by Jakina Debnam on September 13, 1976
by Jakina Debnam and Council on Wage and Price Stability

The Council on Wage and Price Stability today urged the Interstate Commerce Commission (ICC) to rectify the anti-competitive tendencies inherent in the Commission’s most recent proposal regarding a definition of “market dominance.” Under the recently passed Rail road Revitalization and Regulatory Reform Act (4R Act) of 1976, maximum rates charged by railroads would be governed by competitive market forces, except in those cases where the Commission determines that a railroad possesses “market dominance.” The Act requires the ICC to establish standards for a determination of market dominance, and it is these proposed standards that were criticized in the Council’s filing.

The Council noted that the latest proposal is, in some respects, an improvement over the standards suggested earlier. However, even the new standards, the Council argued, represent a perversion of Congress’s intent, as expressed in the 4R Act, to increase competition and efficiency in transportation. The Council stated, “It is our reading of the 4R Act that Congress and the President have made a determination that the Commission has been too interventionist in the past … [and that] Congress has now directed that the Commission stay out of such rate matters where it is likely that the forces of competition would playa meaningful role.”

The ICC has proposed that the fulfillment of anyone of three principal tests would create a presumption of market dominance. These three tests are: (1) if the railroad carrier has handled 70 percent or more of the traffic in question, (2) if the rate exceeds variable cost by 80 percent or more, and (3) if shippers have made substantial investments in railroad equipment. However, the Commission left itself free to find market dominance in other instances.

 View Complete Document as PDF    Share Share    Print Print    Email Email

Previous post:

Next post: