FOR YOUR INFORMATION............................March 21, 1991 FTC STAFF OPPOSES INCREASED BARRIERS TO ENTRY IN ILLINOIS TRUCKING INDUSTRY Proposed rules for issuing operating certificates to new truckers in Illinois go beyond what is required by the Illinois trucking statute in restricting entry into the market and, as a result, would be likely to raise prices and reduce the flexi- bility of motor carriers to respond to consumer needs, according to Federal Trade Commission staff in comments made public today. In general, FTC staff said, arguments typically advanced against deregulation in the trucking industry have been refuted in numerous studies. Citing a recent Department of Transporta- tion (DOT) study in particular, which found that trucking regulation in Illinois costs approximately $445 million a year, the FTC staff concluded that, "relaxing regulations that impede market entry and that limit rate flexibility appears to benefit consumers and competition." DOT Secretary Samuel K. Skinner wrote former Illinois Governor James R. Thompson in January expressing similar views. The proposed rules under consideration by the Illinois Commerce Commission (ICC) would add restrictions to entry into the Illinois trucking market by specifying the standards the ICC must use in determining whether a "public need" exists before issuing a new operating certificate. In its comments, submitted in response to a request from ICC Chairman Terrence L. Barnich, the FTC staff said that relaxing the restrictions on new competition rather than further restrict- ing entry would benefit consumers by increasing competition, improving service and reducing prices. According to the comments, signed by FTC Chicago Regional Office Director C. Steven Baker, the proposed rules appear to "go beyond the statutory mandate by defining public need in ways that may unnecessarily impede competitive entry into the market." - more - (Illinois Trucking--03/21/91) For example, the rules would require the ICC to deny a certificate for each commodity or territory for which a sufficient shipper need cannot be shown. The Illinois trucking statute does not require the ICC to consider each commodity or territory separately, however, according to the FTC staff comments. "Further, restricting the commodities and territories for which authorized carriers can operate would inhibit them from responding flexibly to unexpected shifts in shippers' needs," Baker wrote, adding that "the proposed changes could well increase shipping costs in Illinois without offering counter- vailing benefits." The proposed rules also go beyond the statute by requiring the ICC to consider whether shippers who support a new carrier's application have tried to obtain service from other carriers, and whether these supporting shippers have experienced "service failures" warranting the addition of new carriers, according to the FTC staff comments. "Shippers could conclude that existing service is inadequate for a number of reasons that may not be considered a service failure," the staff said. Finally, in response to proposals that would make it more difficult for a new motor carrier to obtain a temporary operating certificate, the comments noted the FTC staff's belief that temporary certificates should ordinarily be issued unless there are strong reasons to doubt the applicant will be granted a permanent certificate. NOTE: These comments are the views of the staff of the Chicago Regional Office and the Bureau of Economics of the FTC, and are not necessarily those of the Commission or any individual commissioner. Copies of the FTC staff comments are available from the FTC's Public Reference Branch, Room 130, 6th and Pennsylvania Ave., NW, Washington, D.C. 20580; 202-326-2222; TTY 202-326-2502. # # # MEDIA CONTACT: Bonnie Jansen, Office of Public Affairs 202-326-2161 STAFF CONTACT: C. Steven Baker, Chicago Regional Office 55 East Monroe Street, Suite 1437 Chicago, IL 60603 312-353-4423 (v910009) (Illtruck)