to confirm, define, and equalize the rights of producers and resellers in the distribution of goods identified by distinguishing brands, names, or trademarks, and for other purposes.

Enactment of H.R. 3669 would result in the implementation of what is surely national public policy, mainly to help small businessthe independent business proprietor who constitutes numerically the biggest segment of the 4.7 million business units in the country. This policy is reflected in the activities and programs of the Senate Select Committee on Small Business, the House Select Committee on Small Business, the Small Business Administration, and I am sure of every Member of the Congress.

Now it has been said that research is a wonderful thing but that one need not employ a whole corps of research chemists to learn that there is salt in the ocean. In the same vein, I don't think it is necessary to undertake a vast research program to discover that the independent business proprietor and more particularly the independent retail store owner needs help if he is to survive and to prosper.

There are increasing reports of the death of the independent retailer. A good friend of mine, E. B. Weiss by name, said, in a talk before the Minneapolis Advertising Club on January 24 of this year:

Yes, the independent retailer is doomed-as an independent, that is. Within no more than 10 years, 75 to 90 percent of total retail drug volume will be divided between corporate and independent drug chains; 75 to 90 percent of total retail hardware volume will be divided between corporate and independent hardware chains. Ditto for the furniture outlets, the appliance outlets, and other major forms of general merchandise retailers.

In brief, the world of marketing faces a distribution future in which most manufacturers of presold brands, in most mass-consumed merchandise categories, will find that 75 to 90 percent of their total volume is moving through: (1) corporate chains, and (2) independent chains.

I don't mean to associate myself with that point of view. I don't happen to agree with it. I think there may be some independent chains, but I think the independent is apt to die before he can produce a great many chains, absent the kind of assistance that independent. retailers are looking to this committee for.

H.R. 3669 would give consumers the very kind of price protection: that they have insisted on for more than three-quarters of a century, and I say this in the knowledge that statements have been made from time to time that the enactment of the quality stabilization bill would cause the consumers to pay X billion dollars per year more for the things they would buy than they would pay, absent such a law.

It is often said, and accurately, that everybody loves a bargain. But is there a consumer who does not resent paying more for a particular article than her neighbor paid for precisely the same item? Every consumer, including your wives, wants to be protected against paying more than somebody else for the same thing.

I suggest that under this bill, in the case of those items that are submitted to quality stabilization by their manufacturers, by the owners of the brands, those consumers will be protected against being outshopped, outbargained by their neighbors.

The demand for this type of price protection goes back to the middle of the 19th century, when the retail store in the United States was little more than a polished version of the oriental bazaar. The customer would haggle with the clerk over the price of an article, and she was very happy indeed when she discovered that her bargaining skill

the branded oil companies will fix prices so high that these unbranded refiners and retailers can gain more and more of the market at the expense of the branded independents. Here again a motivation which has nothing to do with the purpose of stabilizing quality or restraining unfair methods of distribution. We certainly hope that no member of this subcommittee will believe or think that giving the right to fix prices to the major oil companies will save one single independent businessman from extinction. To the contrary, we predict that if the authority granted in the bill is used by these companies, it will ruin many independents and particularly the independent jobbers that I speak for. Admittedly, small merchants throughout the United States are facing difficult times in trying to meet the competition of discount houses, chain stores, and similar types of merchandisers.

We, too, face that difficulty but we do not believe that this legislation is the panacea that will solve our problems. We are likewise of the opinion that many panic-stricken small businessmen who are supporting this legislation will ultimately find that if it works to the benefit of anyone, it will be the manufacturer or brand owner and not the independent merchant. We predict that if this legislation is passed, many of the organizations which purport to support it will ultimately return to this Congress asking for repudiation.

In conclusion, I reiterate that if our interpretation about the exemption of our bulk sales not in wrappers or containers is correct, we feel this is a significant change which has been made by the subcommittee. Further, if such is correct, then the greater portion of my remarks in this statement are directed (1) in support of this exemption, and (2) in opposition to the bill as it relates to our other sales of nonexempt petroleum products or other commodities. I appreciate your consideration of our viewpoints.

Mr. DINGELL. The Chair will recognize Mr. Thomas Rothwell. Mr. JOHN LEWIS. Mr. Rothwell had to return to New York, but he will be down tonight.

Mr. DINGELL. The Chair will recognize Mr. Maurice Mermey of the Bureau for the Advancement of Independent Retailing, 640 Fifth Avenue, New York.

The committee is happy to welcome you back again.

