The Interstate Commerce Commission formally proposed yesterday to give greater weight to the benefits of competition and less weight to protecting existing companies when considering applications for entry into the trucking business.
Although the ICC recently became more liberal in granting motor carrier applications, the formal policy statement proposed yesterday, if adopted after a 60-day period of public comment, would represent a significant change in the agency's traditional "protectionist" attitude.
Under the proposed policy, the ICC would set a new, liberalized test for entering the industry. An applicant would have to demonstrate that the service being proposed would serve "a useful public purpose, responsive to a public demand or need," the agency said.
New common carrier authority would be granted commensurate with the demonstrated need unless the existing carriers could show that entry of a new carrier would endanger their abilities to continue to perform services needed by the public.
"Obviously, only the existing carrier is in a position to show that a grant of the application will have this impact upon it, and it is therefore the protestant which will have to bear the burden of proof..;" the ICC said.
Observers of the trucking industry believe the new test placing the burden of proof on the opponents of entry would ease entry significantly. Applicants previously had to show, in effect, that the proposed services couldn't be performed by existing carriers, a test considered more difficult. Such a test has "outlived its usefulness," the ICC said yesterday.
The commission's proposed policy also would loosen requirements for applications by carriers who provide services to others under continuing contract. The ICC said opponents would have to establish that granting new contract authority would endanger or impair their operations to the extent that they would not be able to provide adequate service within the scope of their authorities.
Complaining that its current policies may be reducing effective competition, the ICC also proposed to over-haul its rules on motor carriers' applications to control, merge with, or purchase the operating authorities of other motor carriers.
The ICC said it has become "common" for a long-haul carrier to purchase the authority of a short-haul carrier to use solely to extend its long-haul service into another market. "The result is that the shippers who had relied upon the vendor's service no longer have that service available," the ICC said.
"It is our firm view that a purchase proceeding should not be used solely to provide for the extension of a motor carrier's service into new markets," the ICC said. "If only a new service is intended, the proper vehicle is the filing of an application for new authority."
As a result, the ICC proposed approving acquisitions only if the acquiring company promises to continue to perform service similar in scope and character to that authorized by the rights being acquired.
Industry observers say the ICC's proposals could erode further the value of the operating certificates that trucking companies have sold for as much as $21 million in the past.
In an effort to avoid "spending an inordinate amount" of resources on acquistion proceedings which do not have a significant effort either on the industry or the markets, the ICC said it would draw up guidelines to identify the transactions it should study closely -- and would concentrate on the potential competitive or anticompetitive aspects of those transactions.
The decision to issue the proposed policy statement came on a 5-to-1 vote with former ICC chairman George Stafford issuing a sharp dissent. He said past ICC policies did not demonstrate a "protectionist" attitude, but always is involved in "balancing... competing interests." The smaller carriers, not the large ones, will suffer from relaxed entry standards, he contended. The latter can survive equally well in a regulated or unregulated environment.
A spokesman for the American Trucking Association said yesterday it is "completely opposed" to the ICC's proposed policies.
"We feel the commission is administratively thwarting the intent of Congress. They are placing maximum participation in the industry ahead of the protection of existing carriers which the Congress intended as a stabilizer for the industry," the ATA said.