influence cited by the MEC is the attempt by BAR to divert traffic from it. This allegation relates to an investigation by the Commission on our own motion in No. 35940. The MEC filed a complaint against the BAR in No. 35987, Maine Central Railroad Company v. Bangor and Aroostook Railroad Company, alleging that it was unduly prejudiced by the interchange arrangement. The MEC's complaint was embraced in No. 35940. Our decision in Interchange Arrangements Between Bar and CP, 356 I.C.C. 749 (1977), found that the BAR, aided by the Canadian Pacific Limited (CP) unduly prejudiced the MEC and B&M in the distribution of traffic in violation of 49 U.S.C. 10701 [formerly section 3(4)]. The MEC and B&M were awarded damages for their injury resulting from this violation. The damage award was sustained on review. Bangor & A.R. Co. v. I.C.C., 574 F. 2d 1096 (1st Cir. 1978).

The agreement in question was entered into July 25, 1970, and provided that the BAR would interchange with CP rail at Brownville Junction, ME, as many cars of paper products and potatoes as it was possible to interline. An increase of 24,000 cars annually was expected to be interlined under the agreement. CP was to pay a specific allowance for each car of paper products and potatoes. The BAR in turn would solicit traffic to be routed via Brownville Junction.

The MEC cites that proceeding as showing that the BAR attempted to divert traffic from the MEC to diminish MEC earnings and pressure MEC management into a merger. The defendants respond to the MEC's allegation that the violations of 49 U.S.C. 10701 are relevant only to show their motives and are not evidence of power to control. We believe that No. 35940 may be relevant, and we have considered it in the context of the present case. But our finding that the agreement violates 49 U.S.C. 10701 in that the MEC was discriminated against does not have probative value in showing that Amoskeag had the power to control MEC. The agreement unquestionably disturbed the competitive relations between the BAR and MEC. The MEC lost revenue because of the agreement and was under continued pressure to merge with the BAR. Yet, the MEC was able to overcome the pressure by "countersolicitation in an attempt to stem the tide"-an effort in which it "evidently had some success." Bangor, supra, 574 F. 2d at 1103.

Furthermore, as we indicated, there is no evidence showing that the defendants had any influence on the internal operations and management of MEC. All its pressure was external to the MEC management. In Greyhound Corp.-Control-Tex., N. Mex. & Okla.

Coaches, 101 M.C.C. 655 (1967), cited by the MEC to support its argument that the power to divert traffic would be power to control the carrier, Greyhound was found to be in control due to its veto power over internal management of the controlled carrier. Here defendants had no veto power over MEC's management. Defendants' attempts to divert MEC's traffic were purely external and in no way directly affected the internal management of MEC. MEC was not prevented from actively soliciting traffic to counter the loss of revenues due to the diversion. Nor was it prevented from filing its successful complaint before the Commission in No. 35987, supra, to obtain damages for being discriminated against unlawfully. Valuation of stock.-The fourth element cited by the MEC as showing defendant's power to exert control over it involves the valuation of its stock by the defendants. The MEC alleges that defendants had attempted to depreciate the value of MEC stock so it could pressure the MEC into a merger with BAR.

As we previously indicated, after Amoskeag purchased control of the BAR it held discussions with the MEC about a possible merger. In the defendant's merger proposal, the BAR and MEC were equally valued, so that a merger would be a 50-50 combination. In 1970, Mr. Dumaine in a conversation with Mr. Miller said that he would try to raise the value of the BAR and depress the value of the MEC so they could be combined equally. We recall that Amoskeag's MEC stock was being held in a voting trust. Amoskeag lowered the value of MEC on its books from between $75 to $80 per share to $30. In late 1970, Amoskeag reduced its book value of MEC stock to $15 per share.

Amoskeag publicized its reduction of the book value of MEC stock and, according to the MEC, filed its application in Finance Docket No. 27621, Amoskeag Company-Control-Maine Central Railroad Company, to protect its investment in the MEC. Amoskeag's book value for MEC stock fluctuated. As of December 31, 1971, the book value was $25 per share; this increased to $30 on June 30, 1972, and dropped to $20 per share on December 31, 1972.

The devaluation of MEC stock did cause some concern among MEC shareholders. But aside from this, there is no showing that Amoskeag's efforts involving the value of MEC stock had any practical impact on MEC. For example, at the time Amoskeag publicized its devaluation in 1970, it did not purchase additional MEC stock. It did not increase its holding until late 1973, when it purchased additional shares of MEC stock. In the circumstances of this case, we believe that Amoskeag's influence on the value of MEC stock was not the equivalent of control.

Voting trust.-The final element cited by MEC to support its complaint is the alleged attempt by the defendants to undermine the independence of the voting trustee. The use of an independent voting trust as a device to avoid a violation of 49 U.S.C. 11343 [formerly section 5(5)] has been sanctioned by the Commission and the courts, B. F. Goodrich Co. v. Northwest Industries, 303 F. Supp. 53, 61 (D. Del. 1969) affirmed 424 F. 2d 1349 (3d Cir. 1970), cert. den. 400 U.S. 822 (1971), so long as the trustee is truly independent from the settlor, Illinois Central R. R. Co. v. United States, 293 F. Supp. 421, 429 (M.D. III. 1966) affirmed per curiam 385 U.S. 457 (1967).

The MEC argues that the defendants sought to control it through the voting trust. The original trust was with Irving. Irving resigned in May 1973. The MEC argues that Irving resigned because defendants had prevented it from being independent.

