I think the discussion of the proviso about goods "of like grade or quality" in the report is sound. So far as the report's treatment of the burden of proving competitive injury is concerned, at pages 160-167, I feel the report goes too far. At least the prima facie proof of competitive injury is surely part of the plaintiff's case, under the statute. And it should remain his burden, in view of the nature of the problem of assessing the significance of price discrimination in the various market situations where it appears. But the practical and flexible approach of the Automatic Canteen case to the problem of burdens of proof, and burdens of coming forward with evidence, does not require so rigid a rule as that implied by the report. Proof that a large chain store was receiving a significant price advantage, not sought to be justified on cost grounds, should surely support a presumption of injury to competition, to say the least, in the light of the Supreme Court's reasoning in the Morton Salt case. Nor is the contrast between injury to competition and injury to a competitor so sharp as the report seeks to make it. The statute speaks only of injuring, destroying, or preventing competition with the grantors or recipients of price discriminations. But a showing of business injury to a competitor as a result of the discrimination is the only way I can imagine of demonstrating that he has been put to a competitive disadvantage as a result of the discrimination. "Thorough economic analysis of market data" by the Federal Trade Commission as a body of economic experts is not an incantation to be recited in all cases, nor a universal requirement under the law. We are not interested in reading long economic theses by the Federal Trade Commission, however expert, when they are unnecessary to the decision of cases. There is a risk in this field that easy and hard cases will alike be drowned in a mass of economic data, to the detriment of the enforceability of the law.

I might mention three other aspects of this lengthy chapter for present purposes.

While I agree in general with the report's treatment of the Standard of Indiana case, that the good-faith meeting of a rival's lower price should be an absolute defense, I may have fallen into error myself on page 183. The report notes that where a seller absorbs freight to reach a distant market, and quotes the price prevailing in that market, he should be regarded as meeting his rivals' prices there, even though he is absorbing freight. I agree with that interpretation of section 2 (b). My comment on page 183 was aimed at the related point, implicitly raised on page 183, and developed at greater length later, on page 203; namely, the attempt in the report to declare mill-net variations irrelevant in determining whether discriminations in price actually occur. On the good-faith defense generally, I think the Supreme Court, and the committee report are sound. The public advantage of having independent sellers of unbranded or privately branded gasoline is the pressure they put on the pattern of price leadership in the marketing of major company brands of gasoline. The Federal Trade Commission's approach in the Detroit Standard Stations case would insulate the market against such pressures, and seek to carve out a protected zone within the market for the independent seller. That would be nice for him, but would deny us, as consumers, the real, if sometimes transient pleasures of a price war. And I may add that in gasoline markets served by strong independents, with adequate access to supplies of gasoline, the atmosphere of price war becomes a permanent condition; or, to put the matter more accurately, the prevailing price in such a regional market is lower than that in markets which do not enjoy the presence of one or more strong independents.

Secondly, there is to my mind an ambiguity in the report's treatment of functional discounts. While most of the report's criticism of the Federal Trade Commission as to this aspect of the Standard Stations case is sound, in my opinion, the recommendation in the report is not clear. The language on pages 208-209 seems to propose an absolute exemption for functional discounts "as legitimate pricing techniques in the distribution process." I can find no justification under the law for such an exemption, nor do I believe such a rule should be read into the law. I strongly favor giving due recognition in pricing practice to those economies which modern large-scale distribution methods permit. I think the law now permits such recognition of genuine economies, through the cost justification of quantity discounts, especially if the cost provisions of the act are given realistic scope.

Finally, I should like to comment briefly on the discussion of delivered pricing in the report (pp. 209-219). While the report very soundly recognizes the role which basing point and other uniform price quotation systems may play in facilitating an illegal concert of policy among sellers, and acknowledges that the adop

tion of such a system is always evidence to be considered by the trier of fact as bearing on the issue of combination or conspiracy, it seeks to discount the Robinson-Patman Act aspects of such practices by relying on two recent Federal Trade Commission cases. Those cases, National Lead and Chain Institute, are put forward for the proposition that the measurement of price discriminations by variations in the seller's mill-net, as in Staley, Conn Products, and Cement Institute, are improper, and that the law must rest on the contradictory dictum of Chief Justice Stone in the Staley case, that uniform delivered prices are not discriminatory. I find it difficult to agree that the brief and summary discussion of the problem in these two Trade Commission opinions was intended to have the effect attributed to it by the report. In any event, the report's exclusive emphasis on invoice delivered prices ignores the importance of price discrimination in the competition among sellers and ignores also the business and economic realities behind competition among spatially separated sellers.

