Mr. WHITE. Yes, sir; that is correct, sir

Mr. CURTIN. You don't think this bill would help that independent dealer?

Mr. WHITE. No, sir; I don't.

Mr. CURTIN. That is all, Mr. Chairman.

Mr. DINGELL. Mr. Long.

Mr. LONG. No questions.

Mr. DINGELL. Mr. Van Deerlin.

Mr. VAN DEERLIN. When we talk about difference between branded and unbranded, we are talking about a difference in price. Are we also talking about a difference in quality?

Mr. WHITE. In some cases yes and in some cases no. Some suppliers sell the same product to an independent account that they sell to their own branded service stations.

Mr. VAN DEERLIN. So that is the same quality, just turning up under a different name.

Mr. WHITE. Yes. Due to the distribution of bulk products in terminals it is a little difficult to maintain separate products due to storage capacity. In many cases the product is the same as to quality. Mr. VAN DEERLIN. Does this also apply to tires?

Mr. WHITE. I am not in a position to answer that. I do know that we are associated with a company, B. F. Goodrich, which we have a tire store in Charleston and they manufacture tires for other sellers, but as to the quality, I cannot answer for tires, only on gasoline. Mr. VAN DEERLIN. Thank you.

Mr. DINGELL. Mr. White, I am particularly interested in a couple of points in the bill which I think you might be well qualified to discuss with us. I want to refer you to two sections of the bill.

The first is the language appearing on page 8, line 14, section (15), which says as follows:

All rights and remedies provided in paragraphs (7) to (17), inclusive, of this subsection, to owners of a brand, name, or trademark, shall be also available to any owner of a brand, name, or trademark who, in the sale of goods identified by such brand, name, or trademark, shall compete, at any level of distribution, with any reseller offering such goods.

This, briefly stated, authorizes an individual who manufactures and markets in competition with wholesale and retail outlets to fix the price of those wholesale and retail outlets?

Mr. WHITE. Yes.

Mr. DINGELL. I wondered what your comment would be on that? Mr. WHITE. We think that would be bad. We think it would be bad for any manufacturer to be in the position of fixed prices for resale to the consumer.

Mr. DINGELL. Particularly when he competes.

Mr. WHITE. When he competes. There is a lot of competition now within the industry to where a lot of suppliers are competing with their own jobbers by selling products at prices below what they sell to their jobbers, particularly in commercial consumer accounts which makes it impossible to compete with that kind of business.

Mr. DINGELL. Now, on page 8 of the bill, I would also like to refer you to the following language on line 3 of page 8.

Each such currently established resale price and resale price range shall be uniform at each level of distribution within each marketing area determined by the owner of the brand, name, or trademark.

I wonder if you have any feelings or comments on the language on page 8, lines 3 to 6?

Mr. WHITE. Yes, I do. We are a little concerned about in what geographical area could this be established. If the supply is sold to the branded, that is one level; if he sold to a commercial account, that is another level of distribution. The unbranded marketers is another level, and certainly geographical areas could be under that division and that concerns us a little bit.

Mr. DINGELL. Let's construe this business of geographical price discrimination. Is it your opinion that this section authorizes geographical price discrimination between dealers situated in different parts of the country?

Mr. WHITE. Well, I cannot honestly answer that, sir, because I am not a lawyer and I am just not in a position to interpret this bill. Mr. DINGELL. Assuming it is, would you regard that as being a wholesome thing and in the interest of your industry?

Mr. WHITE. No, sir; I do not, if that was the interpretation.
Mr. CURTIN. Would you yield?

Mr. DINGELL. Yes.

Mr. CURTIN. Do you think, then, that you could sell gasoline, for example, at the same price in some area of Alaska as you could sell it close to a production point in other States of the United States? Mr. WHITE. I am sorry.

Mr. CURTIN. Do you feel that the price has to be the same in all geographical sections of the country?

