Subcommittee on May 23, 1955, by William B. Snow, Esq., counsel for the National Congress of Petroleum Retailers. In your letter you inquire about the status of the Antitrust Division's program to institute proceedings against segments of the petroleum industry as outlined in the Department of Justice press release dated June 6, 1951, relating to the voluntary dismissal of the API case. You also ask for a statement of my views concerning price leadership in the petroleum industry.

United States v. American Petroleum Institute et al. was a civil action filed in September 1940, involving 367 defendants and charging an overall conspiracy to monopolize the entire petroleum industry from the production and sale of crude oil to the retail sale of finished products. The case was held in abeyance during World War II. When it was reactivated after the war, the practical difficulties involved in the preparation and a trial of a case of this scope and magnitude were made dramatically apparent. In 1946, 216 of the defendants filed motion raising numerous pretrial issues requiring extensive court argument and months of effort. Apparently, about this time it was determined that the Government could obtain relief more quickly, more certainly, and more economically through segment cases involving narrower and more sharply defined issues, and by confining the litigation to only the most significant defendants. As related in the June 6, 1951, press relase, the Department embarked on a program involving further investigations of the petroleum industry, and the institution of segment suits.

The first segment suit brought under this program was United States v. Standard Oil Company of California and Standard Stations, Inc. This action was filed January 2, 1947, and attacked the exclusive dealing contracts and agreements whereby major oil companies controlled and dominated the operators of service stations and deprived competitors of access thereto. As you know, this case was successfully concluded, final judgment being entered on June 30, 1948. The Supreme Court affirmed this judgment on appeal (337 U. S. 293).

The second segment suit was United States v. Richfield Oil Corporation, a civil action essentially similar to United States v. Standard Oil Company of California and Standard Stations, Inc. It was filed on April 30, 1947. Again in this case the Government was successful, final judgment being entered on August 2, 1951, enjoining the defendant from entering into or enforcing contracts requiring dealers to purchase all products from the defendant. This judgment was also affirmed by the Supreme Court (243 U. S. 922).

United States v. Sun Oil Company, a civil suit filed January 12, 1950, was the third segment suit brought under the Department's program of serializing the API case. Like the Richfield and Standard Stations cases, it too involves exclusive dealing arrangements between a major oil company and its retail dealers. However, our proofs in the Sun case do not center upon current written exclusive dealing contracts, but rather upon oral understandings and arrangements, more difficult to establish in court. A very able and experienced staff has been assigned to this case, and it has been vigorously and unremittingly pressed. Trial was commenced on October 13, 1954, and on May 11, 1955, the Government rested its case in chief. A total of 38 court days was required for the presentation of the Government's case, the hearings being recessed from time to time so as to enable the court to meet the demands of its docket. This manner of scheduling the trial was suggested by the Government as a means of getting the case heard seasonably. All extremely crowded condition of the docket in the eastern district of Pennsylvania rendered it practically impossible to have a big case set down for trial on a day-to-day basis. Following the conclusion of the Government's case in chief, the defendant advised the court of its decision not to file a motion to dismiss prior to the presentation of its case. The defense is to commence in the fall, presumably about the middle of October.

The Sun case is important from the antitrust enforcement standpoint. It will go far toward deciding whether, as a practical matter, the exclusive dealing interdictions which underlie the Standard Stations and Richfield cases can be circumvented so that an oil company can adopt a business policy of requiring its retail outlets to deal exclusively with or through it and of compelling its distributors to adhere to that policy.

The fourth segment case instituted by the Department was United States v. Standard Oil Company of California, a civil action filed May 12, 1950, charging 7 major oil companies and 1 association with monopolizing the oil industry in the Pacific States area. According to the complaint, the defendants have obtained monopoly control of crude oil and refined petroleum products in the States of California, Oregon, Washington, Nevada, and Arizona. The de

fendants are alleged to have used their power to fix production quotas, to compel adherence to quotas by refusing the use of pipelines on other than discrimitory bases, to acquire stock and assets of independent refineries, and to fix prices at the wholesale, retail, and production levels. The relief, sought by the complaint includes (1) abolition of the private production proration system; (2) the assumption of a true common carrier status with respect to pipelines; (3) the disposal by the defendants of company-owned retail and bulk stations; and (4) the freeing of retail outlets leased by the defendant companies from the obligation of selling exclusively the products of the lessor. Perhaps the most stringent item of relief sought by the Government is the divorcement requested by prayer 20 of the complaint:

