Antitrust Issues In The Motor Transportation Industry

After a long history of regulation, motor carriers today are largely
free of federal regulation. The Surface Transportation Board (STB)
provides some regulation for certain types of carriers. Certain mergers
and joint conduct among motor carriers are subject to STB approval, but
once approved enjoy antitrust immunity. This chapter provides a
comprehensive discussion of the historical and present regulatory and
legal landscape facing motor carriers.
The chapter is structured in four parts. Part A offers an overview of
the history of federal motor carrier regulation from early regulation under
the Interstate Commerce Commission (ICC) and National Industrial
Recovery Act (NIRA) to the abolishment of the ICC and creation of the
STB. Part B addresses mergers and acquisitions in the motor carrier
industry. Part C analyzes other antitrust issues facing motor carriers. Part
D discusses exemptions and immunities in the motor transportation
A. Federal Motor Carrier Regulation
Historically, federal regulation of the motor transportation industry
has been extensive. This introductory section deals with facets of that
regulation relevant to the antitrust and merger control laws and
enforcement, which are discussed in detail in the latter parts of this
Early Regulation: The ICC and the NIRA
The history of federal regulation of the transportation industry dates
back to 1887 when Congress passed the Act to Regulate Commerce,
creating the ICC.1 The ICC was the first federal administrative agency to
impose comprehensive economic regulation on any industry, in this case
the railroad industry. As the Supreme Court explained.
1. Paul Stephen Dempsey, Transportation: A Legal History, 30 TRANSP.
L.J. 235, 265 (2003).
2 Transportation Antitrust Handbook
The principal objects of the Interstate Commerce Act were to secure
just and reasonable charges for transportation, to prohibit unjust
discriminations in the rendition of like services under similar
circumstances and conditions, to prevent undue or unreasonable
preferences to persons, corporations, or localities, to inhibit greater
compensation for a shorter than for a longer distance over the same
line, and to abolish combinations for the pooling of freights.2
The Act to Regulate Commerce was thus designed to fight collusion
between railroad companies and their largest customers.3
The Transportation Act of 1920 provided the ICC with the power to
set minimum rates, to regulate entry and exit from markets, to regulate
intercorporate relationships and the issuance of securities, and to plan
consolidation of rail companies.4 When Congress passed the
Transportation Act of 1920, commercial trucking was in its nascent
stages and thus not addressed by the act.5 Congress felt no need to
regulate such a small industry; indeed, in the 1920s, trucks were seen as
an adjunct to rail lines and not as a separate industry.6
Market conditions during the Great Depression and an expanding
network of roads prompted Congress’ first attempt to regulate the motor
transportation industry. During the Depression, there were little to no
barriers to entry in motor transportation. Because new entrants were also
poor at calculating their own costs, they often set their rates below cost
leading to their (and many of their competitors’) rapid demise.7
Unregulated trucking was also competing with the heavily regulated
rail lines.8 The Great Depression created tension within the ICC to set
trucking rates so that rail lines could make a profit while at the same time
keeping prices low enough to be acceptable to customers.9
2. Interstate Commerce Comm’n v. Baltimore & Ohio R.R. Co., 145 U.S.
263, 276 (1892).
3. Id.
4. Dempsey, supra note 1, at 272-73.
5. Leslie W. Jacobs, Regulated Motor Carriers and the An titrust Laws, 58
CORNELL L. REV. 90, 90 (1972).
6. William E. Thoms, Rollin’ On . . . To a Free Market Motor Carrier
Regulation 1935-1980, 13 TRANSP. L.J. 43, 44 (1983). At the time, most
trucks were used by rail companies to move cargo short distances from
rail yards to final destinations.
7. Dempsey, supra note 1, at 281.
8. Jacobs, supra note 5, at 92.
9. Id.
Antitrust Issues in the Motor Transportation Industry 3
Congress first attempted to regulate the motor carrier market with the
NIRA in 1933 but with little effect.10 The NIRA was ruled an
unconstitutional delegation of power before it had a chance to affect the
market in any substantive way.11 Describing the NIRA, the U.S. Supreme
Court noted:
Section 3 of the Recovery Act is without precedent. It supplies no
standards for any trade, industry or activity. It does not undertake to
prescribe rules of conduct to be applied to particular states of fact
determined by appropriate administrative procedure. Instead of
prescribing rules of conduct, it authorizes the making of codes to
prescribe them.12
The Court also ruled that Congress exceeded its authority in regulating
intrastate commerce.13
The Motor Carrier Act of 1935
Congress reacted to the problems created by the growing motor
transportation industry by passing the Motor Carrier Act of 1935 (the
1935 MCA).14 The 1935 MCA added bus and trucking companies to the
ICC’s jurisdiction.15
The 1935 MCA was “a conscious decision to eliminate open and
natural competition. The Federal Coordinator of Transportation’s reports
outline the three principle bases for this approach: protection of the
railroads, stabilization and consolidation of the trucking industry, and
support of organized labor through the elimination of owner-operators.”16
With this new authority, the ICC interceded in markets and set
minimum rates, minimum qualifications for drivers, safety standards, and
criteria for market entry. This created a controlled market for
transportation companies that was meant to allow some competition
while also permitting a return on investment.17
10. Ch. 90, 48 Stat. 195 (ruled unconstitutional in A.L.A. Schechter Poultry
Corp. v. United States, 295 U.S. 495 (1935)).
11. A.L.A. Schechter Poultry, 295 U.S. at 519.
12. Id. at 541.
13. Id. at 550.
14. Pub. L. No 74-255, 49 Stat. 543 (1935).
15. Id.
16. Jacobs, supra note 5, at 94 (footnote omitted).
17. Dempsey, supra note 1, at 287-88.

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