, dated November 30, 1983, denied the charging allegations of the complaint, and sets forth thirtn defenses to the complaint. These defenses include statements that the complaint fails to state a claim on which relief can be granted; that respondent's members are subject to the Interstate Commerce Act, 49 C. 10101 et seq. and exempt frm regulation by the Federal Trade Commission; that respondent's member carrers are the real parties in interest and are indispensable parties to this proeeding; that regulation of the activities challenged in the complaint is within the exclusive jurisdiction of the several states; that the challenged activities are subject to a special regulatory scheme and because of the clear repugnancy between that regulatory scheme and the Federal Trade Commission Act, the latter is impliedly repealed; that the activities allege in the complaint are exempt from the Federal Trade Commission Act under the doctrines of Parke v. Brow and Noer-Penriingto; that the activities alleged in the complaint are exempt from the provisions of the Federal Trade Commission Act by virtue of l0706(b) of the Interstate Commerce Act, 49 V. C. 10706(b); that beanse of pervasive state regulation it would be unfair to hold respondent responsible for conduct implementing state regulation; that all matters raised by the complaint are within the primary jurisdiction of federal or state transportation regulatory agencies charged with the exclusive right and duty to regulate such mattrs and the Federal Trade Commission 1 Complaint counsel' s motion also seks to strike certn of respondent's afrmative defenss. These contentions have ben responded to by respondent (Respondent's Cross Motion For Summar Deision, pp. 32- 36), and win be considered as par of complaint counsel's motion for parial summar decision. 2 The detemrnations made herein were delayed pending a decision by the Unite States Court of Appeals For The Firs Circuit inMassackusetts FUrniture Pino MQVeTS Ass n" Inc. v. FT 773 F. 2d 391 (1st Cir. 1985), rek. deie (November 21, 1985). (See Complaint Counsel's Report On Status Of Preeing, Febrnar , 1986) 246 FEDERA TRAE COMMISSION DECISIONS Initial Decision 112 F.

has failed to exhaust these administrative remedies; and that this proceeding is balTed by doctrines of laches, eswppei and/or waiver. A prehearing conference was held on January 16, 1984, at which time the parties contemplated preparation and submission of a stipulation of facts. On March 23 1984, the parties filed a stipulation of facts, and reserved the right to present further evidence into the record.

By order dated May 25, 1984, the undersigned denied a motion to quash certain subpoenas duces tecum issued to respondent and to its member carrers. In that order the undersigned detennined that respondent is not a common carrer subject to the Acts to regulate commerce, since the Interstate Commerce Act defines a "motor common carrer" as one who holds "itself out to the general public to provide motor vehicle transportation for compensation " 49 D. C. 10102(13), and respondent does not meet this definition. Further, it was (3) detennined that respondent, as an agent for motor common carrers, does not qualify for an exemption under the Federal Trade Commission Act see Massachusetts Furniture and Pirw MfJers Ass, Inc. 102 FTC 1176, 1212- 1213 (1983), and that respondent's member carrers were not indispensable parties in this proceeding. Cruh Intetiol Ltd. , et al., 80 FTC 1023 (1972) By order of August 7, 1984, complaint counsel's motion to seek court enforcement of subpoenas duces tecum addressed to respondent and certain of its member carrers was certified to the Commission. The Commission directed that court enforcement of the subpoenas be commenced (Commission Order, August 23, 1984), and enforcement of the subpoenas was ordered by the court on December 5 , 1984. FTC v. The New Englawl Mow Raw Bureau, Inc. , et al. Misc. No. 84-0268 (D. C. 1984) Subsequent to the court' s order, on January 14 , 1985 , respondent and complaint counsel entered into a stipulation concerning the matters covered by the subpoenas. Complaint counsel, on April 29, 1985, filed a motion for partial summary decision pursuant to Section 3.24 of the Commission s Rules of Practice. Respondent's answer to this motion was made in the fonn of a cross motion for summary decision. (See Cross Motion For Summary Decision, July I, 1985.) Respondent' s cross motion for summary decision has been considered in connection with this ruling. A separate ruling has been entered denying respondent's cross motion. (See Order Denying Respondent' s Cross Motion For Summary Decision, March 7, 1986. Section 3.24 of the Commission s Rules of Practice authorizes any party to move with or without supporting affdavits for a summary decision in his favor upon all or any part of the issues being adjudicated. The granting of such a motion is directed where the affdavits and other evidence relied upon "show that there is no genuine issue as to any material fact and that the moving party is entitled to such a decision as a matter of law. " (Section 3.24(a) (2)) Any such decision shall constitute the initial decision of the Administrative Law Judge.

Section 3. 24 closely parallels Rule 56 of the Federal Rules of Civil Procedure. The Hearst Cororatio 80 FTC 1011 , 1014 (1972) Summary judgment under Rule 56 may be granted only if there is no genuine issue as to any material fact or the inferences to be drawn from the undisputed facts. United States v. Dibold, Inc., 369 S. 654 (1962); Winlcs v. Highlawls Ins., 569 F. 2d 297 (5th Cir. 1978); Hawli Inv. Co. v. Mobil Oil Co. 550 F. 2d 543 (9th Cir. 1977); Weis v. Kay Jewetry Stores Inc. 470 F. 2d 1259, 1261-62 (d.C. Cir. 1972) The moving party has the burden of establishing that no genuine issue of material fact exists; all doubts and inferences 200 Initial Decision are resolved against the movant; and summary judgment is improper jf conflcting (4) inferences may be drawn frm the same evidence. Exnic v. United States, 563 2d 418 (10th Cir. 1977) This same standard has been accepted in Federal Trade Commission proeedings. The Hearst Cororatio, supra; .Amean Medical Associtio Dkt. 9064, Order Denying Motion Of Respondent The American Medical Association AM" For Summary Decision Dismissing The Complaint For Lack Of Jurisdiction, Apr. 26, 1976 Summary decision may be appropriate in an antitrust case First Nat. Bank of Arizon v. Cities Ser, Co. 391 U. S. 253, 290 (1968); especially where, as here, motive and intent are not an issue. See Polle v. Columbia Broadasting Syste, Inc. 368 U. S. 464 , 467 (1962) Full consideration has ben given to the findings of fact and legal arguments presented by the parties. The Findings of Fact which follow are based on reliable evidence as to which there is no dispute as to authenticity or genuineness. This evidence consists principally of the pleadings, stipulations of fact, admissions by respondent, a deposition of respondent's General Manager, and certain other materials such as state regulatory statutes and rules as to which there is no dispute. Basd on a careful study of the evidence presented by the parties hereto in support of and in opposition to the motion for partial summary decision, the following Findings of Fact and the inferences logically drawn from such facts are without substantial dispute.

Findings of Fact 1. Respondent, The New England Motor Rate Bureau, Inc. ("Bureau ), is a corporation, organized, existing and doing business under the laws of the Commonwealth of Massachusetts, with its offce and principal place of business located at 14 New England Executive Park, Burlingtn, Massachusetts 01803. (Answer to Complaint at 6: CC Ex. A at 9) Respondent Bureau is an organization of approximately 675 common carrers of property by motor vehicle engaged in the interstate and intrastate transportation of general commodities within the states of Massachusetts, New Hampshire, Rhode Island and Venoont. (Stipulation dated March 23, 1984 at 3. Respondent Bureau was incorprated under the Laws of the Commonwealth of Massachusetts in 1936 as a successor to the Motor Truck Rate Bureau of Massachusetts, Inc., which was incorprated under the laws of the Commonwealth of Massachusetts in 1934. The latter organization functioned as the forum through which its members collectively formulated intrastate rates and classifications within Massachusetts. Respondent assumed that function respecting both interstate and intrastate rates and classifications in 1936. Since then it has functioned as the forum through which its members collectively formulated interstate and intrastate rates and classifications within the states of Massachusetts, New Hampshire, Rhode Island and Venoont. (Stipulation dated March 23 , 1984 at 2; CC Ex. A at 9) (5) 4. Respondent Bureau issues tariffs and supplements thereto in which it publishes intrastate rates and commodity classifications on behalf of its motor common carrer members engaged in intrastate transportation of property within the states of Massachusetts, New Hampshire, Rhode Island and Vermont. (Stipulation dated March 23, 1984 at 5. The Bureau s members are in competition among themselves and with other common carrers. (Answer to Complaint at 248 FEERA TRDE COMMISSION DECISIONS Initial Decision 112 F.

6. The Bureau s members are entitled to, and do, among other things, vote for and elec the offcers and diretors of the Bureau. The control, diretion and management of the Bureau is veste in the members of the Board of Diretors, who employ a genera managr who act as chief administrative offcer of the corpration with dire charge of and supervsion over the affairs of the Bureau. (Complaint at Answer to Complaint at 10; CC "x. A at 20-21) 7. The Bureau has a Cost Research Deparment and an Accounting & Finance Department which gather financial information concerning motor carrers, including financial data furnished through a "Continuing Traffc Study" which is given to the General Rate and Classification Committ for its use in deciding if rates should be increasd. (CC Ex. A at 37-40; CC Ex. C at 44-46) 8. The Bureau has a Legal Department which prepares and presents evidentiary submissions to state regulatory agencies and the Intersate Commerce Commission ICe") to justify rate change proposals. (CC Ex. A at 40-42: CC Ex. C at 46-47) 9. The Bureau s Legal Department also issues a "Watching Service Bulletin" which furnishes subscribing carer members with information on tariffs filed with state motor carrer regulatory departments and the ICC for the carrers' use in deciding on changes in their tariffs. (CC Ex. A at 41-42; CC Ex. C at 47-48) 10. All of the members of the Bureau s Board of Diretors and all of its offcers are employees or offcers of carrer members of the Bureau. (Stipulation dated March 23, 1984 at 10) 11. At its annual meeting the Bureau membership approves and ratifies the actions of the Bureau, its dirers and its offcers, since the last annual membership meeting. (Stipulation dated March 23, 1984 at 18) 12. Subseuent to appropriate state commission approval, rates published in Bureau intrastate general commodity tariffs for the states of Massachusett, New Hampshire, Rhode Island and Vennont are chargd to shippers utilizing the servces of intrastate general commodity common carrers participating in the Bureau (6) intrastate tariffs within those four states. (Bureau response to Complaint Counsel's Second Reuest For Admissions dated Marh 15 , 1985) 13. The Bureau carrer members listed in the Bureau s Participating Carrer Tariff as Massachusetts, New Hampshire, Rhode Island and Vennont intrastate carrers participate in and charge the rates contained in the intrastate tariffs listed by number in The Participating Carrer Tariff adjacent to the names and addresses of those carrer members, except to the extent that they ar party to tariff provisions rendering particular rates inapplicable for their account. (Stipulation dated March 23 1984 at 14. The Bureau carrer members listed in the Bureau s Coordinate Freight 20)Classification as Massacusett, New Hampshire, Rhode Island and Vermont intrastate carrers, participate in and apply the Bureau s Coordinated Fright Classification, except to the extnt they are party to tariff provisions rendering particular Classification items inapplicable for their account. (Stipulation dated March , 1984 at 21) 15. Common carrers by motor vehicle engaged in the intrastate transporttion of property within each of the states of Massachusetts, New Hampshire, Rhode Island and Vennont do so under certificates of public convenience and necessity granted by state regulatory agencies in the respective states. (Stipulation dated March 23, 1984 at 200 Initial Decision 16. The Bureau maintains a General Rate and Classification Committ (GRCC), made up of offcers or employees of carrer members of the Bureau. Through the GRCC the Bureau s carrer members collectively formulate interstate and intrastate rates and classifications, including rates and classifications applicable to the intrasate transportation of general commodities of property within Massachusetts, New Hampshire, Rhode Island and Vennont, except that, since March, 1980 , the committe, while continuing to consider proposals for changes in intrastate class rates, has not considered proposals to establish, change or cancel intrastate commodity rates. (Stipulation dated March 23, 1984 at '1 7; CC Bx. A at 24- 35) 17. Member carrers of the Bureau indicate their formal acquiescence in the Bureau s tariffs by entering into an "Agreement as to Rate and Classification Procedures" with each other and with the Bureau. This agrment makes the Bureau the carrer members' agent and attorney in fact and establishes the collective ratemaking proedures between the Bureau and its carrer members. (Stipulation dated March 23, 1984 at '1 11: CC Ex. A at 66) 18. The Bureau s docket bulletins, which contain GRCe meeting dates and rate and classification proposals concerning interstate and intrastate rates and classifications are mailed at regular (7) intervals to carrer members participating in the Bureau intrastate tariffs for the states of Massachusetts, New Hampshire, Rhode Island and Vermont, and to shippers and any other persons subscribing thereto. (Stipulation dated March 23, 1984 at '1 13; CC Ex. A at 27) 19. During the meetings of the GRCe, its members vote upon intrastate . rate and classification proposals, except that since March 1980 the GRCe members have not voted upon proposals to establish, change or cancel intrastate commodity rates. Shippers, non-member carrers, and other interested parties may participate in discussions at these GRCC meetings but are not entitled to vote. (Stipulation dated March 23 , 1984 at '1 14) 20. The tariffs and supplements published by the Bureau which have application to intrastate transportation in Massachusett, New Hampshire, Rhode Island and Vermont, are fied by the Bureau s Tariff Publishing Department with the respective regulatory agencies of the four states and copies are sent to all members of the Bureau. (Stipulation dated March 23, 1984 at '1 15; CC Ex. C at 43- 44) 21. The Bureau s Tariff Publishing Department mails an " advice of disposition " to all carrer members and subscribers to the docket bulletins aftr each meeting of the CRCC advising as to the action taken on proposals considered. (Stipulation dated March 23, 1984 at '1 16; CC Ex. C at 43-44) 22. Copies of the intrastate class, commodity or exceptions tariffs, or supplements thereto, which are approved by the GRCC, are printed, published or reproduced by the Bureau s Tariff Publishing Department and disseminated to carrer members and to any other persons suhscribing thereto. (Stipulation dated March 23, 1984 at'1 17; CC Bx. C at 43-44) 23. The intrastate tariffs filed by the Bureau automatically go into effect on a date specified by respondent unless suspended by the state regulatory agency with which they are filed. (Mass. Gen. Laws Ann. ch. 159B 6: R.I. Gen Laws Title 39 ch. 12 39-12- 12: N.H. Code of Administrative Rules, ch. Puc 800 PUC 802. 11; Vt. Common Carrer Rate Schedule Filing Procedures 24. Before the establishment of the General Rate and Classification Committee in 1980, the rate-making activities of the Bureau were conducted by a Standing Rate 250 FEDERAL TRAE COMMISSION DECISIONS Initial Decision 112 F.

Committe and classification-making activities by a Classification Committee. (CC Bx. A at 24; CC Ex. B; CC Ex. C at 18 , 22) 25. Each of these two committes was made up of three full time Bureau employees. (CC Ex. C at 19 , 22) 26. These two committs were abolished because the Federal Motor Carrer Act of 1980 required that interstate rate and classification committe members be ICe licensed carrer members (8) of the Bureau, rather than Bureau employees. (CC Ex. C at 18, 22) 27. Aftr the General Rate and Classification Committe was established, Mr. Leonard J. Duggan, Bureau General Manager, and a full time Bureau employee, who had chaired the Standing Rate Committee, became co-chairman of the General Rate and Classification Committ. (CC Ex. C at 5 , 15-16, 19-20) Mr. 28. Afr the General Rate and Classification Committee was established, Edward Finnerty, a full time Bureau employee, who was a former member of the Classification Committe, also became co-chairman of the General Rate and Classification Committ. (CC Ex. C at 24) 29. At the same time that the General Rate and Classification Committe was established, the Bureau established a Rate Research Department and a Classification Research Department, both of which are also known as the Rate Analysis Section. (CC Ex. C at 20-23) 30. The former members of the Standing Rate Committee, full time Bureau employees, became the members of the Rate Research Department. (CC Ex. A at 99; CC Ex. 3 at 19-20) 31. The former members of the Classification Committee, full time Bureau employees, became the members of the Classification Research Department. (CC Ex. A at 111: CC Ex. C at 22-23) 32. Mr. Leonard J. Duggan, Bureau General Manager and Co-chairman of the General Rate and Classification Committee is, and has been since its inception manager of the Rate Research Department. (CC Ex. C at 20-21) 33. The other Co-chairman of the General Rate and Classification Committee, Mr. isEdward Finnerty, who was a former member of the Classification Committee, manager of the Classification Research Department. (CC Ex. C at 24-25) 34. The Rate Research Department administers support servces to the General Rate and Classification Committe by, researching and analyzing data pertaining to rate proposals for the information of the General Rate and Classification Committee for its consideration in rate change proposals. (CC Ex. A at 98- 103; CC Ex. C at 21-22) 35. The Classification Research Department renders support services to the General Rate and Classification Committe by, researching and analyzing data pertaining to classification change proposals for the information of the General Rate and Classification Committe. (CC Ex. A at 111; CC Ex. C at 24-25) 36. Any change in the classification rating of a given commodity listed in the Bureau s Coordinated Freight (9) Classification Tariff wil have an effect on the charge for transportation of that commodity under the Bureau s intrastate class rate tariffs. (CC Ex. C at 48-55) 37. The Bureau files a Section 10706(b) Agreement with the Interstate Commerce Commission which, when approved by the ICC, gives the Bureau limited immunity from the antitrust laws. (49 D. C. 10706). The Section 10706(b) Agreement fied by ........... .......... ..... , .... 1'J.n J.H"-Lf''' ""'-n 200 Initial Decision the Bureau with the ICC is neither filed with, approved by, nor required by, the state regulatory agencies in Massachusetts, New Hampshire, Rhode Island or Vennont. (CC Ex. C at 25-26) 38. The Bureau does not fie an agreement similar to the Section 10706(b) Agreement filed with the ICC, with the states of Massachusetts, New Hampshire, Rhode Island and Vermont with respect to intrastate rates. (CC Bx. C at 27-28) 39. The Bureau does not file its Massachusetts class rate tariff No. 524 with the Interstate Commerce Commission because it only applies on intrastate Massachusetts rates. (CC Ex. C at 28) 40. The Bureau does not fie its Rhode Island intrastate tariff No. 320 with the Interstate Commerce Commission because it contains only intrastate Rhode Island rates. (CC Bx. C at 28-29) 41. The Bureau files its tariff No. 503, which contains intrastate class rates for New Hampshire and Vermont, with the Interstate Commerce Commission, but only because that tariff is also an interstate tarff. (CC Bx. C at 29) 42. Bureau carrer members holding only intrastate operating authority may serve on the Bureau s General Rate and Classification Committee. (CC Ex. C at 33) 43. The Bureau does not perform any transportation of general commodities. (Bureau Response to Complaint Counsel's First Request for Admissions, dated April , 1984 at 'I 1) 44. The Bureau does not hold a certificate of public convenience and necessity issued by the Interstate Commerce Commission, Massachusetts Department of Public Utilties, Rhode Island Division of Public Utilities, New Hampshire Public Utilties Commission or Vermont Agency of Transportation. (Bureau Response to Complaint Counsel's First Request for Admissions, dated April 20, 1984 at 'I 2) 45. The Bureau has 447 carrer members that hold certificates of public convenience and necessity issued by the Massachusetts Department of Public Utilities and participate in the Bureau s Massachusetts intrastate tariffs. Of those 447 carrer members, 315 also hold certificates of public convenience and necessity issued by the Interstate Commerce Commission and participate in the Bureau s interstate tariffs. (Stipulation dated March 23 , 1984 at 'I 25) (IOJ 46. The Bureau has 26 carrer members that hold certificates of public convenience and necessity issued by the New Hampshire Public Utilities Commission and participate in the Bureau s New Hampshire intrastate tariffs. All 26 of those carrer members also hold certificates of public convenience and necessity issued by the Interstate Commerce Commission and participate in the Bureau s interstate tariffs. (Stipulation dated March 23 , 1984 at 'I 26) 47. The Bureau has 80 carrer members that hold certificates of public convenience and necessity issued by the Rhode Island Division of Public Utilities and participate in the Bureau s Rhode Island intrastate tariffs. Of those 80 carrier members, 59 also hold certificates of public convenience and necessity issued by the Interstate Commerce Commission and participate in the Bureau s interstate tariffs. (Stipulation dated March 23 , 1984 at 'I 27) 48. The Bureau has three carrier members that hold certificates of public convenience and necessity issued by the Vermont Agency of Transportation and participate in the Bureau s Vermont intrastate tariffs. All three of those carrer members also hold certificates of public convenience and necessity issued by the 252 FEDERAL TRAE COMMISSION DECISIONS Initial Decision 112 F.

