thereby altered. As Mr. Justice Brandeis pointed out in his dissenting opinion in the case of Federal Trade Commission v. Gratz (—U. S. —), the Federal Trade Commission was not intended to prohibit individual acts or practices, but to protect competition from unfair methods. It is obviously a far different thing to protect competition by outlawing certain methods (which methods are defined by "the judicial process of inclusion and exclusion") than to delegate to the Federal Trade Commission vast powers to police individual practices alleged to deceive the consumer, without reference to the maintenance of free and fair competition. From the legal point of view, the authority to restrain "unfair methods of competition" was sustained by the courts despite the obviously broad delegation of power, on the ground that the common law had for centuries prohibited "unfair competition" and there was a very definite body of law on this subject. This fact, and this alone, cured what would have otherwise been an unconstitutional delegation of power to an administrative agency. From the point of view of public policy the drastic change now proposed is unsound in that over the course of more than two decades the term "unfair methods of competition" has been given a meaning and a content by judicial decision with the result that businessmen and their counsel can, with some degree of assurance, be cognizant of their rights and duties under the Federal Trade Commission Act. The proposed change, however, which is recommended by the Commission on the sole ground that it is desirable to cure a weakness in administrative procedure, would necessarily create vast confusion. It will be necessary for the business of the country to undergo years of trial by fire and operate during those years at its own peril. It must be remembered that despite the fact that the Federal Trade Commission alleges that the decision of the Supreme Court in the Raladam case has hamstrung its activities, it is nevertheless true that the Commission in recent years has increasingly expanded its functions and has entered into literally thousands of stipulations in a wide field. We respectfully urge, therefore, that the proposed change will not cure any real evil but will merely substitute an indeterminate series of obligations of undiscoverable implications. It is submitted that if the Congress deems it desirable to revise the antitrust laws and to improve the Federal Trade Commission Act such changes should not be made until after thorough-going study of all the vital problems involved. We earnestly request this honorable committee to consider carefully the policy involved in altering the fundamental basis of the Federal Trade Commission Act by an apparently simple twist of language, requested by the Commission, for the purpose of curing a relatively unimportant incident of administration. The Wheeler-Rayburn bill proposed an amendment to the Federal Trade Commission Act which would delegate to the Federal Trade Commission vast powers, undefined and undelimited, to investigate businesses of the country without reference to any allegation of wrong-doing or without limitation as to purposes of such investigations. The National Association of Manufacturers welcomes the fact that this unsound and clearly illegal amendment is not included in the present bill. One other point is worthy of discussion in connection with the present bill. The bill would alter the present procedure under the Federal Trade Commission Act by a provision that cease and desist orders of the Commission "shall become final and conclusive" at the end of 60 days from the date of service if the respondent fails during such period "to seek court review." The Federal Trade Com mission recommended this change in its annual report for 1935 and again in its report for 1936. The reason assigned by the Commission for the change was that such amendment would be "in the interest of expedition and consistency in enforcement of its orders" (annual report for fiscal year ended June 30, 1936, p. 17). A serious matter of policy is involved in this proposed change. At the outset, it is desirable to point out that the Commission in its report for 1935 stated that during the year 125 cease and desist orders were issued and that in the same year only 10 cases were taken to the circuit court of appeals for enforcement. Again, in its report for 1936, the Commission stated that 161 cease and desist orders were issued, of which only 15 cases were taken to the United States Circuit Court of Appeals. It is therefore obvious that the Commission successfully obtained compliance with its orders. The only other conclusion would be that the Federal Trade Commission had issued cease and desist orders in many cases in which it was doubtful of its jurisdiction or of the propriety of its orders, and so hesitated to apply to circuit courts of appeals for enforcement thereof. The Federal Trade Commission does not undertake to explain which alternative is the true one and it, therefore, must be assumed that the former supposition is correct. If that is true, the requested change in the procedure would serve no useful purpose other than to harass the small- and medium-sized business enter prise, who would be faced with the alternative either of complying with a cease and desist order conscientiously believed by the respondent to be illegal or unfair or else expending large sums of money to bring action in a circuit court for the purpose of testing the legality of the order. Such a burden should not be imposed unless there is real reason for such a drastic change in the present procedure. The Commission points out that the Packers and Stockyards Act contains a provision to the effect that