Mr. WHITE. No, sir. Obviously, you could not have the same price in all States and areas.

Mr. CURTIN. Then that particular section of the bill is not objectionable to you?

Mr. WHITE. No. The only thing we object to is the level of distribution in distinguishing between whether it is a commercial account, a consumer account, or an unbranded account.

Mr. CURTIN. But you recognize that in different geographical areas there is going to have to be a price differential?

Mr. WHITE. We recognize that, but one thing that concerns us about the geographical area, if you have a disturbance or if you have a fixed price, let's say, in a city in North Carolina and the price level is higher in North Carolina than it is just over the line in South Carolina, where do you stop? It could go on from one area to another and if you had to extend it from North Carolina to the edge of the South Carolina line, then you would have to extend it right on down to the next level of distribution.

That has concerned us quite a bit. I know one company set up a zoning price policy of which they establish certain geographicel areas and they established differentials of, you might say, 3 cents in one area and 2 cents in the other one, but then it began snowballing and it had to be extended on out.

Mr. CURTIN. Thank you.

Mr. DINGELL. Thank you very much. The committee is very much appreciative of your being here this morning and for your very fine

statement.

The committee will recognize Mr. Rothwell.

Mr. WHITE. Mr. Chairman, before I am excused, shall I present the copies of my testimony to you?

Mr. DINGELL. We have already received a copy of it, Mr. White, Your full statement will be inserted in the record.

Mr. WHITE. Thank you very much for the opportunity.
Mr. DINGELL. Thank you, sir.

(The statement referred to follows:)

STATEMENT OF JOHN H. WHITE ON BEHALF OF THE NATIONAL
OIL JOBBERS COUNCIL, INC.

My name is John H. White. I am an independent oil jobber now operating my business under the name of Port Oil Co., at Charleston, S.C. I am appearing here today on behalf of the National Oil Jobbers Council.

The National Oil Jobbers Council is a trade association group composed of 34 State and regional associations of independent jobbers and distributors of petroleum products. These associations, covering 41 States, represent the greater majority of the thousands of bona fide independent petroleum jobbers in the United States. Following is a list of the member associations:

Alabama Petroleum Jobbers Association, Inc.

Arkansas Oil Marketers Association, Inc.

California Petroleum Marketers Council (Jobber Division).

Colorado Petroleum Association.

Connecticut Petroleum Association.

Empire State Petroleum & Fuel Merchants Association, Inc.

Florida Petroleum Marketers Association, Inc.

Fuel Merchants Association of New Jersey (Jobbers Division).

Georgia Oil Jobbers Association.

Illinois Petroleum Marketers Association.

Independent Oil Marketers Association of Indiana, Inc.

Intermountain Oil Marketers Association (Idaho, Nevada, and Utah).

Iowa Independent Oil Jobbers Association, Inc.

Kentucky Petroleum Marketers Association ( Jobber Division).

Louisiana Oil Marketers Association (Jobber Division).

Michigan Petroleum Association.

Mississippi Oil Jobbers Association.

Missouri Oil Jobbers Association.

Nebraska Petroleum Marketers Association, Inc.

Independent Oil Men's Association of New England (Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont).

New Mexico Petroleum Marketers Association (Jobber Division).

North Carolina Oil Jobbers Association.

Northwest Petroleum Association (Minnesota and North Dakota).
Oklahoma Oil Jobbers Association.

Oregon Oil Jobbers Association.

Pennsylvania Petroleum Association, Inc.

South Carolina Oil Jobbers Association.

South Dakota Independent Oil Men's Association.

Tennessee Oil Men's Association.

Texas Oil Jobbers Association.

Virginia Petroleum Jobbers Association.

Washington Oil Marketers Association.

Wisconsin Petroleum Association.

Wyoming Oil Jobbers Association.

At the outset I would like to state that in the preparation of this presentation I have leaned heavily on the statement presented to this subcommittee last year, by our general counsel, on a bill similar to that now before the subcommittee for consideration.