Interstate Commerce Commission and participate in the Bureau s interstate tariffs. (Stipulation dated March 23, 1984 at '1 28) 49. Of the 258 Bureau carrier members that filed annual report with the Massachusetts Department of Public Utilities for calendar year 1983, 143 reported from 50% to 100% of their revenues as derived frm intrastate Massachusett transportation operations. (CC Ex. D) 50. The Interstate Commerce Commission may not in any manner Of for any purpose regulate the rates charged for intrastate transportation of property by motor common carers. (49 D. C. 10521(a)(b)) 51. The states of Massachusetts, New Hampshire, Rhode Island and Vennont have no rules, regulations or statutes pertaining to the establishment or operation of motor carrer rate bureaus within these states. (Mass. Gen. Laws Ann. ch. 159B; R.I. Gen Laws Title 39 ch. 12: N.H. RSA ch. 375-B; Vt. Stat. Ann. Title 38 ch. 5) 52. Carrer members of the Bureau transport substantial numbers of shipments of property which originate and terminate either within the Commonwealth of Massachusetts, the State of New Hampshire, the State of Rhode Island or the State of Vermont, for private businesses with headquartrs and principal places of business located outside of the state within which the member carrers are located. The rates charged for that transportation (11) are governed by the Bureau s intrastate tariffs. (Stipulation dated January 14, 1985 at '1 1) 53. The Bureau s carrer members transmit bils for intrastate transportation services to these private businesses at their headquartrs and principal places of business located outside of the Commonwealth of Massachusetts or States of New Hampshire, Rhode Island and Vermont. (Stipulation dated January 14, 1985 at '1 2) 54. The private businesses for whom property is transportd by carrer members of the Bureau within the Commonwealth of Massachusetts and States of New Hampshire, Rhode Island and Vermont, which businesses have their headquartrs and principal places of business located outside of the state Mthin which the carrer members are located, transmit substantial sums of money, in payment for intrastate transporttion servces rendered, to carrer members of the Bureau located in the Commonwealth of Massachusetts and States of New Hampshire, Rhode Island and Vermont. (Stipulation dated Janoary 14, 1985 at '1 3) 55. Bureau carrer members located in Massachusetts, New Hampshire, Rhode Island and Vermont transport substantial quantities of general commodities of property from warehouses and distribution centers located within those states to customers located within the same state as the warehouse or distribution center which property had been transportd from out-of-state origin points to such warehouses and distribution centers for distribution within those states or for distribution in other states. In many cases Bureau carrier members charge shippers or shippers' customers the intrastate rates contained in the Bureau s intrastate tariffs for the intrastate transportation of these general commodities of property frm warehouses and distribution centers. (Answer to Complaint at 12; Stipulation dated January 14, 1985 at '1 4) 56. Bureau carrier members located in the Commonwealth of Massachusetts, State of New Hampshire, State of Rhode Island and State of Vermont purchase substantial amounts of equipment and other goods for use in their transportation business, including their intrastate transportation business, from private businesses with headquarters and principal places of business located outside of those states, and the NJ;W J;NGLAV MOTOR RATE BUREAU, INC. L:oi! 200 Initial Decision equipment and other gods are transportd into the Commonwealth of Massachusetts and States of New Hampshire, Rhode Island and Vermont. (Stipulation dated January , 1985 at '\ 5) 57. Bureau carrer members located in the Commonwealth of Massachusetts and States of New Hampshire, Rhode Island and Vermont transmit substantial sums of money in payment for equipment and other goods purchased for use in their transportation business, including their intrastate transportation business, to private businesses from whom the equipment and other goods were purchased, whose headquartrs and (12) principal places of business are located outside of those states. (Stipulation dated Januar 14 , 1985 at '\ 6) 58. Many of the Bureau s active members are persons, partnerships or corporations located in states other than Massachusetts. (Stipulation dated January 14, 1985 at '\ 7) 59. The Bureau s out-of-state members pay substantial amounts of money for annual membership dues to the Bureau and fees for servces perfonned by the Bureau on their behalf, which are transmitted across state lines to the Bureau s offices in Massachusetts. (Stipulation dated January 14, 1985 at '\ 8). 60. The Bureau purchass substantial amounts of equipment and supplies from private businesses with headquartrs and principal places of business located outside of Massachusetts, and transmits substantial sums of money to these businesses in payment for such equipment and supplies. (Stipulation dated January 14, 1985 at '\ 9) Conclusions Paragraphs eight and nine of the complaint allege that respondent, its members offcers and directors, and others have engaged in a combination, conspiracy, agrment, or concertd action to unlawfully restrict, suppress or eliminate competition among motor common carrers engaged in the intrastate transportation of property within the sttes of Massachusetts, New Hampshire, Rhode Island and Vennont by establishing and maintaning collective rates for the intrastate transportation of property within said states. These acts and practices are alleged to fix stabilze, maintain, and otherwse interfere with the intrastate rates charged by motor common carrers for the transportation of property within the states of Massachusett, New Hampshire, Rhode Island and Vennont, depriving shippers and consumers within these states of the benefits of fre and open competition in the intrastate transporttion of property within said states. Secion 3. 11(b)(2)(c) of the Commission s Rules of Practice requires only that the complaint contain a factual statement suffciently clear and concise to infonn respondent with reasonable definiteness of the types of acs or practices alleged to be in violation of law, and to enable respondent to frame a responsive answer. Commission complaints, like those in the federal court, are designed only to give a respondent "fair notice of what the ... claim is and the grounds upon which it rests. Glmte v. Gibslm 355 U.S. 41, 47 (1957) "Only a generalized statement of the facts frm which the (Respondent J may fonn a responsive pleading is necessary" in order that a complaint state a claim upon which relief may be granted. New Hom Applianc Cente, Inc. v. 'IPSIm 250 F.2d 881 , 883 (10th Cir. 1957) Moreover, in antitrust cases, all that is required to 113) state a claim of a violation of the Shennan Act is "an allegation of a conspiracy, contract or combination which unreasonably Initial Decision 112 F.

restrains interstate commerce. Burch v. Goodyear Tire and Rubber Co. 420 F. Supp. 82 , 91 (D.Md. 1976), affd 554 F. 2d 633 (4th Cir. 1977) As stated, the complaint charges a violation of law through collective rate-making by a combination of competitors which fixes, stabilizes, or maintains rates for the intrastate shipment of property. It has long been held that the Commission has jurisdiction over defendants engaged in a price-fixing combination. FTC v. Pacfu; States PapCf Trad Ass ' 273 U. S. 52 (1927); sec also FTC v. Cernt Institute 333 U. S. 683 , 693 (1948) From the above, it is clear that the Commission s complaint states a cause of action that could constitute a violation of the Federal Trade Commission Act. Respondent's first defense, failure to state a claim on which relief can be granted, and respondent' fourth defense, lack of subject matter jurisdiction, are stricken. As its second defense respondent assert that it is "a non-profit membership organization of motor common carrers subject to the Interstate Commerce Act" and as such, is exempt from FTC regulation or investigation. (Respondent's Answer at 4) It is well established that the Commission has substantive authority to regulate notfor-profit corporations that are not primarily eleemosynary. In FTC v. Nationl Commissio on Egg Nutritio 517 F.2d 485 (7th Cir. 1975), CCft. denwrJ 426 U. 919 (1976), the court quoted the Eighth Circuit' s opinion in Community Blood Bank of Kansas City Area, Inc. v. FTC 405 F.2d 1011 , 1017 (8th Cir. 1969), wherein the Eight Circuit interpreted the legislative history of Section 4 of the FTC Act, stating: Congress did not intend to provide a blanket exclusion of all non-profit corporations, for it was also aware that corporations ostensibly organized notfor-profit, such as trade (14) associations, were merely vehicles through which a pecuniary profit could be realized for themselves or their members. 3 517 F.2d al 488.

In Amean Medical Ass 94 FTC 701 (1979), the Commission concluded that it could assert jurisdiction over a respondent that is "engaged substantially in activities which confer a pecuniary benefit upon (its) members," 94 FTC at 986 The Second Circuit Court of Appeals, in affirming the Commission s jurisdictional determination found FTC jurisdiction even "where (t)he business aspects of the activities of the petitioners (were J considered secondary to the charitable and social aspects of their work. Amean Medical Assoc. v. FTC 638 F. 2d 443 , 448 (2d Cir. 1980), affd by an eventy divied court 455 U.S. 676 (1982). Clearly, in the present matter, the Bureau was organized for the profit of its motor common carrer members, and its collective rate-making activities ensure to the financial benefit of its carrer members. The membership of the Bureau is composed of motor common carriers. (F. 2) An of the members of the Bureau s Board of Directors and all of its officers are employees or offcers of carrer members of the Bureau. (F. 10) At its annual meeting the Bureau membership approves and ratifies the actions of the Bureau, its directors and its offcers, since the last membership 3 The court, in Community Blood Bank, cited a number of court cases where the Commission has successfully exercise jurisdiction over trade associations; speifically,FTC v. Cemt Institute, 333 U.S. 683 (1948); Fashim Ornatos ' Guild v. ptc 312 U.S. 457 (1941); Milline Creatos Guild, Inc. v. FTC 312 S. 469 (1941); Pacfu States Paper Trad Ass n v. FTC 273 U. S. 52 (1927); Calioria Lumber Counclv. FT 115 F.2d 178 (9th Cir. 1940),art. de 312 U. S. 709 (1941); ChamberajCrYmece v. FTC 13 F. 2d 673 (8th Cir. 1926).CrYmunity BloadBank ajKansas GityArea, Inc. v. FT 405 F.2d 1011 , 1019 m.L ..,- .",.", NICW ICNuLAU MUTUH RATE BUREAU, INC. :.55 200 Initial Decision meeting. (F. 11) The Bureau is support by membership dues and fees paid by its carrer members. (See F. 59) Among the purpses for which the corporation was fanned, as set forth in its Articles of Organization, is the coordination of "the activities of motor fright rate bureaus and individual operators engaged in the transporttion of freight and express by motor vehicle in the development of proper and legal rates, schedules and classifications" and "(tJo compile, publish and file as agent the rates, classifications tariffs, and schedules of charges of common and contract carrers with state, federal and other regulatory bodies.... " (Stipulation dated Marcb 23, (151 1984 at '\ 11) The activities of the Bureau s General Rate and Classification Committee, which is composed of officers and employees of carrer members (F. 16), in compiling and approving proposals for changes in rates and classifications, and of its Tariff Publishing Department in the preparation, publication and fiing of tariffs and supplements with federal and state agencies, obviously ensure to the financial benefit of its carrer members. (F. 16-22) Moreover, supportd by dues of its members, the Bureau maintains a Rate Research Department, a Classification Research Department, a Legal Department, a. Cost Research Department, and an Accounting and Financial Department which serve the business interests of the carrer members. The Rate Research Department, Classification Research Department, Cost Research Department, and Accounting and Finance Department collect and. develop data for statistical and cost research purposes, which is used to justify rate increases for carrer members before regulatory bodies. (F. 7 34-35) The Legal Department' s employees appear before federal and state regulatory boards and agencies to present evidence and advocate Bureau justifications for rate increases in its fied tariffs. (F. 8-9) Such activity enures to the benefit of respondent' carrer members.

Taking all the above factors together, the character of its membership, source of funding, its origin, its functions, and its publications, it is manifest that respondent is not primarily an eleemosynary corporation, but is engaged in business practices through which its members realize a pecuniary benefit. Thus, the Commission has jurisdiction over respondent and its activities. See Natiral Commissi On Egg 2d 485 (7th Cir. 1975), cet. dewd Nutritio 80 ITC 89 , 177 (1976), affd 517 F. 426 U.S. 919 (1976).

Nor is respondent exempt from Commission jurisdiction under either section 5(a)(2) or Section 6(a) of the Federal Trade Commission Act, which sections exempt " 4 Respondent does common carrers subject to (IG) the Acts to regulate commerce. 1 Section 5(a)(2) of the Federal Trade Commission Act, 15 U. C. 45(a)(2), reads as follows: The Commission is empowere and direte to prevent persns, partnerships, or corprations except banks, common carers subject to the Acts to regulate commerce, air earners and foreign air carers subject to the Federal Aviation Act of 1958, and persons, partnerships, or corprations insofar as they ar subject to the Packers and Stokyard Act, 1921 , as amended, except as provided in section 406(b) of said Act, from using unfair methods of competition in or afecting commerce and unfair or deceptive ac or pracices in or affecing commerce.

Section 6(a) of the Federa Trade Commission Act, 15 U. C. 46(a), reads as follows: The Commission shall also have power- (a) To gather and compile information concerning, and to investigate from time to time the organization business, conduct, practices and management of any person, partnership, or corpration enga in whose business aft'cts commerce, excepting banks, savings and loan institutions described in section (footnote cont' 256 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

not possess a certificate of public convenience and necessity issued by the Interstate Commerce Commission (F. 44), and does not perform any transportation of general commodities. (F. 43) Thus, respondent is not a "motor common carrer" as that term is defined in the Interstate Commerce Act, because it does not hold "itself out to the general public to provide motor vehicle transportation for compensation. " 49 D. 10102(12) Consequently, respondent is not an exempt common carrer within the aforesaid provisions of the Federal Trade Commission Act. The argument that the Bureau is merely an agent for, or alter ego of, its common carrer members and therefore exempt from FTC jurisdiction must also be rejected. The Commission, in responding to a similar argument in Mass. Movers stated: The fact that the Association operates as an agent for common carrers, some of which are subject to the ICC, does not qualify it for a common carrer exemption. See Breen Air Freight, Ltd. v. Air (17) Cargo, Inc. 470 F. 2d 767 771-73 (2d Cir. 1972), cert. deied 411 U.S. 932 (1973), where a corporation formed solely to act as agent for airlines for terminal and cartage servces was deemed not an " air carrer" under the Federal Aviation Act for purposes of federal antitrust jurisdiction; see also Offical Airline Guides, Inc. v. FTC, 630 2d 920, 923 (2d Cir. 1980), cert. denied 450 U.S. 917 (1981). Massachusetts FUrniture and Piano Mauers Ass 102 FTC 1176, 1212- 13. Nor does respondent derive any immunity from FTC jurisdiction from the fact that some of its members are common carrers subject to the Interstate Commerce Act. By respondent' s own figures, approximately 27% of its member carrers do not operate in interstate commerce and, therefore, are never subject to the Interstate Commerce Act. (F. 45 48) The Commission, in Mass. Movers, considered a similar argument, and rejected the claim of exemption from its jurisdiction. The Commission stated: Respondent argues that the Association derives immunity from the fact that some of its members are interstate carrers that are subject to ICC jurisdiction. It is questionable whether the status of the Association s membership is relevant to this case: the carrer members are not named in the complaint and the challenged conduct is that of the Association. However, since at least 50% of the Association s members are wholly intrastate carrers, its derived jurisdictional status can just as easily be characterized as nonirnmune. In fact cases construing analogous exemptions listed in FlCA S 5(a)(2) have held that membership by non-qualifyng entities subjects an association to antitrust scrutiny. See e.g, Case Swayn Co. v. Sunkist Growers, Inc. 389 U. S. 384 (1967), rehearing deied 390 U. S. 930 (196S); Crosse Blackwell Co. v. FTC 262 F. 2d 600 (1959) 102 FTC at 1213.

The United States Court of Appeals for the First Circuit in its consideration of the Mass. Movers proceeding, found no occasion to overturn the Commission s finding of jurisdiction over an organization similar in composition and activity to the present respondent. Massachusetts Furniture Piano Movers Ass, Inc. v. FTC, 773 F. 391 (1st Cir. 1985) Respondent' s defenses raising the issue of primary jurisdiction and exhaustion of 18(f)(3), and common carrers subject tv the Act tv regulate commerce, and its relation other persons partnerships, and corprations.

