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The CHAIRMAN. The meeting will now adjourn, and we reassemble on Wednesday, September 25, when we will hear from the Chairman of the Federal Trade Commission, Mr. Dixon, and Assistant Attorney General Zimmerman, of the Department of Justice.

(Whereupon, at 12:42 p.m., the subcommittee recessed, to reconvene on Wednesday, September 25, 1968.)

NEWSPAPER PRESERVATION ACT

WEDNESDAY, SEPTEMBER 25, 1968

HOUSE OF REPRESENTATIVES,
ANTITRUST SUBCOMMITTEE OF THE
COMMITTEE ON THE JUDICIARY,
Washington, D.C.

The subcommittee met at 10:10 a.m., pursuant to recess, in room 2141, Rayburn House Office Building, Hon. Emanuel Celler (chairman of the committee) presiding.

Present: Representatives Celler, Kastenmeier, McGregor, McClory, and Railsback.

Staff members present: Kenneth R. Harkins, chief counsel; and Howard W. Fogt, Jr., associate counsel.

The CHAIRMAN. The committee will come to order.

The first witness is the chairman of the Federal Trade Commission, Paul Rand Dixon, who is not a stranger here. He and I have been associated together, in antitrust matters, for a great, great many years. I can testify to the fact that Rand Dixon is a really dedicated public

servant.

TESTIMONY OF HON. PAUL RAND DIXON, CHAIRMAN, FEDERAL TRADE COMMISSION, ACCOMPANIED BY JOHN V. BUFFINGTON, ASSISTANT TO THE CHAIRMAN, AND JOHN N. WHEELOCK, EXECUTIVE DIRECTOR OF THE FEDERAL TRADE COMMISSION

Mr. DIXON. Mr. Chairman, thank you for those kind remarks. It is always a pleasure for me to be invited before your committee.

On April 16, 1968, I had the pleasure of appearing before the Subcommittee on Antitrust and Monopoly of the Senate Committee on the Judiciary in connection with consideration of the bill S. 1312, the "Failing Newspaper Act" bill.

Since that time, there has been little, if anything, in the way of developments in the law of antitrust which has had an effect upon the attitude taken by myself, and I believe also by the other members of the Federal Trade Commission, with respect to the alleged necessity for an antitrust exemption in favor of combinations or joint operating arrangements between newspaper publishers.

We in the Government, of course, have a great amount of sympathy and compassion for any failing business-whether he be industrialist, newspaper publisher, or the operator of a shoe shine parlor. More than 7 years ago, I took an oath as Chairman of the Federal Trade Commission to bend my every effort to the full and fair enforcement of antitrust and trade regulation statutes which have as their para

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mount public purpose the protection of the public and the preservation of all our businessmen from unfair methods of competition and from unfair or deceptive acts or practices.

Constitutional lawyers, a great portion of the public, and undoubtedly a large number of legislators and other public officials are highly concerned today about the threat to the basic freedoms of our citizens which are involved in the problem of maintaining an adequate number of independent and diverse editorial opinions in our newspapers and other communications media. There are two sides on this issue, however. One of these sides emphasizes the importance of numbers. It says that we require many voices, albeit a majority of them may be small, which reflect the myriad shades of opinion and serve as appropriate vehicles for the expression of unpopular viewpoints as well as those which are more accepted and popular.

On the other side of the issue are those who emphasize that we must maintain the independence, the vitality, of individual editorial voices. Members of the public who are of this persuasion are not concerned so much with the absolute numbers of voices as with having at least an adequate number of truly and completely independent editorial voices, ready and able to advocate the unpopular view when there is conviction that it is the one in the American tradition.

Fortunately for us, the Federal Trade Commission is not in the forefront of the struggle between such conflicting philosophies. Our function is solely to enforce statutory policies which proscribe a diminution of independent editorial voices through unfair, predatory, and restrictive means.

The statutes we administer do not authorize and empower us to preserve economically failing newspaper businesses, in the interest of some overriding concern such as the preservation of basic freedoms.

Now our detachment has been interrupted again. The honorable step forward and to make known our views on H.R. 19123, the “Newschairman of this committee and subcommittee has requested us to paper Preservation Act" bill. In compliance with that request, I am privileged to come before you today and express those views.

Let me say first that I am in favor of preserving the greatest possible number of independent, viable newspaper ownerships. Newspaper publication represents both a truly significant commercial activity and a necessary and vital public service in the functioning of our democracy.

However, I am not in favor of artificial legislative means for preserving business enterprises against the normal rigors of competition and against common economic pressures-especially when the means involved is through antitrust exemption.

There are already a substantial number of antitrust exemptions. One class of exemptions falls on regulated industries which require allocation of limited resources or markets and supervision of ratemaking. Included are the utilities or power companies and the carriers. Antitrust principles, however, are customarily applied to these industries by their respective regulatory authorities.

The second class of antitrust exemptions benefits collective activities in marketing and collective bargaining activities. The labor laws and the Capper-Volstead Act exemption for agricultural marketing cooperatives are the principal examples. These were initiated in response

to imbalances in economic power which needed adjustment. The necessary scope of these adjustments-the means to maintain the balanceis still being explored.

Both the pending "Newspaper Preservation Act" and its companion Senate "Failing Newspaper Act," which already has received extensive consideration in committee, purport to create a new class of antitrust exemption-a specific and virtually total special area of exception from the generally universal application of firm Government supervision over economic activities affected with a public interest.

There is but one significant discernible difference between the two measures referred to. The instant measure very assiduously avoids use of the term "newspaper combination" which is very prevalent in the Senate bill. In terms of an operating arrangement between separate entities, I think it matters not the least scintilla that the House bill does not expressly provide an exemption to a "newspaper combination." The phrase "any contract, agreement, joint venture (whether or not incorporated), or other arrangement" is more specific and equally all-encompassing as the recognized antitrust terminology "combination.”

In my statement of April 16 before the Senate subcommittee, I detailed a number of features of the Senate bill with which we have been troubled. Only one of these points has been met, and then not completely, by the House bill. Our objection was that the proposed legislation appeared to be unnecessarily broad. One element in this was the definition under "newspaper combination" of an acquisition, directly or indirectly, of one newspaper publication by another.

The House bill would not grant an exemption to an acquisition of the stock or assets of one newspaper by another or to the merger of two newspapers. These would continue to be governed under existing principles. The proposed exemption would be restricted to joint operating arangements between separate entities or owners.

Another commendable feature of the House bill is that is removes a substantial doubt which existed under the Senate measure as to the scope of the exemption insofar as the activities and practices of a joint arrangement affect directly business and competition with third parties. Predatory practices and other conduct which would be unlawful when engaged in by a single entity are not covered by the exemption.

However, there are several objectionable features which were discussed on April 16 which are inherent now in both the Senate and the House bills. I will only summarize them here.

First, under existing legal doctrines, it is possible for a financially sound newspaper to purchase the assets and/or business interest of a "failing" newspaper which satisfies certain criteria. In that event, the seller receives assets which either are taken out of the newspaper industry and invested elsewhere, or are available for reinvestment in the newspaper industry.

In the case of a joint operating arrangement, however, the assets of two separate enterprises are pooled together and retained in the existing businesses. They are not available for reinvestment elsewhere in the newspaper industry and they serve as a formidable economic reserve which operates as a barrier to discourage new competition in that city, community, or metropolitan area.

20-914 068-16

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