He interpreted the word "accorded" in a similar manner and the Commission has adopted the same interpretation. However, the Supreme Court has not ruled squarely on this matter, so that there is need that Congress clarify its original intent by inserting in both subsections in place of the words "available" and "accorded" some such language as "actually and openly offered." By so doing an ambiguity in the act will be eliminated with consequent benefit to all concerned. 5. Strengthen the enforcement of the act by increasing the sanction of cease-and-desist orders, by providing for a minimum measure of damages in private suits, and by allowing the Government to sue for treble damages. In discussing the effectiveness of the Robinson-Patman Act in suppressing discriminations that lessen competition, I think one fact stands out above all others. It is that on its face this act is a strong and forceful law, whereas in actual operation it is often ineffectual and disillusioning. No one would assert that it has been a complete failure or that it has not resulted in greatly improved competitive relations. It has been and will continue to be the mainstay of small merchants and suppliers in resisting the stranglehold of mass distributors. Yet the independent retailers whom this association represents are agreed that the act has not measured up to their legitimate needs. Foremost among the reasons for this dissatisfaction is that it has not served as effectively as we feel it might to prevent injuries to small business. You gentlemen of the committee have listened to complaints from hundreds of businessmen, and I venture to say that the vast majority of them concern practices which are already in direct violation of the act as it exists today. Concrete examples of this condition are provided by the alarming number of instances brought to light by the Commission involving long-established pricing policies which systematically discriminate against small purchasers. It therefore behooves us to consider the manner in which this act has been enforced. The Clayton Act, as amended by the RobinsonPatman Act, provides many alternative methods of enforcement. Violators may be subject to a cease-and-desist order by the Commission, treble-damage suits by an injured party, a fine or imprisonment, and injunction suits brought by the Government or by a private person. This array of legal remedies has been frequently cited to demonstrate the severity of the statute's enforcement provisions. In actual fact, however, most of these remedies and penalties have hardly ever been used, and the seemingly great risk which accompanies violations is more apparent than real. In very rare instances a fine is imposed, but it invariably represents only a slight fraction of the gains which accrue to the violator from his illegal activities. The recent A. & P. case is a good example. The court found this company guilty of violating both the Sherman and Clayton Acts and a fine of $175,000 was imposed. This represents about 2 percent of the "headquarters allowances" which, according to the Government, this concern collected in 1 year in the form of advertising allowances, quantity discounts, and discriminatory price preferences. Mr. BALLINGER. It is an illegal advertising allowance, wouldn't you say? Mr. TAYLOR. Yes, sir. Of the numerous remedies provided in the act only two are in sufficient use to warrant detailed attention. The first is cease-and-desist orders issued by the Commission. They are by far the most frequently used means to compel adherence to the law. Yet they are lamentably weak in either discouraging violations or stopping them once they have begun. In the first place a cease-and-desist order issued for a violation of the Robinson-Patman Act is not in itself enforceable against the person to whom it is directed. He may openly violate it with impunity. In order for it to be enforceable, the Commission must first obtain a court affirmance of its order. And if it is then disobeyed, the Commission must return to the court and request a contempt citation. This unique, time-consuming procedure requires the Commission to prove three separate and distinct violations-one for the cease-and-desist order, one to demonstrate to the court that affirmance is necessary to compel the violator to abide by its terms, and one to justify the institution of contempt proceedings. This archaic enforcement procedure ought to be replaced by one that gives a cease-and-desist order under the act the same authority and conclusiveness as a similar order has under section 5 of the Federal Trade Commission Act. This step will put more teeth in the law, but it is not, in our judgment, sufficiently by itself to discourage violation to the degree necessary to make the law operate effectively. For even with the expanded effectiveness of cease-and-desist orders it is more than likely that many violations would escape the Commission's detection, either entirely or for such length of time that violators would be able to destroy their competitors and consolidate their monopoly position. Up until January 1, 1948, the Commission had issued 55 cease-and-desist orders in 2 (a) cases, 104 in 2 (c) cases, 14 in 2 (d) cases, 4 in 2 (e) cases, and 9 in 2 (f) cases, making a total of 186 cease-and-desist orders that have been issued in the entire history of the Commission. And when to this revealing fact is added the notorious slowness which characterizes the proceedings leading up to the issuance of such orders, one would have to be an extreme optimist to conclude that cease-and-desist orders alone can insure effective compliance with the act. There is some feeling that expansion of the Commission and its facilities will take care of this situation. This seems highly doubtful unless the expansion were made on a very large scale, which probably is not feasible in view of the many demands being made on public funds today. If