Hcon CO!,U.Ld1..HU !'!V.LV.n .n.l DUI'U , 11'1L. L;DI 200 Initial Decision administrative remedies are without merit. The Federal Trade Commission has sole responsibility for and jurisdiction to enforce the Federal Trade (18) Commission Act. The complaint herein charges a violation of that Act by the collective formulation of rates on intrastate shipments. The Interstate Commerce Commission has no jurisdiction over intrastate rates, 49 U. C. 10521(b)(2); therelore, resort to the ICe would be a useless act. There is no requirement that the Federal Trade Commission, a federal agency, exhaust state administrative remedies, if any, in enforcing the provisions of the Federal Trade Commission Act, a federal statute. The doctrine of primary jurisdiction is not applicable in such a situation. See Ric v. Chicago Mercantile Exchange 409 U. S. 289 , 299-300 (1973). It has ben previously determined, in an earlier order entered in this proceeding, that respondent's motor carrer members are not indispensable parties to this proeeding. (Order Denying Motion To Quash Subponas Duces Tecum And Dismiss The Complaint, May 25, 1984, at 4) The notice of contemplated relief set forth in the complaint would apply only to respondent; there is no relief proposed as to respondent's carrer members, In the Mass. Movers proceeding, the Commission did not name any member carrers as a party to that proceeding, and relief was entered only as to the association, There are numerous antitrust proeedings, both in the federal court and at the Commission, where it was determined unnecessary to join in the proeeding all parties to a contract the legality of which was being challenged in , 1972); the proceeding. See Cruh Inletiol Ltd. 80 FTC 1023 (March 23 Balfour Co. v. FTC 442 F.2d I (7th Cir. 1971) (contracts with Iraternities cancelled although fraternities were not party to litigation) Thus, respondent's carrer members are not indispensable parties to this proeeding. As its Eighth delense respondent asserts that Section 10706(b) of the Interstate Commerce Act ("Ie Act") (Iormerly Section 5(a) of the Reed-Bulwinkle Act, 49 C. 5(b)), exempts its collective rate-making activities from "the proscriptions of the (FTC) Act. " (Respondent's Answer at 6) This provision 01 the Ie Act provides lor collective rate-making agrments between motor common carrers with respet to interstate rates, the parties to which, if the agrments are approved by the (19) Interstate Commerce Commission, are exempt from the antitrust laws "with respet to making or carrng out the agreement. " 5 Section 10706(b) 01 the Ie Act expressly applies only to collective interslate ratemaking, and as the agency responsible for administering the National Transportation Policy, the Ice has consistently held that the Ie Act's Section 10706(b) exemption does not extend to intrastate rate-fixing. See, e. , Alaska Carrs Associtio 321 5 Section I0706(b) provides, in pertinent par, that: (Al motor common carer of property providing trasporttion or Bervce subjec to the juriicton of the Commission.. may enter into an agment with one or more such carers concerning rates ... allowances, classifcations, divisions, or rules relate to them, or proedures for joint consideration initiation, or estblishment of them. Such agrment may be submitt to the Commission for approval by any carrer or carers which ar parties to such agrment and shall be approved by the Commission upon a finding that the agment fulfills each requirement of this subseion, unle the Commission finds that such agment is inconsistnt with the trasporttion policy set forth insetion 10101(a) of this title. The Commission may reuire compliance with reasnable conditions consistent with this subtitle to asure that the agment furthers such transporttion policy. If the Commission approves the agment, it may be made and carried out under its term and under the conditions reuire by the Commission, and the antitrust laws, as defined in the firs seion of the Claytn Act (15 D. C. 12), do not apply to partes and other persns with respet to making or carng out the agrment. , , Initial Decision 112 F.

LC.C. 7 , 10 (1963); Ohio Motor Freight, 311 LC. C. 127 , 128 (1960); Pacfic Motor Tarif Bureau, Inc. 313 LC.C. 406, 407- 08 (1961) Respondent's argument was expressly rejected by tbe Fifth Circuit in S. v. Souther Motor Carrs Rate Conferene, Inc., 672 F.2d 469 (5th Cir. 1982), where, after discussing the provisions of Section 10706(b) of the IC Act, the court noted that " (t)he 1CC has no similar jurisdiction over intrastate motor carrer rates. Indeed, 49 U. C. 10521(b) expressly reserves this area for state regulation. " 672 F.2d at 475 n. 9 The First Circuit, in Mass. Movers, specifically rejected any statutory immunity from the Federal Trade Commission Act for any collective intrastate ratemaking. 773 F. 2d at 394 Consequently, since the complaint in this matter addresses coHective intrastate rate-fixing, the defense is insuffcient and must be stricken. (20) As its Twelfth defense respondent declares that this proceeding is barred by the doctrines of "laches, estoppel and! or waiver" because for nearly fifty years the Government has allegedly permitted and even encouraged the conduct which it now seeks to hold violative of the antitrust laws. (Respondent's Answer at 7) It is wellsetted that the doctrines of laches, estoppel and waiver are inapplicable as a defense to a suit brought by the government to enforce the antitrust laws. U.S. v. New Orleans Chapter, Associated General Contractors 382 U. S. 17 (1965), reversing, per curiam 238 F. Supp. 273 (E. D. La. 1964); U.S. v. F'restor Tire and Rubber Co., 374 F. Supp. 431 , 433 (N. D. Ohio 1974); American Motor Inns, Inc. v. Holiday Inns, Inc. 365 F. Supp. 1073, 1098 (D. J. 1973); see also Horzon Cor., 97 FTC 464, 860 (1981) Moreover, any knowledge of or acquiescence in respondent' anticompetitive conduct by federal offcials is legally irrelevant. See U.S. v. Maryland & Virginia Milk Producers Association 167 F. Supp. 799, 808 (D. C. 1958); U.S. v. Socony-Vacum Oil Co., 310 U. S. 150 , 225-226 (1940) Because respondent's twelfth defense is insufficient as a matter of law, it is stricken.

Respondent' s answer to the complaint has denied that its activities were in or had an affect upon interstate commerce (Respondent's Answer to Complaint 6), and, as its Fourth Defense, respondent has asserted that the "activities alleged in the Complaint to be in violation of the Federal Trade Commission Act" were "within the exclusive jurisdiction of the several States...." (Respondent's Answer at 5) Under the provisions of Section 5 of the Federal Trade Commission Act, unfair methods of competition "in or affecting commerce " are declared unlawfl. The affecting commerce" requirement is satisfied if some nexus exists between the acts and practices at issue and interstate commerce. Purely intrastate activities are deemed to "affect commerce" if the activity, local in nature has an effect on some other appreciable activity demonstrably in interstate commerce. McLain v. Real Estate Bd. of New Orleans, Inc. 444 U. S. at 242 (1980); see also Hospital Building Co. v. Trwes of Rex Hospital 425 U.S. 738 (1976) To establish the jurisdictional element of a Section 5 violation it would be sufficient (for complaint counsels to demonstrate a substantial effect on interstate commerce" generated by respondent' overall rate bureau activities, a more particularized showing is not required. McLain v. Real Estate Bd. of New Orleans, Inc. 444 U. S. at 242 In the conduct of their business, Bureau carrier members invoice and receive substantial sums of money from private businesses for rendering intrastate transportation services, which invoices and money flow across state lines. (F. 52-54) The prices charged for these transportation services are (21) determined by the ), ), 200 Initial Decision Bureau s tariffs (F. 52), and thus directly affects the amount of money flowing across state lines.

Bureau carrer members transport substantial quantities of general commodities of property from warehouses and distribution centers located in Massachusetts, New Hampshire, Rhode Island and Vermont to points within those states. These general commodities of property had been transportd from out state origin points to such warehouses and distribution centers. Consequently, these commodities have been transportd in a continuous stream from points out of state to destinations within each of the states. The Bureau carrer members' intrastate transportation of such commodities are an integral part of the commodities' overall transportation, resulting in a substantial and direct effect upon interstate commerce. Norther Califoria Pha eutical Ass n v. United States 306 F. 2d 379, 387 (9th Cir. cert. deied 371 U.S. 862 (1982) In many cases the rates charged for the transportation of these general commodities are those contained in respondent's intrastate tariffs (F. 55), thus affecting interstate commerce.

Bureau camera members purchase substantial amounts of equipment and other goods used in their intrastate transportation business from out-of-state suppliers. These supplies and equipment are transportd into Massachusetts, New Hampshire Rhode Island and Vennont from points outside such states. (F. 56-57) These interstate purchases are affected by respondent's activities to the extent that monies used for these purchases are derived from revenues for intrastate transportation servces, the rates for which are established by the Bureau s tariffs. Respondent' s out-of-state camera members pay substantial amounts of money for membership dues and fees to the Bureau, which money flows across state lines, and the Bureau transmits substantial sums of money to out-of-state businesses in payment for goods and supplies purchased for use in its business. (F. 58-60) This flow of funds substantially affects interstate commerce. Rex Hospital, supra; Bodicker v. Arizona State Deutal Ass 549 F.2d 626 (9th Cir. cert. deied 434 U. S. 825 (1977); Evans v. S. S. Kresge Co. 544 F. 2d 1184 (3d Cir. 1976), cert. deuied, 433 S. 908 (1977) The record in this proceeding clearly demonstrates that respondent's challenged acts and practices are in or affecting commerce, as commerce is defined in the Federal Trade Commission Act.

Respondent' s Seventh Afrmative Defense alleges that its activities in connection with collectively formulating rates are protected by the Noer-Pennington doctrine which permits people to petition the government about matters in which they have an interest. Easte Railroad Presidts Conferene v. Noer Motor Freight, 1m. , 365 S. 127 (1961); United Miue Workers v. Peunington 381 U. S. 657 (1985) Respondent has renewed this (221 assertion in its cross motion. (Respondent's Cross Motion For Summary Decision, pp. 35-36) The Noer-Pennington doctrine holds that attempts to influence governmental action are immune from prosecution as a violation of the Sherman Act, absent circumstances which constitute a "sham" or an abuse of process. The doctrine protects political activity, not collective ratemaking by private parties. " (NJothing in the Noer opinion implies that the mere fact that a state regulatory agency may approve a proposal included in a tariff .. is a suffcient reason for confemng antitrust immunity on the proposed conduct. Cantor v. Detroit Edison Co. 428 U.S. 579 260 FEDERA TRAE COMMISSION DECISIONS Initial Decision 112 F.

601-602 (1976); see also Litli Syste, Inc. v. AT&T 700 F.2d 785 (2d Cir. 1983), cert deied 104 S. Ct. 984 (1984).

The Commission, in Mass. Movers held in a proceeding substantially similar to this present matter, that the Noer-Pennington doctrine did not extend to collective ratemaking by a private association:

The Noer-Penningto doctrine affords protection to certain joint efforts by private parties to influence governmental action, even where the motive of the private parties is to obtain an anticompetitive result. The anticompetitive conduct challenged here, however, cannot be characterized as a joint effort by the Association and its members to induce the MDPU to require collective ratemaking; the conduct challenged is the concertd behavior of the Association and its members in agreing on the rates that they would include in their tariff and would charge the public. Such conduct, which is neither an effort to influence government action nor required in order to make such an effort, is not encompassed within the doctrine.

102 FTC 1224. This issue was not raised on appeal to the First Circuit. Thus, the Commission s determination stands, and respondent's defense based on Noer- Pennington is stricken.

Paragraphs eight and nine of the complaint allege that respondent's collective ratemaking activities violate Section 5 of the Federal Trade Commission Act. The record evidence establishes that respondent' s motor carrer members, through respondent' General Rate and Classification Committee which is composed of officers or employees of the motor carrer members, collectively formulate intrastate rates and classifications applicable to the intrastate transportation of general commodities of property within Massachusetts, New Hampshire, Rhode Island and Vennont. (F. 16) The rates and classifications (23) which are collectively fonnulated, are filed by respondent with the regulatory authorities of aforesaid states (F. 20), where they automatically go into effect unless suspended by the regulatory agency of each state. (F. 23) These rates which have been collectively formulated and filed with and approved by each state are charged to shippers utilizing the servces of intrastate general commodity motor common carrers participating in the respondent' s intrastate tariffs within the four states. (F. 12, Respondent' s Answer To Complaint Agreements among competitors affecting price have long been held to violate the antitrust laws, notwithstanding any argument that may be advanced to justify them. Any combination which tampers with price structures is engaged in an unlawfl activity.... The (Shennan) Act places all such schemes beyond the pale and protets that vital part of our economy against any degree of interference... (Congress) has not pennitted the age-old cry of ruinous competition and competitive evils to be a defense to price-fiing conspiracies. United States v. Socony- Vacum Oil Go., 310 S. 150 , 221 (1940) As the Supreme Court stated in United States v. Natimt Associtio of Real Estate Boards 339 U.S. 4S5, 489 (1950): "Price-fixing is per se an unreasonable restraint of trade. It is not for the courts to determine whether in particular settings price-fixing serves an honorable or worthy end.... (tJhat is the teaching of an unbroken line of decisions.

The Supreme Court' s decision in Arizona v. Mamopa Gaunty Medical Socity, 102 Sup. Ct. 2466 (1982) is instructive on the application of the per se rule to price-fixing conspiracies. The court applied the per se rule to a situation where a group of NI'W I'NliLANU MOTOR RATE BUREAU , INC. 261 200 Initial Decision foundations for medical care organized by the medical society, by agreement of their member physicians, established maximum fees the physicians might charge for servces provided to policyholders of certain insurance plans. In a detailed analysis of the history and meaning of the per se rule against price-fixing agreements, the Court beginning with its decision in U.S. v. Joint Traffic Ass n, 171 U.S. 505 (1898), traced the development of and reason for the per se rule up to the present. The Court pointed ont that " (bJy 1927 the Court was able to state that 'it has... oftn been decided and always assumed that uniform price-fixing by those controllng in any substantial manner a trade or business in interstate commerce is prohibited by the Sherman Law. Unitrd Statrs v. Trento Pottes 273 U.S. 392, 398 (1927)." 102 Sup. Ct, at 2473. Continuing its analysis, the Court noted that in U.S. v. Socony- Vacum Oil Co., 310 S. 150, 218 (1940) "the Court could report that 'for over forty years this Conrt has consistently and without deviation adhered to the principle that price-fixing agreements are unlawfl per 86 under the Shennan Act and that no showing of socalled competitive abuses or evils which those agreements were designed to eliminate may be interposed as a defense.''' Id. at 2472. (241 In conclusion, the Court stated that " (wJe have not waivered in our enforcement of the per se rule against price-fixing. Indeed, in our most recent price-fixing case we summarily reversed the decision of another Ninth Circuit panel that a horizontal agrement among oompetitors to fix credit terms does not necessarily contravene the antitrust laws. Catalano, Inc. v. Target Sales, Inc. 446 U.S. 643 (1980). Id. at 2475 Respondent' s conduct is virtually identical to that engaged in by a household goods motor carrer association in Mass. Movers which was found by the Commission to violate Section 5 of the FTC Act. The Commission stated: "Plainly, the rate-making activities of the Association are per S6 unlawful under the antitrust laws." 102 FTC at 1225 The Court of Appeals For The First Circuit agreed that collective ratemaking was pricefixing, but remanded the matter for further consideration of the association Parker v. Brow defense. Further, collective rate making by trade associations of competing railroads repeatedly has been held to constitute price- fixing. United Statrs v. Trans-Missouri Freight Ass 166 U.S. 290 , 341 (1897); United States v. Joint- Traffic Associatio, 171 U.S. 505, 575- 578 (1898); Keogh v. Chicago & N. Ry. 260 U. S. 156, 161- 162 (1922); Georgia v. Pennsylvania R. 324 U. S. 439 456-461 (1945).

Respondent' s acts and practices prevent all customers from making price comparisons in the initial selection of a motor carrer, and impose respondent' s views of costs and benefits on the entire marketplace; therefore, its conduct constitutes a per se violation of the Federal Trade Commission Act. requiring no rule of reason analysis. See Natiol Socity of Professioal Engirwers v. U.S. 435 U.S. 679, 688- 692 , 695 (1978); U.s. v. Souther Motor Carrs Rate Can ference, Inc. 467 F. Supp. 471 (N.D. Ga. 1979), aff'd 672 F.2d 469 (5th Cir. 1982), on rehearing, 702 2d 532 (5th Cir. 1983) (en bane), rev d an other ground, 105 S. Ct. 1721. The Fifth Circuit, in Souther Moto Carrs succinctly set forth the state of the law with respect to collective raternaking:

Collective formulation clearly tampers with the price structure for intrastate transportation of general commodities; the rate bureau arrangement substitutes concertd pricing decisions among competing carriers for the influence of 262 FEDERA TRADE COMMISSION DECISIONS Initial Decision 112 F.

impersonal market forces on proposed rates. Such combinations have been condemned as ilegal per se.

672 F. 2d at 478.

Accordingly, unless respondent's rate-making conduct is exempt from the antitrust laws by virtue of state action under the Parker v. Broum doctrine, as recently explicated by the (25) Supreme Court in Southe Moto Camers, respondent has violated Section 5 of the Federal Trade Commission Act. The conclusion reached above applies to collective agreements as to rates. Respondent contends (Respondent's Cross Motion For Summary Decision, at 17-19) that the classification of commodities is not conduct which constitutes a naked restraint designed solely to suppress competition. As complaint counsel contends, the classification of a commodity directly affects the rate to be charged for shipment of that commodity. (F. 36) However, the record at this time contains little information as to whether the coJIective formulation of commodity classifications by respondent is an activity that almost always tends to restrict competition, or instead is designed to make markets more effcient and competitive. Further evidence on respondent' coliective formulation of commodity classifications and the effects of such practices will be received in the record, if proffered. Conclusion and Order The facts and conclusions set forth above are deemed established for purposes of this proceeding. The parties are directed to complete necessary discovery and prepare for trial on the remaining issues, the state action exemption to the federal antitrust laws and the nature of the restraint imposed by respondent's forruJation of commodity classifications.

ATTACHMENT II ORDER DENYNG RESPONDENT CROSS MOTION FOR SUMMAY DECISION Respondent has moved for summary decision in its favor based on the state action doctrine, as first enunciated in Parker v. Brown 317 U. S. 341 (1943). This doctrine has been confirmed and clarified over the years, most significantly in the recent decisions of the Supreme Court in Califoria Retail Liquo Dealers Ass n v. Midal Aluminum, Inc. 445 U. S. 97 (1980), and Southern Motor Carrrs Rate Con! U.S. 105 S. Ct. 1721.

To determine whether private conduct falls within the Parker v. Brown state action doctrine and is therefore immune from the federal antitrust laws, the Supreme Court has set forth a two prong test: (1) there must be a " clearly articulated and affrmatively expressed state policy" to displace competition, and (2) the policy must be "actively supervsed. Midcal 445 U.S. at 105. "A clearly articulated perissive poljcy will satisfy the first prong of tbe Midcal test." Southern Motor Camers 1 D5 S. Ct. at 1729, n. 23 The Court has made clear that as long as the State as sovereign clearly intends to displace competition in a particular field with a regulatory structure, the first prong of the Midal test is satisfied. The regulatory agencies, acting alone, cannot immunize private anticompetitive conduct. The second prong of the test prevents states from thwarting the national policy in favor of competition by "casting 200 Opinion ... a gauzy cloak of state involvement over what is essentially a private price-fixing arrangement. Midal 445 U.S. at 106 "This active supervision requirement ensures that a state's actions will immunize the anticompetitive conduct of private parties only when the 'state has demonstrated its commitment to a program through its exercise of regulatory oversight.''' Southe Moor Carrs slip op. p. 13 , n. 23 As is obvious from the above, a detennination of whether respondent' s conduct is immune from antitrust challenge depends upon the facts in the four states involved in this proeeding; i.e. has each state clearly articulated a policy to displace competition. Further, does each state actively supervse the conduct here under challenge. A detennination in this respect wil require at a minimum further legal briefing on state policy in the four states, and, especially as to the second prong of the Midq.l test probative evidence on the state supervsion issue. The record as presently existing, is devoid of facts sufficient to make a decision one way or the other. Inferences which can be drawn from existing facts are subject to dispute. The law is clear, summary judgment may not be granted where the facts are disputed, or non-existent in the record, on where one of several inferences may be drawn from the evidence. See, e. , Hearst Car. 80 FTC 1011 , 1014 (1972). Accordingly, respondent's request for summary decision based on state action immunity is denied.

