ML19329C909
| ML19329C909 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse, Perry  |
| Issue date: | 07/12/1974 |
| From: | Hjelmfelt D CLEVELAND, OH, GOLDBERG, FIELDMAN & HJELMFELT |
| To: | US ATOMIC ENERGY COMMISSION (AEC) |
| References | |
| NUDOCS 8002200888 | |
| Download: ML19329C909 (12) | |
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UNITED STATES OF AMERICA BEFORE THE ATOMIC ENERGY COMMISSION In the Matter of
)
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The Toledo Edison Company and
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The Cleveland Electric Illuminating
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Docket No. 50-346 Company
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(Davis-Besse Nuclear Power Station)
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The Cleveland Electric Illuminating
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Docket Nos. 50-44 Company,' et al.
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and 50-441A (Perry Plant, Units 1 and 2)
)
STATEMENT IN CLARIFICATION OF THE CITY OF CLEVELAND This Statement in Clarification is submitted by the City of Cleveland (Cleveland), pursuant to the Board's direction in its Order Requesting Clarification docketed June 28, 1974. In this statement, Cleveland has utilized the assumptions set forth by the Board in paragraph 3 of its Order.
However, Cleveland notes that the Board did not include the regional energy exchange market in its definition of " relevant product market. " Cleveland believes that the regional energy exchange market is a separate and distinct market which is relevant to the issues before the Board. For the purposes of this statement, Cleveland accepts the Board's definition with the proviso that Cleveland is including the regional power exchange market within the '
rubric of wholesale bulk power transactions.
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9 A. -In view of the Atomic Energy Act, as amended, its legislative history, and applicable case law, is dominance by Applicants of a relevant market sufficient in and of itself to constitute "a situation inconsistent with the antitrust laws" under Section 105c of the Act?
To date, no commission nor judicial case law exists to provide a commis sion or judicial gloss to the term "a situation inconsistent with the antitrust laws. " Until such time that the commission or the courts have construed the phrase no party can be certain that its view of the phrase's meaning will prevail. Certainly, the phrase indicates that something less than a violation of the antitrust laws is intended. How much less is uncertain.
The legislative history is helpful but fails to dispel the uncertainty. It is said in House Report No. 91-1470 (U. S. Code Congressional and Administrative News (91st Congress 2nd Session) p. 4981, 5011):
The legislation proposed by the committee provides for a finding by the Commission 'as to whether the activities under the license would create or maintain a situation inconsistent with the antitrust laws as specified in section 105 a'.
The concept of certainty of contravention of the antitrust laws or the policies clearly underlying these laws is not intended to be implicit in the standard; nor is mere possibility of inconsistency.
It is intended that the finding be based on reason-able probability of contravention of the antitrust laws. -It is intended that, in effect, the Commission will conclude whether, in its judgment, it is reason-ably probable that the activities under the license would, when the license is issued or thereafter, be inconsistent with any of the antitrust laws or the policies clearly underlying these laws.
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, It is important to note that the antitrust laws within the ambit of subsection 105 e of the bill are all the laws specified in subsection 105 a.
These include the statutory provisions pertaining to the Federal Trade Commission, which normally are not identified as antitrust laws.. Accordingly, the focus for the Commission's finding will, for example, include consideration of the admonition in section 5 of the Federal Trade Commission Act, as amended, that ' unfair methods of competition in commerce, and unfair and deceptive acts in commerce, are declared unlawful. '
The starting point is to examine whether dominance of the relevant market would violate the antitrust laws for if such were the case, it would be unnecessary to speculate as to what lesser showing rises to the level of "a situation inconsistent with the antitrust laws. " Despite the numerous statements in the cases that mere " bigness" is not a violation of the Sherman Act, it is clear that dominance is a matter apart from " bigness" and may violate the antitrust laws in certain situations.