The problem of competition among geographically separated sellers has at least two aspects, which are closely related: How prices are determined in each separate geographical market; and whether, and in what sense, sellers are discriminating in price by selling in more than one such market, at prices which yield them differing returns from each market. In such situations, it may safely be assumed that the markets are sufficiently distant, and transportation costs sufficiently high, that there would be no arbitraging between markets on the part of buyers, except for price differentials greater than the cost of transportation. Under conditions of pure competition, no seller would ship to two such markets if his return were different from each; wheat or cotton farmers may sell through different markets, but only if the prices they expect to receive, net of transport costs, are the same from each market. If this were not so, the product would move toward the higher-priced market until the producers' net receipts for sales in each market were equalized. Therefore, the fact that the seller will accept different returns from two markets marks the presence of a market imperfection, which in each case may or may not be significant from the point of view of analysis and policy.

Where sellers absorb freight to sell in distant market areas at net receipts below those earned on sales nearer home, the seller is willing to engage in the practice because he believes that it will pay him to do so. He calculates that he can secure added sales, at some return above out-of-pocket costs, without reducing his net receipts from his previous volume of sales in other spatially distinct market areas, where his market position is stronger. Such a calculation on the seller's part has two principal elements: his estimate of the limits of demand (either seasonal or absolute), at the prices he believes most advantageous, in the home market areas where he has been selling in the past; and his estimate of the risk that rivals will penetrate his home markets by absorbing freight, either on their own initiative or by way of reprisal for his penetration of their home markets. The risks of such reprisals and the losses for all parties to which they could lead, are among the factors leading to the development of basingpoint and similar systems of price quotation. One of the principal aspects of many such systems is that they serve as a means for limiting or eliminating price competition, by establishing predictable patterns of price leadership and price formation, through which concerted action to restrict price competition can readily take place.

The fact, however, that a seller with a strong position in his home market is willing independently and sporadically to reduce his return on some sales by absorbing freight, in order to be able to sell in a distant market, is not of itself evidence as to the extent of competition among the sellers as a group in the whole series of connected markets. It does, of course, throw light on the seller's position in his home market, where he is not being forced to sell at the lower return he receives for sales elsewhere. Such practices constitute price discrimination. But they are of interest, in themselves, primarily as evidence that the industry's product is not sold in a single market, but in a series of interrelated and overlapping markets, the boundaries of which will be somewhat different for each seller, depending on his location. Insofar as the seller is independently absorbing freight in order to meet and match, or to undercut, rivals' offerings in the distant market, his discrimination in price will be in effect a competitive move, so far as the distant market is concerned.

The report takes account of this contention, on page 216, but dismisses it as a theoretical economic idea, irrelevant to competition among buyers. This is debatable. But what the report does not face is the possible impact of such practices on competition among sellers. That impact may be favorable or unfavor

able, depending on circumstance. But it serves no purpose to deny that the problem exists.

In addition, I should like it to appear that I disapprove of the report's criticism of the Rigid Conduit case, as to which the report fails to make clear that I agreed with Professor Schwartz, on pages 220–221.

I have little to add today to the report's comments on administration and enforcement. In chapter 8 I was among the dissenters as to the use of grand juries to investigate possible violations of the antitrust laws. The historic functions of the grand jury are very broad, and I can see no impropriety, against that background of history and usage in the practice of grand jury investigations of antitrust problems. I disapprove giving prosecuting officers the power of subpena, for the reasons well stated on page 348 of the report, and fail in any event to see how documents alone can give the Government all the information it needs in order either to draft an intelligent complaint or to decide whether to proceed criminally or civilly.

In antitrust cases I generally prefer the civil procedure, through which substantive and permanent changes in market structure or industry practice can be accomplished. But I agree that criminal proceedings have a role in antitrust enforcement, in a variety of circumstances. That being so, the criminal penalties should be made significant, by an increase of fines to at least $50,000 as recommended by the Department of Justice.

I have grave doubts about further extensions of the clearing practices of the Department of Justice, consent-decree procedures have proved their utility in recent years. The railroad release letter practice is to my mind less satisfactory, and comes close to an advisory opinion procedure, which has no place in our legal system. Negotiations before the filing of complaints, as recent experience indicates, are full of pitfalls, and raise more problems than they can be expected to settle.