Respondent' s other contentions in its cross motion, inapplicability of the per se rule to respondent' s ratemaking activities, lack of jurisdiction over respondent, respondent not being in or affecting commerce Noer-Penningto immunity, and the argument that certin affrmative defenses should not be stricken, have been considered in detail and ruled on in an Order Granting In Part Complaint Counsel's Motion For Partial Summary Decision, filed concurrntly with this order. Therefore Respondent' s Cross Motion For Summary Decision is Denied. OPINION OF THE COMMISSION By OUVER Chairman:

1. INTRODUCTION Respondent New England Motor Rate Bureau, Inc. ("NEMRB" appeals from an initial decision finding that it violated Section 5 of the Federal Trade Commission Act, 15 U. C. 45, in formulating and filing collective motor carrer rates for its members, in the states of Massachusetts and New Hampshire. The Administrative Law Judge rejected allegations in the complaint regarding NEMRB' s similar activities in Vermont and Rhode Island. For the reasons set forth below, we affrm the decision of the ALL 1 1 The following abbreviations ar use in this opinion: Initial Deision of December 12, 1986 Parial Summary Decision of Marh 7, 1986 From - Finding of Fact in the Initial Deision FFSD- Finding of Fact in the Partial Summary Decision (footnote cont' 264 FEDERA TRAE COMMISSION DECISIONS Opinion 112 F.

A. Statement of the Case On October 24, 1983, the Commission issued a complaint alleging that the New England Motor Rate Bureau, Inc. ("NEMRB" ), its members, officers, and directors, and others were engaged in a conspiracy to fix prices in violation of Section 5 of the Federal Trade Commission Act, 15 U. C. 45, by collectively formulating and fiing rates for the transportation of commodities within the states of Massachusetts, New Hampshire, Rhode Island, and Vermont.2 NEMRB' s conduct is alleged to have deprived carrers, shippers, and consumers of the benefits of free and open competition. (2) NEMRB responded that the Commission lacked jurisdiction, and denied that it or its members had engaged in any unlawfl activities under the federal antitrust laws. NEMRB also contended that its ratemaking activities were exempt from antitrust scrutiny by virtue of both the "state action " and the Noerr-Pennington doctrines. In addition, NEMRB interposed several procedural and common law defenses.

On April 29, 1985, complaint counsel moved for partial summary decision, and NEMRB filed a cross-motion for summary decision. Administrative Law Judge Ernest G. Barnes granted in part complaint counsel' s motion and denied NEMRB' s motion, ruling that the Commission had jurisdiction, and dismissing all of NEMRB's defenses except for the state action defense. The ALJ also concluded that the challenged activities were per se unlawfl unless the state action defense obtained.

The parties thereaftr filed a joint stipulation as to the facts pertaining to the state action defense. On December 12, 1986, the AL issued his initial decision, based on the pleadings, stipulations and admissions, proposed findings of fact and conclusions of law, and the briefs submitted by the parties. The AL found that NEMRB' collective ratemaking in Massachusetts and New Hampshire was not insulated from antitrust scrutiny under the state action doctrine, but that its conduct in Rhode Island was protected under that doctrine. Accordingly, the ALJ found violations of Section 5 in New Hampshire In addition, all citations to exhibits refer to those atthed to the Stipulation of the parties date August 28 1986.

Z Afr the complaint was issued, the State of Vermont deregulated the intrasate transporttion of fright and NEMRB ceas to formulate and fie rates applicable to Vermont. On November 17, 1986, complaint counsel moved to dismiss the complaint with respet to NEMRB' s acivities in Vermont. The Administrative Law Judge granted that motion on December 12, 1986. ID at 19 n.5. NEMRB's ratemaking in Vermont is therefore not involved in this appeal.

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YV J.nuunnu UVJ.V.. ""'.L""""

200 Opinion and Massachusetts and recommended entry of a remedial order to prevent recurrence of the violations. The AU dismissed the complaint with respect to NEMRB's activities in Rhode Island. This matter is before the Commission on NEMRB's appeal from the initial decision. On appeal, NEMRB argues that its activities are exempt from antitrust enforcement under the state action and Noer- Pennington doctrines, and raises defenses based on Sections 4, 5(a), 6(a), and 11 of the FTC Act, 15 U. C 44 , 45(a), 46(a), 51 , and Sections 10521(b) and 10706(b)(2) of the Interstate Commerce Act 49 U. C 10521(b), 10706(b)(2). By way of defense, NEMRB also points to an alleged failure to join indispensable parties; the doctrines of laches, estoppel, and waiver; and an assertd lack of capacity to conspire. NEMRB further maintains that the challenged activities should be evaluated under the rule of reason, and that the Commission lacks the authority to order the relief recommended by the ALJ. (3) B. Responent' s Activities The facts are not in dispute and for the most part have been stipulated by the parties. NEMRB's principal function is developing and fiing collective tariffs and tariff supplements governing interstate and intrastate rates and commodity classifications within the states of Massachusetts, New Hampshire, Rhode Island, and Vermont. FFSD 3. Collective tariffs and tariff supplements are initiated and developed by the General Rate and Classification Committee ("the Committe which is composed of offcers or employees of carrer members of NEMRB. FFSD 16. Whenever a tariff proposal is to be considered by the Committee, it is communicated to the general membership of NEMRB. FFSD 18. Shippers, non-member carrers and other interested parties may participate in discussions at meetings of the Committee, but they are not entitled to vote on tariff proposals. FFSD 19. Tariff proposals approved by the Committee are filed with the appropriate state regulatory agencies and sent to all members of NEMRB. FFSD 20. The actions of NEMRB are ratified by the general membership at annual meetings, and the members indicate their formal acquiescence in the collective tariffs by granting NEMRB the power of attorney with respect to tariff filings. FFSD 11 , 17. S By order date December 10, 1986, the AL grnte a motion by the National Assiation of Regulatory Utility Commissioners (NARUC) for leave to intervene. NARUC has filed a brief supporting dismissal of the complaint on the basis of the state action doctrine. Opinion 112 F.

C. State Regulation The regulation of motor carrers is quite similar in Massachusetts New Hampshire, and Rhode Island in several salient respects. First before a carrer can provide servces in any of these states, the carrer must obtain a certificate of public convenience and necessity or its equivalent from the appropriate state agency. FFID 6, 28, 51; FFSD 15. A certificate normally is issued only after a public hearing to determine whether the applicant is qualified and the servce needed. Id.

Second, carrers are not required in any of these states to formulate or file collective tariffs or to adopt uniform rates. (4) Each jurisdiction permits, but does not require, carriers to utilize a filing agent or to adopt and participate in a tariff filed by an agent or another carrer. FFID 17, 38 , 61. If a carrer elects to participate in a tariff filed by another carrier or an agent such as NEMRB, the carrer is obliged by law to adhere to the rates specified once the tariff becomes effective. FFID 15, 33 , 64.

Third, apart from their roles in reviewing tariff filings, regulators in Massachusetts, New Hampshire, and Rhode Island do not monitor economic conditions in the trucking industry within their respective jurisdictions. FFID 21, 45, 66. Moreover, none of these state agencies has ever undertaken a study of the effects of its regulatory policies on the intrastate trucking business. Id. Notwithstanding these similarities, regulation of intrastate carrers in Massachusetts, New Hampshire, and Rhode Island also differs in several significant ways. A more detailed review of each state regulatory program is set forth below.

1. Massachusetts Under Massachusetts law, a carrer or its agent must file a tariff with the Massachusetts Department of Public Utilities (MDPU) containing the carrier s charges for moving goods within the state. FFID 31-33. The policy of the MDPU is to " (pJromote adequate economical and effcient service by motor carriers, and reasonable .j Of NEMRB' s 675 earrer members, 447 hold certificates of public convenience and necessity issued by the State of Massachusett and participate in NEMRB'B intrastate tariff filings in Massachusetts. FFSD 2, 45. Nearly thre..uarrs of these members also hold certifcates of public convenience and necessity issued by the ICe. FFSD 45. Twenty-six of NEMRB's members hold certificates issued by the State of New Hampshire and the ICe and participate in NEMRB's interstate and intrastate tariff filings in New Hampshire. FFSD 46. Eighty of NEMRB's members hold certificates granted by the State of Rhode Island and participate in NEMRB' s intrastate tariff filings in Rhode Island. FFSD 47. Of these 80 members, 59 also hold ICe certificates. ld.

. .

200 Opinion charges therefor without. . . unfair or destructive competitive practices. . . . " Mass. Gen. L. ch. 159B 1. Every motor carrer is required to "establish, observe and enforce just and reasonable rates which automatically "become effective on a date fixed by such carrer . . . unless suspended by the (MDPUJ prior to its effective date. . Mass. Gen. 1. ch. 159B , para. 2. Massachusetts law empowers the MDPU to review rates fied by each carrer to ensure that they are consistent with the policy expressed above and are not unjust or prejudicial. Mass. Gen. L. ch. 159B , 6. The law also authorizes the MDPU to reject rates that fail to comply with those criteria. Id. Rates contained in a tariff can become effective automatically 30 days after filing, unless the MDPU suspends or (5) rejects the proposed rates. FFID 33-34. During the six years preceding the stipulation filed by the parties on August 28, 1986, the MDPU did not hold any public hearings either to investigate or to suspend a motor carrer s rate. FFID 37. The record is silent as to whether MDPU did so at any time prior to that period.

The MDPU employs only one rate analyst to process motor carrer rates. FFID 26, 27. When a tariff is fied, the analyst reviews the tariff to ensure that it is in the proper filing format and that it accurately reflects the rates the carrer intends to charge. FFID 34. The rate analyst has never rejected a rate because of the price to be charged. FFID 31. The analyst does not undertake an audit of the carrer s records; a tariff will be rejected only if it fails to comply with Massachusetts filing requirements. FFID 34. No one at the MDPU looks behind the fied rates to determine whether they accurately reflect a carrier s profits and costs. FFID 31. The rate analyst has never requested financial information to support a tariff. Id. NEMRB voluntarily submits ICC rate filings and rate justification statements to the MDPU, and requests that the MDPU take the same action as did the ICC on rates for comparable routes. FFID 39. Carrers who are not members of NEMRB or any other rate bureau do not ordinarily submit ICC data to the MDPU. Id. 2. New Hampshire In New Hampshire, motor common carriers are required to file rates with the state Department of Transportation (NHDOT). FFID 4 , 11. 5 The MDPU also has authority to establish "reasnable maximum and minimum rates or chars consistnt with industry and economic conditions" and consistnt with the policy ariculate in Chapter 159B. Mas. Gen. 1. en. 159B , par. 5. The MDPU, however, has never exercise this authority with respe to motor carrers of property, except as to dump trucks and petroleum tank trucks. FFD 32. ).

268 FEDERA TRAE COMMISSION DECISIONS Opinion 112 F.

Rates become effective thirty days aftr filing unless the NHDOT takes action to investigate, suspend, or reject the proposed rates. FFID 11 , 14 , 18.

From a period preceding issuance of the complaint, through the time of the AL' s initial decision, NHDOT's statutory authority to investigate rates was limited to reviewing whether rates unjustly discriminated among similarly situated customers. FFID 12. The record reveals that, at least until January 1, 1988, NHDOT did not have the authority to suspend or reject rates for being unjust or unreasonable. On that date, an amendment to the statute governing the NHDOT took effect. 6 As amended, New Hampshire law now provides that "(aJll rates and charges filed by motor carrers shall be just and reasonable. See H. Rev. Stat. Ann. 375-B:13 (1988 Supp. (6) The NHDOT employs one tariff investigator or rate analyst. FFD , 14. During the pendency of this litigation before the AL, the rate analyst examined tariffs solely for the purpose of ensuring that they were in compliance with the format prescribed by regulation and that the rates set forth in the tariffs were not discriminatory. FFID 14. The rate analyst was also responsible for ensuring that carrers adhered to the rates they filed. FFID 13. Although the NHDOT has had occasion to suspend the certificates of carrers, the sole ground for its doing so identified by the AL was that the carrers had disregarded filed rates. Id.

3. Rhode Island In Rhode Island, carrers are required to file their proposed rates with the Division of Public Utilities and Carrers (DPUC) of the state Public Utilties Commission. FFID 49, 54. Under Rhode Island law rates must be just and reasonable and reasonably compensatory, and may not be unjustly discriminatory. FFID 54. The DPUC has authority to suspend or reject rates that do not meet these statutory standards. FFID 59.

As in Massachusetts and New Hampshire, proposed rates are subject to a statutory thirty-day waiting period to permit the DPUC to take whatever action may be deemed necessary before the tariff becomes effective. FFID 55. In Rhode Island, however, if the rate analyst cannot complete this review within the thirty-day waiting period, the DPUC suspends the tariff. FFID 56. During the waiting 6 On July 31 , 1987, the Commission notified the parties that it would take offcial notice of this amendment. NEW ENGLAD MOTOR RATE BUREAU, INC. 269 200 Opinion period, DPUC's rate analyst reviews filings to ensure compliance with format requirements. FFID 56. The rate analyst also examines the proposed rates to determine whether they fall within a "zone of reasonableness " a measure based on the maximum and minimum industry averages of previously approved rates for each category or motor carrer. Id. The rate analyst may also consider the percentage rate increase and the date ofthe carrer s last request. Id. Rates found to be within the "zone of reasonableness" are approved without a hearing. Id. However, DPUC does not permit rate increases based solely on inflation, unless a hearing is held and it is determined that the increase is warranted. FFID 60.

Afr making its initial determination on an individual or an NEMRB tariff proposal, the DPUC staff drafts an order. FFID 58. The staff may also prepare a memorandum recommending that (7) the Administrator of DPUC, who has the final authority in such matters either approve the proposal or suspend it and conduct a hearing. Id. Whichever action is taken, the Administrator issues an order. Id. On at least one occasion in the recent past, the Administrator of the DPUC opted to suspend an NEMRB rate filing and held a formal public hearing on the proposal. FFID 58. On April 21 , 1986, the DPUC suspended fied rates that NEMRB had proposed to take effect on April 22. FFID 58; Exhibit 1. Following its suspension order, DPUC requested NEMRB to attend an informal conference at the DPUC' offces to answer certain questions about the proposal. FFID 58. After issuing a public notice on June 17, DPUC conducted a formal public hearing on the proposal on July 9, 1986. FFID 58; Exhibit J. The record contains a transcript of this formal public hearing. FFID 58; Exhibit K. Following the hearing, the DPUC granted NEMRB' s rate increase in a Report and Order, issued October 24, 1986. ID at 34. In general, if the DPUC suspends the tariff and determines that a public hearing is necessary, the carrier is required to submit cost information or other financial data to justify the proposed rate increase. FFID 57 , 60. Upon finding that the hearing evidence does not justify a proposed rate, DPUC wil deny the request and establish a rate that the evidence supports. FFID 60. In determining the appropriate rate, DPUC sets a rate that wil afford a carrier a good living and wil allow for increased expenses. FFID 60. Once rates have 7 NEMRB routinely submits ICe rate justification statements with the tariffs it files with the DPUC. FFD 58. The DPUC sta analyzes these statements and makes use of the infonnation contained therein, in making its initial detennination of the lawflness of NEMRB' s rate proposals. Id. 270 FEDERA TRADE COMMISSION DECISIONS Opinion 112 F.

been approved by the DPUC, the carrier is obliged to adhere to them strictly. FFID 64.

II. JURISDICTION In its appeal brief, NEMRB interposes four jurisdictional defenses to this proceeding, based on Sections 4, 5(a), and 6(a) of the FTC Act, 15 C 44, 45(a), 46(a), and provisions of the Interstate Commerce Act known as the Reed-Bulwinkle Act, codified, as amended, at 49 U. 10521 , 10706.

First, NEMRB argues that, as a not-for-profit corporation, it is beyond the reach of the Commission by virtue of Section 4 of the FTC Act, which defines corporations within the Commission s jurisdiction as those that are "organized to carry on business for (theirs own profit or that of (theirs members. . . . " 15 U. C 44. However, it is well setted that the Commission has authority to regulate not-for-profit corporations that are not primarily eleemosynary. American Medical Association 94 FTC 701 (1979), enforced as modified 638 F.2d 443 448 (2d Cir. 1980), affd by an equally divided court 455 U.S. 676 (1982); FTC v. Natioal Comm n on Egg Nutrition 517 F. 2d 485 488 (7th Cir. 1975), cert. denied 426 U.S. 919 (1976); (8) Community Blood Bank of Kansas City Area, Inc. v. FTC 405 F. 1011 , 1017 (8th Cir. 1969). A not-for-profit organization is subject to Commission jurisdiction under Section 4 if it engages in activities that engender a pecuniary benefit to its members if that activity is a substantial part of the total activities of the organization, rather than merely incidental to some noncommercial activity. American Medical Association, 94 FTC at 983. As the AU found, NEMRB' collective ratemaking activities have inured directly to the financial benefit of its carrier members. SD at 14- , FFSD 16-22. Because NEMRB is operated in substantial part for the benefit of its for-profit carrier members, NEMRB' s status as a not-for-profit corporation does not exempt it from Commission jurisdiction. See Community Blood Bank 405 F.2d at 1019.

Second, NEMRB argues that the Commission lacks jurisdiction to regulate or investigate it by virtue of Sections 5(a)(2) and 6(a) of the FTC Act, 15 U. C 45(a)(2), 46(a), which exempt common carriers subject to the Interstate Commerce Act. NEMRB, however, is not itself a common carrier as that term is used in the Interstate Commerce Act, because NEMRB does not hold "itself out to the general public to provide motor vehicle transportation for compensa- NEW ENGLAD MOTOR RATE BUREAU , INC. will 200 Opinion tion." 49 U. C 10102(14). NEMRB does not possess a certificate of public convenience and necessity issued by the Interstate Commerce Commission and does not provide transportation servces. FFSD 43 44.

Nor does NEMRB come within the "common carrer" exemption simply because some of its members are common carriers subject to 8 A significant proportion of NEMRB'the Interstate Commerce Act. members do not operate in interstate commerce, and therefore are not subject to the Interstate Commerce Act. FFSD 45-48. It is well established that membership by the entities that do not qualify for a statutory exemption subjects the trade 19) association as a whole to antitrust scrutiny. , Massachusetts FUrniture Piano Movers Ass 102 FTC 1176 , 1213 (1983), rev d on other grounds and Cir. 1985) (hereinaftr Mass.remanded 773 F.2d 391 (1st Movers ); Case-Swayne Co. v. Sunkisl Growers, Inc. 389 U.S. 384 (1967); Crosse Blackwell Co. v. FTC 262 F.2d 600 (4th Cir. 1959). Moreover, the price-fixing charges alleged in the complaint concern intrastate shipments, which are beyond the jurisdiction of the ICC. As the Commission determined in Mass. Movers activities of common carrers that are not subject to ICC regulation are subject to the provisions of the FTC Act. 102 FTC at 1213. If we were to hold otherwse, common carriers regulated by the ICC with respect to interstate rates could enter any non-transportation business they desired and engage in anticompetitive behavior without the threat of antitrust liability. Id.

In short, we hold that NEMRB is not exempt from the Commission s jurisdiction by virtue of Sections 5(a)(2) and 6(a) of the FTC Act.

