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America. Such legislation will enable the small businessman to com
MG pete effectively against giant retail corporations in the sale of national brands and the consumer will be guarded against the practices of
M loss-leader operators who use the brand name to fool the public.
beton For these reasons, I urgently request that the subcommittee give
Sider favorable consideration to quality stabilization legislation so that it may be enacted into law at the earliest possible time.
I thank you, Mr. Chairman.
dth I notice you refer to the retail groups of the country using this as a method of bringing in groups. Are you saying that the large chainstores are the ones who are guilty of this as a general rule?
Mr. FRIEDEL. All the large chainstores are not.
Mr. FRIEDEL. That advertise a certain product, a brand name. When the consumer goes into the store, he finds out that this product has already been sold out, and then they say, "Well, we have another product here that is much better. It is a little cheaper, a nonbrand name.” Such advertising is used to bait them into the store.
Mr. STAGGERS. I understand now. That intrigues me, though. I notice that you and Mr. Proxmire use almost the same language in
M referring to the large groups that are driving the small businesses out of operation.
Now, where they do not have the discount houses--you have them in Baltimore and in Washington, but a lot of small communities across the land do not have discount houses. Now, we do have the chainstores. Are they the ones who are doing this, or what?
Mr. FRIEDEL. In certain instances, yes. I could cite a certain neighborhood drugstore. Now, he sells certain articles. When he buys the articles, it costs him more than the big giant retailers sell it for, and that is unfair competition. He just cannot buy it as cheap as the large chain. He cannot buy it by carload lots and get it at great discount.
3 Mr. STAGGERS. Some of these-I am just trying to establish thissome of these small businesses, perhaps, are inefficient for one reason or another. Are you saying, then, they should be protected in the sale of these articles up to a certain point, or what? Mr. FRIEDEL. Competition will bring everything into line. Mr. STAGGERS. Competition?
Mr. FRIEDEL. Competition on nationally advertised products. Now, this bill would not affect any name brands or products that are not nationally advertised, but competition will bring all the others in line that are nationally advertised.
Brand name products are the ones that are generally advertised much cheaper than the usual price to bring people into the store to sell them other products than just that one particular item.
When they advertise one well-known item at a very reduced rate, they have hundreds and hundreds of other articles that the consumer might purchase.
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when we look around the world and see the revohutionary results which flow from these social practices which concentrate economic power in the hands of a few gigantic companies or corporations, that we should be thankful for our small business community.
I am sure every member of this committee is aware of the fact that in every small town you go, the backbone of the community, the people who really provide the community responsibility and the leadership in the community in every kind of drive and every kind of community effort, are the small business people--the local druggist, the local hardware merchant, the local photo dealer--the local people who own their stores. These are the people who take pride in their community and are so tremendously important in that community.
Today, we are concerned with the small business retailer, and I l'espectfully suggest that the Quality Stabilization Act is a sound way to insure that we will continue to have diversification and competition in retailing by strengthening the small business community.
Competition is much more than price competition. There is competition for location, competition for service, competition in all kinds of ways. But price competition can destroy other kinds of competition. This bill's purpose is to continue competition on the basis of a vailability to the consumer of our honored brand-name products in the broadest possible, yet fair, way:
The New York Times, in its August 19 issue last year, reported that the New York metropolitan area, some 10 years ago, in 1950, had 153,000 shopkeepers; that is, 153,000 people who were classified as managers, corporate officials, and proprietors in retail trade. By 1960, 10 years later, although the population had increased substantially, and although sales had enormously increased, the number of retail merchants had dropped from 153,773 to only 66,474. In other words, there are now fewer than half as many small business retail operators in New York as there were 10 years ago. This is perhaps vur greatest retailing area in the country.
It seems to me that this startling, stubborn fact--that small busiless simply is not surviving in the retail area-should be brought home to the American people and to the Congress.
This quality stabilization bill is not only designed to help elimiate pricing practices that so damage both the brand name owner nd the ethical retailer, this bill is also designed for protection of de consumer. Paragraph 8 is the heart and soul of this bill. Paragraph 8(A) als with bait-merchandising practices and (C) deals with mispresentation. Thus, two-thirds of the practices at which this bill aimed are designed primarily to protect the consumer. Add to this the further provision of paragraph 8, giving the conmer a right of action where he has been injured as the result of srepresentations by the manufacturer as to the size, capacity, qualcondition, model, or age of the goods, and it should leave no doubt anyone's mind that this quality stabilization bill is indeed conner oriented. assure you I intend to work hard for the passage of this quality ilization bill
. I urge you to give it favorable consideration in Tsubcommittee at the earliest possible date.
fixed by the manufacturer, to extract from him court costs and at-
means that he can compete with the man and can still fix the prices. I wonder if you endorse that.
Mr. FRIEDEL. I told you earlier I endorse the bill in its entirety. I do not say it is price fixing. You say it. I am not saying that.
Now, you just keep adding in words that are not in my bill. John,
Mr. DINGELL. I am not referring to the fact
Mr. DINGELL. I am asking you whether you feel that the little man ought to find his prices fixed on the retail and the wholesale level by a manufacturer who is also competing with him at the same level
, at the wholesale or the retail level?
