One of President Reagan's appointees to the Interstate Commerce Commission said in a private meeting that the agency should not worry about kickbacks in the trucking industry because such bribes "are probably one of the clearest instances of the free market at work."
Commissioner Frederic Andre told his ICC colleagues in the Oct. 20 closed-door meeting that he sees nothing wrong with trucking companies conspiring to set monopoly prices, according to a confidential transcript obtained by The Washington Post. He also said there was no reason for the ICC to stop a convicted felon from operating a trucking firm while in prison.
He said that bribes in the trucking business were just "discounts," or "rebates."
Andre, 49, a transportation consultant from Indiana, who joined the commission last March, made the comments during a strategy session called to map out the ICC's future enforcement policies. The ICC has been debating what role it should play in overseeing trucking practices as Congress proceeds to free the industry substantially from decades of regulation.
Andre, a onetime truck driver who later became chief deputy commissioner of the Indiana Bureau of Motor Vehicles, also served on Reagan's transition team for transportation issues. He did not respond to repeated requests for comment yesterday. ICC spokesman Robert Dahlgren would say only that "the transcript stands on its own."
According to the transcript, Andre said the trucking industry has developed into a cartel with a "subculture" of unique rules and traditions that defies federal regulation. The government should not interfere if a trucker pays a kickback to a shipping manager to hire his company to haul freight along a particular route, he said.
"Bribes among principals are probably one of the clearest instances of the free market at work," said Andre, a strong advocate of deregulation.
"Well, I can't agree with you about that," said Chairman Reese H. Taylor Jr., also a Reagan appointee.
"Well, they are just discounts," Andre responded. " . . . A bribe is a rebate, is it not? . . . It is an attempt to get around the rigidities imposed on the market by a government cartel."
"That is just like saying that murder eliminates hunger, you know," Commissioner J.J. Simmons said.
Andre contended that existing laws against fraud are sufficient to allow local prosecutors to pursue bribery cases "without having a special ICC cop coming along and having special jurisdiction."
Chairman Taylor responded that local officials "just absolutely ignore" such violations, but Andre said this is because "they have been preempted by federal police, which is the ICC police."
Andre said the ICC should follow the same approach with a form of extortion called "lumping," in which someone is not allowed to load his truck without paying off a carrier or shipper. Taylor said this practice, sometimes enforced by gunfire, is "rampant" in New York, New Jersey, Chicago, Los Angeles and San Francisco.
"Maybe we should get entirely out of worrying about lumping . . . , " Andre said.
Commissioner Heather Gradison, also a Reagan appointee, said yesterday that Andre's comments came in "a discussion between commissioners about philosophy. Each member would throw out one extreme [idea] or another . . . . That was just Fred talking. What you've gotten hold of is Fred Andre's philosophy, not the commission's philosophy."
Two other ICC sources said that Andre is viewed as an extremist and that he is not taken seriously by the other commissioners. "Some of his ideas are off the wall," one source said.
According to the transcript, Andre does see one clear-cut role for the ICC, in defending the special antitrust immunity that truckers have enjoyed since the 1940s. Congress is in the process of phasing out this immunity, which allows competing truckers to set common rates or carve up territory without being accused of price-fixing.
"I think the greatest function that the ICC performs . . . is that it grants antitrust immunity to surface transportation," Andre said. He said this helped protect truckers "from the latter-day McCarthyites that populate the [Justice Department's] Antitrust Division."
Scoffing at "British neoclassical" theories about price-fixing, Andre said: "No one has yet proven that a monopoly price that came about as a result purely of market activity has ever been socially onerous."
Andre also brushed aside suggestions that a convicted felon should be denied a trucking license.
"This might be a perfectly legitimate thing," he said. "I think murderers in jail, there is no reason why -- if the general cultural laws of this country permit them to run trucking companies--they are in jail because they are a physical danger to other people, but that does not mean their mind is utterly corrupt as far as running a surface transportation business is concerned."
"Think of all the businessmen . . . who still run their companies from jail," Andre said. " . . . Why should we have a higher standard, of all things, in surface transportation?"
Taylor said he hoped everyone's comments would remain secret, but added, "I have no illusions, after having been here for a year and a half, about keeping anything confidential around here."