Since some of the members of this subcommittee may not be aware of what an oil jobber is and does, and, further, because of the unusual nature of the pending legislation as related to the marketing of petroleum products, I deem it necessary to define the term "independent oil jobber," briefly describe the role these jobbers play in the distribution of petroleum products, and, of equal importance, to show that the nature of the petroleum marketing arena is completely different

from the conventional methods of marketing most other products in the United States.

An independent oil jobber is a person, partnership, or corporation that owns its own bulk storage and transportation facilities and engages in the sale of petroleum products, primarily in bulk quantities, for delivery into bulk storage tanks. Most jobbers also sell tires, batteries and accessories, lubricating oils and greases, as well as antifreeze and other related items. In brief, the jobber sales, from one standpoint, are made in bulk quantities without wrappers or containers, while other commodities sold are in containers or wrappers, or are items which are not sold in bulk but are otherwise individually identified by trademark or by the nature of the product itself. Many jobbers own service stations which they lease to independent dealers and in turn sell products to these dealers both in bulk quantities and otherwise. The jobbers' sales, dependent on each individual jobber's type of operation, are wholesale or retail and, in most instances, jobbers engage in both wholesale and retail sales, dependent upon the definition of these terms. The independent jobber owns his own business properties and even though the majority of them sell the branded petroleum products of a major oil company, or the branded products of a supplier of tires, batteries, accessories, et cetera, the jobber nevertheless is his own boss, provides his own financing, carries his own accounts receivable, and in all other respects is independent as contrasted to commission agents and consignees who are sometimes used by major oil companies for bulk distribution of their branded petroleum products. Independent jobbers distribute approximately 30 percent of all gasoline delivered to the service stations of the country, well over 50 percent of all bulk petroleum sales to farms, 85 percent of home heating oils, and more than 50 percent of the residual or commercial-type fuel oils. In addition, jobbers sell to what is known in the trade as commercial consumer accounts. This type of account is, for example, a trucking company or business enterprise operating a fleet of trucks or automobiles and who purchases in bulk quantities for the fueling of such vehicles from their own tanks. This phase the commercial consumer account-of the jobbers' business has been greatly diminished, due principally to the predatory pricing practices of many of the major oil companies. From this we can see that the jobber deals not only in the sale of petroleum products in bulk but also in the sale of tires, batteries, accessories, and other related items both to service stations, which sales would be at wholesale as well as sales to homeowners, farmers and commercial accounts, the latter group being sales at retail, since they are made to the ultimate consumer.

The marketing of petroleum products and these related items differs greatly from the marketing of most other products sold in this country in that the refiners or manufacturers of petroleum products engage in the wholesale distribution of well over 50 percent of the gasoline sold throughout the country and, to a large degree, also engage in the distribution of the related items used by vehicle owners. Most of these refiners are branded suppliers and all of them engage in some degree in retail distribution. Some of these branded suppliers utilize independent jobbers and commission distributors as a means of bulk distribution to a greater extent than others. For example, the Mobil Oil Co. sells to approximately 2,800 independent jobbers as contrasted to the Gulf Oil Corp. which probably has less than 500 jobbers. The market or price leader at all stages of petroleum distribution is a large major company whose abilities to establish such prices as it sees fit are generally limited only by consumer resistance and the competition of private brand products. It is peculiar but true that the 32 leading oil companies of the Nation supply a substantial part of the volume sold by the private brand, or sometimes called unbranded, marketers. This means that a branded jobber or branded dealer (service station operator) may oftentimes be competing with an unbranded jobber or dealer who received its products out of the same tank and from the same supplier. The same situation exists as to tires, batteries, and other accessories.

I do not believe that anyone could successfully contend that any predatory pricing in the petroleum industry is attributable to branded wholesalers or by branded retailers to any significant degree. Predatory pricing in the petroleum industry has thus far been engaged in principally by some I repeat, someprivate brand marketers and major oil companies.

