Mr. POTVIN. Yes, sir. I happen to reside in Annapolis. I checked that. And it is my impression they also have a double-barreled monopoly in that city.

Mr. LUSKIN. I mean in the State of Maryland, whatever environs they operate in. Of course, my knowledge of them is directly in Baltimore. I oversimplified, I imagine, by saying Baltimore constantly. But as I understand in Washington there is for example a separate gas utility and separate electric utility. Consequently, they compete with each other, one trying to get a load on gas, and the other on electric. In Baltimore, it is rather obvious that they make more money in getting a load on gas. There is very little attempt to put additional loads on conventional electric.

Mr. DINGELL. You say promotional activities are all in the field

of gas?

Mr. LUSKIN. Primarily. There are some activities in the field of electric, but I would think that they are going through the motions. For example, in some cities where there are separate utilities, you can have a 220 line, an electric drier installed or range installed in your home for as little as $25-where in Maryland it generally would cost you anywhere from $100 to $150. Consequently, there is a tremendous gas load in the Maryland area.

The Baltimore Gas & Electric has an extremely aggressive pricing situation on their appliances which they sell, because they of course are able to buy by tremendous quantities that the average dealer would have no dream of able to do.

Four, there are

Mr. POTVIN. Mr. Luskin, if I might inquire at that point.

Now, what you are saying is that B.G. & E., as they are sometimes. referred to, is in the retail appliance business.

Mr. LUSKIN. Oh, very definitely. Ten stores.

Mr. POTVIN. They have 10 stores, and they are in competition with you?

Mr. LUSKIN. Absolutely.

Mr. POTVIN. Now, on a number of these appliances-as, an exammay I assume you buy certain appliances for resale from General Electric?

ple,

Mr. LUSKIN. Yes.

Mr. PorvIN. From their newspaper advertisements, I gather they do, too. Since you are in competition, then the Robinson-Patman Act would apply. If they are selling for less, the law would require that this be cost justifiable based on quantity discounts and so on. Is that

correct, sir?

Mr. LUSKIN. Yes. But I think there are methods of circumventing this. For example, I am certain that General Electric has what is known in the trade as derivative models, which are models that are more or less exclusive to dealers who buy them or commit for them completely. I know that in relation to General Electric, which you have brought up, there are many models of GE which are not available to Luskins, who is of course a franchised GE dealer and who does a sizable GE business, but they are "out of stock," or there are only a "limited number" made, and we did not step up to buy them at that particular time. Whereas sometimes by the time we hear of an offer by mail of a particular closeout, or derivative model, by the time we can respond, they are all gone.

Mr. POTVIN. Sir, I would like to hand you, if I may, a full-page advertisement from the Annapolis daily paper, February 22, 1968. There are, as you will note, a number of GE items.

Could you, after you return to your premises, check to see which of those you carry, and inform the committee if some of them are models not available to you.

Mr. LUSKIN. First of all, this half page of the front, which devoted to Eureka, is a line which we have been attempting to buy from Eureka for 9 years now. Not only will-not only Eureka won't sell us, but Eureka will not sell anyone in Baltimore, and the reason for not selling anyone in Baltimore is "we get enough business from the gas and electric company." And I just heard this at the Chicago Housewares Show directly from Eureka in February.

Mr. DINGELL. Does Baltimore Gas & Electric have 10 stores in Baltimore, or 10 stores scattered throughout the whole State, the whole of their service area?

Mr. LUSKIN. Five are essentially in the Baltimore area, one in Annapolis, one in Laurel, one in Westminster, one in Bel Air, one in Havre de Gras. They also have a very strong "shop at home" service which no dealer can possibly come up with. They also will send a salesman to your home, which the average dealer simply cannot afford to do.

Mr. DINGELL. In connection with those items, would you please give us, among those which are available to you, the price at which you are able to get them, if you could give that information to us without revealing any trade secrets?

Mr. LUSKIN. Our pricing is public knowledge. It is a printed sheet. We simply abide by it. We have no choice. I will be delighted.

Mr. POTVIN. Mr. Chairman-Mr. Luskin, for your information, I have already, pursuant to the chairman's instructions, done the following:

I have requested from General Electric the prices which they have charged Baltimore Gas & Electric on each invoice during the last 6 months, on each of the GE items in that advertisement. So as you can see, what we are trying to do is to compare the B.G. & E. price with your price. And in those cases where they are not the same, which may well be all of them, the burden, of course, would be on General Electric to explain why that is so.