A third jurisdictional defense raised by NEMRB is predicated on the provisions of the Interstate Commerce Act known as the Reed- Bulwinkle Act. Under Section 10706 of the Interstate Commerce Act agreements among motor common carrers on interstate rates are exempt from antitrust scrutiny if the agreements have been approved B NEMRB erroneously cites ftc v. Mille 549 F.2d 452 (7th Cir. 1977), in support of its contention that activities of its common carer members ar beyond the Commission s jurisdiction by virtue of their status as common carers. In Mille the Seventh Circuit held that the Commission did not have jursdiction over advertising by common carers where the advertsing was subjec to ICe regulation but was not acvely regulate. However, the court expressly declined to decide whether "non-carrer activities of a common carer" qualify for the exemption under Setions 5 and 6 of the FTC Act. 549 F.2d at 458. Since theMille decision, the Firs Circuit has explicitly held that the Interste Commerce Act poses no bar to the application of federal antitrust laws in general, or the FTC Act in particular, to collective intraste rate making. Massachusetts Furniture haoo Mooers Ass n v. FTC 773 F.2d 391 , 394 (1st Cir. 1985). !, ,, 272 FEDERA TRAE COMMISSION DECISIONS Opinion 112 F.

by the ICC. 49 U. C 10706. The Section 10706 exemption, however is expressly limited to approved interstate ratemaking; the ICC has repeatedly held that it does not extend to intrastate ratemaking. See , 10 (1963); Pacfic, Alaska Carrers Association, 321 LC.C. 7 08 (1961); OhioMoto Tariff Bureau, Inc. 313 LC.C. 406, 407- Motor Freight 311 LC.C. 127, 128 (1960). Furthermore, the Reed- Bulwinkle Act should not be construed as an implied repeal of Section 5 of the FTC Act with respect to rate bureau activities. There is no irreconcilable conflict between the statutes; NEMRB is not a common carrer subject to the Interstate Commerce Act, and NEMRB engages in an activity-intrastate ratemaking-that is beyond the scope of the Interstate Commerce Act. See Mass. Movers 773 F.2d at 393-94. We therefore hold that the antitrust exemption of the Reed-Bulwinkle Act does not extend to the collective intrastate ratemaking at issue in this proceeding.

Finally, NEMRB argues that the challenged activity is beyond the jurisdiction of the Commission because it does not affect interstate commerce. Section 5 of the FTC Act prohibits unfair methods of competition and unfair or deceptive trade practices (10) in or affecting commerce" among the states. 15 U. C 45. In interpreting identical jurisdictional language in the Sherman Act, the Supreme Court has held that a local business practice is deemed to be affecting" interstate commerce if "it has an effect on some other appreciable activity demonstrably in interstate commerce. McLain v. 242 (1980).Real Estate Bd. of New Orleans, Inc. 444 U.S. 232, Accordingly, complaint counsel can satisfy the interstate commerce requirement of Section 5 by demonstrating a substantial effect on interstate commerce generated by NEMRB's ratemaking activities. Id. ; see also Hospital Building Co. v. Trstees of Rex Hospital, 425 S. 738 , 743 (1976).

The record reveals that NEMRB' s ratemaking has had a substantial the intrastate effect on interstate commerce. As the Al found, shipment of general commodities by NEMRB's members frequently is just one leg of the interstate shipment of such commodities. SD at 21. NEMRB carrer members take delivery of commodities originating 9 As originally enacted, the FTC Act limited the Commission s jurisdiction to business practices " corneree," Act of Sept. 26, 1914, en. 311 , 38 Stat. 717, 719. In 1975, the Magnuson-Moss Warranty- Federa Trae Commission Improvement Act expanded FTC jurisdiction beyond activities merely " commerce" to include activities "afecting" commerce. Pub. 1. No. 93-637, 88 Slat. 2183. The purpse of this amendment was to enable the Commission to regulate activities "which are unfair or deceptive and which while local in character, nevertheless have an adverse impact upon interstate commerce. " S. Rep. No. 151, 9ad nn.. 1" 9'" 1107':1 NEW ENGLAD MOTOR RATE BUREAU, INC. 273 200 Opinion out-of-state at an in-state warehouse or distribution center, then transport the commodities to in-state customers pursuant to the tariff schedules filed by NEMRB. FFSD 52, 55. Commodities thus are shipped in a continuous stream from points out-of-state to in-state destinations, and the rates that NEMRB's members charge for the instate leg of the shipment have a direct and substantial effect on interstate commerce. Furthermore, NEMRB's members receive substantial sums of money from out-of-state customers in payment for instate transportation servces. FFSD 52-54. The rates charged for these services are determined by NEMRB' s tariffs, and thus directly affect the amount of money flowing across state lines. In view of this evidence, we conclude that NEMRB' s activities were " in or affecting commerce" within the meaning of the FTC Act. II. STATE ACTION IMMUNITY The principal issue on appeal is whether NEMRB' s ratemaking activities are beyond the purvew of the federal antitrust laws by virtue of the state action doctrine. The state action doctrine attempts to resolve any conflicts that arise between the (11 J national policy favoring free competition, as embodied in the federal antitrust laws and the principle of federalism. Restraints on competition are insulated from antitrust attack if they constitute " state action or offcial action directed by a state. Parker v. Broum 317 U.S. 341 351 (1943).

The Supreme Court, however, has admonished that a "gauzy cloak of state involvement" in private anti competitive conduct is not sufficient to confer antitrust immunity. California Retail Liquo Dealers Ass n v. MidcalAluminum, Inc. 445 U. S. 97 106 (1980). In Midcal the Supreme Court set forth two criteria that anti competitive conduct by private entities must satisfy to qualify as exempt "state action: (i) the challenged conduct must be undertaken pursuant to a clearly articulated and affirmatively expressed" state policy to displace competition with regulation; and (ii) the conduct must actively supervsed" by the state itself. Id. at 105- 06; accord Patrik v. Burget 108 S. Ct. 1658 , 1663 (1988); Southern Motor Carrers Rate Conference v. United States 471 U. S. 48, 57 (1985). We now apply these criteria to NEMRB's ratemaking activities in Massachusetts, New Hampshire, and Rhode Island. 10 We not. that the complaint alleges only that NEMRB's activities constitute "unfair methods of competition" in violation of Secion 5 of the FTC Act, 15 U. C 45. The state action defense is available in Section 5 cases applying Sherman Act standards. See, e. , Ashel18 Tobac Bd. afTrad, Inc. v. FTC, 263 2d 502, 508-10 (4th Cir. 1959).

274 FEDERA TRAE COMMISSION DECISIONS Opinion 112 F.

A. Clearly Artirlated Slate Policy The AU correctly held that the Massachusetts and Rhode Island statutes evince an intent to countenance collective ratemaking among motor common carrers. In Southern Motor Carrrs the Supreme Court found that a Mississippi statute similar to those in Massachusetts and Rhode Island expressed a state policy to permit joint setting of rates by motor carrers. 471 U.S. 48, 63-66. Although the Mississippi law did not explicitly authorize private collective ratemaking, it directed the Mississippi Public Servce Commission to prescribe just and reasonable" rates for motor carrers on the basis of several enumerated factors. Id. (citing Miss. Code Ann. 77- 221). This statutory mandate, the Court concluded, indicated the state s intent to displace rate competition in the intrastate trucking industry with regulatory program. 471 U. S. at 65 n. 25.

Applying the rationale of Southern Motor Carrs the U.S. Court of Appeals for the First Circuit held in Mass. Movers that the Massachusetts statute at issue in this case sanctions collective ratemaking among motor carriers. (12) 773 F.2d 391 , 394-97. The court observed that the language of the Mississippi statute at issue in Souther Motor Carrers was "remarkably close" to that of the Massachusetts statute governing motor common carrers, which empowers the MDPU to " (pJromote . . . reasonable charges" for transportation services "without. . . unfair or destructive competitive practices. . . . " 773 F.2d at 395 & n.6 (quoting Mass. Gen. 1. ch. 159B 1). Consistent with the Southern Motor Carrers and Mass. Movers decisions, we hold that the Massachusetts statute satisfies the first prong of the Midcal test. Similarly, the Rhode Island statute governing motor carriers provides that moving rates must be "just and reasonable and reasonably compensatory" and authorizes the DPUC to suspend or reject rates that do not meet these statutory criteria. We find this statutory mandate to be indistinguishable from the rate provisions of the Mississippi statute that the Supreme Court in Southern Motor Carrs found to satisfy the first prong of the Midcal test. The Al also correctly held that the New Hampshire statute did not satisfy the first prong of the Midcal test. During the period considered by the AU, the New Hampshire statute required only that motor carrers not discriminate in offering rates to similarly situated customers. See H. Rev. Stat. Ann. 375-B:14 (1984 Replacement !,d.). Unlike its Massachusetts and Rhode island counterparts, the J:YI l'lUun.,.. .u 200 Opinion NHDOT lacked the statutory authority to suspend or reject rates for being unjust or unreasonable. FFID 12. The NHDOT thus had no authority over rate levels; its authority was limited to prescribing the format in which rates were to be filed and enforcing those rates by prohibiting discounts or other forms of discrimination. 11 The New Hampshire statute subsequently was amended to empower the NHDOT to suspend or reject rates for being unjust or unreasonable. See note 6 supra and accompanying text. Thus, the New Hampshire statutory scheme now more closely resembles that of Massachusetts and Rhode Island. This amendment, by itself, however cannot confer state action immunity. At most it satisfies only the first of the two prongs of the Midcal test, by providing a clearly articulated state policy to displace competition with regulation. It does not however, relieve respondent's burden of showing that the second prong of the (131 Midcal test was also satisfied that New Hampshire authorities are actively supervsing rate regulation. See Mass Movers 773 F. 2d 391 , 397 (1st Cir. 1985). Moreover, this statutory change cannot immunize conduct that NEMRB engaged in before the amendment went into effect.

B. Active State Supervsion To qualify for state action immunity, pri,ate conduct must also have been actively supervsed by the state. Midcal 445 U.S. at 105. The active supervsion requirement "serves essentially an evidentiary function: it is one way of ensuring that the actor is engaging in the challenged conduct pursuant to state policy. . . . Where a private party is engaging in the anti competitive activity, there is a real danger that he is acting to further his own interests, rather than the governmental interest of the State. Town of Hallie v. City of Eau Claire 471 U. , 46-47 (1985).

The Supreme Court recently elaborated on the meaning of active state supervision in Patrick v. Burget 108 S. Ct. 1658 (1988). Patrick alleged that competing physicians conspired to terminate his staff privileges at the only hospital in Astoria, Oregon, by initiating and participating in proceedings before the hospital's private peer-review committee. 108 S. Ct. at 1660-61. The Court held that the state action defense did not apply to the challenged conduct because the State of 11 Because the furmer New Hampshire statute did not evince an "afrmative!y cxpresge state policy" that rate levels be determined by a regulatory agency rather than by the market, it did not satisfyMUkai' first prong. At the time of the AL' s decision, this provided an independent grund for the conclusion that the state action doctrine did not immunize NEMRB' s anticompetitive conduct in New Hampshire. 276 FEDERA TRADE COMMISSION DECISIONS Opinion 112 F.

Oregon did not actively supervse the decisions of hospital peer review committees. The Court stated:

(TJhe active supervsion requirement mandates that the state exercise ultimate control over the challenged anticompetitive conduct. . . . (This) prong of the Midal test requires that state offcials have and execie power to review particular anticompetitive acts of private parties and disapprove those that fail to accord with state policy. Absent such a program of supervsion, there is no realistic assurance that a private party s anticompetitive conduct promotes state policy, rather than merely the party s individual interests.

108 S. Ct. at 1663 (emphasis supplied, citations omitted). The Court found that neither Oregon regulatory agencies nor state courts would review the merits of privilege determinations. Id. at 1664-65. Inasmuch as the state did not exercise "ultimate authority" over private peer group decisions, the active supervsion requirement was not satisfied and the state action defense therefore could not sustained. Id. at 1664-65. (14) The active supervision requirement thus serves to affrm the state intent to tolerate private anti competitive conduct, not merely as a theoretical possibilty, but as it is actually undertaken in the marketplace. To establish active state supervsion, it is not enough to show, as NEMRB contends, that the statute governing the anticompetitive activity provides some mechanism for regulatory oversight. Under Patrik there must be a showing that the state actually exercises its power to review particular anticompetitive acts of private parties. 108 S. Ct. at 1663. It is only through the exercise of its authority that the state s conscious approval or disapproval of the private conduct can be discerned. 12 The state s involvement in the challenged activity, then, must be more than peripheral to satisfy the active supervsion requirement. In Midcal the Supreme Court found no "active supervsion" in the state s enforcement of resale price schedules established by wine wholesalers pursuant to state law. The Court emphasized that the state had not established prices, reviewed the reasonableness of price schedules, regulated the terms of fair trade contracts, monitored market conditions, or engaged in any "pointed reexamination" of the program. 445 U. S. at 105- 106. Rather, the state s enforcement 12 The Supreme Cour' s statement in Patrik v. Burget that the state must "exercise" its power to review puts to rest NEMRB's interpretation of lower court decisions that prof of regulatory autlwty alone is Buffcient to establish that private anticompetitive conduct has ben "actively supervse" by the state. , 200 Opinion activities merely had cast a "cloak of state involvement over what (was) essentially a private price-fixing arrangement." Id. at 106. Similarly, in Patrik the Court, observng that " (t)he mere presence of some state involvement or monitoring does not suffce 108 S. Ct. at 1663, held that state action immunity could not be predicated on a showing that Oregon health offcials had licensing authority over hospitals or physicians and that Oregon courts had some authority to review private peer group decisions on procedural grounds, 108 S. Ct. at 1663-65. Rather, because the merits of peer review decisions themselves were not "actively supervsed" by any state actors, the state action doctrine did not protect the peer review activities challenged in the case. Id. at 1663 , 1665. The Patrik court stated Absent such a program of supervsion, there is no realistic assurance that a private party s anticompetitive conduct promotes state policy, rather than merely the party s individual interests. Id. 1663.

The Midal and Patrik decisions indicate that a state offcial or agency must engage in a substantive review of the (15) challenged conduct before active supervsion can be found. Such a review ensures that the state agency has consciously considered the anticompetitive consequences of the activity for which private parties seek approval. No clear inference of conscious state approval of the product of private collective ratemaking can be drawn from a state agency's passive acceptance or nonsubstantive review of rate filings. 13 Thus we hold that the active supervsion requirement is satisfied only where the state agency has reviewed the proposed tariffs or rates on the 14merits. (16) 13 Cj. Mid 445 U.S. at 104, in which the Supreme Court observed that a majority of the Cour had found in Cantov. Detrot Edisrm Ca., 428 U.S. 579 (1976), that " no antitrust immunity was conferr when a stte agncy pasively acptB a public utility s taff. J4 Complaint counsel contend that the acve supervsion requirement is met only if the stte regulator provides notice and an opportuniy for public comment prior to the implementationof the fied rates, and issues a wrttn opinion settng fort the grounds for approving the rates. We decline to acpt this formulation. A finding that the stte engas in substtive review of the private conduct is esntiaJto a finding of "acve stte supervsion. " Thus the test that complaint counsel proposes is overinclusive, beause it would pennt a finding of state acion immunity where the stte has merely adopted particular proedures designed to ensure fairness. Such an approach was implicitly rejec by the Patri court' s conclusion that the Oregon scheme of judicial review, designed only to ensure per review proedure were reasnable, did not constute acve supervsion. 108 S. Ct. at 1665. Oversight on merely fomal tenn does not esblish a "pointe rexamnation" of private acion. On the other hand, we ar hesitat to limi to 8 written opinion the fonn of evidence that could be use to show that a stte has acually enga in a substive review of the merits of a proposal for private conduct. States should be aforded grater latitude in stcturing supervry schemes. Morever, we ar not awar of any court decision holding that notice, an opportunity to be hear, and a supervsion. Several of the decisions cite by complaintwrttn decision ar the since qu no of acive st counsel 8tt. that the challenge acivity must be the result of the "considered judgment" of the stte (footnote cont' );

278 FEDERA TRAE COMMISSION DECISIONS Opinion 112 F.

Apart frm the matter of what constitutes active state supervsion there is the question of who has the burden of proving such supervsion. The AL errd in suggesting that the burden of proof on the active supervsion requirement shifts to the government once the respondent demonstrates the existence of latent oversight authority. ID at 30. Language in the Supreme Court' Patrik decision clearly implies that the proponent of the state action defense has the burden of demonstrating the exercise of regulatory authority by state offcials. See, e. 108 S. Ct. at 1664 (stating responents have not shown that the (Board of Medical Examiners) in practice reviews privilege decisions," (emphasis added)). The AL cited no authority the contrary. We therefore conclude that NEMRB, as the proponent of the state action defense, had the burden of demonstrating that state offcials engaged in a substantive review of NEMRB' s rate proposals. 15 See also Mass. Movers 773 F. 2d 391 , 397 (1st Cir. 1985) (T)he Association met its first burden in establishing Parker immunity. In order to be immunized from antitrust liabilty under Parker the Association must also satisfy the second prong of the Midal test that the anticompetitive activity was ' actively supervised' by the state. North Carolina ex rei. Edmisten v. P.I. Asheville, Inc. 740 F.2d 274 , 277 (4th Cir. 1984), cert. denied, 471 S. 1003 (1985); Sollenbarger v. Mountain State Tel. 121 F.R.D. 417 426 (D. N. M. 1988); Englert v. City of McKeesport 637 F. Supp. 930, 932-33 (W.D. Pa. 1986); Gold Cross Ambulance Transfer v. City of Kansas City, 538 F. Supp. 956, 967 (W. D. Mo. 1982), afJd 705 F. 2d 1005 (8th Cir. 1983), cert. denied 471 U.S. 1003 (1985) A defendant who seeks to invoke the state action exemption must meet a heavy burden.

We now apply these principles to the Massachusetts, New Hampshire, and Rhode Island regulatory programs. (17) regulatory agency to be immune frm antitrust attak, but none suggests that this result can be achieved only if the regulawry agency provides public notice and an opportunity to be heard and expresses its decisions in wrting. See Jeffre v. Sauthweste Bell 518 F.2d 1129, 1134 (5th Cir. 1975) (quoting Gas Light Co. Columbu v. Gewgi Power Co. 440 F.2d 1135, 1140 (5th Cir. 1971));Sonitrol ofFrrm, Inc. v. AT&T, 629 F. Supp. 1089, 1095- 1100 (D. C. 1986); Mac Products Cor. v. AT&T 359 F. Supp. 973 , 977 (C.D. Cal. 1973).