cease and desist orders become effective in 30 days if an appeal is not taken within that period. But there is no real analogy between the Federal Trade Commission Act and the Packers and Stockyards Act. The latter act involves large enterprises and a limited field of jurisdiction. The Federal Trade Commission Act, unlike the Packers and Stockyards Act, does not define particular unfair methods of competition. Such unfair methods of competition must be defined and limited by judicial decision, as has been repeatedly held by all the Federal courts of the country. Therefore, there is an obvious obligation upon the Commission to justify its cease and desist orders by recourse to judicial determination. The only other alternative would be to amend the Federal Trade Commission Act by defining particular methods of unfair competition, which would be a practical impossibility. Moreover, the Federal Trade Commission Act, unlike the Packers and Stockyards Act, affects business throughout the country, large or small. It would seem that in policy and in reason the change requested by the Commission would not accomplish any useful purpose and would throw upon business (particularly those least able to afford it) the enormous expense of seeking judicial review. CONCLUSIONS The National Association of Manufacturers is anxious that its position with respect to this bill be understood. In calling the attention of this committee to the considerations set forth in this statement we desire merely to point out that the proposed amendments may not have the beneficial consequences contended by the Commission. On the contrary, we are of the opinion that the alteration of the fundamental basis of the Federal Trade Commission Act will create an enormous amount of confusion and hardship and will raise serious legal and constitutional questions. However, we are aware that considerable sentiment exists in behalf of a thoroughgoing reexamination of the substantive principles and administrative problems inherent in the antitrust laws in their present form. Various suggestions have been made from time to time as a basis for such reexamination. In pointing out the defects and evils inherent in the bill before your committee we wish to negate any implication that the association would not willingly cooperate in a reexamination of the antitrust laws, particularly for the purpose of administrative reform. Respectfully submitted. NATIONAL ASSOCIATION OF MANUFACTURERS. Hon. CLARENCE F. LEA, MACHINERY AND ALLIED PRODUCTS INSTITUTE, Chairman, Committee on Interstate and Foreign Commerce, MY DEAR MR. CHAIRMAN: Your committee, as I understand it, is now studying H. R. 3143 (Lea) to amend the Federal Trade Commission Act, and in this connection is giving consideration to statements filed for the information of the committee and to the testimony and statements filed in the preceding Congress with reference to S. 3744 (the Wheeler-Rayburn bill, also to amend the Federal Trade Commission Act). The bill presently before your committee does not provide such broad revision of the Federal Trade Commission Act as was involved in S. 3744. Machinery and Allied Products Institute endorses the elimination of those amendments proposed in S. 3744 and not included in H. R. 3143, but upon careful study of H. R. 3143 we find ourselves opposed to two major provisions of the present bill for reasons we regard as most important and fundamental. We respectfully and earnestly ask the full consideration of the committee of the views herein stated, and request that the bill be not approved. First. The bill seeks to amend section 5, which now reads "unfair methods of competition in commerce are hereby declared unlawful" to cover also "unfair or deceptive acts and practices in commerce." We submit that such inclusion would be unwise, that it is unnecessary, and would lead directly to wholesale confusion in industry and business. When it is remembered that since the origination in 1915 of the Federal Trade Commission Act the courts have been engaged in ruling as to what the phrase "unfair methods of competition in commerce" means, and that with all the progress which has been made since that time through cooperation between the courts and the Federal Trade Commission there is still wholesale uncertainty and confusion respecting the definition of that term, incorporated into law 22 years ago, it is unquestionably true and clearly apparent that an extension of the act to include the broader term "unfair or deceptive acts and practices in commerce" will lead to untold confusion and uncertainty vitally affecting the flow of commerce, harassing businessmen and discouraging new enterprise. An example of this type of confusion and uncertainty may be seen in the present difficulties and deterrents to business enterprise which have been brought about through the ambiguity of the terms of the Robinson-Patman Price Discrimination Act. Such a broad and confusing extension of the act would be justified only if it could be shown that the evils sought to be remedied or the good sought to be gained for the public were clearly worth the means. This amendment is proposed in this bill as the result of recommendation of the Federal Trade Commission itself in its annual reports for 1935 and 1936. The recommendation was unquestionably made with a sincere desire to serve the public better. Nevertheless, while explaining its recommendation as due to the fact that under the act as it exists the Commission is not empowered to proceed in cases where competitors of the respondent are themselves engaged in similar practices, it is important to note that the Commission is able to point to only one case since 1915, in which such a situation arose. Such a broadening