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acquisitions made by the Bell System of independent companies were those made by exchanges of properties with the independent industry in order to eliminate telephone service by both within the same areas. Such acquisitions were submitted to and approved in advance by the Attorney General.

In order to permit future acquisitions in appropriate cases without risk of antitrust-law violations where in the public interest, the duty of policing acquisitions was shifted by the Willis-Graham Act from the Department of Justice to the regulatory commission. The law provides that an interstate telephone company desiring to acquire another company may apply to the Commission, and, if approved, "any act or acts of Congress making the proposed transaction unlawful shall not apply."

The acquiring company may thereby obtain protection from any possible antitrust-law violation. This language would be continued in the proposed amendment to section 221 (a) of the Federal Communications Act and is to be found in S. 1456, page 4, lines 19 through


The United States Independent Telephone Association does not oppose any and all acquisitions of independents by the Bell System. Where the service cannot be rendered for the benefit of the subscribers and in the public interest by an independent company, the independent segment of the industry has not opposed acquisition applications under section 221 (a) before the Federal Communications Commission. Where, on the other hand. it is believed that the proposed acquisition would be contrary to the public interest and adequate service could and would be rendered by an Independent telephone company, the independent segment of the industry has opposed Bell acquisitions.

It is our position that, consistent with past history and consistent with the American philosophy of encouraging industry and discouraging monopoly, the independent segment of the industry should not be weakened through piecemeal acquisitions by the dominant segment. of the industry.

The past record of the independents' opposition to acquisitions under section 221 (a) substantiates my statement that the independents have not opposed acquisitions where they did not believe such opposition would serve the public interest. The only opposition by the independents in the past few years, in fact, occurred several months ago in the so-called Tomball case wherein the trial examiner recently issued his decision denying approval of the proposed acquisition.

In this connection, it should be stated, in all fairness, that over a period of years the Bell System has not often attempted to acquire independent properties if a member of the independent industry desired and was willing to provide adequate subscriber service. However, the independent industry recently has become disturbed lest. this Bell System policy might be undergoing a change.

I would not have the committee left with the impression by anything I say that relations between the independents and Bell are less. than cordial. Hundreds of business transactions take place between the two daily and literally millions of messages are interchanged. The two segments of the industry do and must maintain the finest. possible working relations.

Coming now to the provisions of S. 1456 and proposed amendments to section 221 (a), it is our firm view that, in light of the historical background which I have briefly referred to, it would be a mistake and contrary to our American concepts for Congress to enact into law the changes proposed in S. 1456, as now written. If this should happen, the Bell System would thereby be permitted to acquire independent companies without giving other independents or the association of independent companies notice and a right and opportunity to a hearing in opposition, while at the same time continuing in the law the exemption of such transaction, if approved, from the provisions of of the antitrust laws. I know that such was not the purpose of the bill's sponsor.

The sole purpose of the amendment to section 221 (a) is to eliminate the present requirement for a hearing in every case, whether or not opposed, prior to exempting these acquisitions from the antitrust laws. As presently written in the bill this would be accomplished by eliminating the requirement for a hearing and leaving that matter wholly within the discretion of a regulatory commission. Not only would the independent segment of the industry be precluded from the right to a hearing, but also it would lose all the rights and safeguards afforded by sections 5, 7, and 8 of the Administrative Procedure Act, the purpose of which is to assure a fair and reasonable hearing with adequate notice and an appropriate record for a court review of the administrative decision. These sections of the Administrative Procedure Act are only applicable where a hearing is required by law as is presently the case in section 221 (a).

While I believe the present Commission would exercise its discretion to afford the independent segment of the telephone industry a hearing where requested in these cases, it must be borne in mind that Commission personnel and policies change and we feel strongly that such important matters should not be entrusted solely to the discretion of a regulatory commission. It might be mentioned at this point that the recent recommendations of the so-called Hoover Commission on such matters are in the direction of affording interested persons further protection in administrative hearings rather than to eliminate the opportunity to obtain a fair hearing.

We are not opposed at all to the Federal Commission's objective to eliminate hearings where they are unnecessary and serve no useful purpose. It is for that reason that we have taken the matter up with the Commission in an effort to obtain agreement on language which will eliminate the requirement for a hearing in every case, but assure a hearing to the independent telephone industry where requested.

As a result, the attached language changes in S. 1456 were agreed to by the Commission's representatives after careful consideration and conferences concerning the matter. If these changes are included in the bill, we have no objection to its passage.

Mr. Chairman, I heard your remarks concerning the possibility of broadening the language to include others who might have rights such as we feel that we have, which should be protected. I want to say that we have no objection to any change in the language which would include others which the committee may feel are also entitled to protection.

Senator PASTORE. I think myself that inasmuch as the public interest is involved in these matters of consolidation, that while independent companies are very much interested and should be given the right to be heard, so too I think that the people representing the subscribers in a locality have the right to intervene and be heard if they thought that they had a logical case.

I am not saying that the Commission would deny them that hearing anyway, just as you have said. After all we are a government of laws, not of men, and I think we ought to write it into the law.

Mr. Ross. We would certainly have no objection to that.

Senator PASTORE. Thank you, Mr. Ross.

Does anyone else want to be heard on this?

Mr. CowGILL. I was going to suggest that those few words eliminated would accomplish everything we are discussing.

Senator PASTORE. "A public hearing shall be held in all cases where a request is made." Don't you want to say "by an interested party"?

Mr. Ross. I do not believe that we would want to see it left within the discretion of the Commission to determine who is an interested party.

Senatore PASTORE. Then "where a request is made" will cover it. That concludes this hearing.

(Thereupon, at 1:45 p. m., the meeting was adjourned.)


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