That each defendant major and its subsidiaries be required to sell all of its facilities for the marketing of gasoline and other refined petroleum products, at both wholesale and retail, in the Pacific States area, wherever located, except those wholesale facilities located at the refineries and at marine terminals, so that there will be a complete and perpetual separation of the business of producing and refining crude oil and the transporting of crude oil and refined petroleum products from the business of marketing gasoline and other refined petroleum products except as to that type of wholesale business presently carried on at refineries and at marine terminals; that the business of owning, controlling, and marketing the production and refining of crude oil and the transportation of crude oil and refined petroleum products be completely and perpetually separated from the business of owning, controlling, and managing the marketing of gasoline and other refined petroleum products, except as to that type of wholesaling carried on at refineries and at marine terminals.

This case is one of the biggest and most complicated on the Antitrust Division's docket. In the 5 years which have elapsed since it was filed, a very good deal of effort by Division attorneys has been devoted to preparing it for trial. Shortly after I was appointed Assistant Attorney General in charge of the Antitrust Division, I took steps to assure that this case would receive the expert and priority attention to which its importance entitles it, assigning one of the Division's best qualified attorneys to head the trial staff and detailing thoroughly competent attorneys to assist him. The completion of trial preparations represented a challenge which even our best legal talent has not yet been able to accomplish. Although this case is still in its discovery phase, I am hopeful that it can and will be brought on for trial within the next year.

The program outlined in the June 6, 1951, press release also embraced investigation of additional antitrust matters involving the petroleum industry and included alleged illegal price-fixing arrangements at both the crude oil and finished product levels, the misuse of legitimate conservation programs, the denial to independent distributors of access to supplies of petroleum products at prices which would permit their competition with distributors controlled by or exclusively handling the products of major oil companies, the control by relatively few companies of supplies of crude oil, the unavailability to smaller members of the petroleum industry of common carrier pipelines and of substantial numbers of retail outlets and the operation of patent pools relating to refining processes. Within the limits of manpower available to the Antitrust Division, and with due regard for the Division's antitrust enforcement responsibility in fields other than petroleum, these investigations have been pursued and kept up to date. To the extent that our information justifies, these investigations will be made the subject of further active litigation when the Antitrust Division has sufficient skilled attorneys available to staff such litigation. As you know, the Division is hard pressed to meet the staff requirements of our present extensive docket of major antitrust prosecutions. Under the circumstances we cannot expect to enlarge that docket if it is to be serviced only by our present staff. It is my hope that budgetary considerations will permit the recruitment of additional antitrust attorneys during the next fiscal year.

I am reluctant to comment further upon the status of our investigations relating to the petroleum industry. To do so might prejudice further investigatory work and hamper the effective prosecution of pending and future cases. Accordingly, I will confine my comments with respect to the Antitrust Division's activities in the petroleum field to a discussion of the status of related cases filed in that field since June 6, 1951, and to the Division's policy generally.

Far and away the most important action by the Antitrust Division affecting the petroleum industry since the dismissal by Attorney General McGranery of the American Petroleum Institute case has been the filing of the Oil Cartel by Attorney General Brownell. This civil suit, United States v. Standard Oil Co.

(New Jersey) et al., was filed April 21, 1953, and is pending before the United States District Court for the Southern District of New York. Our complaint alleges that five major domestic oil companies have conspired to divide foreign production and markets in petroleum, to control foreign production, and to fix domestic and world prices. Other charges are that the defendants have conspired to increase domestic market prices of petroleum imported into the United States, to curtail domestic production in amounts related to imports to maintain world prices, to exclude other American companies from foreign production and from importing foreign oil, to monopolize patents for petroleum products, and to control a major part of the world's tanker fleet.

Continuously since this suit was filed proceedings have been under way to secure for the Government documentary evidence in the possession of the defendants for use in connection with our trial preparations. To date approximately 60,000 documents have been obtained. An accelerated program of documentary discovery has recently been decided upon, with a view to completing trial preparations in this case during the next year. An exceptionally wellqualified staff has been assigned to complete trial preparations, and this staff has been instructed to press this suit vigorously.

