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U.S. Supreme Court

Pan American World Airways v. United States, 371 U.S. 296 (1963)

Pan American World Airways, Inc. v. United States

No. 23

Argued November 8, 1962

Decided January 14, 1963*

371 U.S. 296


Charging violations of §§ 1, 2, and 3 of the Sherman Act, the United States brought this civil suit against Pan American World Airways, W. R. Grace & Co., and their jointly owned subsidiary, Pan American-Grace Airways (Panagra). The complaint alleged that, when Pan American and Grace organized Panagra in 1928, they agreed that Pan American and Panagra would not parallel each other's air routes, that this was a combination and conspiracy in restraint of trade and monopolization and attempted monopolization of air transportation between the United States and South America, and also that Pan American had used its control over Panagra to prevent it from obtaining authority from the Civil Aeronautics Board to extend its route from the Canal Zone to the United States. The District Court found that Pan American had violated § 2 of the Sherman Act by suppressing Panagra's efforts to extend its route from the Canal Zone to this country, and it ordered Pan American to divest itself of its stock in Panagra; but it dismissed the complaint against Grace and Panagra, holding that none of their practices violated the Sherman Act.

Held: the narrow questions presented by this complaint had been entrusted by Congress to the Civil Aeronautics Board, and the entire complaint should have been dismissed. Pp. 371 U. S. 298-313.

(a) Since enactment of the Civil Aeronautics Act in 1938, the airline industry has been regulated under a regime designed to change the prior competitive system, and the Federal Aviation Act of 1958 made no changes relevant to the problem presented by this case. Pp. 371 U. S. 300-301.

(b) Under § 411 of the Federal Aviation Act of 1958, the Civil Aeronautics Board has jurisdiction over "unfair practices" and "unfair methods of competition," even though they originated prior to 1938. Pp. 371 U. S. 302-303.

Page 371 U. S. 297

(c) In regulating air carriers, the Board is to deal with at least some antitrust problems. In addition to its power under § 411, it is given authority by §§ 408, 409, and 412 over consolidations, mergers, purchases, leases, operating contracts, acquisition of control of an air carrier, interlocking relations, pooling arrangements, etc.; and the Clayton Act is enforced by the Board insofar as it is applicable to air carriers. P. 371 U. S. 304.

(d) The legislative history indicates that the Civil Aeronautics Board was intended to have broad jurisdiction over air carriers insofar as most facets of federal control are concerned. P. 371 U. S. 304.

(e) This Court does not hold, however, that there are no antitrust violations left to the Department of Justice to enforce. Pp. 371 U. S. 304-305.

(f) The Acts charged in this suit as antitrust violations are precise ingredients of the Board's authority in granting, qualifying, or denying certificates to air carriers, in modifying, suspending, or revoking them, and in allowing or disallowing affiliations between common carriers and air carriers. Pp. 371 U. S. 305-306.

(g) Whatever the unfair practice or unfair method employed, § 411 of the Act was designed to bolster and strengthen antitrust enforcement. Section 411 is patterned after § 5 of the Federal Trade Commission Act, and cases interpreting § 5 are relevant in determining the meaning of § 411; but the application of § 411 in any given situation must be determined in light of the standards set by the Civil Aeronautics Act. Pp. 371 U. S. 306-308.

(h) The Act leaves to the Board under §411 all questions of injunctive relief against the division of territories or the allocation of routes or against combinations between common carriers and air carriers. Pp. 371 U. S. 308-310.

(i) The Board's power to issue a "cease and desist" order is broad enough to include the power to compel divestiture where the problem lies within the purview of the Board. Pp. 371 U. S. 311-313.

193 F.Supp. 18 reversed and cause remanded.

Page 371 U. S. 298

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