I would advise that a similar letter is going forward to Mr. Edward Jarrett, clerk, Senate Committee on Interstate and Foreign Commerce, in response to a request for views on S. 236. I appreciate the opportunity to comment on this important subject. Sincerely yours, JOHN R. STEELMAN. UNITED STATES MARITIME COMMISSION, Hon. EDWIN C. JOHNSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate. My DEAR SENATOR JOHNSON: This is in reply to your letter of January 7, 1949, requesting comments of the Commission on S. 236, a bill to clarify and formulate a consistent and coordinated national policy with respect to transportation costs 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 distant markets. Upon preliminary examination it appears that the bill S. 236 does not relate directly to the jurisdiction of the Maritime Commission. No comments, therefore, will be submitted thereon unless further detailed examination should indicate the desirability of or need for comment on the part of the Commission. Sincerely yours, Hon. EDWIN C. JOHNSON, W. W. SMITH, Chairman. DEPARTMENT OF COMMERCE, Washington, D. C., Febraury 24, 1949. Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. DEAR SENATOR JOHNSON: In order to complete the record on your letters of January 7, 1949, to the Administrator of Civil Aeronautics and myself requesting the views of this Department concerning S. 236, a bill to clarify and formulate ■ consistent and coordinated national policy with respect to transportation Posts 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 distant markets, I enclose pies of the statement which I made before your committee on January 24, 1949, giving the views of this Department on that bill. Sincerely yours, Hot EDWIN C. JOHNSON, CHARLES SAWYER, Secretary of Commerce. DEPARTMENT OF JUSTICE, Washington, D. C., February 25, 1949. Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. MY DEAR SENATOR: This is in response to your request for the views of the Ipartment of Justice concerning the bill (S. 236) to clarify and formulate a constent and coordinated national policy with respect to transportation costs in interstate commerce; to strengthen the antitrust laws of the United States and provide for their more effective enforcement; and to promote competition by permitting sellers to have access to distant markets. Section 1 of the bill would declare it to be the policy of the Federal Governeat to develop a consistent and coordinated program of promoting competition, as affected by transportation costs, in interstate commerce, to clarify the practice by the Federal Trade Commission which will permit all competing sellers to have access to distant markets by directing the treatment of transportation costs in terstate commerce to promote competition, and to insure to all consumers the advantages of active competition in distribution of all products. Section 2 (a) of the bill would amend section 5 (a) of the Federal Trad Commission Act by providing that certain types of pricing practices, which ar not the result of an agreement or conspiracy or not otherwise unlawful becaus of fraud, deception or coercion, shall not be deemed illegal merely because the involve (1) the charging of uniform delivered prices to all points of delivery (2) the charging of uniform delivered prices within any geographical zone; o (3) the absorption or averaging of freight charges which may result in simila or identical prices to those charged by others. It is feared that this proposed amendment would provide a formula which may be far too rigid and which may legalize pricing systems which all woul agree were unfair. It would make all pricing systems legal unless proved to be the result of a combination or conspiracy or unless shown to be based upon fraud, deception or coercion. It would be unfortunate if the effect of this pro vision would preclude the Commission from inferring agreement in any case from the fact of concurrent use of a pricing system. Cases have arisen in which al sellers had used for years a system of pricing so unnatural in some of its aspect: that it seemed self-evident that the system could not have originated and could not have been maintained in the absence of agreement. In these situations, it is thought that the Federal Trade Commission should and would be justified in inferring agreement. It has always been recognized that proof of a business conspiracy is often difficult to establish. The Commission should not be prevented from proceeding against unnatural pricing systems merely because the conspirators have been able to bury the evidence of their wrongdoing. Section 2 (b) would amend section 5 (a) of the Federal Trade Commission Act by providing that whenever two or more sellers are found to have agreed or conspired to employ any pricing system involving any form of delivered pricing, absorption, allowance, or averaging of transportation costs, the Commission may require each seller (1) to establish an f. o. b. price; and (2) to offer each buyer an option of an f. o. b. or delivered price which may not be more than the f. o. b. price plus the actual cost of transportation. Section 3 of the bill would amend section 2 (b) of the Clayton Act. The section now permits sellers to justify otherwise forbidden price discriminations on the ground that the lower prices to one set of buyers were made in good faith to meet the prices of a competitor. The proposed amendment would justify selling prices lower than the competitive price being met if charged in good faith and if such differential is customary in the general price relationship of the respective products or otherwise justified by the competitive situation of the two or more sellers. Section 4 of the bill would add a new subsection after section 2 (f) of the Clayton Act. It would define (1) the word "price" as meaning the price agreed upon by the buyer and seller; (2) the phrase "to lessen competiton" and the phrase "to injure and prevent competition" both