While most of the report's comments on trial practice are sound, I warn against any tightening up of pleading requirements in antitrust cases, as recommended on page 363. This recommendation is contrary to the whole current of procedural reform in recent years, and would put an unequal burden on antitrust plaintiffs, as compared with other plaintiffs. The Supreme Court long ago recognized that antitrust pleading was necessarily general, and in private litigation it is especially important not to insist that the complaint state facts peculiarly within the knowledge of the defendants.

Several of the report's recommendations, both as to trial practice and otherwise, would weaken the private treble damage action as a means of enforcing the law, and of encouraging self-enforcement. These I oppose, at least for Sherman Act violations. As to the discussion of a statute of limitations, I was with the minority, on pages 384-385, in supporting a uniform statute of limitations, without putting undue burdens on private litigants either with regard to the time of their filing, during the pendency of a Government suit, or with regard to the period for which they can recover damages. Such suits are hazardous enough, as the record makes clear, without further reducing their deterrent value.

II. LEGISLATIVE RECOMMENDATIONS OF THE REPORT

Perhaps the most important single legislative recommendation in the report is that the Congress repeal the Miller-Tydings Act and the McGuire Act, exempting State-authorized resale price maintenance arangements from the antitrust laws. I strongly favor that recommendation, and I believe that the widespread disregard of these laws in many markets, and the growing dissatisfaction of businessmen and consumers with their effect, should provide a favorable climate for their repeal. Canada, Sweden, France, and other countries have recently taken action against resale price maintenance. I hope that this depression-inspired restrictive and protective practice can soon be relegated to history, as an experiment amply proven to be a mistake, both in principle and in experience.

I have commented above on certain of the other legislative recommendations in the report, notably those on increasing the fines in antitrust cases, giving the judges discretion as to doubling or trebling damages in private litigation, and adopting a uniform statute of limitations. The recommendation that the United States be authorized to sue for damages when injured by antitrust violations could become a very important enforcement weapon, and I hope you will give it prompt and favorable consideration. The report recommends that the Government recover only actual damages, rather than the treble damages

available to States, municipalities, and individuals. While there are reasons for so limiting the recoveries of the United States, I feel as a taxpayer that those reasons are outweighed by the contrary considerations of deterrence which generally justify the trebling of damages, and I should favor giving the Government full antitrust status as a "person" authorized to sue for damages.

With regard to the Robinson-Patman Act, I support the legislative recommendations made in the report, with varying degrees of enthusiasm. The criminal provisions of the act have been little used, and fail to serve a useful purpose. The brokerage provisions, as they have been applied, have worked unjustifiable hardship on cooperative buying agencies and other devices for improving the market position of small sellers. And the special provisions of section 2 (c), (d) and (e), dealing with indirect forms of price concession, have not proved to be useful. They are easy to evade, and deal with basically the same problem as the more general prohibitions of section 2 (a), which includes indirect as well as direct forms of price discrimination. If they cannot be reconciled with the general purposes of the law, they should be amended to do so. The quantity limit proviso of section 2 (a) is in a different category. It authorizes quantity discount limitations even where such discounts could be justified by differences in cost, in situations where persons qualified to claim the discounts are so few as to render the quantity discounts "unjustly discriminatory or promotive of monopoly." The effective remedy for this problem, surely, is to attack the existence of the monopoly situation, under section 2 of the Sherman Act, rather than to deny the monopolist or near-monopolist a minor, though presumably cost-justified advantage of his position, The proviso is presently before the courts for the first time. It would do no harm to delay legislative action until the courts have clarified the section. On the other hand, there is no place in the antitrust laws for even a discretionary limitation on efficiency.

Chapter 5 of the report suggests the repeal of section 33 (b) (7) of the Lanham Act, and a corresponding clarification of section 46 (a). I disagree with that recommendation, for reasons stated on p. 260 of the report.

One of the important legislative recommendations of the report appears at p. 342. It is that tariff legislation expressly recognize the purposes of the antitrust laws as one of the justifications for and objectives of both unilateral and negotiated tariff reductions. This proposal supplements the recommendation that the Department of Justice and the Federal Trade Commission, in carrying out their duties, systematically examine the market effects of tariffs and appropriately transmit their findings to the President, the Tariff Commission and the Congress. The tariff has longe been known as "the mother of monopolies." Many market situations have a distinct tariff aspect, and similar results, as the report points out, are achieved by a variety of State, local and national laws imposing market restrictions.

III. RECOMMENDATIONS FOR FURTHER STUDY IN THE REPORT

The report makes certain recommendations for further studies, which will I hope be taken up by your committee.

