present situation is now causing this condition. We can give you many examples from our own files where the present chaotic state of this segment of the market is not only forcing impairment of quality, but has forced many distributors to close their doors.

7. It was also contended that this bill will stifle private initiative, and deprive small distributors of their essential competitive weapon: price. I believe I have demonstrated that the progressive small independent has long since allied himself with some form of distributive organization which provides him with a full line of house brands to meet every price level. Although he has plenty of price competition with other brands, he is not forced to compete with other retailers handling the same brands. I can give you many specific examples of this situation, but time does not permit at this point.

8. This committee was asked by the Government to believe that this bill will create an advantage for large manufacturers who are able to pay for private enforcement. Let me comment only that any manufacturer who owns a national trademark, subject to the current abuses in the marketplace, will be fully able, indeed will be eager, to protect himself. Large distributors, who own controlled house brands, could not care less about this bill. They probably will not use it at all, much less at the expense of small manufacturers and distributors.

9. The allegation made about possible arbitrary establishment of distributive margins akin to subsidies, determined privately and paid for by the consuming public, as far as I am able to tell, is just a sequence of words, with absolutely no relation to what actually will take place. The interplay of competition, particularly with house brands, will fully control this situation, and I believe I have fully explained the safeguards against the possibility of horizontal agreements among competitors. The number of distributor-controlled house brands covering almost every consumer item in food, hardware, and household goods, would make it impossible as a practical matter to arrange collusive price control. Furthermore, even if this were possible of accomplishment, it would be so obvious, that it would draw immediate attention and prosecution under the antitrust laws.

We have given objective attention to the other statements of opposition to the bill and find little, if anything, that is worhy of comment. These are mostly unsupported conclusions; statements based on obvious prejudice; statements based on lack of knowledge of the economic and legal considerations involved; and self-serving statements which provide no basis for relevant analysis.

There are a few points that have been mentioned in the course of other testimony that has been presented here which I should like to cover very briefly if I might do so. It will take but a minute or so to do it.

Reference was made during part of the testimony to the number of business failures. I have before me the official figures of the U.S. Department of Commerce which appeared in the June 1962 Survey of Current Business. And these figures show that there was a net increase in total business starts over the years 1957 through 1961, and that the smallest net gain was 41,000 in 1961 and 76,000 in 1959.

I would also like to say that in the past 7 years the National Small Business Association has received hundreds of communications about small business problems of all kinds. And the curious thing is that

not one has involved a problem arising out of so-called dual distribution.

In the first place, price discrimination in this area would be a suicidal business policy from an economic standpoint.

The Robinson-Patman provisions against price discriminations are unaltered by this bill.

Furthermore, under the "clean hands" doctrine, no trademark owner could avail himself of the protection of this bill, even if he was pursuing an unfair or unethical pricing policy, whether or not his pricing formula was a violation of Robinson-Patman.

As an attorney I happen to know the facts about two large operations which distribute through company-owned channels as well as through independent channels, and I know that the pricing policy in these two cases is uniform throughout. In fact, I know of some instances where the independents receive discounts which are not available to the company outlets.

Now, reference was also made to one of our opinion polls inserted in the Congressional Record by Senator Javits on January 18, 1960. Such polls are conducted on a continuing basis by the association for the purpose of formulating our legislative policy. This particular poll showed that 52 percent of the membership was opposed to fair trade, and that 43 percent was in favor.

We have known for years that our membership was about evenly split on fair trade, so we took no position on that matter, at least during my tenure of office.

When this quality stabilization bill was introduced, we did not hastily jump on the bandwagon. We distributed information on both sides of the question and took action only after a long period of deliberation, and after a poll of the membership in 1961 indicated a 60-percent majority in favor of the bill.

I wish to point out that when we poll a matter it is done on a perfectly fair basis, with full information on both sides of the question.

