TABLE I. Comparison of consumer selling price, fair trade versus non-fair-trade States, 6 months-January 1958 through June 1958 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 Cincinnati. 102.2 110. 1| 112.5 114. 1 114. 1 113.7 116.0 119.6 ( 122.0 Cleveland. Detroit. Houston. Kansas City. St. Louis. San Francisco.. Scranton Seattle. Washington, D.C. 95.7 103. 1 101.2 1 In years shown, indicates fair trade did not exist or had been rendered ineffective by court decision. Source: Bureau of Labor Statistics, U.S. Department of Labor. Mr. DINGELL. Now the next thing with regard to one particular item in the legislation which is before us is the section which permits area discrimination in pricing. I wonder if you would like to make a comment as to why you favor permitting manufacturers to fix prices at different levels in different parts of the country. Mr. MERMEY. I favor it because we are dealing with a great market, a market of infinite complexity requiring infinite flexibility. I have indicated that I think the price variations will not appear over broad areas, that you would have a uniform price. I am not prepared to say that you would have a uniform price over the country. I have indicated that I agree with you that the possibility exists that there could be. But I am suggesting to you that the only way you will find out whether that particular provision of the bill would impose hardships on consumers or retailers or anybody will be to enact the bill. I am sure that if this bill after its enactment, and I hope it will be, turns up instances of grievances, hardship, injustice, I am sure the Congress will address itself to that. Mr. DINGELL. As a matter of fact, you don't view this as being an indispensable part of the bill, do you, because you indicate to the committee that you have no experince with this particular device and therefore you feel that it should receive a trial; but if the committee in its wisdom were to determine that we were not going to afford this particular device a trial, you don't feel the bill then would be hurt, do you? Mr. MERMEY. On the contrary, sir. Mr. KEITH. I believe it was, or Mr. Curtin asked the question, Do you think, sir, that the price of gasoline in Alaska should be the same price as it is close to the source of production? Obviously it could not be, and I think you have got to recognize the common market called the United States is a vast market; populationwise, economicswise and geographicwise. We are not able here to determine, in my judgment, whether a product shall be priced the same in every area of the country because of a lot of factors, freight, and so on. I think that most of the products will be so priced, nevertheless. Mr. DINGELL. Now, Mr. Mermey, you have indicated to us that you feel that the prices will be substantially identical across the country. Assuming that you were a small businessman on one side, let's say, of the Potomac River, and were to find that your competitors on the other side of the Potomac River had their prices fixed at a different and competitive level, what would be your feeling? Mr. MERMEY. I would scream. Mr. DINGELL. Precisely. Mr. MERMEY. I would scream. I will suggest to you it will never happen that way, it could not. Mr. DINGELL. It is a danger though, is it not? Mr. MERMEY. Yes; I agree. Mr. DINGELL. When you vest in a manufacturer the power to fix prices in different parts of the country, that is very definitely a position in which the small businessman might find himself. Mr. MERMEY. I think the greatest protection the small businessman has there is the operation of this wonderful free enterprise system. He would not last long operating that way, the manufacturer would not. Mr. DINGELL. We have the Robinson-Patman Act against discrimination and the practice still exists. Mr. MERMEY. I cannot say to you, sir. You mean the different prices, yes, I know that. Mr. DINGELL. In different parts of the country. Mr. MERMEY. I know that. Mr. DINGELL. And is this factor destructive to the small businessman? Mr. MERMEY. I don't think so. Mr. DINGELL. You indicated you would scream if you were to find yourself in that kind of circumstance and now you are telling the committee Mr. MERMEY. The circumstance that you suggested, sir, was that I am in Texarkana on one side, Arkansas, and the other side is Texas, I am saying to you that is a single marketing area; if any manufacturer sought to effect two prices, I would scream and every other retailer would scream, and I cannot imagine any court saying that such pricing came within the intent of this bill. Mr. DINGELL. There is no language in the bill which says it is not. As a matter of fact, the specific language says: 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. This authorizes the owner of the brand name or trademark to fix prices any way in those marketing areas. Mr. MERMEY. Subject to the rule of reason. Mr. DINGELL. And fix the boundaries in any manner he determines to fit them, am I correct? Mr. MERMEY. I have agreed with you, sir. I said there is a possibility, anything is possible, but I am trying to say to you, sir, that I think there is such a thing as an overriding rule, and that is a rule of reason. Mr. DINGELL. You prefer, then, to rely on the blind faith that this will not happen. Sir, I represent a number of small businessmen and I choose not to place them in the tender mercies of your good hopes and faith. Thank you, Mr. Mermey, for your very fine statement. Mr. MERMEY. Thank you, sir. Mr. DINGELL. Your full statement will be inserted in the record. (The statement referred to follows:) STATEMENT OF MAURICE MERMEY, DIRECTOR, BUREAU FOR THE Mr. Chairman and gentlemen, 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. The aims and purposes of the bureau are as follows: To advance and promote the general welfare by encouraging and fostering independent retailing as a method of distribution based upon honest, economic, and efficient service to the consumer; To gather and correlate information respecting independent retailing and its contributions to the public interest, including the interest of the American free enterprise system; To carry on education in the economic and social concepts implicit in independent retailing; To distribute publications and publicity of every kind, nature, and description touching upon the values and contributions of independent retailing; To foster and encourage the improvement of standards of service and of operation in independent retailing: To develop public understanding of the problems of independent retailing as a basis for lawful constructive actions, both public and private, that will contribute to the advancement of independent retailing. 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. The overwhelming majority of the 2 million retailers in the United States, together with large numbers of manufacturers and wholesalers, endorse and support the principles and objectives of the Harris bill which are set forth 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." Enacement of H.R. 3669 would result, also, in the implementation of what is surely national public policy; namely, to help the independent business proprietor-constituting a large majority of retail trade which itself is numerically the biggest single segment of the 4.7 million business units in the United States. Surely it can be said that the Select Committees on Small Business of the House of Representatives and of the Senate want to do all they can to help the independent proprietor remain a significant and useful segment of American life. The policy of helping this proprietor is reflected in the national pltaforms of the Democratic and Republican Parties and in the Government's efforts in behalf of small business. It has been said that research is wonderful but that one need not employ a corps of research chemists to learn that there is salt in the ocean, In the same vein, I do not believe it is necessary to retain a whole school of statisticians to discover that the independent business proprietor, and more particularly the independent retail store owner, needs help if he is to survive and prosper. Indeed, reports of the death of the independent retailer are appearing, with increasing frequency, in the press. For example, E. B. Weiss, a marketing consultant, said in a talk before the Minneapolis Advertising Club on January 24, 1963: "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 outlet, the appliance outlet, 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." In other words, we'll have two private clubs, according to this view. I suppose freedom of entry-as exists in the marketplace today, albeit with substantial hazards to the entrant-would be severely limited. There are many who disagree with this view. They include the independents themselves. They include, too, Members of the House of Representatives and of the U.S. Senate who believe that enactment of H.R. 3669 would enable the efficient, the hard working, the imaginative independents of the country to compete with the giants-department stores, chainstores, supermarkets, mailorder houses and what have you. 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. It is often saidand 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. This demand for 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. Customer would haggle with clerk over the price of every article which the customer sought to purchase. And customer was very happy, indeed, when she discovered that she paid less for an item than her next door neighbor. But when she paid more--that's when she called the clerk, or the proprietor, or both, 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 anything from a particular brand of aspirin tablets to 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. |