Other items of petroleum litigation on our active docket include United States v. Lawrence Fuel Oil Institute, Inc. et al., United States v. Lowell Fuel Oil Dealer Associates et al. and United States v. Haverhill Fuel Oil Dealers Assn. et al. Each of these is an indictment charging a local trade association and its membership with price fixing and boycotting, returned on May 22, 1953. It is expected that these three cases will be concluded during the next fiscal year.

The remaining items of petroleum litigation on our current docket are com panion civil and criminal cases against Garden State Retail Gasoline Dealers Association, Inc. et al., commenced in the United States district court at Newark, N. J., on May 25, of this year. These prosecutions charge a price fixing and boycotting conspiracy among retail gasoline dealers in New Jersey, and should be concluded during the next fiscal year.

From the foregoing, the Antitrust Division's policy with respect to antitrust enforcement in the petroleum industry should be apparent. We intend to prosecute antitrust violations in that industry to the fullest extent consonant with our available manpower and the need for a balanced antitrust program. We cannot, of course, concentrate our relatively limited resources upon the enforcement problems presented by a single industry, and ignore serious enforcement problems presented by other important industries. On the other hand, we can and will be unrelenting in our efforts to achieve the most effective enforcement of antitrust law.

In answer to your request for my views about price leadership in the petroleum industry, permit me to be very brief. To the extent that "price leadership" is in fact "price fixing," and thus violates the Sherman Act, it should be the subject of criminal prosecution.

Thank you for writing me as you did, and calling my attention to Mr. Snow's testimony. The Antitrust Division is always interested to receive the benefit of testimony given before the Antitrust Subcommittee.

Sincerely yours,

STANLEY N. BARNES, Assistant Attorney General.

Mr. RODINO. I will also include in the record at this point a letter, together with attachment, from J. Gordon Roberts, president of the Roberts Dairy Co., dated June 14, 1955; the attachment is addressed to Mr. Herbert Brownell, Department of Justice. I shall not read the letter, but insert it in the record.

I am also accepting for the record, to be supplied at a later date, a statement by the National Small Business Men's Association. (The documents referred to follow :)

ROBERTS DAIRY CO., Omaha, Nebr., June 14, 1955. DEAR CONGRESSMAN: I have encountered a rash of attempts on the part of large companies to buy our independent business through the appeal described in the enclosed copy of a letter to Herbert Brownell,

Unless it is the intention of Congress to destroy family business entirely, you should not only know what is going on, but also take some action to protect the very foundation of our national welfare.

Sincerely yours,

J. GORDON ROBERTS, President.

MAY 31, 1955.

Mr. HERBERT BROWNELL,

Department of Justice,

Washington, D. C.

DEAR MR. BROWNEL: Dairy chains are now making a drive to buy independents on the grounds that independents get a raw deal on estate taxes because

1. Stock ownership usually represents "majority" interest on the part of those developing the business.

2. Unless stock is on the stock exchange it may be valued at almost any figure by the Department of Internal Revenue.

Because of estate tax laws--and especially because of interpretations of these laws unfavorable to family business-such business is simply being driven out of existence.

How are fellows like you going to work their way through college if you have to get clearance through the "main office" in New York? Remember the Roberts Dairy?

With kindest regards,

Mr. HERBERT MALETZ,

J. GORDON ROBERTS, President.

Washington, D. C., June 30, 1955.

NATIONAL SMALL BUSINESS MEN'S ASSOCIATION, INC.,

Chief Cousel, Subcommittee No. 5,

House Committee on the Judiciary,

House Office Building, Washington, D. C.

DEAR MR. MALETZ: Enclosed please find a statement of our association of the House Committee on the Judiciary, Subcommittee on Antitrust.

I wonder if it would be possible for you to include this statement for the record.

I regret that this is being sent at this late date, but our general counsel, Judge J. Raymond Tiffany, has been away, therefore, this office was unable to forward a statement prior to this time.

Your consideration in this matter is very much appreciated.
Sincerely yours,

BLYTH EMMONS,

Director, Washington Office.