Mr. Chairman, we have had some independent studies made at various universities. These have been slow coming in. And one arrived this morning. These are prepared by experts on economic and marketing aspects of this question. And I would like to have permission to insert one in the record at this point as an appendix.

Mr. DINGELL. The committee will be very happy to receive it for the files, and will review it and give consideration to inserting it in

the record.

(The material referred to will be found in the files of the subcommittee.)

Mr. GOSNELL. That is all, Mr. Chairman.

Mr. DINGELL. Mr. Van Deerlin, do you have any questions?

Mr. VAN DEERLIN. On the 60 percent favoring, does that mean that 40 percent were against?

Mr. GOSNELL. No, there was a lesser percentage-I believe I have that summation right here because a certain number do not answer, you know.

I do not seem to have it. I thought I did.

Mr. VAN DEERLIN. Is there any intention to poll again?

Myself, I am getting regularly the answers to these polls that are going on in your organization.

Mr. GOSNELL. Here it is. I have found it. I will give you that percentage.

For the bill there were 59.8, and 34.44 against.

No, we had not planned to continue the poll. Obviously there are so many complicated economic and legal questions involved here. We came to the conclusion that probably we had about as good a cross section as you could get on the subject. So we had not planned to make any repetitive effort in that direction.

Mr. DINGELL. You indicate here in your statement on page 16 that it is your feeling that:

The number of distributor-controlled house brands covering almost every consumer item in food, hardware, and household goods, would make it impossible as a practical matter to arrange collusive price control.

Mr. GOSNELL. I think it would be extremely impractical in view of the number of competing products under house brands and national brands to get them together.

Mr. DINGELL. If you were the president of company A and I was the president of company B, and we wanted to arrange a little collusive control under this bill, it would be possible for us to meet at lunch and agree that we would price our competing lines at the same level, would it not?

Mr. GOSNELL. It would be under one condition, provided you and I could cut up the entire market.

Mr. DINGELL. Not necessarily; if we could cut up a substantial portion of the market we could do it, could we not?

Mr. GOSNELL. Well, that is not affected by this bill. If they had a monopoly prior to this bill, they would have a monopoly after this bill.

Mr. DINGELL. I recognize that. But we could arrange collusive control?

Mr. GOSNELL. In a monopoly situation.

Mr. DINGELL. So under this bill collusive control is possible, is it not?

Mr. GOSNELL. Not under the bill, in my opinion.

Mr. DINGELL. Well, under the circumstances that would prevail under the bill, collusive price control is possible?

Mr. GOSNELL. I do not see how.

Mr. DINGELL. I do not want to engage in an argument, I just want to get some simple answers here.

As a matter of fact, the answer is that we could arrange to cut up the market, could we not?

Mr. GOSNELL. If we had a monopoly situation.

Mr. DINGELL. If you had a monopoly situation, or if you just controlled a substantial amount of the market, or a substantial amount of the market in a particular area?

Mr. GOSNELL. That is substantially monopoly, as I recognize it. Mr. DINGELL. Yes.

You also said something that concerns me here, and that is this:

No relief can be sought until a violator is caught in the act, so to speak, and at this point he will not have enough grounds for defense to justify the expense of litigation.

Now, it is always a concern to me that we should never take away the last defense of a man. And I wonder if this bill is so drawn that an individual who is caught has no defenses that he can assert. And that is what I derive from your statement on this point.

Mr. GOSNELL. I am not quite sure that I understood that, Mr. Chairman.

Mr. DINGELL. I am quoting your statement here. You say:

At this point he will not have enough grounds for defense to justify the expense of litigation.

Mr. GOSNELL. I meant by that that in the case where-in the situation where there is an aggregated case of one of these unfair acts covered by the bill, that it will be so obvious, after so much notice, that if a suit is brought it would certainly not be very practicable or very profitable to waste much money trying to defend against it, because the evidence will have already been collected.

Mr. DINGELL. In other words, you are saying then that the defenses in the bill really do not amount to much for a small businessman who is caught for a violation of the act; is that right?

