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Western Union Telegraph Co. v. United States

decided: June 15, 1959.

WESTERN UNION TELEGRAPH COMPANY, PETITIONER,
v.
UNITED STATES OF AMERICA AND FEDERAL COMMUNICATIONS COMMISSION, RESPONDENTS, AMERICAN CABLE & RADIO CORPORATION, ALL AMERICA CABLES AND RADIO, INC., THE COMMERCIAL CABLE COMPANY, MACKAY RADIO AND TELEGRAPH COMPANY, R. C. A. COMMUNICATIONS, INC., AND AMERICAN COMMUNICATIONS ASSOCIATIONS, INTERVENORS.



Author: Mathes

Before MEDINA and HINCKS, Circuit Judges, and MATHES, District Judge.*fn*

MATHES, District Judge.

Invoking the jurisdiction of this Court under 5 U.S.C.A. § 1032 [64 Stat. 1129 (1950)], The Western Union Telegraph Company petitions to set aside an order of the Federal Communications Commission made July 9, 1958 pursuant to § 222 (c)(2) of the Communications Act [47 U.S.C.A. § 222(c)(2), 57 Stat. 5 (1943)], modifying "the Commission's Order of September 27, 1943 * * * to provide that * * * Western Union * * * is directed [1] on or before December 31, 1958 to present to the Commission a plan pursuant to which * * Western Union * * * proposes to divest itself of its international telegraph operations, [2] such plan to provide for divestment by any method permissible under then existing statutes * * * within a period of not more than 6 months from the date of the approval of the plan by the Commission * * * [and] * * * [3] to report to the Commission in detail, one month from the effective date of this Order and monthly thereafter, its progress with respect to the divestment * * *" [In the Matter of The Western Union Telegraph Company, Docket No. 10151, - F.C.C. - (1958).]

By the Commission's order of September 27, 1943, the merger of Western Union and Postal Telegraph, Inc., pursuant to § 222(c)(1) had been approved, and Western Union was directed "to exercise due diligence in bringing about the divestment of its international telegraph operations * * * as promptly as it reasonably can * * *" [Application for Merger of The Western Union Telegraph Company and Postal Telegraph, Inc., Docket No. 6517, 10 F.C.C. 148, 171 (1943).]

The salient facts, as found by the Commission in this proceeding, are these: The Western Union Telegraph Company was organized in New York in 1851. During the last century, its landline facilities were extended throughout the continental limits of the United States. Having acquired by merger in 1943 the facilities of the Postal Telegraph system, Western Union today not only has a virtual landline monopoly throughout the continental United States, but also has physical connections with the landline telegraph companies serving the Dominion of Canada and the Republic of Mexico.

Western Union entered into the international telegraph field shortly after the first transatlantic cable was successfully laid in 1866, and now operates ten North Atlantic cables extending from New York and Massachusetts to Europe via Nova Scotia, Newfoundland and the Azores, over which it provides direct telegraph service to points in England, Scotland, Ireland, France, Belgium and Holland; it also operates submarine cables from Florida to Cuba and Barbados and, through the facilities of connecting carriers, provides international telegraph service to various points throughout the world.

Of the ten North Atlantic cables over which Western Union transmits international telegraph messages, five are leased by it from an English concern, the Anglo-American Telegraph Company, Limited, under a 99-year lease which expires in the year 2010. The annual rental for these five cables is 262,500 pounds.

There are at present three American overseas cable carriers: [1] American Cable & Radio Corporation with its subsidiaries: All American Cables and Radio, Inc., The Commercial Cable Company, and Mackay Radio and Telegraph Company, [2] R. C. A. Communications, Inc., and [3] Western Union.

In the hearings which preceded enactment in 1943 of § 222 of the Communications Act [47 U.S.C.A. § 222], under which the merger of Western Union and Postal became legally permissible despite the Federal antitrust laws, concern was voiced that the merged company, through ownership of the single remaining nation-wide landline telegraph system, would be in a position to control the distribution of outbound international telegraph traffic and to favor its own international cable facilities.

Accordingly, § 222(c)(2) of the Communications Act was enacted in 1943 [57 Stat. 51] to provide that:

"Any proposed consolidation or merger of domestic telegraph carriers shall provide for the divestment of the international telegraph operations theretofore carried on by any party to the consolidation or merger, within a reasonable time to be fixed by the Commission, after the consideration for the property to be divested is found by the Commission to be commensurate with its value, and as soon as the legal obligations, if any, of the carrier to be so divested will permit. The Commission shall require at the time of the approval of such consolidation or merger that any such party exercise due diligence in bringing about such divestment as promptly as it reasonably can." 47 U.S.C.A. § 222(c)(2).

And § 222(e) directs that the merged company, Western Union, distribute overseas telegraph traffic among the several international carriers and divide the charges for such traffic "in accordance with such just, reasonable, and equitable formula in the public interest as * * the Commission shall approve * * *" [Id. § 222(e)(1).]

Following enactment of § 222, application was filed with the Commission to permit consolidation or merger of The Western Union Telegraph Company and Postal Telegraph, Inc. Public hearings were held and the Commission, finding that the proposed merger was in the public interest, granted the application by the aforementioned order of September 27, 1943, and the merger was thereafter effectuated. [Application for Merger, supra, 10 F.C.C. at 170-171.]

The Commission then found that under the circumstances and in view of the difficulties involved, a period of one year from September 27, 1943, was a reasonable time for Western Union to complete divestment of its international cable operations; but declared that the Commission would require the merged company to report from time to time on its negotiations for divestment and would also require that due diligence be exercised to bring about a speedy and satisfactory conclusion of such negotiations; and stated that, in view of the unpredictable nature of the problem and in particular the unsettled effects of the war, if divestment could not reasonably be accomplished within a period of one year, the Commission would consider an appropriate petition for extension of time. [Id., 10 F.C.C. at 152-154.]

By the time this proceeding was instituted by Commission order of March 5, 1952, Western Union had petitioned for and procured 8 annual extensions of time within which to present a plan of divestment, and had filed with the Commission 32 quarterly reports on the status of negotiations ...


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