STATEMENT OF MAURICE MERMEY, DIRECTOR, BUREAU FOR THE ADVANCEMENT OF INDEPENDENT RETAILING

Mr. MERMEY. I am going to summarize my statement. I will try to answer any questions you may ask.

My name is Maurice Mermey. I appear here as director of the Bureau for the Advancement of Independent Retailing, a nonprofit corporation organized under the auspices of the National Association of Retail Druggists and supported by voluntary contributions from all segments of the drug industry of the United States-retailers, wholesalers, and manufacturers.

I wish to register the unequivocal support of the bureau in behalf of H.R. 3669-the quality stabilization bill introduced by the distinguished chairman of the Committee on Interstate and Foreign Commerce, Representative Oren Harris-and of the substantially identical bills introduced on a completely nonpartisan basis by many other Members of Congress.

I should like to express the opinion, and I think it is a sound opinion, that the overwhelming majority of the 2 million retailers in the United States, and particularly all of the smaller ones, together with large numbers of manufacturers and wholesalers, endorse and support the principles and objectives of the Harris bill which are set forth in the bill as follows:

To amend the Federal Trade Commission Act, to promote quality and price stabilization, to define and restrain certain unfair methods of distribution and

to confirm, define, and equalize the rights of producers and resellers in the distribution of goods identified by distinguishing brands, names, or trademarks, and for other purposes.

Enactment of H.R. 3669 would result in the implementation of what is surely national public policy, mainly to help small businessthe independent business proprietor who constitutes numerically the biggest segment of the 4.7 million business units in the country. This policy is reflected in the activities and programs of the Senate Select Committee on Small Business, the House Select Committee on Small Business, the Small Business Administration, and I am sure of every Member of the Congress.

Now it has been said that research is a wonderful thing but that one need not employ a whole corps of research chemists to learn that there is salt in the ocean. In the same vein, I don't think it is necessary to undertake a vast research program to discover that the independent business proprietor and more particularly the independent retail store owner needs help if he is to survive and to prosper.

There are increasing reports of the death of the independent retailer. A good friend of mine, E. B. Weiss by name, said, in a talk before the Minneapolis Advertising Club on January 24 of this year:

Yes, the independent retailer is doomed-as an independent, that is. Within no more than 10 years, 75 to 90 percent of total retail drug volume will be divided between corporate and independent drug chains; 75 to 90 percent of total retail hardware volume will be divided between corporate and independent hardware chains. Ditto for the furniture outlets, the appliance outlets, and other major forms of general merchandise retailers.

In brief, the world of marketing faces a distribution future in which most manufacturers of presold brands, in most mass-consumed merchandise categories, will find that 75 to 90 percent of their total volume is moving through: (1) corporate chains, and (2) independent chains.

I don't mean to associate myself with that point of view. I don't happen to agree with it. I think there may be some independent chains, but I think the independent is apt to die before he can produce a great many chains, absent the kind of assistance that independent retailers are looking to this committee for.

H.R. 3669 would give consumers the very kind of price protection that they have insisted on for more than three-quarters of a century, and I say this in the knowledge that statements have been made from time to time that the enactment of the quality stabilization bill would cause the consumers to pay X billion dollars per year more for the things they would buy than they would pay, absent such a law.

It is often said, and accurately, that everybody loves a bargain. But is there a consumer who does not resent paying more for a particular article than her neighbor paid for precisely the same item? Every consumer, including your wives, wants to be protected against paying more than somebody else for the same thing.

I suggest that under this bill, in the case of those items that are submitted to quality stabilization by their manufacturers, by the own-ers of the brands, those consumers will be protected against being outshopped, outbargained by their neighbors.

The demand for this type of price protection goes back to the middle of the 19th century, when the retail store in the United States was little more than a polished version of the oriental bazaar. The customer would haggle with the clerk over the price of an article, and she was very happy indeed when she discovered that her bargaining skill

was so great that she paid less for an item than her next-door neighbor paid. But when she paid more, that is when she called the clerk or the proprietor a cheat, profiteer, or whatever other condemnatory word that would come to her mind and lips. That is also when she began to demand that the store operate on a one-price-to-every-customer policy.

Today, no reputable store would ask Mrs. Smith to pay a higher price than Mrs. Jones for a particular brand of aspirin tablets or a particular brand of washing machines. Nor would one outlet of a chain ask Mrs. Smith in, say, Washington, D.C., Northwest, to pay a higher price for a given article than another outlet of the same chain, located in another part of Washington, D.C., would ask Mrs. Jones to pay for the same article at the same time.

