morning at about 9:30 that there apparently is only one lawyer in the Department of Justice who they feel is prepared, without some extensive preparation, to explain the Department's jurisdictional authority, and that lawyer was unavailable today because he was on leave. The CHAIRMAN. All right, sir. Off the record. (Discussion off the record.) Mr. DIXON. I would like to say that the chairman has been extremely kind to me with regard to listening and giving me time, as have committee members. For that reason I should like to reciprocate by asking unanimous consent to put my talk in the record, to save the members that time. The CHAIRMAN. Well, you may have that permission, of course. STATEMENT OF HON. HENRY ALDOUS DIXON, A REPRESENTATIVE IN CONGRESS FROM THE FIRST CONGRESSIONAL DISTRICT OF THE STATE OF UTAH Mr. DIXON. Mr. Chairman, it is my pleasure to appear here in support of H. R. 7743 by Representative Hill, but also to go more to the heart of this problem by advocating S. 1356 by Senators O'Mahoney and Watkins (now passed by Senate subcommittee) and my measures H. R. 5283 and H. R. 8536. H. R. 5283 was given a hearing by the House Joint Committee on Judiciary and Interstate Commerce. I expected it at the time to come before our own Committee on Agriculture, but since it was assigned to Interstate Commerce, and H. R. 7743 (by Representative Hill) was assigned to Agriculture, by a slight change in the wording of H. R. 5283, I was able to have assigned to Agriculture as H. R. 8536. This, in my opinion, becomes necessary because both H. R. 7743 (by Representative Hill) and my bills deal with the same problem. I support H. R. 8536 because I believe that the Federal Trade Commission and not the Department of Agriculture should have authority to regulate unfair trade practices by meatpackers just as it regulates such practices in other industries. The attempted Dirksen amendments in the Senate and H. R. 7743 (by Representative Hill) would leave the wholesaling and retailing activities of a firm principally engaged in meatpacking under USDA, although, in spite of a growing volume of complaints made by competitors of such packers the USDA in 18 years has not issued a single cease-and-desist order for engaging in unfair trade practices (title II of the Packers and Stockyards Act) involving the wholesaling and retailing of a meat product or has it in the past 36 years issued a cease-and-desist order for unfair trade practices in wholesaling or retailing of nonwheat and nonfood products. While I support H. R. 7743 as far as it goes, I greatly favor S. 1356 and H. R. 8536 for reasons as follows: (1) The same set of trade practice rules and the same type of supervision should apply to all firms. The livestock growers whom I represent, the National Milk Producers Federation and 24 major organizations affected, want to transfer from the United States Department of Agriculture to the Federal Trade Commission jurisdiction over unfair trade practices of packers themselves as well as other firms appearing to circumvent the law by purchasing 20 percent of the stock in a packing corporation and consequently coming under the lack of supervision under the Packers and Stockyards Act. (2) The meatpacking industry is an important industry in the American economy with a long antitrust history. (3) America's livestock producers are in a poor economic condition and need protection against unfair trade practices which can artificially lower the price of their products. (4) The Federal Trade Commission would be a more effective and economical enforcement agency than the Department of Agriculture. (5) The Federal Trade Commission actively defends primary producers in other areas. (6) The meatpacking industry is heavily concentrated and has high monopoly potential. (7) The meatpacking industry has a history of market sharing. (8) The meatpacking industry is not a low-profit industry. (9) Meatpackers engage in feeding operations which should be carefully examined. NUMEROUS COMPLAINTS ARE BEFORE THIS COMMITTEE While visiting livestock growers in 25 counties in Utah, I heard widespread complaint against practices assumed to be violations of the Unfair Trade Practices Act. Other witnesses in these hearings have testified to the same complaints in areas which they represent. Again we have in the record 29 complaints which the FTC has referred to the USDA for investigation and action. All 29 of these cases would remain under USDA if H. R. 7743 were passed without amendments, so these complaints would still remain unsatisfied. Representatives of the Western States Meat Packers Association have also filed for our record 8 complaints from members of their 462 packers upon which they ask USDA action. One packer, Paul Archie McFarland, of Salt Lake City, Utah, testified in the Senate hearings as follows: I have worked in all departments of the company from livestock buying to administration of policies. Our growth has been gradual and profitable until Swift & Co. took over the American Packing & Provision Co. at Ogden within the past few years. Since that time Swift & Co. has proceeded to dominate our market. It has been said by good authority that Swift set aside over a million dollars to become established in every butcher shop in the intermountain area. Since that time, Swift has used every trick in the book to monopolize the livestock market in the intermountain area and to dominate the sales of meat and meat products. In the lamb market in our area, Swift has placed a man at every point of sale, and it is almost impossible to purchase live lambs at a price that will show a profit. Swift has been following the policy of wherever we get any business, they will cut our price from 1 to 2 cents to take the business we have away from us. They follow us around like a bloodhound, trying to keep us out of the market. They have in this area 10 salesmen to our 1 and are trying every kind of a trick to freeze us out, and when I say "us" I mean the independents. Many of the customers state that they would rather buy from us than the big packers, but they cannot afford not to buy from them because of the cheap prices which they quote. The chainstores are also putting on the squeeze, especially in this local meat market. They have got the business spread so thin among all the packers that they just seesaw the price from one to the other. For example, the Safeway buyer went to Ogden and marketed a string of cattle at William Parke & Son, and then went over to Swift, and Swift quoted 1 cent a pound cheaper so the 96278-57-19 chainstore called Parke's and told them they would either have to cut their price 1 cent a pound or cancel the order. This is the kind of tactics they are putting out. We have been showing a continuous loss on choice beef and where we used to get 60 to 70 head a week from Safeway, they have cut us down to less than 10. Between the chainstores and the big packers they are going to hurt the independent unless something is done immediately. The wholesale grocers have joined the livestock growers and the small packing plants in registering their complaints. Mr. Harold O. Smith, Jr., executive vice president of the United States Wholesale Grocers' Association, testified before our committee as follows: These are practices engaged in by some meatpackers, as reported to us by our members, and apparently about which nothing effective can or will be done in the present state of the law and enforcement jurisdiction, or could or would be done if H. R. 7743 in its present form were enacted: 1. Discriminating in price between competing buyers. 