16 None of the appeal briefs fied by the paries speifically mentions the ALJ' s comment on the burden of prof. Complaintcounse!, however, appear to take the position that a private pary seeking to avail itslf of the stte action defense has the burden of prof on both Midal criteria. Complaint Counsel' s Answering Brief at 9. NEMRB does not challenge that asrtion in its Reply Brief. NEMRB could not, in any event, be prejudiced by our finding of errr on this question, because we se nothing in the reord to suggest that the parties ever assumed that the burden was 7Wt on NEMRB. 200 Opinion 1. Massachusetts We see no evidence that the MDPU has engaged in a "pointed reexamination" of rates resulting from NEMRB's ratemaking activities. Midcal 445 U.S. at 106. Although the MDPU has authority to review the reasonableness of motor carrier rates, in practice, the MDPU' s review of rate fiings has been limited to a determination that the carrer has complied with filing format requirements 16 and that the tariffs accurately reflect the rates the carrer intends to charge. FFID 34. The rate analyst rejects only fied tariffs that do not comply with the fiing requirements of the regulations. 17 FFID 34. The rate analyst (18) has never rejected a rate because of the price to be charged. FFID 31. Indeed, the MDPU has never requested financial information to support collectively set rates, and it does not look behind the filed rates to determine whether they accurately reflect the carriers' profits and costs. FFID 31. Nor has the (19) MDPU audited 16 Included in the reord is a true copy of MDPU' s rules and regulations governing motor earners of property. FFID 25. See Mass. Regs. Code tit. 220, 250-272. These regulations set out procedures of practice before the MDPU Commercial Motor Vehicle Division, general reg1lations governing the conduct of motor carrers and eligibilty fof a common carrer certificate, rules involving the leasing of equipment, rates for towing motor vehicles, and rules governing theConn and filing of freight rate taffs and contracts by motor carrers and brokers. These latter reg-lations, found in Section 260.03, cover such matters as the size of paper of tariff fiings, the color of the print, the number of copies to be submitted, the title page, the delineation of various classes of commodities, the appropriate source for determining mileage, designation of units in which to indicate rates, and so forth. In short, these regulations solely concern the formal rather than substantive adequacy of tariff filings. Nothing in the regulations, however, provides any guidance as to what might constitute a "just and reasonable" rate or provides criteria by which MDPU or its staff will determine the merits of a particular rate reuest.

J7 The only example of an MDPU tariff rejection contained in the record is labeled "Supplement 1 to NMF 103- " a "Zip Code Tariff" !rum the National Motor Fright Traffc Association, Inc. , that MDPU reeived on Mareh 28, 1986. Exhibit F. It purport to use zip codes as gegraphic point designators in determining freight rates. Id. On April 3, 1986, MDPU responded to this filing by letter stating: NMF 103-B and Supplement No. 1 tendered this Department are hereby rejeded. NMF 103-B is simply the Unite States Postal Service Code Guide. It is not issued by your agency. There is no provision in our lariff regulations for the acceptance of such a fiing. Further, we would have no idea who is a party to such typ publication since it does not contain a list of participating carrers. Also, on the title page of the Supplement Nu. 1 and on the reverse side thereof, the designation MADPU" is incorr. The designation for this Department should read "MDPU." Finally, any tariff fiing tendered this Department must be accompanied by a fiing fee of $10.00 up to 30 pages, and 10 cents per page aftr.

Exhibit F. Clearly, action of this typ docs not evince substantive review of rates, as required for private partiesJ8 Paragraphto establish62 oftheStipulationactive statedatedsupervsionAugust 28,prong1986,of thewhichstatetheactionAU adopteddefense. as FFID 35 , states: It is the opnil of Uw rate analy. that whenever tariffs become effedive without rejection, suspension or hearing, that actionre.mlts from a deteinatil that the proposed rates meet the regulatory criteria ofthe statute, orders, rules and regulations pertaining to motor carrers of property. (Emphasis added. However, this finding does not directly address the central issue in this price-fixing case whether the rates analyst, or anyone else at MDPU, has formed an opinion that approved rates are just and reasonable. Thus this stipulated finding does nut undercut our conclusion stated above, or the Alj' s finding, that MDPU review is limited to compliance with the format requirements of the tatutes and regulations. (footnote cont' , 280 FEDERA TRAE COMMISSION DECISIONS Opinion 112 F.

carrers' records or monitored economic conditions within the trucking industry. FFID 34 , 45.

NEMRB does voluntarily submit to the MDPU rate proposals and rate justification statements that it has fied with the ICC, and it requests the MDPU to take the same action with respect to the intrastate Massachusetts proposal as does the ICC with the (20) interstate proposal. FFID 39. If the ICC suspends the proposal NEMRB requests the MDPU to postpone the effective date of the proposal in Massachusetts pending the outcome of the ICC investigation. FFID 39. If MDPU does suspend rates under such circumstances it is at the request of NEMRB, and not based on an examination of the fied rates. Such action solely at the behest of NEMRB does not evince active supervision. 20 It is unclear to which reg1!arory criteria the stipulation refers. As discussed in note 16 supra, the regulations applicable to motor carrer tariffs address only the filing fannat, and do not involve justne&. and reasnableness of rates. Thus, in Massachusetts, review for meeting the "regulatory criteria" of the rules and regulations does not constitute active supervsion of privately set rates. Further, no MDPU "orders containing "regulatory criteria:' alluded to in this finding, are contained in the reord. The statutes, on the other hand, do contain, as "regulatory criteria " requirements that rates be just and reasonable. Nonetheless this stipulation does not show that the second prong of the Midal test is satisfied. The stipulation states that the effective rates " result() from a detennination " hut the stipulation does not indicate who has made such a detennination. Speifically, the stipulation does not say that such rates result from an opinion of the rate analyst that the regulatory criteria are satisfied. While we are loathe to pars stipulations to closely, it is important, on the other hand, to remember that stipulations are the product of agrment between the parties to the cas. Consequently, it would be eIToneuus for us to read unstated facts into this stipulation or to asume that a turn of phras is the product of accidenl rather than draftsmanship. Indeed, the relevant statute specifically says Every such common carrer shall establish, ohserve and enforce just and reasonable rates. . . ." Mass. Gen. Laws Ann. Ch. 159B , para. 2. Thus, this stipulation may simply mean that the carrers have detennined that the rates are reasonahle. Active supervsion, however reuires that the state interpse its judgment as to whether private conduct furthers state, and not merely private, interests. This stipulation does not indicate that Massachusetts has done so. Finally, we note that FFD 15 and 63 contain similarly worded findings, based on stipulations, applicable to the states of New Hampshire and Rhode Island. Yet as noted in the text, the factual settinj,'1 in the three states are vastly different. Thus, this ambiguous stipulation is entitled to less weight than the state-speific stipulations that provide concrete detail.

19 NEMRB notes that the parties stipulated that MDPU's rate analyst would recommend suspension and investigation "if confront." with rates that, in his opinion: (1) were out of line with the average rates that had ben established for that pricing zone; (2) semed extraordinarily high, such as a 20% to 50% increas; or (3) appeare to be discriminatory. Fluid 31. That an agency employee can hypthesize situations in which he or she 'Would reomme that the agency take action is not evidence that an agency actually e:es its supervisory authority over private conduct. Morever, there is no evidence that the MDPU has ever issued regulatory guidelines for detennining- whether suspension or investigation of rates is appropriate, so we cannot even conclude that this hypothetical reommendation is consistent with agency policy. Finally, that the rate analyst would recommend action "if confronted" with such rates suggests a haphazard approach rather than a program of supervsion.

20 The parties stipulated, and the AU found, that the MDPU generally relies on the fact that the ICC has already conducted an investigation and reached a conclusion as to the justness and reasonableness of NEMRB rates. FFID 39. (Emphasis supplied. ) However, this peculiar word choice in the stipulation of parties does not overcome the general finding that MDPU review is limited to compliance with filing format requirements. There is nothing in the reord to indicate that MDPU would suspend ICC-suspended rates, except at the rt'quest of NEMRB , or that Ice approval makes MDPU approval more likely. Rather, the reord as a whole shows that MDPU review is limited to whether the tariff complies with the format requirements. .. ...., 200 Opinion We conclude that because MDPU does not review the substance or the merits of collective tariff filings, but merely allows the rates to go into effect as long as the collective tariffs satisfy formalistic format requirements, the second prong of the Midcal test is not satisfied. Because MDPU does not exercise its supervsory authority over rates the state action exemption does not apply, and NEMRB collective ratemaking activity in Massachusetts is subject to antitrust scrutiny. 2. New Hampshire As noted above, during the period considered by the AL , the NHDOT lacked statutory authority to reject or suspend rates for being unjust or unreasonable. By statute, motor common carrers were prohibited only from discriminating in price among similarly situated customers. FFID 16. The NHDOT had no other authority over the development of rates. NHDOT's review of fied rates was limited to ensuring that the rates were submitted in the proper format and were identical for similarly situated customers. FFID 14. Because the NHDOT had no authority over price levels, it could not-and the record shows that it did not-engage in a substantive review, or 21 pointed reexamination " of the rates themselves. See Midal, 445 S. at 105-106. The state has 121) displaced competition among private motor carrers without substituting an adequate system of regulation. See 324 Liquo Cor. v. Duffy, 479 U.S. 335, 345 (1987). Collectively set filed rates in New Hampshire were simply the product of private action furthering private interests. 21 The NHDOT ocasionally has investgate whether motor common carers were complying with their filed rate. The mere fact that a state may enforce the rates set by private parties, however, is not enough to establish acive stte supervsion. See 324 Liq Cor. v. Duffy, 479 U.S. 335, 343-45 (1987); Mw,('u 445 S. at 105-106.

22 As reueste by counsel for respondent, the Commission has taken offcial notice of an amendment to the New Hampshire statutes, effecve Januar 1988, reuiring that motor common carers file just and reasnable rates. See H. Rev. Stat. Ann. 375-8:13. (1988 Supp.) Thus, the facts shown in respondent' reuest to take offcial notice suggst that New Hampshire now has an afnnatively expressed policy that rates be set according to regulatory criteria, and not purely through competition. However, respondent has not ared, nor made any showing that, pursuant to this new authority, the NHDOT presently engas subsntive review of the merits of these filed rates. Nor has respondent asked the Commission to consider furter infonnation to that effec. Se Commission Rules of Prtice 3.51(e), 3.43(a) & (c). 16 CI''R 3. 51(e), 54(a) & (c). There wil always be change in fac during the pendency of any appeal. To a larg extent, the Commission must rely on the paries to indicate that there ha. ben sufcient change for the Commission to exercise its discretion to obtain more infonnation. Respondent has not done 80 here. At best, the fac now of reord indicate that New Hampshire s scheme, in practice, is like that of Massachusett, where we also find the stte acion defense wanting.

A demonstration relating to the firnt prong of theMidal test simply does not compel any inferences as to the second prong. That is, the existnce of supervsory authority does not establish that the authority is (footnote cont' , , 282 FEDERA TRADE COMMISSION DECISIONS Opinion 112 F.

3. Rhode Island Although the Massachusetts and Rhode Island statutory schemes are quite similar, the states have differed substantially in the exercise of their authority to regulate rates. Unlike its counterpart in Massachusetts, the Rhode Island DPUC reviews (22) proposed rates for their reasonableness and not solely for the purpose of ensuring compliance with format requirements.

The record reveals that the DPUC's rate analyst uses historical rate information to make initial determinations on the reasonableness of rate proposals. Rates are permitted to become effective without a hearing only if they are consciously determined to fall within a "zone of reasonableness " which is based on the maximum and minimum industry averages of previously approved rates for each category of motor carrer. FFID 56, 60. In applying this analysis, the rate analyst may consider the percentage increase and the date of the last request but general increases cannot be granted based solely on inflation unless there is a hearing. FFID 56 , 60.

Aftr making its initial determination on an individual or an NEMRB proposal, the staff drafts an order, which may be accompanied by a memorandum, recommending that the Administrator, who has final authority in such matters, either approve the proposal or suspend it and conduct a hearing. FFID 58. As noted above, on at least one occasion in the recent past, the DPUC suspended an NEMRB rate proposal pending the receipt of further evidence at a formal public hearing. FFID 58. On that occasion DPUC met with NEMRB in an informal conference to ask questions about the proposal. Id. After issuing a public notice on June 17, DPUC conducted a formal public hearing on the proposal on July 9, 1986. FFID 58; Exhibit J. The record contains a transcript of this formal public hearing. FFID 58; Exhibit K. Following the hearing, the DPUC granted NEMRB' application for a general rate increase. ID at 34. Irrespective of whether review of a rate proposal is limited to scrutiny under the zone of reasonableness" standard or entails a formal hearing, the DPUC always issues an order concerning the tariff. FFID 58, 60. exercise. For example, in Masachusetts, Mas. Gen. L. Ch. 159B 6, para. 5 provides, in par The (MDPU) shal annualy e.'1tablish reasnable maximum and minimum rates or charges consistnt with industry and economic conditions and consistent with the declaration of policy contained in seion one. (Emphasis supplied.) However, the AU found Although MDPU has the authority to establish maximum and minimum rates, ch. 159B , para. 5, it has not doneso as to motor carrers of property, except a minimum r-dte order was entered many years ag with respet to dump trcks and petroleum tank truck carers." FFD 32.

...

200 Opinion Tak ntogether, the evidence establishes that the DPUC conduct a program of supervsion and has engaged ina suffcient review of the rates fied by motor carrers and their agents to satisfy the second prong of the Midaltest. NEMRB' s ratemaking activities in Rhode Island are therefore immune frrr antitrust liabilty by Virtue ofthe state.. action. doctrine.

IV. NOBR-PENNGTON IMMUN NEMRB also argues that its acivities are insulated f om antitrust liability by virtue of the Noer-Penningtm doctrine. That doctrine shields from antitrust scrutiny concertd efforts by competitors to petition government offcials to take action that would restrain competition, except in circumstances where the petitioning is a sham or an abuse of process. Easte Railroad Presits Conferenv. NOer Motor Freight, Inc. 365 U. S. 1 7 (1961); United Mine Workers v. Penningto 381 U. S. 657 (23) (1965); Califoria Moto T'tanso- Co. v. Truking Unlimited, 404 U.S. 508 (1972). NEMRB contends that the Noer-Pennington doctrine applies here beause the filing of collective tariffs in Mllsachusett, New Hampshire, and Rhode Island was part of an effort to persuade regulatory agencies to permt carrers to use the fates contained therein.' NEMRB further contends that its activities in formulating the rates to be fied also must be proteted, because the right to petition a governmental agency includes the right to formulate the position the present to the agency;group will ' The Supreme Court most recently considered the Noer-Penningto doctrine in Allied Tube Conuit Cor. v. Indian Head, Inc. 108 S. Ct. 1931 (1988). Alled was a producer of steel.electricalconduitand a member of a private standard-setting organization that publishes the National Electrical Code. The Code listd approved types of electrical conduit. The plaintiff, Indian Head, was a manufacturer of plastic conduit and had asked that its product be included in the new edition of the Code. To prevent approval of Indian Head's product, Allied and other members of the stel industry "packed" the annual.l meeting of the standard-setting organization with representatives whose sole purpse was to vote against the plaintiffs proposal. 108 S. Ct. at 1935.

Alled did not deny that its actions were anticompetitive, but claimed that because state and local governments routinely adopted the National Electrical Code, its activities within the private standard. 284 FEDERA TRADE COMMISSION DECISIONS Opinion 112 F.

setting meeting were immunized as simply an effcient means to influence governmental action. The Supreme Court disagreed, ruling that "immunity of anticompetitive activity intended to influence the government depends not only on its impact, but also on the context and nature of the activity. " 108 S.Ct. at 1939. Because of its context (private standard-setting) and nature (packing the annual meeting) the Court concluded that Alled's activity, in essence promoting agreements not to manufacture, distribute, or purchase plaintiffs product id. at 1937, was "the type of commercial activity that has traditionally had its validity determined by the antitrust laws themselves id. at 1939. Accordingly, the Court held that Noerr- Pennington immunity was not available. We may assume that NEMRB's activities in Massachusetts, New Hampshire, and Rhode Island were designed to influence governmental action-specifically, regulatory approval of the privately determined rates. Nevertheless, that fact standing alone is insufficient to confer Noerr-Pennington immunity. In addressing an argument similar to NEMRB' s, the Court in Allied Tube stated, "We cannot Noer doctrineagree with (Alled' sJ absolutist position that the immunizes every concerted effort that is genuinely intended to influence governmental action. If all such (24) conduct were immunized then, for example, competitors would be free to enter into horizontal price agreements as long as they wished to propose that price as an appropriate level for governmental ratemaking or price supports." 108 S. Ct. at 1938-39. We find this reasoning, specifically applicable here, to be persuasive.

Indeed, where the jointly fied tariffs go into effect without adequate state supervision, any anticompetitive impact is a direct result of the price-setting agreements among the filing competitors and not of action by the state. To hold that respondent's price agreements are protected as joint petitioning would virtually eliminate the "active supervsion" requirement of the state action doctrine. Under this interpretation of Noerr any competitor conduct would be immunized from antitrust scrutiny so long as it was "proposed" in a collective tariff filing, irrespective of whether state review and approval have been adequate to ensure furtherance of state rather than purely private interests. 23 Such a broad application of Noer 2: Arda and Hovenkamp assert that rate filing1 should presumptively lackNoer protetion, and contend that the relationship between the regulatory regime and the antitrust laws is the critical issue "frm which Nae immunity for the filing is an undesirable and unnecessar diversion." P. Areeds & H. Hovenkamp, Antitrut Law para. 206. 1 (1988 Supp.

....

".1" .J"' H"U''' "'.L"".L"".u ...... ..w, u.... 200 Opinion cannot be reconciled with the teaching of Allied Tube that the scope of Noer protection depends "on the source, context, and nature of the anticompetitive restraint at issue. " 108 S.Ct. at 1936. NEMRB' s collective rates amount to a horizontal agreement on price, an arrangement that "has traditionally had its validity determined by the antitrust laws themselves. See 108 S. Ct. at 1939. In short, NEMRB's collective rate setting efforts can "more aptly be characterized as commercial activity with a political impact " 108 S. Ct. at 1941 , than as political activity with a commercial impact. Accordingly, we hold that NEMRB's collective ratemaking is not immune from the antitrust laws by virtue of the Noer-Penningto doctrine. Such conduct is protected, if at all, by the state action doctrine. 24 V. OTHER DEFENSES NEMRB further argues that the Complaint should be dismissed because of the doctrines of laches, estoppel, and waiver, and an alleged failure to join indispensable parties. The AU rejected (25) each of these defenses in the Partial Summary Decision, SD at 18, 20 and we affrm. The AU' s findings, analyses, and conclusions with respect to these defenses, as set forth in the Partial Summary Decision, are hereby adopted as the findings of fact and conclusions of law of the Commission.

VI. RESTRANT OF TRADE The AU ruled that NEMRB' s collective ratemaking was per se ilegal under the antitrust laws. SD at 23-24. In its appeal brief NEMRB contends that its conduct should be judged under the rule of reason rather than the per se rule. Although we eschew perfunctory application of the per se rule, we hold that NEMRB' s collective ratemaking activities constitute an unfair method of competition under Section 5 of the FTC Act.