Mr. LUSKIN. I will be delighted to give you that information. Shall I continue?

Mr. POTVIN. Yes.

Mr. LUSKIN. They enjoy a service image in the Maryland are that is unmatched. No dealer can possibly compete.

There would appear to be a certain amount of question as to how they break down the cost of servicing-whether it is a separate arm of the business that is devoted to appliance sales and service, and hov much of it is actually the servicemen which are employed in othe factors of the Baltimore Gas & Electric Co. business.

Mr. POTVIN. Will B.G. & E. service appliances which were no purchased from them?

Mr. LUSKIN. During the period of the first year they will not do it. You have to fend for yourself either depending upon the supplier's service or your own particular service department.

Mr. PorvIN. Would this not in and of itself constitute some pressure on the consumer to buy from the utility rather than from the independent?

Mr. LUSKIN. No question about it. They have a fantastic edge. Mr. DINGELL. You are saying they will only service those items sold by them?

Mr. LUSKIN. That is right.

Mr. DINGELL. And not any sold by an independent?

Mr. LUSKIN. During the period of warranty purchase, meaning the first year. After the first year, when the warranty has expired, they undoubtedly will service it on a c.o.d. basis, where they charge the consumer for service.

Mr. DINGELL. You may proceed, Mr. Luskin,

Mr. LUSKIN. At one time their profit and loss relating to the service rather to the appliance business, was available to us through the Maryland Public Service Commission report. This report was file No. 402. It no longer exists; it is no longer available. Our answer as to the profit and loss, and file 402, is that this was discontinued, because of an order by the Federal Power Commission which had indicated that they no longer require B.G. & E. to publish such a report.

Mr. DINGELL. Well, the Chair is going to instruct right now that counsel scrutinize that matter, to see whether that order in fact was issued by the Federal Power Commission.

Mr. LUSKIN. I would appreciate that, sir.

Many consumers-we had talked earlier about the consumer feeling if they do not make their payments, that they fear that their gas and electric will be turned off. I think you will find there are many poor-paying customers who would be rejected by the average finance company, who are sterling payment people with the gas

company

for that reason.

The interest rate which they use on selling consumers is less than the average dealer in the Baltimore market. The average dealer operates through a GECC type loan, on installment conditional sales at the rate of 12 percent per annum. Baltimore Gas & Electric Co

Mr. POTVIN. Is that true annual interest?

Mr. LUSKIN. Yes. The Baltimore Gas & Electric Co. is 8 percent. I want to make it clear that we would love to be able to use the same rate, and we would like very much to be able to put our appliances on the gas bill. It would be a fantastic edge for us to compete. It is generally regarded in the trade, as a person who buys merchandise I am constantly told they will not carry any merchandise which will not enable them to gross a minimum of 25 percent. In discussing this further, it turns out that they will discount below their advertised prices an additional 25 percent to their "employees." Their employees of course in many instances will buy the merchandise and sell it to their relatives and whatnot. This 25 percent below these sell prices are guaranteed as far as I am concerned to be far less than the average dealer could every buy the merchandise at. And this would include delivery and service.

Mr. DINGELL. Would you like to submit to the committee some figures on that, please?

Mr. LUSKIN. I will be glad to.

Mr. DINGELL. We would like to have some further suggestions.

On the points you have just discussed-with regard to either the cost to the Baltimore Gas & Electric, or with regard to the fact that their sales are below the costs on items-and you may choose such items as you find appropriate.

Mr. LUSKIN. I will be delighted to. You must understand there are many areas of their purchasing not available to me.

Mr. DINGELL. I understand. We are only asking your best assist

ance.

Mr. LUSKIN. Fine. I will do my very best, sir.

Mr. DINGELL. We are particularly interested in the fact that they can be selling at below the cost at which the dealer can purchase it. Mr. LUSKIN. Fine. I will be glad to get that information.

Mr. POTVIN. Mr. Luskin-does B. G. & E. engage in builder sales? Mr. LUSKIN. Yes. I understand they have a separate department for contract and builder sales.

Mr. POTVIN. Are you familiar at all with their pricing structure in that respect?