Dominance may be evidence of monopoly power. Monopoly or monopoly power is the ability to fix or control prices in, or exclude com-petition from, a relevant market. If neither of these abilities may be shown directly, they may be presumed if there is control of a massive percentage t
of the relevant market. To find a violation of the Sherman Act it is necessary that there have been an intent to obtain the monopoly position through unfair or forbidden business practices. If the position of power was achieved through normal business methods, then in order to prove a violation there must be evidence that the firm is seeking to maintain or expand its position 4
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- by the use of unfair or unconscionable means. These unfair or other-than-normal business methods are generally considered to be those restraints of trade cognizable under Section 1 of the Sherman Act, and include refusals to deal, boycotts, and tying. If no such predatory practices can be shown, there must be an indication of general intent to obtain or expand a position of dominance or power in the relevant market. Kintner, An Antitrust Primer (2nd. Ed. The Macmillian Company). If dominance alone is a violation of the antitrust laws, it must be because of a general intent to obtain c e expand the position of dominance in the relevant market.
For example, in United States v. Aluminum Co. of America (Alcca),
148 F. 2d 416 (CA 2, 1945), the Court ruled that it is sufficient that one possessing a monopoly power act in such a way as to maintain its monopoly power to prove a violation of the antitrust laws. In Gamco, Inc. v.
Providence Fruit and Produce Building, 194 F. 2d 484 (CA 1, 1952) the Court said that "the Sherman Act condemns the power which makes pricing abuse possible as well as the abuse itself. " The Supreme Court said in United States v. Griffith -
334 U.S.100, 92 L. ed.1236, 68 S. Ct. 441 (1948) that:
It is, however, not always necessary to find a specific intent to restrain trade or build a monopoly in order to find that the antit. rust laws have been violated; it is sufficient that a restraint of trade or monopoly results as a consequence of a defendant's conduct or business arrangements.
In Schine Chain Theaters. Inc., v. United States, 334 U.S. 110, 92 L. ed 1245 (1948), the Court said, " Monopoly power is not condemned by
2 the Act only when it was lawfully obtained. The ' mere existence of the power to monopolize, together with the purpose or intent to do so, con-stitutes an evil at which the [Sherman] Act is aimed. " See, also United States v. Paramount Pictures, Inc., 334 U. S. 131, 92 L. ed. 1260, 68 S.
Ct. 915 (1948).
In a given case then the Courts may sustain a finding of a violation of the antitrust laws predicated solely on dominance. But, a case under the antitrust laws predicated upon dominance alone would not be strong.
One woulck be greatly disadvantaged if he were forced to rely on dominance alone to make out a violation when other proof were available to him.
Lowering the burden of proof from that of showing a violation to the somewhat lesser but at present a somewhat more untested standard of showing a " situation inconsistant with the sntitrust laws or the policies underlying them" makes dominance alone stronger evidence upon. which to ground one's Here it should be noted that $105c of the Act as is made clear by the case.
statement from the House Report, supra, not only reduces the quantum of evidence required to something less than a violation but also reduces the degree of proof required from a preponderance of the evidence to a
" reasonable probability. "
It is also relevant to consider the policy underlying the antitrust laws
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for that is one yardstick given for identifying " situations inconsistent. " Among
. the policies underlying the antitrust laws are the beliefs set forth by the Court in Alcoa, supra, that:
Possession of unchallenged economic power deadens initiative, discourages thrift, and de-presses energy.
Competitors versed in the craft as no con-sumer can be, will be quick to detect opIsortunities for savings and new shifts in production.
Because of indirect social and moral effects a system of small producers, each dependent for success upon his own skill and character is pre-ferable to one in which the great mass of those engaged must accept the direction of a few.
In his dis sent to United States v. Columbia Steel Co., 334 U. S. 495, 536, 92 L. ed.1552, 68 S. Ct. 1107 (1968) Justice Douglas used the following language to describe the philosophy of the Sherman Act:
Industrial power should be decentralized. It should be scattered into many hands so that the fortunes of the people will not be dependent on the whim or caprice, the political prejudice, the emotional stability of a few self-appcinted men.
The fact that they are not vicious men but respectable and social-minded is irrelevant. That is the philoso-phy and command of the Sherman Act. It is founded on a theory of hostility to the concentration in private hands of power so great that only a govermnent of the people should have it.