Correspondence submitted into the record shows that the defendants, in late 1972 and early 1973, had written Irving on several occasions concerning the management of MEC and its earnings record. Irving responded to defendant's comments by preparing several analyses of MEC's earnings. For example, on October 16, 1972, Mr. Dumaine wrote George White, of Irving, pointing to MEC's low earnings and asking what the trustee was going to do about it. The letter implied that the MEC management was at fault for the low earnings, and that Mr. Miller was approaching 65 years in age and should have a successor. Irving performed an analysis of the MEC showing that the decline in earnings was due to causes other than the management's performance. On December 23, 1972, Mr. Dumaine wrote Mr. White that the stockholders had not received cash dividends in 8 years. The letter also asked whether MEC could meet payments on a mortgage obligation.

The MEC points to the correspondence as showing Irving resigned as voting trustee because it could not be independent of defendants. On May 9, 1973, counsel for defendants wrote Mr. White criticizing him for turning over to Mr. Miller of the MEC correspondence from Mr. Dumaine. The letter stated that Irving was not a conduit between the management of MEC and Amoskeag, but should take an active role to protect the assets entrusted to it.

In its letter of resignation dated May 23, 1973, Irving responded to the letter of May 9, 1973, that its role as trustee was not confined to transmitting communications from Mr. Dumaine to Mr. Miller. It indicated that the questions it raised as trustee come from a number

of sources such as Irving's officers, attorneys, and analysts, as well as Mr. Dumaine and Amoskeag. Irving stated that it, as trustee, determined what questions it presented MEC.

No testimony was presented from Irving officials to provide further information about its relationship with the defendants. The correspondence submitted into evidence indicates that the defendants had attempted to use Irving in its intended goal of obtaining control of MEC, and that Irving resigned its trusteeship rather than be used by the defendants.

Mercantile became voting trustee in September 1973. It had several meetings with Mr. Dumaine and Amoskeag officials to discuss the MEC. Mercantile knew about the proposed merger of MEC and the BAR and was acquainted with the stock valuation controversy. Mercantile also conducted an extensive evaluation of the MEC to acquaint itself with MEC's management and operation. In late 1973 and early 1974, Amoskeag and Mercantile exchanged correspondence concerning the internal management of MEC. Amoskeag criticized MEC management and its earning record. The MEC contends that Amoskeag intended to have Mercantile lead a proxy fight at its April 1974 annual meeting against MEC management. At the April 1974 stockholders meeting, Mercantile had intended to present a report critical of MEC management, but did not present the report at that time. Instead, it presented its analysis at a closed meeting of the MEC board so that its report would not be published. Mercantile voted with MEC management and did not engage in a proxy fight.

The initial decision discussed at length the testimony of the employees of Mercantile presented at the hearing relating to the allegation that the defendants had undermined the independence of the trustee. Despite the correspondence between the defendants and Mercantile, the Administrative Law Judge found that Mercantile had maintained its integrity as an independent trustee. He based his finding on testimony by Mercantile's vice chairman, W. Broadman Jones and Arthur Jones of Mercantile's trust department.

Mercantile was more aggressive in its requests for information from MEC than Irving. MEC alleged that this was due to pressure by the defendants to have Mercantile interfere in MEC's internal management. Our analysis of the record indicates that when Mercantile assumed its duties of voting trustees, it hired consultants to analyze the MEC and met with MEC and inspected MEC facilities to inform itself, so it could act as trustee. We consider the actions by Mercantile to be sound business practices rather than interferences, as alleged by MEC.

The MEC is correct that the voting trust agreement between defendants and Mercantile and its predecessor Irving had not been submitted to the Commission for analysis and approval. While there is no requirement that we have to approve voting trusts before they are established, carriers have been advised to seek our approval so they can be assured that the trust is lawful. See, Missouri Pac. R. Co.-Control-Chicago & E. I. R. Co., 327 I.C.C. 279, 320 (1965). But the failure to submit the agreement is not relevant to the question of the trustee's independence.

We find that the defendants attempted to undermine the independence of its voting trustee, but that both Irving and Mercantile, withstood the pressure and maintained their independence. We conclude that Irving and Mercantile were independent trustees. MEC was insulated from the attempts by defendants to exert control through the the trustees by the independence of Irving and Mercantile.

No evidence has been submitted showing that either one of the trustees-let alone Amoskeag-had attempted to participate in the management of the MEC. Neither trustee had been represented on the MEC board of directors, or had even sought to be represented. Neither trustee had any veto power over the MEC or had any authority to control any of MEC's activities. In those instances when the trustees voted the shares held in trust, they followed their independent judgment and did not act as a rubber stamp for the defendants. See, Illinois Central Gulf R. Co.-Acquisition-GM&O et. al., 338 I.C.C. 805, 868-69 (1971).

CONCLUSIONS

The five elements cited by the MEC do not, in our view, show that the defendant had power to control MEC. The facts of record show that the defendant, Amoskeag, owns beneficially about 36 percent of MEC's common stock and intends to expand its stock ownership to achieve control, but have been unable to purchase control. The facts also show the defendants have attempted to exert control over MEC through external pressure. First, they attempted, by valuating their stock interest in MEC at a low price, to pressure MEC into a merger. Secondly, they executed an agreement with CP Rail to divert traffic from the MEC and thereby diminish MEC's revenues. Thirdly, they attempted to influence their voting trustees so they would take an active interest in the MEC favoring defendants' interest.