STATEMENT OF BLYTH EMMONS, NATIONAL SMALL BUSINESS MEN'S ASSOCIATION

My name is Blyth Emmons. I live in Washington, D. C., and am the director of the Washington office of the National Small Business Men's Association, Inc., with offices at 925 15th Street NW., Washington, D. C. The association's national headquarters is located at 2834 Central Street, Evanston, Ill.

The National Small Business Men's Association, of which DeWitt Emery is the president, was formed in 1937 to give small-businessmen a voice in national affairs, and to help preserve free competitive enterprise in the United States. We have members in all 48 States, representing approximately 170 categories of business.

We would like to commend the members of this subcommittee for their efforts in the present study of the antitrust laws. Our association feels that not only at this time but during the progress of business in this country the antitrust laws, i. e., the Sherman, Clayton, and Robinson-Patman Acts should be continually examined, and where found necessary amended.

The members of this association are not, and cannot be, students of antitrust laws. They do have interest in said laws as they apply to them individually, but as for being thoroughly informed on the many applications of these laws it would be a time-consuming and perhaps wasted effort for the independent businessman, who would be considered small business, to be formally briefed on the many intricacies of antitrust laws.

Our interest in presenting this statement to your subcommittee is to point up the problems of some of our members over and above the normal method of

competitive trade, which we have strongly endorsed since the founding of this association in 1937 in an effort to preserve competition and to protect the smallbusiness man inasmuch as every small-business man looks forward to the day when he will be an influential businessman and obtain size and influence. He is not concerned with the size of a business but rather the way this size is used and the use to which the power which is attendant upon size is exercised.

We do not urge the increase in number of laws against business but rather the enforcement of those laws already in existence; through a better enforcement of existing laws.

The small-business man knows from the experience of everyday competition that he must be alert and aware that he has to use every device of sales and promotion to sell his product to remain in business, and this in general he does not object to. He is not by nature lazy, nor does he by nature want his livelihood or the growth of his business to be handed to him in an easy manner. He is willing to plan and fight for it. His problem today is the joining of large corporations who tell him what products he can and cannot sell and at what price. The association is opposed to the fair-trade laws and believes the Attor ney General's national committee's recommendations are in the public interest and that the marketing practices authorized under the Fair Trade Act such as the Miller-Tydings and McGuire Acts work against open competition in the market place and are detrimental to fair competition. As an example, we have a member who is a gasoline station operator. He has, in the past, been franchised to operate stations of several large corporations, at different times, and in doing so he has had for sale their other products such as oil and tires in addition to their gasoline. As time went on he felt it would be advantageous to his business if he added the accessory products of other corporations. These products would perhaps given him additional profit. In the cases where he did add these additional accessory products he was told by the corporation, whose franchise he held, that if he continued this pactice he would lose his franchise; and he did lose said franchise. This is an improper use of the power that comes with bigness in business and our laws against tie-in sales should be strengthened and enforced.

It is not only this one member that we have in mind, but other of our members, no doubt have been on the verge of losing or dissolving their businesses, under the same circumstances through which this member above cited, was forced to yield his franchise.

We would also urge upon this committee the necessity of making trade unions who are big business, as demonstrated in the Ford and General Motors wage negotiations for annual wage guaranties amenable to the antitrust laws to the same extent that any other business is amenable to such laws.

Mr. RODINO. Our first witness this morning will be Mr. Stanley Gewirtz. Will you come to the witness stand, Mr. Gewirtz.

Please give your name and official title to the stenographer. STATEMENT OF STANLEY GEWIRTZ, EXECUTIVE ASSISTANT TO THE PRESIDENT, AIR TRANSPORT ASSOCIATION OF AMERICA Mr. GEWIRTZ. My name is Stanley Gewirtz, and I am executive assistant to the president of the Air Transport Association.

I have submitted a fairly comprehensive statement to the reporter for the record and I would like to talk from that statement, and essentially to cover the highlights of it, trying to be as brief as I can, Mr. Chairman.

Mr. RODINO. All right, you may proceed.

Mr. GEWIRTZ. Of course, we thank the committee for the opportunity to appear.

The Air Transport Association is the trade association for most of the certificated airlines of the United States. That covers the small airlines as well as the larger ones-the helicopter airlines, the domestic trunk airlines, the local service carriers, the international carriers, and some of the territorial carriers.