Stores which charge different prices to different customers for the same branded article at the same time do not enjoy reputations for fair dealing. Shoppers stay away from such stores because they resent being price discriminated against.

Now then, this one-price-to-every-customer policy, is, to my mind, a good way to characterize what would happen under the quality stabilization bill. This one-price-to-every-customer policy is far from unique in this country. You will find it in house-to-house selling. There are manufacturers who sell through canvassers, sell about $2 billion worth of goods per year. No canvasser is allowed to sell, as Mr. Keith, I believe, said with respect to insurance policies, no canvasser is allowed to sell a consumer at a lower price than the manufacturer ordered him to charge. There is absolute uniformity of price in house-to-house selling.

You have the same in consignment selling where, technically, the manufacturer retains title not alone to the brand which is his, but also to the tangible goods until such time as the retailer pays for those tangible goods.

Then there is forward integration. Goodrich owns outlets of its own, and I suggest that Sears, Roebuck could very well be considered a case of forward integration since Sears is a retailer with manufacturing facilities or a manufacturer with retailing facilities. Sears does $4.2 billion worth of business a year and 95 percent of that $4.2 billion is done in Sears' own brands. There is no price cutting on Sears brands because through all of Sears' outlets the price on a particular branded product is exactly the same-absolute uniformity -in any given marketing area.

Further, $20 billion worth of business in this country is done each year on private brands, which are brands owned or controlled by retailers, usually giant retailers. There is no price cutting of any private brand by the brand owner because he also owns or controls the means of distribution. In the bill that we are talking about here -the Harris bill-we are dealing with manufacturers who do not own or control the means of distribution of the products identified by their brands. The means of distribution consist of retailers-large and small-including the independent proprietors.

Now, H.R. 3669 offers the American consumer a one-price-to-everycustomer policy with respect to national brands. For H.R. 3669 permits a manufacturer to apply this policy to his branded property.

But he can avail himself of this provision only, as the bill says, "if goods usable for the same general purpose are available to the public from sources other than the owner of such brand, name, or trademark, and are in free and open competition therewith."

Mr. DINGELL. I notice you have been reading. I wonder if you have copies for members of the committee.

Mr. MERMEY. I have given copies to Mr. Williamson. I assume they were distributed. I gave copies the other day.

Mr. DINGELL. Very well. We will get them.

Mr. MERMEY. In other words, the branded product of the manufacturer availing himself of the provisions of H.R. 3669-which he need not avail himself of if he does not choose to do so-are competing every minute of every day with (1) every brand identifying similar goods which are also using the provisions of the quality stabilization bill; (2) every brand identifying similar goods which are not being sold under the terms of the quality stabilization bill; (3) similar goods not identified by brand; and (4) all goods and services competing in the entire American economy for the consumer dollar.

Now then, it is argued by opponents of the Harris bill that H.R. 3669 would destroy free competition. I don't believe that is so by any definition of free competition that I understand. A whole host of statutes testify that competition in the United States does not mean "free" in the sense of unbridled.

Planned operations in the red to destroy competitors is a classic violation of the antitrust laws. Impairment of competition through certain types of merger are likewise banned by law. The Federal Trade Commission Act addresses itself to unfair competition. The Robinson-Patman Act makes unlawful discrimination by manufacturers in their selling prices to distributors.

H.R. 3669 not only gives the American consumer the price protection afforded by the one-price-to-every-customer policy, it gives her, too, relief from deceptive price advertising and merchandising practices. I refer here to price juggling, loss leadering, and consumer bait techniques used by certain retailers.

The fool-the-public process is set forth in the news article in Home Furnishings Daily, dated April 11, 1963, by Alvin M. Winters. I am not going to read this, but I am merely going to say that this article points out that national brands, according to discounters, have a serious drawback. A recognizable brand can easily be "knocked off"-met or beaten in price-by competition. And with the lust for traffic often resulting in lower prices, discounters sometimes find their profits are pinched in their prime asset, the national brand. This, by the way, is what is happening to the small independent retailer.

For this reason private brands are gaining in importance. Another reason for the inroads of private labels is that they stir repeat business through identification and so on.

But national brands, even the stanchest supporters of private brands agree, are essential in the first few years of a discount store's operation to create images of reliability, quality, and price. In other words, selective price cutting of national brands, the most popular items in the marketplace, would continue to go on, and it is one of the purposes of this bill to prevent that.