Cleveland submits that it is probable that a showing of dominance by Applicants of a relevant market is sufficient in and of itself to constitute a situation inconsistent with the antitrust laws under Section 105c of the Act.
Cleveland, however, is well aware that the statute is yet to be tested in a court of law. Irdeed, as stated earlier it is yet untested within the admini-L2
. strative process. Any decision rendered by this Board is likely to be appealed ultimately to the Courts. The Board, the Commission, and the 1/
parties are in uncharted waters. -
It would be foolhardy in the extreme for Cleveland now to limit its proofs to a theory of yet untested validity.
Cleveland intends to prove more than mere dominance. Cleveland believes that it is entitled to present its strongest case. It would be unfair to fore-close to Cleveland the opportunity to present its best case limiting it to a simpler presentation on an untested theory. To do so may appear to result in administrative economy. Cleveland submits that it may well be false economy which would ultimately necessitate reopening hearings after pro-tracted litigation. In any event substantial discovery will be required to permit the parties to litigate the issues relating to the remedies required to eliminate the " situa tion. "
Cleveland is opposed to limiting discovery, the matters in contro-versy or the presentation of evidence in such a way as to preclude the parties from proving more than mere dominance.
1/ Alabama Power Company (Farley Nuclear Units) AEC Docket Nos.
50-348A and 50-364A, Prehearing Order on Joint Prehearing Conference, March 20-21, 1973, docketed April 26, 1973.
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. B. If dominance by Applicants of a relevant market constitutes a " situation inconsistent with the antitrust laws" under Section 105c of the Act, need anything else be alleged and proven under Section 105c to permit the Board to condition a license? Could such conditions provide other electric entities with access to Applicants' generating facilities by means of ownership shares, or unit power sales? Could such conditions provide other electric entities with access to Applicants' transmission system by means of wheeling?
Section 105c of the Act requires the Commission to make "a finding as to whether the activities under the license would create or maintain a situation inconsistent with the antitrust laws as specified in subsection 105a. "
Proof of dominance alone would only show a situation inconsistent with the antitrust laws. To enable the Commission to make the finding required by statute it would be necessary also to allege and prove that the " situation" would be created or maintained by the Applicants' activities under the license.
In short, there must be proof of a relationship between the activities under the license and the " situation. "
Once the Board makes the statutory finding, the Board, on the basis of its findings, "shall have the authority... to issue a license with such conditions as it deems appropriate", 5105c(6). The Board has broad dis-cretion to fashion conditions which will eliminate the situation inconsistent with the antitrust laws. There is no language in the statute which would restrict the Board to eliminating the anticompetitive situation only with respect to those parties who intervened but not with respect to others.
-9 In granting a license with conditions, the Board is charged with considerations which it "in its judgment deems necessary to protect the public interest," $105c(6). It clearly is not in the public interest to remove anticompetitive restraints against Cleveland but to allow the same restraints to continue against other electric entities.
The purpose of a hearing such as this is not to vindicate private rights but to advance the public interest, American Communications Association v. United States, 298 F. 2d 648 (1962). A party is permitted to intervene upon a showing of its private interest but thereafter it is repre-sentative of the broad public interest.
l The Board must utilize its broad discretionary power to fashion remedies in the public interest to eliminate the anticompetitive situation created or maintained by the activities under the license. The only limitations on its power to fashion remedies is that the remedy must be directed at eliminating the anticompetitive situation. Accordingly, if it is shown that conditions requiring that other electric entities be granted access to Applicants' nuclear generation and to Applicants' transmission facilities for wheeling are reasonably designed to eliminate the anticompetitive situation, the Board has sufficient power to impose such license conditions.
It is important to note that the question of remedies involves a com-plexity transcending simple questions of access and wheeling. Simply, by way of example, Cleveland would note that access must be coupled with
UNITED STATES OF AMERICA BEFORE THE ATOMIC ENERGY COMMISSION In the Matter of
)
The Toledo Edison Company and
)
The Cleveland Electric Illuminating
)
Docket No. 50-346A Company
)
(Davis-Besse Nuclear Power Station)
)
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The Cleveland Electric Illuminating
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Docket Nos. 50-440A Company, et al.