Mr. LUSKIN. Well, not really. All I know is at one time, about 3 years ago, we attempted to go on a very aggressive tact to get some of that business, and we were never competitive.

Mr. POTVIN. It is your impression that, generally speaking, their prices to builders would be substantially below their usual consumer prices?

Mr. LUSKIN. I am really not well enough aware to give you an intelligent answer there. It is a field in which I am just not very active. Mr. POTVIN. I am sure they would not go out of their way to supply you with this information.

Mr. LUSKIN. It is virtually impossible for us to get any information about their buying tactics, selling prices, et cetera.

They would appear to have an added advantage by means of the public money, in that certainly a supplier who would sell me a carload of merchandise let's say at $25,000 value might have some hesitation as to whether I am a good enough risk to pay for it, or any other dealer in the market. There is no element of doubt that Baltimore Gas & Electric Co. is in a position to pay the bill.

They appear superficially to be enjoying the largest percentage of advertising in our market. When questioning most of our suppliers about-what do we have to do to get the ability to run a full-page ad like Baltimore Gas & Electric, their answer is that they are a "bellringer" account, and they are good for the marketplace, and they are good identification, and they don't hurt anybody.

Mr. POTVIN. What does a bellringer account mean?

Mr. LUSKIN. A bellringer is a store or a company in a marketplace that is regarded with high esteem by the buying public. Mr. DINGELL. Is it bellringer or bellwether?

Mr. LUSKIN. Bellringer, bellwether, bellcow. There are all kinds of reference to that kind of company.

Mr. POTVIN. Let me ask a question at this point, if I may, Mr.

Chairman.

Mr. Luskin, Baltimore Gas & Electric has a double monopoly, both gas and electric, in a very substantially populated area. As such, they

have total annual revenues-I do not have the arithmetic before me, but I would estimate $300 million. Is that a reasonable estimate?

Mr. LUSKIN. I have their latest annual report here. Here is their latest report, sir. It just came out yesterday.

Mr. POTVIN. That is most timely.

Mr. Chairman, this reveals that they had revenues of $177 million. That is just electric. To that you have to add something over $80 million for gas. Thus you would have $257 million.

My point is, in perusing the particular Annapolis advertisement that I gave you, it seems to me that these people are going out of their way from the height of their almost $300 million gross revenues to compete with really the ma's and the pa's of your industry.

Have they given any explanation or rationale to you for this? Mr. LUSKIN. They won't offer any conversation to us, other than when they have a sales promotion program involved, and the conversations relate only to that program.

Mr. POTVIN. I note, as an example, that in that ad they offer for sale two items-first, a portable phonograph; and secondly a pocket transistor radio, neither of which could consume the energy forms which they market, is that not correct?

Mr. LUSKIN. That is correct. Those are most battery operated, sir. Mr. PorvIN. So they certainly cannot defend this by saying they only sell things that are a function of the energy that they are marketing.

Mr. LUSKIN. I think we all realize they are not doing this for load alone.

Mr. POTVIN. In fact, one finds oneself constrained to ask whether they plan to enter, for example, the greeting card industry, that is also totally unrelated.

Are there any other areas they are in? Do they sell plants, or maintain hothouses? As far as you know, is this the full extent of their excursion into the nonmonopoly sector?

Mr. LUSKIN. I think in every ad they run on television, for example, you will note there is a reference as follows: "Ninety days free TV service," and then an explanation of the service. "Expert service also available after 90 days." The fact that they do servicing certainly does not relate to a load factor. It is another area of the business that small business could derive a living from that I think they deprive many people of.

Mr. POTVIN. Does your firm also engage in servicing of appliances? Mr. LUSKIN. Yes, we do.

Mr. PorvIN. So that really the utility is in competition with you not only on one front, but on two.

Mr. LUSKIN. They are in formidable competition to us on every front that relates to the appliance and TV industry. They are not slouches by any stretch of the imagination. They are tough.

Mr. POTVIN. Has the tempo or the scope of their retailing or service activity increased of late?

Mr. LUSKIN. They have added new locations that stretch beyond the normal scope of their activity. Their pricing I consider aggressive. One of our shoppers visited their Towson Plaza store yesterday and was greeted by their saleswoman, Mrs. Edith D. Hauf. The Gas & Electric Co. offered them the same washer, a Whirlpool, LSA-5600,