cease-and-desist orders cannot do the job alone, then how can they be supplemented so that better enforcement can be obtained! We suggest that the answer to this question is provided by making private suits for damages an effective weapon which small-business men can use to defend themselves against unfair and discriminatory trade practices. Section 4 of the Clayton Act allows injured persons to sue for treble damages. However, suits of this nature, because of certain technical rules which the courts follow, have been seldom used and very rarely successful in producing timely relief. Many pitfalls beset the path of the small-business man who attempts to sue for injuries sustained by him as a result of violations of the act. In the first place, his right of action is not based on proof of a violation but on proof of injuries resulting therefrom. He must bear the burden of proof not only that there has been a violation, but he must also show that there was an injury to him as a proximate result. And many courts have ruled that speculative, remote, or contingent damages cannot form the basis of a lawful judgment for treble damages. It is therefore required that the injured person demonstrate to the satisfaction of court and jury that, as a result of the defendant's act, damages in some amount susceptible of expression in figures resulted. A practical application of this requirement is found in the case of Clark Oil Company v. Phillips Petroleum Company, 148 F. 2d 580 (C. C. A. 8th, 1945), where the injured retailer lost because he increased his selling price to meet a cost increase which his supplier imposed on him as a result of a conspiracy in violation of law. The Court in this case ruled that the conspiracy to raise prices would in any event result in no damage to him in the absence of proof that his selling price was not correspondingly increased. Thus, this retailer could not recover damages unless he sold his product at a loss. It is obvious that to do this would involve a considerable risk, since there is no telling how many years of litigation it would take before he could even hope to recoup his losses. We believe that the right of an injured party to recover damages was intended by Congress not only to be a basis for such a party to be reimbursed for his pecuniary losses, but also to provoke greater respect for the act. It is therefore suggested that section 4 be strengthened by (1) allowing a person who can show damages to collect three times the amount of the prohibited discrimination made against his purchases unless he can prove greater damages; and (2) by permitting the Government to sue for treble damages in cases where there has been no recovery by private persons. As stated at the outset, we have not felt it possible within reasonable time limits to go into the whole body of antitrust laws. And, even in discussing the Robinson-Patman Act, we have not felt that we are as yet in a position to make useful suggestions to the committee for dealing with the problem of below-cost selling. As you know, this has been regarded as a matter which is properly the subject of State legislation. However, as I have stated to Mr. Ballinger, we are making a close study into the possibilities for effective Federal loss-leaderlegislation and would like the privilege of submitting our findings to. the committee at a later date. 8301949- -80 In the meantime, we feel that Mr. Patman has perhaps made a promising approach to this troublesome problem from an entirely dif ferent angle. By the terms of his bill (H. R. 1672), losses sustained by individual chain-store outlets would not be deductible by the parent organization for income-tax purposes. This, it seems to us, might prove to be a powerful deterrent to localized price cutting and sales below cost. I thank you very much, Mr. Chairman. Mr. BALLINGER. That is a fine statement, Mr. Taylor. Mr. STEVENSON. A very fine statement. We will now recess until 2 o'clock. (Thereupon, at 12 noon, the committee recessed until 2 p. m. the same day.) AFTERNOON SESSION (Whereupon, at 2:05 p. m., the committee reconvened, pursuant to the taking of the noon recess.) Mr. STEVENSON. The committee is in session. Mr. Blair, will you please come forward? Mr. BALLINGER. Give your full name for the record, Mr. Blair. STATEMENT OF DR. JOHN M. BLAIR, ASSISTANT CHIEF ECONOMIST, FEDERAL TRADE COMMISSION, WASHINGTON, D. C. Mr. BLAIR. John M. Blair. Mr. BALLINGER. You are the Assistant Chief Economist of the Federal Trade Commission? Mr. BLAIR. That is right, sir. Mr. BALLINGER. Mr. Chairman, I have known Mr. Blair for many years. He is quite an authority on the concentration of wealth and economic power in America. I asked him to appear before the committee and give his conclusions as to the extent of this concentration. Mr. BLAIR. Mr. Chairman, I would like to begin my testimony with the submission of some new facts on the extent of concentration in manufacturing industry. These new facts consist of figures which have been developed by the Federal Trade Commission. They are presented in the form of balance sheets in which the proportion of various items on the balance sheet held by large corporations, as a percent of the total, is clearly set forth. With your permission, I would like to offer for the record these new figures on the extent of concentration. Mr. STEVENSON. I would suggest that you just offer them. Mr. BLAIR. I would like briefly to comment on them, if it meets with the pleasure of the committee. Mr. BALLINGER. It is accepted for the record, Mr. Chairman? Mr. BLAIR. Thank you. (The document referred to follows:) Concentration in manufacturing as measured by the holdings of 113 corporations with assets of $100,000,000 and over 1 Texas Co., Socony-Vacuum Oil, Standard Oil of Indiana, Standard Oil of New Jersey, Standard Oil of California, Gulf Oil Co. Texas Co., Socony-Vacuum Oil, Standard Oil of Indiana, Standard Oil of New Jersey. |