The Supreme Court has guarded its opinions to this extent: "In order further to guard against any misapprehension of the scope of our decision, it may be well to observe that we do not hold that the mere fact of competition, no matter what its character or extent, necessarily relieves the carrier from the restraints of the third and fourth sections, but only that these sections are not so stringent and imperative as to exclude in all cases the matter of competition from consideration, in determining the questions of undue or unreasonable preference or advantage,' or what are substantially similar circumstances and conditions.' The competition may in some cases be such as, having due regard to the interests of the public and of the carrier, ought justly to have effect upon the rates, and in such cases there is no absolute rule which prevents the commission or the courts from taking that matter into consideration." 3

6

§856. Competition may affect all parts of a joint rate.

In Interstate Commerce Commission v. Cincinnati, Portsmouth & Virginia Railroad, the rates between the west and Wilmington, North Carolina were attacked as unreasonably high compared with the rates from the same points to Norfolk and Richmond. The greater part of the carriage in all cases was a common haul over trunk lines; and those lines exacted as their part of the through rate for the same haul on their roads, a much greater amount for goods destined to Wilmington than for goods destined to Richmond or Norfolk. This difference was held justified by the active competition at the latter points.

§ 857. Potential competition.

Whether potential river competition which is not actual can be considered was discussed by the Circuit Court of Appeals

3Mr. Justice Shiras, in Interstate Commerce Com. v. Alabama Midland Ry., 168 U. S. 144, 167, 42 L. Ed. 414, 18 Sup. Ct. 45 (1897).

4 124 Fed. 624 (1903).

in East Tennessee, Virginia & Georgia Railway v. Interstate Commerce Commission. The facts were not shown to present a case of even potential competition; but Judge Taft seemed on the whole to agree that mere potential competition might properly affect the rate. The effect of the Erie Canal upon grain freight rates was cited as a significant example of merely potential competition affecting the rates.

If, however, a potential competition has not in fact affected rates, it clearly need not be considered. This was clearly held by the Supreme Court. Mr. Justice White said: "In the report of the Commission a suggestion is found that LaGrange should be entitled to the same rate as Atlanta, because, if the carriers concerned in this case in connection with other carriers reaching LaGrange chose to do so, they might bring about competition by the way of a line between Macon and LaGrange which would be equivalent to the competitive conditions existing at Atlanta. We are unable, however, to follow the suggestion. To adopt it would amount to this: That the substantial dissimilarity of circumstances and conditions provided. by the Act to Regulate Commerce would depend, not as has been repeatedly held, upon a real and substantial competition at a particular point affecting rates, but upon the mere possibility of the arising of such competition. This would destroy the whole effect of the Act, and cause every case where competition was involved to depend, not upon the fact of its existence as affecting rates, but upon the possibility of its arising. What the 4th section of the Act to Regulate Commerce has reference to is an actual dissimilarity of circumstances and conditions, not a conjectural one."

5 99 Fed. 52, 39 C. C. A. 413 (1899).

6 Interstate Commerce Com. v. Louisville & N. R. R., 190 U. S. 273, 47 L. Ed. 1047, 23 Sup. Ct. 687 (1903).

§ 858. Competition artificially removed at the nearer point. The question whether a higher rate can be justified for the shorter haul when the natural competition at that point has been removed artificially by an agreement of all the carriers there was considered by Judge Taft in East Tennessee, Virginia & Georgia Railway v. Interstate Commerce Commission. The rates from Nashville through Chattanooga to the southern seaboard were lower than those from Chattanooga. The discrimination was justified on the ground that there was competition in Nashville, but not in Chattanooga. In the physical conditions of the cities there was no reason for the distinction; each was situated on a navigable river, and each was a railroad center. More roads entered Chattanooga than Nashville. But the Chattanooga rates were fixed and agreed upon by an association of the Southern railways and steamship companies. Judge Taft regarded such a stifling of competition as no excuse for the higher rate. The Supreme Court reversed the judgment of the Circuit Court of Appeals, not because the latter erred in its law, but because the finding of facts was not justified by the record.

