Hearings

Washington, D. C. The subcommittee met, pursuant to call, at 10 a. m., in the caucus room, Senate Office Building, Hon. Edwin C. Johnson (chairman) presiding.

Present: Senators Johnson, McMahon, and Capehart.

Also present: Senator Clyde M. Reed; William Simon, general nel, Subcommittee on Trade Policies; Frank W. Schattschneider, associate counsel; Edward Jarrett, clerk; William P. Bolles, clerk of the subcommittee.

The CHAIRMAN. Ten o'clock having arrived, the subcommittee hearing will please come to order.

During the past several months, under the direction of Senator Capehart, the subcommittee of the Interstate and Foreign Commerce Committee appointed for that purpose has been holding extensive hearings on the general subject of the basing point pricing system. I want to compliment and offer words of commendation to Senator Capehart for the vigorous way in which he has proceeded in this very difficult

matter.

The hearings which he has held have explored the subject very arefully. He has invited and urged persons of all views on this subject to appear and testify and has made every effort to get a full and complete statement of the effects of the Supreme Court decision in the so-called cement case and steel conduit case that have been indivative of a very serious situation in the United States.

It seems to me, now that I have been given a responsibility of carrying on the work so ably started by Senator Capehart, that we ought to get down to brass tacks. We ought to find out, first, whether any legislation is needed, and, second, if legislation is needed, what should the legislation provide.

In order to have a starting point I have introduced a bill on the subject. The only part of that bill of which I claim the authorship is the preamble. The preamble reads as follows:

To clarify and formulate a consistent and coordinated national policy with respect to transportation cost in interstate commerce; to strengthen the antitrust laws of the United States and to provide for their more effective enforcement; and to promote competition by permitting sellers to have access to dis

tant markets.

Not being an attorney myself, and having to depend upon the members of that profession to provide the language, I submitted that

preamble to the lawyers of the legislative counsel's office and to experts employed by the subcommittee which has this matter un consideration, and asked them to provide the language which wo implement that preamble. Whether it does or not, I cannot say. The purpose of this hearing today is to ascertain to what extent does implement that preamble, and to what extent it falls down, it does fall down; whether or not it is the complete answer to problem.

(S. 236 is as follows:)

[S. 236, 81st Cong., 1st sess.]

A BILL To clarify and formulate a consistent and coordinated national policy with resp to transportation costs in interstate commerce; to strengthen the antitrust laws of United States and to provide for their more effecive enforcement; and to promote com tition by permitting sellers to have access to distant markets.

Be it enacted by the Senate and House of Representatives of the United Sta of America in Congress assembled,

POLICY AS TO TRANSPORTATION COSTS IN INTERSTATE COMMERCE TO PROMOTE COMPETITION

SECTION 1. In order to permit the treatment of transportation costs in in terstate commerce to contribute to the promotion of competition in America industry among all sellers for the business of all buyers; to safeguard and s cure to American workers continued employment in the areas in which they no make their homes; to promote the full development of our national resources particularly in presently sparsely settled areas, and effectively to utilize th vast transportation systems of the United States, it is the policy of the Federa

Government

(a) to develop a consistent and coordinated program of promoting con petition, as affected by transportation costs, in interstate commerce, by th Federal Trade Commission, the Civil Aeronautics Board, the Post Offic Department, and the Interstate Commerce Commission;

(b) to foster competitive private enterprise by the treatment of tran portation costs in interstate commerce so that access to distant market may be available, when economically feasible, to any competing seller;

(c) to encourage the Interstate Commerce Commission to continue an extend the policy of promoting regional and sectional competition by th establishment of appropriate transportation rates where required and i the best interests of the national economy;

(d) to clarify the practice by the Federal Trade Commission which wil permit all competing sellers to have access to distant markets by directing the treatment of transportation costs in interstate commerce to promote competition;

(e) to prohibit the requiring of the sale of products at f. o. b. factory or mill prices, where buyer and seller do not choose to transact business or such terms; and

(f) to insure to all consumers the advantages of active competition in distribution of all products.