As we observed in Massachusetts Board of Registratio in Optometry, 110 FTC 549, 602-04 (1988), the Supreme Court has moved away from the per se rule/rule of reason dichotomy in analyzing horizontal restraints. In Broadcast Music, Inc. v. CBS 24 We have held that NEMR' s conduct in Massachusetts and New Hampshire is not entitled to stte action proteion, but that the stte acion defense does prote its activities in Rhode Island. Se Seion Il supr 25 We reognze that the Cour has at times continued to invoke the pe se role. For example, in the rent pas the Court has held that agments among competitors to estblish maximum prices or to fix creit tenns County Medical Soc. , 457 U.S. 332, 351 (1982); Catano, Inc. v.ar ilega pe se. Ari v. Maria Target Sal, Inc. 446 U.S. 643, 648-50 (1980). ), , 286 FEDERA TRADE COMMISSION DECISIONS Opinion 112 F.

441 U. S. 1 (1979) BMf'), and NCAA v. Board of Regents of the University of Oklahoma 468 U. S. 85 (1984) NCAA" the Court declined to apply a traditional antitrust analysis to the restraints at issue. In BM! the Court upheld an agreement among composers to issue a blanket license to CBS to perform the composers' works even though the agreement was technically a form of price fixing. The Court found that the blanket licensing agreement created a market in the sale of musical compositions and therefore was procompetitive. 441 U. S. at 21- 23. Similarly, in NCAA the Court declined to invoke the per se rule where the NCAA had entered into exclusive contracts with the television networks that restricted pricing and output. The Court ultimately found that the contracts constituted an unreasonable restraint of trade, but only after it considered and rejected the defendants' purported justifications for them. 468 U. S. at 113-20. Taken together, recent Supreme Court decisions suggest a method of analysis for determining the legality of a trade restraint that is more functional than the per se/rule of reason dichotomy. This analysis entails a series of inquiries: (26) First, we ask whether the restraint is "inherently suspect. " In other words, is the practice the kind that appears likely, absent an effciency justification to restrict competition and decrease output?" For example, horizontal price fixing and market division are inherently suspect because they are likely to raise price by reducing output. If the restraint is not inherently suspect, then the traditional rule of reason with attendant issues of market definition and power, must be employed. But if it is inherently suspect, we must pose a secon question: Is there a plausible effciency justification for the practice? That does the practice seem capable of creating or enhancing competition (e. by reducing the costs of producing or marketing the product, creating a new product, or improving the operation of the market)? Such an effciency defense is plausible if it cannot be rejected without extensive factual inquiry. If it is not plausible, then the restraint can be quickly condemned. But if the effciency justification is plausible, further inquiry-a third inquiry-is needed to detennine whether the justification is really valid. If it is, it must be assessed under the full balancing test of the rule of reason. But jf the justification is, on examination not valid, then the practice is unreasonable and unlawful under the rule of reason without further inquiry-there are no likely benefits to offset the threat to competition.

Mass. Board 110 FTC at 604. See also Detroit Auto Dealers Ass D. 9189, Final Decision and Order, Slip Op. at 20 (February 22 1989). The restraint at issue in this proceeding is the joint setting of rates for transportation services. Such an agreement is inherently suspect because it "substitutes concerted pricing decisions among 200 Opinion competing carrers for the influence of impersonal market forces on proposed rates. United States v. Southern Motor Carrs Rate Conference, Inc. 672 F.2d 469 , 478 (5th Cir. Unit B 1982), rehearing, 702 F.2d 532 , 542 (5th Cir. Unit B 1983) (en bane), rev on other grounds 471 U.S. 48 (1985).

Having concluded that NEMRB' s price-fixing agreement is inherently suspect, we next inquire whether there is any plausible effciency justification for the agreement. Despite its insistence that the per se rule should not apply, NEMRB has offered no efficiency justification for its collective ratemaking, and we can conceive of none. Accordingly, we hold that NEMRB's collective ratemaking activities in Massachusetts (27) and New Hampshire constituted an unfair method of competition in violation of Section 5 of the FTC Act. 26 VII. REUEF Under the AL' s order, NEMRB is prohibited from engaging in all activities related to collective rate setting in Massachusetts and New Hampshire, including providing information or helping to faciltate the establishment and maintenance of rates among competing catriers. Further, NEMRB would be required to cancel all tariffs currently in effect and to notify its members of entry of the order. Under the order, NEMRB must also notify the Commission within thirty days of any proposed change, such as dissolution, assignment or sale, and must file a compliance report within six months of the order and annually for the next five years. We believe that these provisions are warranted and have included them in the final order. We have modified the AU' s order in one salient respect. The AU determined that the prohibition against collective rate setting should apply only in Massachusetts and New Hampshire, where the violations actually occurred. He declined to extend the order to all of the states where NEMRB operates, because the record was silent regarding the availabilty of the state action defense in states including Connecticut Maine, New York, and New Jersey. We believe that the order should apply to all of the states in NEMRB's operating area. The Commission has broad discretion to choose a remedy so long as 26 AJternatively, under a traditional analysis. NEMRB' s liability could be preicate on ape se theory. In Mass. Movers the Commission declare that collecive ratemaJcng falls squarly within the rnbric that agrments among competitor. to set price levels or price rages ar pe se ilega under the antitrust laws, 102 FTC at 1224. Acc, Georgi 11. Pennslvania R. 324 U.S. 439, 456-61 (1945); Keogh v. Chico & N. W. Ry. 260 U.S. 156, 161-62 (1922). The ratemaking activities of NEMRB ar indistinguishable frm those held to be illegal per se in Mass. Movers. 288 FEDERA TRAE COMMISSION DECISIONS Opinion 112 F.

the remedy has a reasonable relation to the unlawfl practices. 104 FTC 1 , 222 (1984), citingAmean Medicalintetioal, Inc. Jacob Siegel Co. v. FTC 327 U.S. 608 (1946). Extending the order to the entire operating area of NEMRB will simplify enforcement and serve as a safeguard against future violations in the other states where the state action defense is not available. Courts have recognized that where the business operations of a violator are not therestricted to the areas where the unlawful acts occurred, possibilty of future violations is a suffcient basis for rendering a Commission order applicable to the entire operating area of a respondent. See, e. (28) Nationl Dairy Products Cor. v. FTC 395 F.2d 517 , 529 (7th Cir. 1968), cet. rknied 393 U.S. 977 (1968). The record shows that NEMRB collective rate setting activities are conducted centrally. The NEMRB's members, operating in several states, elect the offcers and directors who control the direction and management of the organization, and a single chief administrative officer supervses the affairs of the bureau. FFSD 3, 6. The bureau has a Cost Research Department and an Accounting & Finance Department, which gather financial information concerning motor carrers, and a Legal Department. FFSD 7, 8. The bureau s carrer members from several states use the General Rate and Classification Committee to collectively formulate intrastate rates. FFSD 16. The tariffs and supplements published by the bureau are filed by the NEMRB' s Tariff Publishing Department, which mails an "advice of disposition" to all carrer members and subscribers aftr each General Rate and Classification Committee meeting, advising as to the action taken on proposals considered. FFSD 20, 21. Thus, NEMRB rate setting conduct is not limited to the four states discussed extensively above, and its activities affecting the remaining states covered by this order are intertwined with its rate setting in New Hampshire and Massachusetts. See Exhibit K. (Transcript of hearing before Rhode Island DPUC, generally describing NEMRB organization and rate setting procedures).

In deference to state action, the order does not extend to NEMRB' collective ratemaking activities in states, such as Rhode Island, where such activity is conducted pursuant to a clearly articulated and affirmatively expressed state policy to displace competition and is actively supervsed by a state regulatory body. NEW .hNlJLAU MUTUt( ttTl! 15Ult.lU &"UOJ 200 Separate Statement SEPARATE STATEMENT OF COMMISSIONER MAY L. AZCUENAGA CONCURRING IN PART AND DISSENTING IN PART I agree with the majority that the collective ratemaking of the New England Motor Rate Bureau ("NEMRB") is unlawful price fixing and that in the state of New Hampshire NEMRB's price fixing is not protected by the state action doctrine from Section 5 of the Federal Trade Commission Act. I also agree with the majority that the state legislatures in Massachusetts and Rhode Island have clearly articulated their intent to displace competition with regulation and, therefore that the first part of the Midal test for state action has been met in both states. Califoria Retail Liquo Dealers Associatio v. Midal Aluminum, Inc. 445 U. S. 97 , 105 (1980); see Souther Moto Carrs Rate Conferene, Inc. v. United States 471 U.S. 48, 64- (1985).

I disagree with the opinion ofthe majority insofar as it distinguishes between Massachusetts and Rhode Island in assessing active supervsion, the second part of the Midal test for state action, because the facts relating to active supervsion are virtually identical in these states. The majority is able to reach different results in Massachusetts and Rhode Island only by a highly selective review of the evidence picking and choosing among the stipulated facts and rejecting those inconsistent with its preferred result, with no discernible purpose except to create a distinction between Massachusetts and Rhode Island. This distinction simply does not emerge from a straightforward reading of the record. I also disagree with the majority analysis of active supervsion. As discussed below, I conclude that Massachusetts, like Rhode Island, actively supervses the rates proposed by NEMRB and that NEMRB's collective ratemaking is protected in both states by the state action doctrine from Section 5 of the Federal Trade Commission Act.

In general, the majority appears to be gnided by the mistaken notion that the state action doctrine is to be narrowly construed as an exemption to the federal policy favoring competition. The conclusion of the Administrative Law Judge that the state action doctrine of Parker v. Brown is "an implied exemption to the antitrust laws " to be narrowly construed, LD. at 20, should be explicitly rejected because it confuses preemption with exemption. 1 The state action 1 The following abbreviations ar use in this statement: J.D. Initial Deision (footnote cont'd) :

290 FEDERA TRAE COMMISSION DECISIONS' Separate Statement 112 F.

doctrine involves principles of preemption. Community Communicatio Co. , Inc. v. (2) City of Boulder 455 U. S. 40, 60-70 (1982) (Rehnquist, J., dissenting); accord 324 Liquo Cor. v. Duffy, 479 S. 335, 345-46 n. 8 (1987); Fiher v. City of Berkeley, 475 U. 260, 264-65 (1986). Prnciples of exemption, on the other hand, apply when two enactments of a single sovereign conflict. Exemption is not a question of federalism or state sovereignty. Although we may earnestly believe that state regulation of common carrer rates is anticompetitive and wrong, this is a question of state policy, not federal law enforcement.

It is not our role to question the correctness of a state agency decision that proposed prices are reasonable or unreasonable but rather to examine whether a state agency in fact exercises its authority to review privately fixed prices. As an agency concerned with promoting competition, the Commission generally prefers to see prices set by the competitive forces of the market. We have no authority, however, to impose this preference for competition on unwiling states that choose instead to regulate certain industries. To do so would establish the Commission as the arbiter of state policy, a result that the principle of federalism underlying the state action doctrine precludes.

Active Supervision Active supervision exists when "state offcials have and exercise power to review particular anticompetitive acts of private parties and disapprove those that fail to accord with state policy. Patrik v. Burget 108 S. Ct. 1658, 1663 (1988). Such a "program of active supervsion" is necessary to ensure "that a private party s anticompetitive conduct promotes state policy, rather than merely the party individual interests. Id. ; accord, Town of Hallie v. City of Eau Claire 471 U.S. 34, 47 (1985).

As the majority concludes, the responsible agencies in Massachusetts and Rhode Island have the requisite authority to review private common carrer rate proposals to ensure that they are consistent with I.D.F. Initial Deision Finding Stip. Stipulation of the Paries (August 28, 1986) Slip op. Slip Opinion of the Majority.

2 Justice (now Chief Justice) Rehnquist pointe Qut thatParke v. Bro is dearly the language of federal pre.emption under the Supremacy Clause In a dual systm of government in which, under the Constitution the states ar BOvereign, save only as Congrs may constitutionally subtrat frm their authority, an unexpress purpse to nullfy a slate' s control over its offcers and agents is not lightlyto be attribute to Congrss.'" 455 U.S. at 62-63. aztina Parke. R17 TUt t !Hil 200 Separate Statement state policy and to disapprove those prices that are not. I agree with the majority that the authority to review and to disapprove necessary but not suffcient to establish active supervsion. We also must consider whether the (3) state agency exercises the authority delegated to it, whether the state in fact actively supervises the anticompetitive conduct. See Patrik v. Burget 108 S. Ct. at 1663. We know from Patrik that active supervsion requires a review suffcient to ascertain consistency with state policy. I therefore agree with the majority s holding that "the active supervsion requirement is satisfied only where the state agency has reviewed the proposed tariffs or rates on the merits. " Slip op. at 15. The majority appears to suggest, however, that the state agency must take some visible action to evidence its review, so "that the state's conscious approval or disapproval of the private conduct can be discerned." Slip op. at 14. The majority s statement that "(n)o clear inference of conscious state approval. . . can be drawn from a state agency s passive acceptance or nonsubstantive review of rate filings " slip op. at 15, also suggests that the majority would find active supervsion only when the agency engages in some visible activity.

Neg-ative Option Procedures The majority s apparent requirement of some visible activity to evidence state agency supervsion of tariff proposals seems to require more of the states than the Supreme Court required in Patrik where the Court said that "state officials (must) have and exercise power to review (private acts) and disapprove" those that are inconsistent with state policy. 108 S. Ct. at 1663. By suggesting that evidence of visible activity is required and that "passive acceptance" is equivalent to a nonsubstantive review " the majority apparently excludes as a basis for active supervsion the use of so-called negative option procedures pursuant to which a proposed tariff is deemed approved if it is not 4 This approach may be toorejected or suspended by the state agency. facile and may overlook a genuine review on the merits. (4) Review of proposed tariffs pursuant to negative option procedures S The merits that the state agncy must examine ar equivalent to consonance with state policy, however iIadvise or anticompetitive that policy might be.Su Putr 108 S. Ct. at 1663. The majority s statement that an aeptable review on the merits "ensures that the stte agncy has consciously considered the antirpetitive coeq of the acivity" (slip op. at 15; emphasis added) seriously mispereeives the gravamen4 Consistntof thewithsttethis approach,acion docrine.the majority rejects the stipulate fac that the Massahusetts rate analyst believes that rate pennitt to beome effective without a hearng have ben determined ro be consiErnt with sttutory stdars, apparently beause the state agncy did not enga in any visible acts of review.Su Stip. , discuss below at 10- 11.

292 FEDERA TRE COMMISSION DECISIONS Separate Statement 112 F.

such as those provided by statute iu Massachusetts and Rhode Island 5 may provide less tangible evidence of active supervsion than for example, the notice and hearing procedures that complaint counsel propose or the evidence of visible activity that the majority apparently would require. But review pursuant to negative option procedures can be sufficient to constitute active supervsion, unless we equate administrative silence with the abandonment of administrative duty. See Washington Gas Light Co. v. Virginia Electri Power Co., 438 2d 248, 252 (4th Cir. 1971) ("It is just as sensible to infer that silence means consent approval." 6 When a state agency reviews private proposals and permits them to become effective because they are consistent with state policy, nothing in Patrik or Midal or 324 Liquo Cor. appears to require ome more visible activity to demonstrate active supervision.

It would be the epitome of a double standard and inaccurate to presume that the use of negative option procedures by a state agency implies "nonsubstantive review" of proposed tariffs. The Commission also uses negative option procedures. When it does so, the Commission retains "ultimate authority and control" over the proposed course of action and can be presumed to believe that the proposed action is consistent with Commission policy unless a majority acts to disapprove it within a specified period of time. The evidence of substantive review is more clear when the Commission issues a written opinion, but the fact that the evidence is less clear when review is pursuant to a negative option does not mean that review does not occur. Judged by the majority s standard, the Commission approval of a course of action considered under negative option procedures apparently would be considered "passive acceptance equivalent to a (5) "nonsubstantive review." If this were true, then it also would be true that the Commission routinely sits as a passive observer to certain major law enforcement decisions made in its name.

5 In both sttes, a proposed tariff is effecive 30 days aftr filing, unless suspended and set for a hearing by the stte agncy. Mass. Ann. Laws ch. 159B, ti 6 (1979) (Ex. D, Tr. 1057-59); R.I. Gen. Laws ch. 12 39- 12-12 & - 13 (1984) (Ex. G, Tr. 1146-47).

6 The majority s approach disregas the mmal presumption that official actions by public offcers have ben regularly performed. C. McConnick Law of Evie 343 , at 807 (2d ed. 1972). See J.D. at 30. 7 The Supreme Court sems 00 shar this view. In Southe Mawr Carrs 471 U. S. at 50- , the Court said, in dicta that state agncies implementing negative option regulatory schemes similar those in Masachusetts and Rhode Island "thus have and exe ultimate authority and control over all intrastate rates." (Emphasis added.

8 One example refutes this suggestion. When the Director of the Commission s Bureau of Competition informs the Commission that he intends aftr a certin time has elapsedto dose a merger investigation, unless 200 Separate Statement The state' s choice of procedure to implement its regulatory programs ought not be dispositive of the active supervsion issue, nor should the Commission through application of the state action doctrine impose procedural requirements on the states. 9 The majority apparent requirement of visible activity to evidence review belies its disclaimer of any intent to impose such requirements. See slip op. at 15 n.14. Certainly it is true that if the negative option procedures used in Massachusetts and Rhode Island were merely described in the statutes but not implemented, then the exercise of active supervsion would be absent. But the record shows that both Massachusetts and Rhode Island used their procedures, and the manner in which they were used is virtually identical in both states. Comparison of the Evidence for Massachusetts and Rhode Island In their discussion of the facts concerning active supervsion in Massachusetts and Rhode Island, the majority s preference for some visible activity to evidence state review of proposed rates becomes clear. The majority finds active supervision in Rhode Island, where the state agency's review is evidenced by visible acts of approval (written orders) and a visible act of suspension (a single, post-complaint hearing), but the majority finds no active supervsion in Massachusetts, where the state agency issued no written orders and held no hearings in the six years before the complaint was issued. I' These are the (6) only plausibly significant factual differences between the two states in this record and, as discussed below, even these differences on examination, are not meaningful. The slightly more visible activity in Rhode Island does not by itself demonstrate a review on the merits and the absence of similar activity in Massachusetts does not demonstrate the absence of review.

In both Massachusetts and Rhode Island, the rate analyst 11 reviews proposed tariffs for compliance with formal requirements that are otherwse dirte, it is not my view (and presumably not the view of my colleagues) that he has infonned us only so that we may check the grmmar and spellng in his closing letter. 9 State agncy decisions to suspend propo taffs and hold hearngs ar in the nature of pro8eUtoriai decisions, traitionally a matter of agncy discretion. If use of negative option proedures is iIlufcient supervsion for purpses of the stte acon docrine, then the stte will be forced to make 8 show of exercising it discretion to keep the Commssion frm interfering with the implementation of its regulatory policy. Ths in turn would reduce the stte's discretion in a manner probably inconsisnt with the stte acion docrine. 10 The Masachusetts agency held a hearng to consider minimum rates "many years ag. " Stip. 52. 11 Rhode Island and Massachusetts each has a single rate analyst to review propose tas. The reord provides no basis for judging the "adequacy" of either agncy s staffng decisions, and the finding of the Administrative Law Judge that Massachusett "docs not have a staff adequate to monitor the reasnableness of filed rates " LD. at 31, should be rejected. , , . . .