as to the buyers and the sellers; and (3) the term "may be" as meaning reasonable probability. It would seem unwise to attempt to define "price" or the terms "to lessen competition" or "to injure or prevent competition." It is believed that antitrust and related laws should be general rather than specific. This is particularly true of legislative definition with respect to the meaning of terms contained in those laws. The bill is apparently intended to dispel the uncertainty relating to the enforcement of the antitrust laws arising as a result of the decision of the Supreme Court in Federal Trade Commission v. Cement Institute (333 U. S. 683). In that case. so far as the Federal Trade Commission Act is concerned, the Supreme Court affirmed the ruling of the Federal Trade Commission that the cement producers violated that act when they agreed among themselves to use a delivered price multiple basing point system, the effect of which was complete suppression of all price competition in sales of cement. The opinion of the Court, however, contains dicta to the effect that conduct which falls short of being a violation of the Sherman Act may constitute an "unfair method of competition" prohibited by the Federal Trade Commission Act and that the existence of a "combination" is not an indispensible ingredient of an unfair method of competition under that act. It has been asserted that these dicta set forth an interpretation of the Trade Commission Act which would empower the Commission to outlaw freight absorptions or sale at delivered prices by a seller acting independently. The dicta in the Cement Institute case have undoubtedly created some confusion and uncertainty with respect to basing point systems and delivered pricing methods. This uncertainty and confusion may have been increased by the recent decision of the Court of Appeals for the Seventh Circuit in Triangle Conduit and Cabe Co. v. Federal Trade Commission (168 F. 2d 175). In that case the court affirmed a holding of the Commission that the concurrent use of a formula method of making delivered price quotations with the knowledge that others did likewise, and with a resulting absence of price competition among the sellers was an unfair method of competition under the Federal Trade Commission Act. The Supreme Court has granted certiorari in the latter case. While the Department of Justice is in accord with some of the objectives of the bill, it is felt that it would be undesirable to legislate on this subject until the Supreme Court has handed down its decision in the Triangle Conduit case. It is believed that the issues will then be more sharply defined and that the Congress will be able to more clearly determine the areas and need for legislation. Accordingly, the Department of Justice is unable to recommend the enactment of the bill. The limitation on the time available has not permitted the Department to ascertain whether this report is in accord with the program of the President. Yours sincerely, PEYTON FORD, RECONSTRUCTION FINANCE CORPORATION, Washington, February 25, 1949. Hon. EDWIN C. JOHNSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. DEAR SENATOR JOHNSON: This is in response to Mr. Jarrett's letter of January 7, 1949, and to your letters of February 18 and 19, 1949, requesting our comTents concerning the following proposed legislation: S. 236, the amendment to 8236 introduced by you and Senator Capehart, and S. 1008. 8.236, the proposed amendment thereto, and S. 1008 raise questions of national policy with respect to the interpretation and enforcement of certain provisions of the Federal Trade Commission Act and the Clayton Act. The Reconstruction Finance Corporation exercises no functions under those acts and we do not feel qualified to express an opinion regarding the merits of the proposed legislaon. However, since all three of these measures deal with the subject of pricing systems which result in uniform delivered prices, your committee may be interested in the practice followed by the Reconstruction Finance Corporation with espect to freight charges involved in the sale and delivery of synthetic rubber produced in the Government's synthetic rubber program. The Rubber Act of 1948 (Public Law 469, 80th Cong., approved Mar. 31, 1948) provides for the continued ownership and operation of synthetic rubber facilities by the Government pending the adoption by Congress of a plan for the disposal thereof to private industry upon a basis that will assure the continuance of an equate rubber-producing industry in the United States in the interest of the ational security and common defense. The act further provides for the mandause by industry of a certain quantity of synthetic rubber in the manufacture of certain rubber products, in order to insure a minimum market and as the survival of the synthetic rubber industry. The RFC is, for all practical purposes, the sole producer and seller of synthetic abber. It is sold by RFC at a uniform price, depending up the type of rubber volved. Necessarily involved in the establishment of a uniform Nation-wide Pice is the problem of transportation and related charges, which must be either ad individually or recovered by Government as a part of the total sales price, since the Government program is conducted on a self-sustaining basis. If sold b. the producing plant or warehouse, the purchaser nearest such plant or Warehouse would obviously enjoy an unfair competitive advantage over more stant purchasers, since he could obtain the rubber at a lower over-all purchase e due to the shorter haul and consequent lower transportation charges. In der, therefore, to treat with all purchasers on a uniform basis, we must sell he Government produced synthetic rubber on a uniform delivered price basis at be consumer's plant regardless of his location or the location of the plant or warehouse from which the rubber is made available. From the foregoing it is apparent that RFC, practically the sole producer