In the first place, it recommends, on p. 116, a complete review of the problems presented by the interlocking directorate provisions of section 8 of the Clayton Act. The policy behind section 8 is now easily avoided, due to the form in which it is drafted. It may be that interlocking directorates are an important problem affecting the competitive character of the economy. If so, then section 8 is clearly inadequate to the task of restricting such arrangements in fact. A full scale study by a congressional committee, armed with the subpena power, is necessary before section 8 can be rationally reexamined.

Secondly, the report recommends (p. 342) that study be given to the tax aspects of the problem of competition and monopoly. The report urges that the tax elements of the problem be thoroughly reviewed, and I believe the recommendation is an important one. Many students believe that the tax laws encourage mergers, and discourage the voluntary sale of the component units of major enterprises. I am not now prepared to recommend specific legislation in this field. But I believe it is a fruitful area for serious legislative inquiry. Thirdly, the report recommends that consideration be given to tariffs, and to State, local, and national laws whose purpose or effect may be to restrict competition, as, for example, in bidding on Government contracts. The problem of national and interstate trade barriers created by law is a broad one, where encroachments on the free market can and do occur piecemeal and unnoticed.

Finally

Finally, and perhaps most important of all, chapter 6 of the report makes a series of recommendations for congressional review of its policy towards the application of antitrust standards in relation to the regulated industries, especially the transportation industries, the primary jurisdiction doctrine, and the present status of agricultural cooperatives. This chapter raises and outlines very clearly some of the most important unsolved problems of the economy. With regard to the entry of competitors,the merger of licensed competitors, and the status of rate agreements among competitors, the Transportation Act, the Shipping Act, the Civil Aeronautics Act, the Communications Act, and certain other statutes bristle with problems. The report indicates the nature of the conflict these problems presents-a conflict between more competition, on the one hand, and protection for the firms within the industry, on the other. This is a field in which I strongly believe that a full dress congressional study could make an important contribution to national policy. The regulated industries present different problems. Some, like trucking, have greater competitive potentials than others--the railroad industry, for example. The problems raised are complex, but they are important. Should a single agency regulate competing industries? Should the same restrictions on entry apply to new and expanding industries, like trucking, as apply to old, established and rather undynamic industries, like the railroads. Much of our legislation on these matters developed in the depression era, and inevitably reflects some of the restrictionist and protective spirit natural in a period of depression. The entire matter should be reviewed in the light of modern experience, and the prevailing philosophy of the Employment Act of 1946, committing the National Government to stabilize the economy, and to assure its capacity for growth, through the use of fiscal and monetary policy, on the one hand, and its reliance on free competitive enterprise, on the other.

IV. OMISSIONS FROM THE REPORT

I made it clear in my statement of partial dissent, parts of which appear at pages 388, 98 and 383 of the report, that I regret the committee's failure to endorse the possibility of action by means of international agreement to protect the American economy against exploitation by foreign cartels. This is a most important problem, where a lead from our Government now could within a generation produce a major change in the economic situation, and really significant economic benefit to the American people.

I do not wish to burden the committee by repeating here what I said on the subject in the report. May I add to that statement, however, a comment on the position taken by our Government before the Economic and Social Council of the United Nations on the matter? On the 4th of April, the U. N. published the comment of our Government on the proposed international agreement submitted by the Council for the consideration of governments. That statement opposed any kind of broad international agreement of the type offered by the committee. It did not merely oppose the draft agreement submitted. It vetoed any approach to the problem by international action.

Two reasons are advances for this conclusion. They are stated in these terms: "In order to recommend action against cartel practices, the proposed international body would be required not only to find that such practices exist but that they have harmful effects on production or trade in the light of very general criteria. This latter determination would be extremely difficult for a body of governmental representatives to make in the light of the substantial divergences in approach previously referred to, and, in the opinion of the United States Government, would likely result in the condoning of restrictive practices or in no agreement by the international body on the disposition of complaints brought before it. In addition, since action under the proposed agreement would be primarily a matter of enforcement procedures under national laws, the present stage of development of national legislation offers little hope that recommendations of the international body could be effectively carried out. While encouraged by the progress which has been made in recent years in this field, the United States does not feel that the point has been reached at which a broad international arrangement of the type proposed by the committee could be successfully implemented."

Both reasons are unsound. The standard established by the proposed agreement, which is that of the Havana Charter, and of many foreign laws on the subject, while admittedly less strict than that of the Sherman Act, represents the only possible compromise of American and European views on the monopoly problem. This standard is now being successfully applied by legal bodies in other