Mr. FRIEDEL. Do you think it is fair for a
Mr. FRIEDEL. I cannot answer you the way you want me to say it yes or no. I am saying, Do you think it is fair for a big chain store to sell a product cheaper than this little retailer can buy it for?
Mr. DINGELL. I am not talking about that.
Mr. FRIEDEL. Are you in favor of that? That is what we are trying to stop .
Mr. DINGELL. This is not the point I am discussing now.
Mr. DINGELL. Let us take a situation where you and I are in business and I am a manufacturer and you are a wholesaler, and I say to you that I am going to have a wholesale store and my wholesale operation is going to be headed by my friend, Mr. Staggers, right here, and I am going to fix all your prices under this, and I am going to determine the level of profit, markup, and so forth, that you get in your wholesale operation, and I am going to be competing with you.
Now, I am asking, Do you think that is fair? This language of the bill on page 8, lines 14 through 20, provides for exactly that
Mr. DINGELL. Then you do not think that that is proper?
Mr. DINGELL. I see. You do not think that it is proper that a
Mr. DINGELL. Do you think it is proper that it should be permissive that a manufacturer can fix the prices of his wholesaler and retailer when he competes with him? Do you think that is proper?
Mr. FRIEDEL. He is competing with his other
Mr. DINGELL. Wait a minute. Let us not talk about whether he is doing it now or whether he is going to do it. Do you think it is fair that he should be able to do so?
Mr. FRIEDEL. Do I think it is fair for what?
Mr. DINGELL. Do you think it is fair for a manufacturer to be able to compete with wholesale and retail outlets handling his goods when he, at the same time, markets through his own distribution system that exact same item?
Mr. FRIEDEL. I think the manufacturer is entitled to a fair profit. Mr. DINGELL. Yes, but you are not answering my question. Mr. FRIEDEL. That is the only way I can answer it. I am not going what you want me to say,
and you are trying to get me to say that this bill authorizes price fixing—and I am not
Mr. DINGELL. I am not saying price fixing at all. Mr. STAGGERS. Mr. Friedel, the question is—and I do not know whether there is any real case of it in America, but what he is saying is this: If a manufacturer
Mr. FRIEDEL. If a manufacturer?
Mr. STAGGERS. One manufacturer has an outlet of his own, do you think, then, it is fair that he sets the price of all other outlets around the country that sell his product?
Mr. FRIEDEL. Is that the only product of its kind in the United States or does he have competition?
Mr. STAGGERS. He has a name brand.
Mr. FRIEDEL. If there is only one manufacturer of the item I can see how the rights granted him under this bill could be abused. But if he has competition, there are four or five other electric razors, or whatever it might be, do you think this manufacturer is going to price himself out of business?
Mr. STAGGERS. I am not answering questions. I am only trying to interpret the question.
Mr. FRIEDEL. I cannot picture, unless there is only one product, but if there is more than one, each manufacturer is in competition, and they want to stay in business, and they are not going to price themselves out of business.
Mr. DINGELL. I would like to thank my friend. I have a great deal of personal affection and high regard for the gentleman, and I do appreciate his statement.
Mr. FRIEDEL. I wish to say the same for my colleague from Michigan. The only thing is that we just see the bill differently. We have different views and anything I say will not convince you and anything you say is not going to convince me.
Mr. 'STAGGERS. Mr. Glenn, do you have any questions?
Mr. VAN DEERLIN. I would be interested, Mr. Friedel, in having more information on this housewife survey that you mentioned. Who
conducted it and the form of the questioning and so forth. If 80 per-
Mr. STAGGERS. Mr. Keith ?
Mr. FRIEDEL. The survey I quoted from earlier in the hearing was a so-called homemakers survey conducted by the firm of Ernst & Ernst in May 1961. I have not yet been able to get a copy of the questions as Mr. Van Deerlin asked but I am still trying and will submit them to the committee if I can get them.
Mr. STAGGERS. Mr. Curtin?
Mr. STAGGERS. At this time I would like to call on our colleague,
STATEMENT OF HON. MILTON W. GLENN, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. GLENN. Mr. Chairman, for the sake of expediency and perhaps propriety, I would like permission to introduce my statement into the record without reading it.
Mr. Staggers. Thank you very kindly, and the record will so show.
STATEMENT OF Hon. Milton W. GLENN, REPUBLICAN, OF NEW JERSEY
For the purposes of the record, I submit, in capsule form, reasons why I think this bill should be given priority and quickly enacted by this Congress.
Independent retailing in all fields is being relentlessly liquidated as the result of selective, monopoly producing price cutting known as customer bait pricing.
There may be, and probably are, other reasons for the decline of independent retailing.
But I think the inability of the small storekeeper to sell--at a fair profit--the famous brand-name products which are his bread and butter, must come at, or near, the top of these reasons.
The quality stabilization bill won't cure customer bait pricing entirely, but its enactment will help curb it.
In urging approval of this legislation, I say that the bill reflects free enterprise at its enlightened best.
It enables manufacturers, if they wish, to guard the reputation of their trademarks, brand, and trade names. In so doing, the bill, if enacted, would restore fair competitive pricing in the marketplace. And it would cost neither the Government nor consumers a single penny.
Mr. STAGGERS. The next witness is our colleague on the full committee, the Honorable John Jarman. Mr. Jarman, we will be glad to hear you at this time.