FEDERAL TRADE COMMISSION ACT AMENDMENTS

SEC. 2. (a) Section 5 (a) of the Act entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes", approved September 26, 1914 (38 Stat. 719, as amended; 15 U. S. C. 45), is hereby amended by inserting immediately after the first sentence thereof the following:

"Any pricing practice employed pursuant to an agreement or conspiracy among two or more sellers shall be an unfair method of competition, but no pricing practice employed by any seller in the absence of any agreement or conspiracy with any other seller shall be deemed an unfair method of competition or an unfair act or practice in commerce within the meaning of this section because it involves (1) the charging of uniform delivered prices for goods of like grade and quality to all purchasers without regard to the place of delivery, or (2) the charging of uniform delivered prices for goods of like grade and quality to all purchasers for delivery within any geographical zone, or (3) the absorption (in whole or in part), allowance (in

whole or in part), or averaging (in whole or in part) by such seller of transportation charges for the delivery of any goods, or results in delivered prices similar or identical to those charged by any other seller for goods of like grade and quality: Provided, That nothing contained in this sentence shall render lawful any act or practice in commerce otherwise unlawful because of fraud, deception, or coercion."

b) Section 5 (b) of the Act entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes", approved September 26, 1914 (38 Stat. 719, as amended; 15 U. S. C. 45), is hereby amended by inserting at the end thereof the following:

"Whenever the Commission shall find, pursuant to this section, that any two or more sellers are conspiring or agreeing, or that within three years prior to the date of issuance of its complaint, such sellers have conspired or agreed to employ any pricing system involving any form of delivered pricing, or absorp tion, allowance, or averaging of transportation costs, the Commission may issue an order requiring each such seller, for such period of time as may reasonably be necessary to dissipate the effects of such agreement or conspiracy

(1) to establish from time to time for each commodity of the grade and quality involved in the conspiracy an f. o. b. price or prices at each factory, mill, or shipping point maintained by such seller, and

(2) to offer each such commodity for sale, at the option of each buyer, at either (A) such f. o. b. price or prices, or (B) a delivered price or delivered prices which shall not in any case exceed (but which may be less than) such f. o. b. price or prices plus the actual cost to the seller of transporting such commodity from the factory, mill, or shipping point to the point of delivery."

CLAYTON ACT AMENDMENTS

Src. 3. Section 2 (b) of the Act entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October 15, 1914 (38 Stat. 730, as amended; 15 U. S. C. 13), is hereby amended to read as follows:

"(b) Upon proof being made, at any hearing on a complaint under this section, or in any judicial proceeding involving an alleged violation of this Act, that there has been discrimination in price or services or facilities furnished, the burden of rebutting the prima facie case thus made by showing justification shall be upon the person charged with such violation. In any such case the person thus charged tay rebut the prima facie case thus made, and may establish that the seller's pries or practices are lawful, by showing that the lower price, or the furnishing of such services or facilities, to any purchaser or purchasers was made in good fath to meet the competitive price of any competitor or the services or facilities ished by such competitor: Provided, That this defense shall not be available Then the seller is acting pursuant to any agreement or conspiracy with any other er. Any such lower price charged in good faith to permit such sellers effectively to compete may be less than the competitive price being met if such differal is customary in the general price relationship of the respective products or therwise justified by the competitive situation of the two or more sellers. Competition may be met in good faith, and in the absence of conspiracy, by the charging by any seller of lower prices to meet competition in any or all markets, regularly, customarily, or systematically, with or without prior announcement. Unless such justification shall be affirmatively shown in any proceeding before the Commission, the Commission is authorized to issue an order terminating the discrimination."

SEC 4. Section 2 of the Act entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes". approved October 15, 1914 (38 Stat. 730, as amended; 15 U. S. C. 13), is hereby further ended by adding immediately after subsection (f) thereof the following new subsection:

"(g) As used in this section

"(1) 'Price' means the price fixed by contract, expressed or implied, between buyer and seller.

"(2) To lessen competition,' or 'to injure or prevent competition,' means: As to buyers, a result which materially threatens the ability of any buyer to compete with any other buyer or buyers in the resale of any commodity or in the sale of any product manufactured from such commodity, and as to sellers, a result which materially threatens the ability of any seller to continue to compete with any other seller or sellers in the sale of the commodity; and "(3) May be' means reasonable probability.”

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