[From Platt's Oilgram, of March 24, 1941] ICC ORDERS PIPELINES, RAILROADS TO CUT RATES ON PETROLEUM PRODUCTS FROM MIDCONTINENT Washington.-Interstate Commerce Commission, in decision covering Petroleum Rail Shippers' Association case (ICC Docket 28106), has prescribed maximum rates for Great Lake Pipe Line Co. and Phillips Petroleum Co., based on 10 percent return on investment, and ordered acceptance by them of 5,000-barrel minimum tenders, to be held in storage at shipping point until a 25,000-barrel movement has accumulated. (New rates are based on average transportation costs for 32-year period ended June 30, 1940, plus 10 percent of carrier valuation as of December 31, 1939.) Commission also ordered lower single carload rates on gasoline (representing reductions ranging from 3 cents per 100 pounds to St. Joseph, Mo., to 16 cents to Marquette and Escanaba, Mich.) from group 3 to various midwestern points, removal of prejudice in single-car rates favoring Illinois over Indiana destinations, and recommended railroads consider publication of trainload rates. These rates, together with maximum pipeline rates and new tender requirements, must be put into effect by June 11, ICC stated. Commission found rate requirements of Great Lakes and Phillips for transportation of refined petroleum products and natural gasoline from origins in Oklahoma and Texas to their terminals in western trunkline territory to be unreasonable, and prescribed new maximum tariffs, which in case of Great Lakes, range from 28 cents per barrel to Kansas City, Kans., to 67 cents to Chicago, and for Phillips, from 33 cents to Kansas City, Kans., and 53 cents to East St. Louis, Ill. Rates on single carloads of gasoline, other refined petroleum products taking the same rates, and natural gasoline, from midcontinent territory to certain points in western trunkline territory, Illinois and Indiana, were found unreasonable by Commission, which prescribed rates varying from 22 cents per 100 pounds to Kansas City, Kans., to 46 and 47 cents to Escanaba and Marquette, Mich. To remove prejudices favoring Illinois, ICC held future rates from group 3 to Indiana groups should not exceed Effingham, Ill., rate by more than 3 cents per 100 pounds to Terre Haute, 6 cents to Indianapolis, 9 cents to Muncie, and 12 cents to Fort Wayne. MEMORANDUM FOR MR. ANDREWS: APRIL 1941 I am in Washington this week trying to clean up odds and ends with the staff. Colonel Klein has asked me to get Senator Pepper to start giving consideration to the form the decree will ultimately take. Mr. Hall has already asked John W. Davis to think about the matter, and the Texas Co. has made a similar request of the New York law firm which is their outside counsel. Standard of Indiana has asked Mr. Kirkland to study the matter. What Colonel Klein hopes is that Senator Pepper will take our original memorandum to the industry in which we restated Mr. Arnold's remarks about the form of decree and see whether he can devise a practical means of giving effect to the Arnold suggestion. I was unable to reach Senator Pepper Saturday and was not able to reach him by telephone this morning. The negotiating committee would appreciate it very much if you would either get in touch with him direct or through Alan Montgomery and ask that some study be given to the matter. Next week Colonel Klein hopes that we can begin to compare notes on what the various outside counsel think about the Arnold suggestion and how it could be made practically effective. I will be in Philadelphia next week and the entire committee is coming to Washington again on the 23d of April to conclude the negotiations. By April the 23d we hope that ideas about the form of decree will be pretty well crystallized so that we can discuss the problem with the staff. 98505 0-58-pt. 1, vol. 2 -38 C. I. T. It is, perhaps, needless to say that the enclosed report contains extremely confidential information which, at the present stage of the proceeding, should not be made available to anyone except the members of the negotiating committee. It is our understanding with the staff that the conferences with the entire industry committee will be reconvened on Tuesday, April 1, unless the hearings of the Cole committee make it impossible for Mr. Hall or any other member of the committee to be present. Upon the assumption that there will be no conflict. Mr. Hall and I have reserved accommodations for the entire industry committee at the Shoreham for Monday, March 31, with the hope and expectation that the committee can spend the entire day discussing the enclosed report. I am sending a copy of this letter and of the enclosure to each member of the committee. Very truly yours, CHARLES I. THOMPSON. the entire a perce and "vers all problems raided ricul The numbers on the lefthand sangin er tre på to on the first line of enel parograph r ate t. 4raps of the Pill of flaplaint. The desirations, "C-", "S-L", "KF-L" or "k. -3" and "C-3" relate to the sections of the Shormon Robinson-Fatsar Actor Clayton let, wbjem-re-eensidered be the The subcommittee has not attempted to put the above r the above in that the Staff has tentatively agreed, and all subsequent paragraphs were written upon the theory that, the prohibitions thin contained should be applicable only to activities of defendants while egaged in the course of interstate commerce. The subcommittee believes that this paragraph in its revised form will be less objectionable to the Industry than either the paragreth Negotiating originally written by the Staff or the Industry Committee's counter proposal. Neither the Staff nor the subcommittee interprets the above guage as anything more than a restatement of the principles of Sections 1 and 2 of the Sherman Act. More specifically, we think it obvious that the Sherman Act has always prohibited acquisition of crude oil reserves pursuant to an agreement either to monopolize such reserves or to restrain competition of others in the acquisition thereof. In line 5 م You will note-tat-the Inclusion of the word "substantially" is a concession by the Staff that the rule of reason is still the law. III (2) Co-ment: Obviously, a cestisation, conspiracy, or agree-ent anong competing companies engaged in it state commerce respecting the quantities of commodities to be produce? br each is a restrain of trade. The phrase in the cl The revision requires no extended comment. effect that the 1915graph d 6s not either "authorize or prohibit" !!! • tion was a tentative concession.ade by the subcommittee to . who insisted upon the Inclusion of the words "autherize or." cuzmittee b-lieves that the phrase thus insisted upon is gearin less and that it is inmaterial whether it is included or excluded. Attention is called to the Asut & at the revisi ́n 13 substs tally less restrictive tu t'e Stuffa or. inri proposal. The subcommittee believes that the above language is nothing more than a restatement of the obligations imposed upon crude oil pipe line conmon carriers by the Interstate Commerce Act. The above paragraph merely bans price-fixing combinations, conspiracies and agreements and-the-subcommittee believes that it will not be me te lig objected to by any member of the Committee. The language used is copied As the Committee has already approved substantially the above language, the subcommittee believes that the redraft will be found acceptable. III (6) or the Bomment: Comparison of the above language to (6) of the original agenda try Committee's revised agenda will demonstrate that the re vision is less restrictive in its langire than the prior drafts. Ob viously any common carrier which followed the practice prohibited would viclute the Interstate Coerce Act. An arreement to follow such practice would, in addition, violate the Sherman Zet. |