2. Giving kickbacks to supervisors of a retail distributing company. 3. Subsidizing certain customers to the disadvantage of their competitors. 4. Selling evaporated milk in five-case lots to some outlets cheaper than the wholesaler can buy evaporated milk in carload lots. 5. Favoring some retailers under the guise of advertising and promotional allowances and even selling to them at prices cheaper than to the wholesaler. 6. Selling to some retail buyers from branch houses below wholesale prices temporarily to make up monthly branch-house tonnage quota. 7. Packer salesmen telling wholesale grocers' retail customers the prices they have charged the wholesaler for purchase of packer merchandise and in some cases telling the retailer to buy up the wholesaler's stock of an item on which the price has advanced before the wholesaler learns of the advance. 8. Discriminating in price on frozen foods on a basis of purchases of meat products. We respectfully urge the committee to reject H. R. 7743 as presently drawn, in favor of H. R. 8536, which we believe would completely eliminate the present inequity. THE FEDERAL TRADE COMMISSION WOULD BE A MORE EFFECTIVE AND ECONOMICAL ENFORCEMENT AGENCY THAN THE DEPARTMENT OF AGRICULTURE Our present Secretary of Agriculture, Ezra Taft Benson, should be commended, as he appears to be the only Secretary of Agriculture since 1925 who has indicated any noteworthy willingness to enforce title II of the Packers and Stockyards Act. He has promised to make a budget request for increased personnel for this purpose. The Trade Practices Section of the Packers and Stockyards Branch of USDA has not been supplied with sufficient personnel to do the job. Few of the field office personnel of the Packers and Stockyards Branch are regularly employed in enforcing title II of the act. Most of the field personnel are doing a commendable job in enforcing title III of the Packers and Stockyards Act, which, incidentally, would not be affected by the legislation under consideration. Representatives of USDA frankly admitted that prosecution under title II had been neglected, and that it was the plan of the Department to reform. Mr. Roy W. Lennartson, Deputy Administrator for Marketing Services, USDA, told the House Committee on Appropriations that it would take until the end of 1958 before the Department could post 93 percent of the stockyards and that this posting was their first objective. He said: Although we have been criticized recently for not devoting some of the funds under this act to explorations into trade practices on the part of packers and others outside the yards, I think our policy has been sound in attempting first to use our funds to bring the impact or benefits of this act down closest to where the producer can obtain them. In addition to the posting of the 150 yards next year, we are hopeful that some of the funds requested would be available to begin some investigations into the buying practices of packers off the yards. Again, during the hearings of the Senate committee when Senator Watkins commented that USDA personnel were spread too thin and that a 36-year trial period with USDA was a "long enough trial period," Under Secretary Butz said: It is quite true for 26 years that it has not been adequately enforced, but don't you think when the sinner confesses and resolves to do better he should be given a chance? (transcript, pp. 697-698). Representative Celler told the Senate committee that the regulatory branch is 3 echelons removed from the Secretary, that it was built in 1923 on the basis of 260 persons, but that it dropped to 130 in 1925 and has only 68 today, if the 29 clerical workers be excluded. The USDA history of regulation under title II bears out the above admissions, because only 28 cease-and-desist orders have been issued since 1922. The cease-and-desist orders issued by the Secretary of Agriculture under title II of the Packers and Stockyards Act are as follows: Of the above 28 cease-and-desist orders 18 are for refusals to pay for livestock, 6 for weight and grade frauds, 8 involved preferences, price fixing, and unfair practices (1 involved discrimination on a yard) and 7 involved wholesaling of meat products. The Department has never issued a single cease-and-desist order against a packer involving the wholesaling of nonmeat food or a nonfood product yet. Eighteen percent of their shipments in ICC in 1950 were nonmeat food and nonfood products. If we wipe out the consent decree as big packers requested and leave packers under USDA, as Representative Hill's bill would do, they could threaten control of food stores on account of an advantage through preferential treatment under the law. The mere fact that the FTC has referred 29 complaints to the USDA since 1950 and that little if anything has come of these complaints, is ample evidence of the admitted inadequate enforcement. It should be noted that all 29 are complaints against packers (11 against 1 packer), that as a result none of them could be prosecuted by FTC and that passage of H. R. 7743 (the Hill bill) as it now stands, would in no way change jurisdiction over these packers or give those complaining any more protection than they now receive. Summary of matters referred to the Secretary of Agriculture pursuant to Packers and Stockyards Act since Jan. 1, 1950 1 Investigation disclosed Swift & Co. was Alleged that product packed by subject which was sent abroad in a CARE package was inedible. Charge that subject using beef shortage to Alleged false and misleading advertising of Question raised as to whether contest con- Alleged price discrimination in favor of chainstore as opposed to independent store. 1 Informal since May 1, 1950. Previous records not available. |