From this limited statement of petroleum marketing and the role played by jobbers it is quite obvious that the jobber is in effect a hybrid marketer-by that I mean that he is both a wholesaler and a retailer of products. Even though a jobber may not own or supply any service stations, he nevertheless, 99-685-63-10

for example, sells gasoline, diesel oil, motor oils, greases, and other accessories to farmers and in a limited degree to commercial accounts. These sales are sales at retail as contrasted to the service station type of sale which is also a sale at retail. It is also obvious from what I have said thus far that jobbers, from a competitive standpoint, must compete with other jobbers with major, intermediate, and small size integrated companies, and in many instances, with their own suppliers, branded and otherwise. Most branded jobbers sell only one brand of petroleum products and do so by virtue of a contract agreement under the terms of which the branded supplier allocates to them a given geographical area for the handling of this brand. Unfortunately, some of these suppliers also sell to unbranded outlets in the same territory products of equal or substantially equal grade and quality at prices and under conditions that create difficult competitive situations for their own branded customers.

It should also be noted that the use of so-called private branded service sttaions has grown considerably in the past 20 years. As a result, branded suppliers, even though they may continue to supply unbranded or private brand outlets, nevertheless are engaged in a death-to-the-finish struggle to recoup the business taken by these private brand stations from branded stations, and as a result many areas in the United States have been plagued with price wars for almost 2 years, which price wars, if not stopped, are driving many jobbers and retail dealers toward bankruptcy.

I go into these explanations in detail for the purpose of laying the groundwork or background reasoning for your position in regard to H.R. 3669. This bill, to us, is nothing more than a fair trade bill, the likes of which we have vigorously opposed for years. We do not feel that the price-fixing provisions of this bill could ever be made to work in the petroleum industry without (1) collusion between the principal petroleum companies of the country, or (2) a form of price parallelism by these companies which would produce the same result. As a matter of fact, we do not think price maintenance for branded products as sold by petroleum jobbers and dealers would work in the petroleum industry even with collusion or parallelism of prices, due to the strong position of private brand marketers and discount houses, drugstores and department stores, many of which are now engaged in the sale of packaged items normally sold by oil jobbers or service stations. The strength of the private brand marketer, as well as the impact which the other category of resellers exerts on the marketing of such products, varies from one section of the country to another. As a matter of fact, fair trading of gasoline has been tried and ultimately resulted in miserable failure. Unfortunately, if the brand owners in the petroleum industry were given this right to fix prices, sooner or later some of them would attempt to do so and in the process of trying to make the system work, they would ruin some of their independent reseller customers, both wholesalers and retailers, in the process.

The general objections of our organization to this type of legislation are based on the following beliefs and conclusions:

First, oil jobbers are independent businessmen and view with suspicion any legislation that would create artificiality in the free enterprise system with the probable chance of depriving the consumer of the benefit of fair but free competitive enterprise and deprive the jobber and his dealer customer of the ability to quickly respond to the competition in his market;

Second, the record of attempting to apply fair trade laws in the petroleum industry has served more to produce losses for jobbers and dealers as well as the promotion of litigation than it has served "to promote quality and price stabilization" or "to define and restrain certain unfair methods of distribution.” This is particularly true where the supplier of a well-accepted product normally sold by branded jobbers and dealers, also sells for resale a product of equal or substantially equal grade or quality to discounting resellers;

Third, the bill is drafted in such a manner and with such wordage that when we attempt to relate this wordage to marketing within the petroleum industry, it leaves many questions unanswered and, in our judgment, creates confusion to such an extent that this wordage could only be clarified by extensive litigation which the independent jobber is financially unable to stand;

Fourth, the provisions of the bill would vest in the giant oil companies the legal right for such companies to determine the margin of profit for the petroleum jobber and dealer at all levels of distribution while at the same time competing with that jobber or dealer. Since the large integrated companies