of authority, if it subjects the business of the country to uncertainty and harrassment as it does, can well wait until such time as the actual present need for it can be demonstrated. It should not and cannot be justified under the circumstances on any other ground. A still further question of policy is involved in the proposed extension to “unfair or deceptive acts and practices." When proposed and supported by business and industry generally in 1915, the Federal Trade Commission Act was intended to aid the determination of definitions of "unfair methods of competition" between competitors, and the act was sustained by the Supreme Court only on the basis of common law of many years standing outlawing unfair competition. There was no delegation of authority to determine and police the individual acts and practices of persons engaged in business. Such was not intended and the need for anything of this sort has not been made evident throughout the experience of the Commission since that date as that experience has been reported or made known. The delegation of authority by Congress to the Commission, itself a matter of questionable constitutionality, should be carefully guarded against, and in our opinion should not be given anv consideration whatever unless it can be incontrovertibly shown that such a policing agency is necessary in the public interest. No such evidence has been offered to date. Second. The bill seeks to amend the act by placing the burden of appeals from orders of the Commission upon the persons or companies subject to those orders. The Federal Trade Commission throughout the years has made a splendid record of obtaining observance of its cease and desist orders. Business and industry has cooperated in seeking and observing determinations of violations of "unfair methods of competition" between competitors. Where necessary (in the great minority of cases) the Commission has been in position to obtain both judicial review of its determinations by the circuit court of appeals, and court orders against the noncomplying respondents. If amended as proposed in this bill, for all practical purposes as concerns the small businessmen cited as respondents, the Commission would be set up as a court with power both of determination and review. The history of the experience of the Commission does not warrant any such extension of power on the basis either of competitor interest or public interest. It must be borne in mind that the act pertains to all of business and industry, that respondents cited through a wide range of trades and industries are usually businesses of relatively small size. To require the small businessman to undergo expensive litigation on appeal within 60 days of issuance of cease-and-desist order by the Commission is not only to shift an excessive burden to him, but in effect deprives him of his day in court and forces recognition of the Commission as the court of last resort. Such an amendment would constitute an encroachment by bureaucracy upon individual rights and serves no needful purpose so far as has been shown. There is increasing need in the public interest for less encroachment by Government and bureaucracy upon individual perrogatives. Small enterprise must be encouraged, unnecessary uncertainty and harrassment must be provided against, if we are to continue to increase employment throughout the country. disapproval of H. R. 3143 is urgently requested. Very truly yours, Your JOHN W. O'LEARY, President. NATIONAL ASSOCIATION OF RETAIL GROCERS, Mr. ELTON J. LAYTON, Clerk, Interstate Commerce Committee, House of Representatives, Washington, D. C. DEAR SIR: Enclosed please find statement that I respectfully desire to have filed in the records of the hearing on bill H. R. 3143. Appreciating you giving this your attention, I remain Very truly yours, JOHN M. POHLHAUS, National Director. NATIONAL ASSOCIATION OF RETAIL GROCERS, COMMITTEE ON INTERSTATE COMMERCE. HONORABLE SIRS: The National Association of Retail Grocers hereby wish to go on record as being in favor of bill H. R. 3143, a bill to amend the act creating the Federal Trade Commission, to define its powers and duties, because we believe Congress passed the Clayton Act to prevent deceptive and unfair practices. We fully realize the impossibilities of cataloging or defining all unfair and deceptive practices, and that large businesses and corporations have finances and brains to create new deceptive and unfair ways to conduct business. Congress established the Federal Trade Commission to act as arbitrator with the power to issue cease and desist orders in cases of deceptive and unfair methods of doing business that had an effect on the general public. It gave to all concerned, who could not agree with the Federal Trade Commission's order, a full opportunity of their day in court by appealing to the circuit courts against said decision. We, the retail grocers of the United States, have the greatest respect for and confidence in the Federal Trade Commission. Here is the one place that the small businessman can go to seek relief without a loss of time and money, which in most instances we do not have. One can only judge the future actions of men by their past actions; and surely, the record of the Federal Trade Commission is such that no honest businessman need fear their acting as arbitrators of unfair and deceptive practices. Therefore, on the above-mentioned facts and the basis of reasoning, we, the National Association of Retail Grocers, sincerely endorse H. R. 3143 as good and sound legislation. Respectfully submitted. JOHN M. POHLHAUS, National Director. (Thereupon, at 12:25 p. m., the committee proceeded to the consideration of other business, after which it adjourned.) X |