294 FEDERA TRADE COMMISSION DECISIONS Separate Statement 112 F.

unrelated to the price proposed, although no tariffs have been rejected for this reason in Rhode Island. In both states, the rate analyst also reviews proposed tariffs to ensure that they are consistent with the statutory standards for price levels. Stip. 51 , 62 & 103-05. The majority emphasizes that "the Rhode Island DPUC reviews proposed rates for their reasonableness and not solely for the purpose of ensuring compliance with format requirements " slip op. at 21and that the Massachusetts Department of Public Utility ("MDPU" rejects only fied tariffs that do not comply with the filing requirements of the regulations." Slip op. at 17. The record does not support this distinction between the two states. Instead, the stipulated record shows that the Massachusetts rate analyst also would recommend suspension and investigation of a proposed tariff if the proposed rates "in his judgment are out of line with the average rates that have been established in the involved pricing zone extraordinarily high" or discriminatory. Stip. 51. Because in the six years of his tenure the Massachusetts rate analyst has never recommended suspension of a proposed rate on the basis of the price level, and because the parties have stipulated that he would reject a proposed tariff "out of line" with industry averages or extraordinarily high " we can infer that in those six years no proposed tariffs in his judgment have (7) been "out of line" with historical rates. Instead, the majority chooses to reject the second stipulated fact on the theory that what the rate analyst has said he would recommend is merely hypothetical and "is not evidence that an agency actually exercises its supervisory authority over private conduct." Slip op. at 19 n. 19 (emphasis omitted). The majority mistakenly treats a stipulated fact, which must be accepted at face value, as ordinary evidence, which can be weighed or rejected. I' The stipulated record establishes not that the Massachusetts rate analyst hypothetically might recommend suspension and investigation of a tariff but that he "would" in fact do so. Despite the 12 Although we ar not fr to weigh or rejec stipulate facts, in drawing our conclusions bas on an entire stipulate reord, we must accept the tableau that is internally consistent. Stipulation 57, on which the majority apparently reiies to conclude that MDPU does only a tehnical review, must be read in the context of other fac that bear on the same issue, here those set forth in Stipulations 51 and 62.See note 21 infra 13 The majority also points to the absence of "regulatory guidelines for detennining whether suspension or investigation of rates is appropriate" to attempt to discreit the stipulate fact that the Mashusett rate analyst would rejec propose tas in certn situations. Slip op. at 19 n. 19. Nothing in the stte acion docrine reuires such "regulatory guidelines." Inexplicably, the majority does not registr similar concern about the identical regulatory void in Rhode Island. 14 C. McConnick Law of Evi 262, at 630 (2d ed. 1972); see alo Note Judicial Admissions " 64 Colum. L. Rev. 1121 (1964).

. .

200 Separate Statement record showing that the rate analyst in Rhode Island never during the relevant period of time rejected or suspended a tariff for any reason the majority does not cry "hypothetical" but rather infers that the rate analyst in Rhode Island does review tariffs. The review in Rhode Island is no different from that in Massachusetts. The Rhode Island rate analyst reviews tariffs to ensure that they are within a "zone of reasonableness " which is a measure developed by the rate analyst based on averages of previously approved rates. Stip. 103 & 104. The rates that fall within the "zone of reasonableness " like those in Massachusetts that are not "out of line" with established average rates, are approved without a hearing. Stip. 105. In Rhode Island, as in Massachusetts, because the rate analyst did not in the six years preceding the complaint recommend suspension of a proposed rate because of the price to be charged, and because the parties have stipulated that unreasonable tariffs are suspended pending a (8) hearing, we can infer that in those six years no proposed tariffs in his judgment were unreasonable. The term zone of reasonableness" may sound more professional than "out of line " but the standard is essentially the same: in both states, the rate analyst relies on historical rate averages to assess the reasonableness of proposed rates.

In assessing the reasonableness of a proposed rate, the Rhode Island rate analyst "may also consider the percentage of the rate increase." Stip. 106. The majority recites this fact, slip op. at 22, but inexplicably omits the fact that the Massachusetts rate analyst also considers the percentage increase, implicit in the stipulated fact that he would recommend suspension of proposed rates that were 20% to 50% higher than previously approved rates. Stip. 51. The record does not tell us what percentage increase the Rhode Island rate analyst might consider unreasonable. For all that we know, in Rhode Island, an increase of 60% to 80% might be deemed reasonable. The point is, of course, that in both Massachusetts and Rhode Island, the state agencies do have standards that they apply in assessing the reasonableness of proposed rates.

16 Although the fac ar preisely the same in the two sttes-neither rate analyst in the six year preing the complaint reommended suspension of a propose tariff beause of price-the stipulation for Rhode Island is wrttn in the parent tense ("DPUC rejec. unreasnable tafs " Stip. 110) while that for Masachusett is wrttn in the conditional ("he would reommend suspension " Stip. 51). 16 Although we may, and I asume do, disagr strongly with the pricing latitude pennitt by the Massahusett rate analyst, this is no reason to misconstrue the state action docrine. We can examine whether the stte's policy is clearly articulate and actively supervse, but we cannot second guess the substantive standards applied by the state implement its regulatory policy. 296 EDERA TRADE COMMISSION DECISIONS Separate Statement 112 F.

For the purpose of assessing active supervision, the most conspicuous factual difference between Massachusetts and Rhode Island in this record is that the Rhode Island agency has held one hearing on a proposed tariff. That hearing, to consider a tariff. proposed by NEMRB, was held in July 1986, more than two and one-half years aftr the complaint was issued. I7 On reading the transcript of the Rhode Island hearing, the Administrative Law Judge wryly observed that "this may be the first and only formal hearing on any tariff' in Rhode Island. LD. at 34. Had the hearing occurred during the period of time that is the subject of the complaint, it could have been significant evidence of active supervsion. Because of the timing, the Commission should not give the fact of this hearing weight in determining whether Rhode Island actively supervsed the respondent' s collective ratemaking during the period at issue. The record (9) also shows that one minimum rate order was entered in Massachusetts "many years ago " although Massachusetts, like Rhode Island held no hearings in the six years before the complaint was issued. Stip. 52. The majority unaccountably credits the Rhode Island hearing but ignores the Massachusetts hearing.

A second potentially important difference is the matter of written orders. In Rhode Island, the agency issues an order approving a proposed tariff. Stip. 108. The record does not tell us whether the Massachusetts agency issues an order with respect to each tariff proposal. The majority notes that the Rhode Island agency issues orders (slip op. at 7 & 22) but does not discuss the significance, if any, of this practice and does not discuss what the practice is in Massachusetts. A discussion by the state agency on the merits of a tariff proposal would provide evidence of active supervsion, and it is safe to assume that if the Rhode Island orders contained such discussion, that fact would be reflected in the record. In the absence of such a discussion, it is of litte if any import whether the agency issues a form order stating that the rate is approved, uses a rubber stamp or simply allows the rate to become effective by declining to suspend it. The other supposed differences on which the majority relies to distinguish between Massachusetts and Rhode Island are not in fact differences. The majority emphasizes that the Massachusetts agency has not requested financial information to support proposed rates. Slip op. at 18. This does not distinguish Massachusetts from Rhode Island. 17 The complaint wa. issued on October 24, 1983. 18 The majority more generously albeit accurately sttes that Rhode Island held a hearing' "on at least one occasion in the reent pas." Slip op. at 7 & 22. 200 Separate Statement The Rhode Island agency requests financial data to justify proposed tariff changes only if the matter is set for a hearing. Stip. 107. Because Rhode Island did not set any tariffs for a hearing during the period relevant to the complaint, the record shows that Rhode Island like Massachusetts, did not request financial information to support proposed rates.

The majority also notes that the Massachusetts agency has not audited carrers' records or monitored economic conditions within the trucking industry." Slip op. at 19. These facts apparently are important to the majority s conclusion that Massachusetts did not actively supervse private ratemaking, for reasons that are not explained. But the majority inexplicably fails to note that Rhode Island, like Massachusetts, has not audited carrers' financial records or monitored economic conditions in the industry. Stip. 107, 120 & 123.

In its rate filings in both Massachusetts and Rhode Island, NEMRB submits rate justification data previously filed with the Interstate Commerce Commission. The Rhode Island agency "makes use" of the information in the ICC filing "to make its initial determination of the (10) Stip. 108. Inlawfulness of the NEMRB (rate) proposals. Massachusetts, the MDPU "relies on the fact that the ICC has already conducted an investigation and reached a conclusion as to the justness and reasonableness of the NEMRB proposals." Stip. 66. No significant difference between the two states flows from these facts. The majority, however, declines to credit Massachusetts' reliance on the ICC data, because, they say, the word "relies" is a "peculiar word choice" that "does not overcome the general finding that MDPU review is limited" to formal requirements. Slip op. at 20 n.20. The real peculiarity is the majority s attempt to distinguish between Massachusetts and Rhode Island on this record.

In both Massachusetts and Rhode Island, the parties have stipulated that the state rate analysts believe that "whenever tariffs become effective without rejection, suspension or hearing, that action results from a determination that the proposed rates meet the regulatory criteria of the statute, orders, rules and regulations" of the state. Stip. 62 (Massachusetts); stip. 117 (Rhode Island). The majority, in an extraordinary and lengthy footnote, concludes that Stipulation 62 (Massachusetts) does not directly address the "central issue " namely, whether the rate analyst, or anyone else at MDPU, has formed an opinion that approved rates are just and reasonable. " Slip op. at 18 18.

, 298 FEDERA TRADE COMMISSION DECISIONS Separate Statement 112 F.

The majority reasons that the reference in Stipulation 62 to regulatory criteria is "unclear " making it impossible to discern whether the state considered the reasonableness of proposed rates. In fact, nothing could be more clear than the reference to the "regulatory criteria of the statute " which require rates to be "just and reasonable." The majority acknowledging that the statute does contain such a standard concludes that Stipulation 62 (nJonetheless" fails to show a review on the merits, because the stipulation is wrttn in the passive voice and, therefore does not say that such rates result from an opinion of the rate analyst that the regulatory criteria are satisfied." Although professing to be "loathe to parse stipulations too closely" and reluctant to "read unstated facts into the stipulation, the majority proceeds to the remarkable interpretation that "this stipulation may simply mean that the carrs have determined that the rates are reasonable." (Emphasis added.)!" By such fallacious reasoning, the majority distorts the plain meaning of the stipulation. (11 J The real problem the majority has with Stipulation 62 is that the facts it contains are inconsistent with the result the majority reaches. Stipulation 62 tells us that the person in Massachusetts who has direct knowledge believes that he conducts a review on the merits. In attempting to discredit this stipulation, the majority elevates the importance of visible yet meaningless acts (pieces of paper that mark the end of uneventful negative option periods and a post-complaint hearing) over evidence that actually shows a review on the merits. The majority s final assault on Stipulation 62 (Massachusetts) stems from the fact that the record contains virtually identical stipulations for New Hampshire and Rhode Island. The majority solution to this inconvenience is to conclude that Stipulation 62 is ambiguous" and entitled to "less weight than the state-specific stipulations that provide concrete detail." Slip op. at 18-19 n. 18. There are three problems with this conclusion. First, Stipulation 62 is unambiguous. Second, the stipulation is "state-specific" and provides no less concrete detail than any other stipulations in the record. Third the majority once again mistakenly treats a stipulated fact, which 19 The majority also uses the passive voice in their statement that rates in Rhode Island are effective "only if they are consciously detennined" to be reasnable. Slip up. at 22. If the majority applied their own rules to their own prose, presumably they would find no acive supervsion in Rhode Island. 20 Under complaint counsel' s theory of the cas, the absence of hearing and notice proeeings in both sttes would be dispositive of the acive supervsion issue, and the rate analyst's opinion about the reasonableness of propose rates would be irrlevant.

200 Separate Statement must be accepted at face value, as ordinary evidence, which can be weighed or rejected.

Because I share the majority s apparent distaste for regulated price fixing, I sympathize with their apparent inclination to require some greater justification before allowing it. But the evidence on which the majority relies simply does not show what they want it to show. Although minimal, the essential evidence is clear: the Massachusetts agency performs a substantive review of privately set tariffs through implementation of a negative option procedure. Conclusion The stipulated record plainly shows that the rate analysts in Massachusetts and in Rhode Island believe that rates allowed to become effective without challenge in fact meet the (12) applicable statutory standards of "just and reasonable." These facts in turn imply a review on the merits in both states, an implication that the majority prefers to ignore, at least in Massachusetts. This cavalier treatment of stipulated facts is unwarranted and inconsistent with the Commission s obligation to decide adjudicative matters on the record before it.

Two discernible rules of law emerge from the opinion of the majority. The first principle that necessarily follows from the opinion is that the implementation of negative option procedures to carr out a substantive review of state policy is not enough, without more, to demonstrate active state supervision. The second principle that we can derive is that the Commission wil infer active supervsion when the state agency (1) issues written orders (although the orders need not explain the agency s decision) and (2) convenes a hearing some time aftr a Commission complaint issues. In practical effect, these "rules of law" may ignore the reality of state agency review and probably wil spawn a plethora of pro fora orders of approval. Any state agency that wants to preserve its regulatory program from federal interference can observe these minimal requirements and stay in business. The principles of the majority, however, do nothing to ensure that a finding of active supervsion will correspond to an actual review on the merits.

Given the stipulated record here, the only reasonable conclusion is that the degree of active supervsion in Massachusetts and Rhode 21 Indee, to support their conclusion of an absence of acive supervsion in Masachusett, the majority rejects this stipulate fact and Stipulation 51 , discuss above at 6- , both of which are "slate-speific stipulate fac that tend to demonstrate that the state agncy does in fact supervse private price fixing. 300 FEDERA TRE COMMISSION DECISIONS Final Order 112 F.

Island is virtually the same and that the decision concerning NEMRB' s liabilty should be the same in both states. In both states the record shows that the state agency reviews NEMRB' s collective ratemaking on the merits, that is, to ascertain consistency with state shows that the agencies in both statespolicy. This review, in turn, engage in active supervsion and, therefore, the complaint allegations of violations in Massachusetts and Rhode Island should be dismissed. I dissent.To the extent that the majority reaches a different result, Final ORDER This matter has been heard by the Commission upon the appeal of respondent New England Motor Rate Bureau, Inc. ("NEMRB") from the initial decision and upon briefs and oral argument in support of and in opposition to the appeal. For the reasons stated in the accompanying opinion, the Commission has determined to deny the respondents' appeal. Accordingly, It is ordeed That the initial decision of the Administrative Law Judge be adopted as Findings of Fact and Conclusions of Law except to the extent inconsistent with the accompanying opinion. Other Findings of Fact and Conclusions of Law of the Commission are contained in the accompanying opinion.

It is further ordered That NEMRB, its successors and assigns, and its offcers, agents, representatives, directors and employees directly or through any corporation, subsidiary, division or other device shall forthwith cease and desist from:

1. Entering into, adhering to, or maintaining, directly or indirectly, any contract, agreement, understanding, plan, program, combination or conspiracy to fix, stabilze, raise, maintain or otherwise interfere or tamper with the rates charged by carrers that compete for the intrastate transportation of property or related servces, goods or equipment within any of the states in which NEMRB operates. 2. Knowingly preparing, developing, disseminating, or fiing a proposed or existing tariff provision that contains collective rates for the intrastate transportation of property or other related servces goods, or equipment.

3. Providing information to any carrier about rate changes ordered n...' .a,UHJUn.HJJ .l'.aV " r. r. DU.nr.i\U , ll..v. "UI 200 Final Order by any other carrer employing the publishing servces of the respondent prior to the time at which such rate change becomes a matter of public record.

4. Inviting, coordinating, or providing a forum for (including by publication of an informational bulletin) any discussion or agreement between or among competing carrers concerning intrastate rates charged or proposed to be charged by carrers for the intrastate transportation of property or related servces, goods or equipment. 5. Suggesting, urging, encouraging, persuading, or influencing in any way members to charge, file, or adhere to any existing or proposed tariff provision that affects rates, or otherwise to charge or refrain from charging any particular price for any servces rendered or goods or equipment provided.

6. Agreeing with any carrer to institute automatic changes to rates on file for that carrer.

Proved, however that except as to the states of New Hampshire and Massachusetts, nothing in this order shall prohibit NEMRB from jointly setting or adhering to rates charged for intrastate transportation of property in any state where such joint activity is engaged in pursuant to a policy, clearly articulated and affrmatively expressed by the state legislature, to displace competition with respect to those prices and where such joint activity is actively supervsed by a state regulatory body.

II.

It is further ordeed That NEMRB shall, within six (6) months after servce upon it of this order:

1. Take such action as may be necessary to effectuate cancellation and withdrawal of all tariffs and any supplements thereto on file with any state or commonwealth that it was involved in preparing, developing, or filing that establish rates for transportation of property or related servces, goods or equipment by common carrers within such state or commonwealth.

2. Terminate all previously executed powers of attorney and rate and tariff servce agreements, between it and any carrer utilzing its servces, authorizing the publication and/or filing of intrastate collective rates within any state or commonwealth. Proved, however that except as to the states of New Hampshire 302 FEDERA TRAE COMMISSION DECISIONS Final Order 112 F.

and Massachusetts, nothing in this order shall require NEMRB to cancel and withdraw tariff filings, powers of attorney, or rate and tariff servce agreements in any state where joint setting of rates charged for intrastate transportation of property is engaged in pursuant to a policy, clearly articulated and affrmatively expressed by the state legislature, to displace competition with respect to those prices and where such joint activity is actively supervsed by a state regulatory body.

It is furthe ordeed That NEMRB shall within thirty (30) days aftr servce upon it of this order, mail or deliver a copy of this order under cover of the letter attached hereto as "Appendix " to each current member, and for a period of three (3) years from the date of servce of this order, to each new member within ten (10) days aftr the member s acceptance by NEMRB.

IV.

It is furthe ordered That NEMRB notify the Commission at least thirty (30) days prior to any proposed change in the respondent, such as dissolution, assignment or sale resulting in the emergence of a successor corporation, or any other proposed change in the corporation which may affect compliance obligations arising out of the order. It is further ordered That NEMRB shall file a written report within six (6) months of the date of servce of this order, and annually on the anniversary date of the original report for each of the five years thereaftr, and at such other times as the Commission may require by written notice to respondent, settng forth in detail the manner and form in which it has complied with this order. Commissioner Azcuenaga concurrng in part and dissenting in part and Commission Machol not participating.

. Pror to leaving the Commission, fanner Chainnan Oliver registere his vote in the afnnative for the Final Order and the Opinion of the Commission in this matter. Chairman Steiger therefore did not register a 303 Set Aside Order