Mr. GOSNELL. The bill will help the small businessman, that is why there are so many here supporting it.

Mr. DINGELL. I am talking about the small businessman that is going to be sued under this bill.

Mr. GOSNELL. Well, he will be a price cutter or someone who practices unfair competition, would he not? He would have to be.

Mr. DINGELL. You are an attorney, and you know that a man who is being sued is not necessarily guilty of anything; is that not right? Mr. GOSNELL. That is right. But you would have a hard time getting into court under this bill unless you had a pretty good case.

Mr. DINGELL. I want to discuss with you something else. I think this is a particularly important point here.

On page 6 of the bill, line 17, defendant has to prove that the plaintiff knew others who had been violating the provisions of paragraph (8).

Is this one of the reasons for your comment with regard to the fact that a small businessman would not have enough defense, enough ground for defense to justify the expense of litigation?

Mr. GOSNELL. A defendant would have to prove what, Mr. Chairman?

Mr. DINGELL. The defendant would have to prove that the trademark or brand owner knew that other persons were violating the fixed price. Is that one of the reasons for your comments?

Mr. GOSNELL. I do not follow that at all, sir.

Mr. DINGELL. The defendant, under this bill, the section that I cited to you, has to prove that the plaintiff knew that others were violating paragraph (8).

Mr. GOSNELL. I will have to give that point some study. I cannot answer that offhand, Mr. Chairman.

Mr. DINGELL. Let's return to another section of the bill here.
Page 8, line 3:

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

Now, first of all, this authorizes the brand owner, trademark owner, name owner, to establish marketing areas, does it not?

Mr. GOSNELL. It would appear to, to the extent that he can establish prices, yes.

Mr. DINGELL. And fix differing prices in those marketing areas where it suits his purposes, could he not?

Mr. GOSNELL. How could he do that under the Robinson-Patman Act?

Mr. DINGELL. You are asking me a question. I am asking you a question.

Mr. GOSNELL. I will change the nature of my answer then; I will say that he could not do that under the Robinson-Patman Act.

Mr. DINGELL. Under this statute, which was passed subsequent to the Robinson-Patman Act, it authorizes him to divide the country into marketing areas, does it not?

Mr. GOSNELL. Yes.

Mr. DINGELL. It authorizes a man to cut the country into marketing areas, right, under the language of the bill?

Mr. GOSNELL. It appears to.

Mr. DINGELL. The next thing it does, it authorizes him to charge, under the language of this bill, differing prices to the differing areas of the country, does it not, in these different marketing areas that he has authority to establish?

Mr. GOSNELL. It appears to.

Mr. DINGELL. Now, having established this, we then find ourselves in the situation where a businessman in one marketing area will be compelled to charge, by mandate of his manufacturer, a different price than his competitor in adjacent areas; is that not correct?

Mr. GOSNELL. In my considered opinion, it does not authorize that. Mr. DINGELL. The language of the bill is very clear on the point,

is it not?

Mr. GOSNELL. Not to me; not with that meaning.

Mr. DINGELL. The language of the bill says:

Such currently established resale price and resale price range shall be uniform at each level of distribution within each marketing area

Right?

Mr. GOSNELL. Yes, that means a uniform price.

Mr. DINGELL. That means he gets to establish uniform prices in marketing areas, and if he gets to establish uniform prices in marketing areas, he can cut the country up into marketing areas, right? Mr. GOSNELL. That is done now legally.

Mr. DINGELL. But this sanctifies it. And in the present circumstances this is a violation of Robinson-Patman.

Mr. GOSNELL. I do not get that meaning out of it, Mr. Congress

man.

Mr. DINGELL. The language in the statute is very clear, is it not? Mr. GOSNELL. I find nothing in the language that would authorize a price discrimination, if we are talking about one

Mr. DINGELL. I am not saying "price discrimination," I am saying differing prices in different parts of the country. I will come around to that in a minute.