The U.S. Court of Appeals yesterday upheld a decision by the Federal Communications Commission to allow a partnership that includes the IBM Corporation and Comsat to enter the domestic satellite communications market without first holding an extensive hearing on possible anti-competitive consequences of the joint venture.
The Justice Department, and Western Union Telegraph Co. and American Satellite Corp, both current suppliers of domestic satellite services, had challenged the commission decision, claiming among other things that the joint venture eliminated possible competition that would result if IBM and Comsat had entered the market individually. American Telephone and Telegraph Co., which currently dominates that industry, joined in the appeal, but sought a full hearing only on the type of services to be provided by the joint venture.
Chief Judge J. Skelly Wright, in an opinion for the majority said that ATT and the other suppliers, "by proclaiming the benefits of competition" were asking the court to hold the Commission to a tougher standard for market entry than had been originally applied to their applications.
"We are inclined to ask here who in this case is truly promoting the policy of competition: the FCC, which granted a license to a new and competitive force, or those who invoke the cry of 'competition' in the interest of restricting entry."
Wright noted that the FCC had disagreed with arguments that a ban on the joint venture effort would actually promote competition in domestic satellite services. Instead the Commission concluded that the joint venture, called Satellite Business Systems, would be unlikely to produce significant anti-competitive effects and that "even if it did, the public benefits would be so substantial as to outweigh those effects."
"If all goes well, SBS satellites could be in the air by early 1981," Wright said. He noted that the combination of Comsat's expertise in satellites and IBM's knowledge of data processing -- "a major expected use for the domestic satellite system" -- promises to challenge AT&T's expected dominance of the market, as the FCC has said repeatedly.
The Commission had argued that federal law does not require a full, evidenciary hearing on all disputed issues and that such hearings would not help evaluate "competitive conditions in a changing and experimental industry" such as domestic satellite services. The Commission has consistently acted without such hearings in connection with domestic satellite decisions and all the parties who protested the SBS action have benefited from the same policy or been a proponent of it, Wright said in a lengthy opinion.
Wright was joined in his opinion by Judges Edward A. Tamm and George E. MacKinnon. Judge Harold Leventhal, who also considered the case, died before the decision was announced.
Judges Spottswood W. Robinson and Malcolm R. Wilkey dissented.