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and 50-441 A (Perry Plant, Units 1 and 2)
)
Certificate of Service I hereby certify that service of the foregoing Statement In Clarification Of The City Of Cleveland, has been made on the following parties listed on the attachment hereto this 12th day of July, 1974, by depositing copies thereof in the United States mail, first class or air mail, postage prepaid.
k<swf(V
- A David C. Hjelmfelt Attachment 4
ATTACHMENT Atomic Safety and Licensing Board Joseph J. Saunders, Esq.
U.S. Atomic Energy Commission Steven Charno, Esq.
Washington, D. C.
20545 Antitrust Division Department of Justice Mr. Frank W. Karas, Chief Washington, D. C.
20530 Public Proceedings Branch Office of the Secretary Abraham Braitman, Esq.
U. S. Atomic Energy Commission Office of Antitrust and Indemnity Washington, D. C.
20545 U. S. Atomic Energy Commission Washington, D. C.
20545 John B. Farmakides, Esq.
Chairman William T. Clabault, Esq.
Atomic Safety and Licensing Board David A. Leckie, Esq.
U. S. Atomic Energy Commission Department of Justice Washington, D. C.
20545 Post Office Box 7513 Washington, D. C.
20044 John H. Brebbia, Esq.
Atomic Safety and Licensing Board Gerald Charnoff, Esq.
Alston, Miller & Gaines Shaw, Pittman, Potts & Trowbridge 1776 K Street,- N. W.
910 - 17th Street, N. W.
Washington, D. C.
20006 Washington, D. C.
20006 Dr. George _R. Hall Frank R. Clokey, Esq.
Atomic Safety and Licensing Board Special Assistant Attorney General U. S. Atomic Energy Commission Room 219 - Towne House Apartments Washington, D. C.
20545 Harrisburg, Pennsylvania 17105 Benjamin H. Vogler, Esq.
Thomas J. Munsch, Jr., Esq.
Joseph Rutberg, Esq.
General Attorney Office of the General Counsel Duquesne Light Company Regulation 435 Sixth Avenue U. S. Atomic Energy Commission Pittsburgh, Pennsylvania 15219 Washington, D. C.
20545 David McNeil Olds, Esq.
Robert J. Verdisco, Esq.
John McN. Cramer, Esq.
Office of the General Counsel Reed, Smith, Shaw & McClay Regulation 747 Union Trust Building U. S. Atomic Energy Commission Pittsburgh, Pennsylvania 15219 Washington, D. C.
20545 John R. White, Esq.
Andrew F. Popper, Esq.
Vice President and General Counsel Office' of the. General Counsel Ohio Edison Company Regulation _
47 North Main Street U. S. Atomic Energy Commission Akron, Ohio 44308
_ Washington, D. C.
20545 4
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Pago 2 ATTACHMENT (Continued)
Pennsylvania Power Company j
1 East Washington Street New Castle, Pennsylvania 16103 Leslie Henry, Esq.
Fuller, Henry, Hodge & Snyder 300 Madison Avenue Toledo, Ohio 43604 Donald H. Hauser, Esq.
The Cleveland Electric Illuminating Co.
Post Office Box 5000 Cleveland, Ohio 44101 John Lansdale, Jr., Esq.
Cox, Langford & Brown 21 Dupont Circle, N. W.
Washington, D. C.
20036 Alan S. Rosenthal, Chairman Atomic Safety and Licensing Appeals Board U. S. Atomic Energy Commission Washington, D. C.
20545 Dr. John H. Buck Atomic Safety and Licensing Appeals Board U.- S. Atomic Energy Commission Washington, D. C.
20545 Dr. Lawrence K. Quarles Atomic Safety and Licensing Appeals Board U. S. Atomic Energy Commission Washington,. D. C.
20545
- C. Raymond Marvin, Esq.
Deborah M. Powell, Esq.
' Antitrust Section 8 East Long Street
' Suite 510 Columbus, Ohio 43215 W
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