Kennecott Copper Corporation

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

IN THE MATTER OF KENNECOTT COPPER CORPORATION Docket 8765. Interlocutory order, July 23, 1974 Denial of respondent’s petition to reopen the proceedings on question of relief. Dissenting statement by Commissioner Nye; separate statement by Chairman Engman, concurred in by Commissioner Dixon.

Appearances For the Commission: Fiodie P. Favarella, Joseph Eckhaus and P. Abbott McC artney.

For the respondent: Sullivan & Cromwell, New York, N.Y. and Howrey, Simon, Baker & Murchison, Wash., D.C. DISSENTING STATEMENT By Nye, Commissioner:

Kennecott Copper Corporation has petitioned the Commission to reopen these proceedings on the question of relief.1 [ would grant the _—_ 'The petition was filed pursuant to Section 3.72(b) (2) of the Commission's Procedures and Rules of Practice, which Provides in relevant part: (cont'd) ae appropriate ‘relief.

Speen 92° Sg ak se Separate Statement f petition. and reopen ‘these proceedings for: the. limited: purpose of supple- — menting the record: with evidence. relating: to.developments <¢ occurring © “since. our original: decision: which maybe relevant: to the question. a whether the relief we ordered, ‘divestiture of Peabody. Coal Company “and a ten year moratorium on further acquisitions, js still the: most re.can fashion to sattsty the: purpose of Section 7 of. the Clayton. Act 15 USC. §18. | oS This ‘conclusion ‘does not aroieed from ‘recognition of any infirmities : in our original decision or order. ‘The Commission was correct on the basis of the facts.as: they. existed. when. ait acted and - nothing occurring ~.. since the: record:was ‘closed—or at least: since our order was’ entered— . - ean. detract from: the correctness: | of that decision. ‘Reynolds ‘Metals Company, 56 F.T. C: 1680 (1960). Nor. do I accept any contention that the Commission: did. not give Kennecott a fair hearing on. the question of -yelief or that: the Commission. somehow has the burden of. proving” it fashioned the least onerous: relief possible after it determines a violation o of the. law. has occurred. The. Commission made. clear its: ‘opposition. | to... the Peabody acquisition long before that acquisition was - consummatec ; and there was no question before, during or after the trial that. complete divestiture was the object. of the Commission’s effort. ‘Divestiture is and should continue to be the normal remedy for violations of Section 7: of . the Clayton Act. United States v. E. I. du Pont de N. emours and Co., 366 - U.S. 316, 328-329 (1961). Finally, I find no merit in the suggestion t that this case is in some: way so important that the ‘relief granted must. be. fashioned to uphold “the public interest” rather than to remedy a_ violation of Section 7-of the Clayton ‘Act. When a distinction between these two. objectives is to be drawn, it will be for Congress to “do'so. - Nevertheless, much which may be highly relevant to the question of appropriate relief has occurred since. the trial record was closed over . - five years ago. 2 The shortage of energy supplies which developed i in the summer of 1973 and became acute during the. subsequent embargo imposed by: some of the ojl-exporting § countries greatly altered this —_——————— (cont'd) - : : . z Ww: oh MIR Whenever any person subject to a decision containing a rule or order + which has become *.* * final, is. ‘of the opinion that changed conditions of fact-or jaw require that said rule or order be altered, modified, or set aside, or that, the public interest so requires, such person may file with the Commission a petition requesting a reopening of the proceeding f for that purpose. * . Statutory authority for the e petition is contained i in Section 11(b) of the Clayton et, 15 u Ss: Cc. s210), which provides in relevant part:

/ [The Commission ae ‘may at any time, after notice and opportunity for hearing, reopen and alter, modify, or. set aside, in ‘whole or in part, any report: or order made or jssued by it under this section, whenever in the opinion ‘of the’. Commission * *.* conditions of: fact or of law have so changed as to require such action or if.the public interest. shall so require * *.*. Es ae 2The trial commenced on Jan. 27, 1969, and 4d concluded on June 11, 1969. Decision and Order 84 F.T.C, country’s perception of its energy needs. The consequent national drive for self-sufficiency in energy production relies in Significant part on accelerated exploitation of our abundant coal reserves and wider participation in that exploitation.s There is substantia] reason to believe these events have precipitated SEPARATE STATEMENT py CHAIRMAN ENGMAN, CONCURRED IN By COMMISSIONER Dixon rule, a violation of Section 7 is generally found only in those circumstances in which the acquired firm is a leading factor in a “tight” oligopoly, whereas the coal industry, at least on a national level, was a “loose” oligopoly. Id. at 922. We recognized an exception to this rule, however, because two additional factors were present in the coal industry, i.e. “the growth of the leading firms compared with the growth of the coal industry as a whole” showed a “demonstrated trend toward high concentration” and “barriers to entry [were] high and * * * becoming more formidable.” /d. at 922, 924. We warned that competition might become nonexistant if we did not act promptly: “(T]he Commission should not wait until an industry has become engulfed in oligopoly's stranglehold before fit should] intercede.” Jd. at 928. . While it is clear that the Commission should not commit itself to such a wait, it is also clear that the Commission should not preclude itself from considering facts which occur during the Process of judicial review if that is necessary to better serve the Purposes of Section 7 of the Clayton Act. +See, eg. Staff Economic Report, Interfuel Substitutability in the Electric Utility Sector of the U.S, Economy (1972) and Staff Economic Report, Concentration Levels and Trends in the Energy Sector of the U.S. Economy (1974). ®The supplemental record should include evidence showing what firms have newly entered the coal industry, the means by which entry was effected, the other business enterprises in which these firms are engaged, the prospect of future entry by additional firms, the kind and amount of investment capital available for the development of coal resources, and the extent to which coal is being or may be substituted for other sources of energy. See Staff Economic Report, re: Interfuel Substitutability in the Electric Utility Sector of the U.S, Economy (1972), but must await completion of steps by Kennecott to develop an appropriate divestiture plan for submission to the Commission. ORDER DENYING PETITION TO REOPEN PROCEEDINGS On May 23, 1974, Kennecott Copper Corporation (hereinafter Kennecott) filed a “Petition to Reopen the Proceedings on the Question of Relief,” pursuant to Section 3.72 of the Commission’s Rules of Practice, including therein a request for oral argument on the petition, and submitted at the same time a request for oral discussion. Kennecott has subsequently filed various supplemental submissions relevant to its petition. The Bureau of Competition has replied, by answer of June 20, 1974, opposing the petition. Oral argument upon the petition was held on July 10, 1974. The Commission has considered the arguments of petitioner, and does not believe that adequate grounds have been shown to warrant reopening these proceedings for the purpose of considering the issue of relief. The issue of appropriate relief was considered by the Commission at the time it issued its original decision, and its order has been affirmed by the United States Court of Appeals [467 F. 2d 67], and certiorari denied by the Supreme Court [416 U.S. 963 (1974)]. Alleged changed conditions of fact and law described by petitioner are not such as to warrant reopening of these proceedings. Accordingly, It is ordered, That the “Petition to Reopen the Proceedings on the Question of Relief” be, and it hereby is, denied. Commissioners Thompson and Nye dissenting.