8

§ 859. Nominal competition as justifying lower rate for longer haul.

In East Tennessee, Virginia and Georgia Railway v. Interstate Commerce Commission, Judge Taft in the Circuit Court of Appeals dealt with an apparent competition which was not real because of a secret arrangement between the carriers. The lower rates for the longer haul from Nashville to the seaboard were justified by the competition at Nashville between two railroads, the Louisville & Nashville and the Nashville, Chattanooga and St. Louis. There was an apparent competition be

7 99 Fed. 52, 39 C. C. A. 413 (1899).

8 East Tennessee V. & G. Ry. v. Int. Com. Com., 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 512 (1901).

999 Fed. 52, 39 C. C. A. 413 (1899).

tween these roads, and they named independent rates; but the latter road was controlled by the former through ownership of a majority of the stock. The Circuit Court of Appeals held that this was not a real competition, and could not be considered as a dissimilar circumstance which would justify a difference in rates. Judge Taft said: "We know that it is stipulated in the record that the officers of the Nashville, Chattanooga & St. Louis Railway Company would testify that it competes with the Louisville & Nashville Railroad Company, and that they are under different managements; but such evidence must be weighed in the light of the history of railroads in this country, and the motives that ordinarily govern in railroad management. One railroad company acquires the controlling interest in another company to control its general policy; and, while it may permit independence in the personnel and the details of management, it needs more than a stipulated statement of this general nature to induce a belief that the company which elects the directors of the other will permit that other to take a course materially detrimental to the interests of the owning company."

The Supreme Court 10 reversed the decision on the ground that the facts on which it was based were at variance with those found by the Commission; and the court refrained from expressing its opinion upon the proposition of law. It is difficult to see how any doubt can exist on the point. If the Circuit Court of Appeals was right in finding that the competition which appeared to exist at Nashville was in reality stifled by a control of all carriers by one of them, there was surely no such competition as would create a dissimilar condition by forcing upon one road a low competitive rate. In a later case in the Supreme Court,11 Mr. Justice White said:

10 East Tennessee V. & G. Ry. v. Int. Com. Com., 181 U. S. 1, 45 L. Ed. 719, 21 Sup. Ct. 512 (1901).

11 Interstate Commerce Com. v. Louisville & N. R. R., 190 U. S. 273, 47 L. Ed. 1047, 23 Sup. Ct. 687 (1903).

“Of course, if, by agreements or combinations among carriers, it were found that at particular point rates were unduly influenced by a suppression of competition, that fact would be proper to consider in determining the question of undue discrimination and the reasonableness per se of the rates at such possible competitive points."

§ 860. Stifling of competition by consolidation.

Where competition at the intermediate point is stifled, not by an agreement among the competing roads, but by a consolidation of all the roads into one, it has been urged that for the purpose of determining the reasonableness of discrimination the point should continue to be regarded as a competitive point. This was urged in the Danville case.12 The rates between Southern and Western points and Danville were very much higher than those between the same points and Lynchburg, the business rival of Danville. There was an active competition between railroads at Lynchburg. Such competition had existed at Danville, but all the other roads were absorbed by the Southern Railway. The courts held the discrimination justified. The case went off on the ground that before the consolidation of the last competing road with the Southern the rates were as high as at the time proceedings were begun.

§ 861. Carrier need not consider competition.

The carrier is not bound to consider competition in fixing its rates, and to give a lower rate to a competitive point. "Now, to anyone who has given the Act to Regulate Commerce much attention it must be obvious that a complainst against a carrier that it gives to non-competitive points the same rates which it gives to competitive is not a complaint that the Act is violated. On the contrary, the spirit and purpose of the Act require that

12 Interstate Commercè Commission v. Southern Ry., 117 Fed. 741 (1902), 122 Fed. 800, 60 C. C. A. 540 (1903).