and seller of synthetic rubber, employs the practice of charging uniform delivered prices for goods of like grade and quality to all purchasers without regard to the place of delivery. In view of the urgency of this request, we have not cleared this report with the Bureau of the Budget, to which copies are being sent. Sincerely yours, HARLEY HISE, Chairman. CIVIL AERONAUTICS BOARD, Washington, February 25, 1949. Hon. EDWIN C. JOHNSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. MY DEAR SENATOR JOHNSON: The Civil Aeronautics Board has been requested to comment on S. 236, a bill to clarify and formulate a consistent and coordi nated national policy with respect to transportation costs in interstate com merce; 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 distant markets. * * ** Section 11 of the Clayton Act (15 U. S. C. 21) provides: "That authority to enforce compliance with sections 2, 3, 7, and 8 of this act by the persons respectively subject thereto is hereby vested in the Civil Aeronautics Authority where applicable to air carriers and foreign air carriers subject to the Civil Aeronautics Act of 1938 * * The only way in which the proposed bill would appear to affect the Board is in reference to the proposed amendments to section 2 of the Clayton Act. To date, the Civil Aeronautics Board has had no occasion to invoke the provisions of the Clayton Act in any of the cases brought before it; and, consequently, we are not in a position to tell what the precise effect of the proposed amendments would be. In this situation, it is believed that mention of the Civil Aeronautics Board in section 1 (a) of the bill relating to policy is unnecessary. The Congress has already delineated the governing policies applicable to the Civil Aeronautics Board in section 2 of the Civil Aeronautics Act, and it is believed that the provisions of section 1 (a) of the bill as applied to the Civil Aeronautics Board might result in confusion and should be omitted. Other than the above, the Board has no comment to offer on S. 236. This letter has not been cleared with the Bureau of the Budget for advice as to its relation to the program of the President. Sincerely yours, JOSEPH J. O'CONNELL, Jr., Chairman. Hon. EDWIN C. JOHNSON, TREASURY DEPARTMENT, Washington, February 25, 1949. Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. MY DEAR MR. CHAIRMAN: Further reference is made to letters dated January 7 and February 19, 1949, requesting the views of this Department on S. 236, to clarify and formulate a consistent and coordinated national policy with respect to transportation costs 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 distant markets, and an amendment dated February 17, 1949, intended to be proposed thereto. This Department does not desire to offer any comments on the bill or the proposed amendment. Very truly yours, THOMAS J. LYNCH, Hon. EDWIN C. JOHNSON, INTERSTATE COMMERCE COMMISSION, Chairman, Committee on Interstate and Foreign Commerce, MY DEAR CHAIRMAN JOHNSON: Your letter of February 19, 1949, addressed to the chairman of the Commission and requesting comments on an amendment intended to be proposed by you and Senator Capehart to S. 236, to clarify and formulate a consistent and coordinated national policy with respect to transportation costs 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 distant markets, has been referred to our legislative committee. After careful consideration by that committee, I am authorized to submit the following comments in its behalf: The views of our committee with respect to S. 236 as originally introduced were expressed to your committee by Chairman Mahaffie in an oral statement at the hearing January 24, 1949. He stated at that time that the subject of the bill in general is not directly related to the jurisdiction of the Interstate Commerce Commission, and that accordingly we do not consider ourselves qualified to comment helpfully on the merits of the bill as a whole. Chairman Mahaffie voiced some concern, however, lest the statement of policy in section 1 of the bill be so nterpreted as to affect the Commission's administration of the Interstate Commerce Act. We are gratified to observe that under the amendment now proposed the statement of policy would be modified along the line suggested by Chairman Mahaffie. It is perhaps remotely possible that in the future the view might be advanced that the clauses (a) and (b) of section 1 under the amendment had a bearing on the regulation of transportation rates of carriers, but we believe that the ger is negligible. We therefore express our thanks for your favorable consideration of our previous suggestions. Respectfully submitted. WALTER M. W. SPLAWN, Chairman, Legislative Committee. JOHN L. ROGERS. Hon EDWIN C. JOHNSON, DEPARTMENT OF AGRICULTURE, February 28, 1949. Chairman, Committee on Interstate and Foreign Commerce, United States Senate. DEAR SENATOR JOHNSON: This is in further reply to Mr. Jarrett's request of January 7, 1949, for a report on S. 236, a bill to clarify and formulate a consistent d coordinated national policy with respect to transportation costs in interstate merce; to strengthen the antitrust laws of the United States and to provide of their more effective enforcement, and to promote competition by permitting wilers to have access to distant markets. understand that Secretary Sawyer and spokesmen for the Antitrust Division of the Department of Justice, the Federal Trade Commission, and the Interstate terce Commission have expressed their views regarding this bill at hearings Lat started on January 24. I concur in the objections and reservations expressed by these agencies and cannot endorse the bill as it is presently worded. The Bureau of the Budget advises that, while there would be no objection to be submission of our report, this involves no commitment as to the relationship the proposed legislation to the program of the President. Sincerely, CHARLES F. BRANNAN, Secretary. |