Mr. JOHNSTON. Well, I do not know that you can answer it in just that way, sir. The effect of that decision taken in connection with the earlier decisions in the two cases that went up from the Seventh Circuit, is this: As I see it, in interpreting the Robinson-Patman Act, they interpret price as to which there is a discrimination as the price, the so-called mill net or f. o. b. price. Therefore, if there is a variance in that price between two purchasers who are in possible competition with each other, there is a violation of the act. The CHAIRMAN. I do not think it goes as far as that, in my humble opinion. I think everything would have been well if Judge Black had not indulged in too much obiter dicta. I think the opinion itself says that an individual, not acting in concert or conspiracy with one or more persons or corporations, could undoubtedly absorb freight charges. If he acted in concert or in conspiracy then he violates the antitrust laws. Then Justice Black indulged in a lot of extraneous opinions which befogged and made difficult exactly what the opinion meant when you read it in toto; but the general opinion of the Court, stripped of the unnecessary comments of Justice Black, to my mind, was clear that you could absorb freight. Mr. JOHNSTON. Well, the trouble I have with your interpretation is this: You are entirely correct, if you are dealing with section 1 of the Sherman Act, that there must be under that decision, and the effect of that decision, a conspiracy or agreement between competitors. But when you are dealing with the second phase of the case, to wit, the Robinson-Patman Act, no conspiracy is required. It is true in that particular case there was a charge in the complaint of the Federal Trade Commission that they did conspire to violate the Sherman Act, but conspiracy, it seems to me, has very little, if anything, to do with the second charge of violating the RobinsonPatman Act, because that is an individual charge against me as a manufacturer, if I sell to two buyers at varying prices, and I can only intepret that decision in one way upon that phase of the case, and that is that when you once place the interpretation upon the language of the Robinson-Patman Act which the Court there placednamely, they adopted the Federal Trade Commission's interpretation that price means mill net, and not the price which the buyer paysthen inevitably you have got a violation whenever you vary your mill net, and inevitably you vary your mill net whenever you absorb freight to meet competition. The CHAIRMAN. I don't want to unduly prolong this colloquy, but there is just one other point that I want to make: Did not the House bill provide that when one acts independently he could absorb freight? There was express language used in the House bill. Mr. JOHNSTON. That is all right, sir, if they had not adopted the Carroll amendment, but the Carroll amendment then said that you can absorb freight provided in so doing you do not violate the Robinson-Patman Act, and that throws you right back into the situation where you were before, in my opinion. Mr. MICHENER. The question of good faith does not cut any figure in the bill as it passed. Mr. JOHNSTON. The question of good faith has to do with the question of meeting competition, good faith in meeting competition. In other words, of course, if you do not in good faith meet competition it is merely a colorable transaction in that respect, and then you will still fall within the purview of the Robinson-Patman Act. But I do not think the question of good faith, sir, has anything to do with the question considering the exception which has been written into the law by the Carroll amendment. Mr. MICHENER. No, neither do I, and that is one reason why I opposed the Carroll amendment. Mr. JOHNSTON. Yes, sir. Mr. MICHENER. I think the businessman is entitled to some protection if he acts in good faith, and where these laws are changed from day to day by the decision of four and five Supreme Court Justices, the businessman certainly ought to have something, some stability. Mr. JOHNSTON. I agree with you, sir, and I think it is really a very important question. It is not purely academic. From my experience it involves a great many businesses that are going to be vitally affected if that interpretation is going to stand and going to be enforced, and it looks to me, from some of the recent complaints filed, that they are going to try to enforce it. Mr. MICHENER. Take that basing point bill as it was reported by the committee to the House. Do you favor that bill? Mr. JOHNSTON. Yes, sir. Mr. MICHENER. Now, then, the O'Mahoney bill was introduced or presented in the Senate by Senator O'Mahoney as a substitute for the original bill over there. Mr. JOHNSTON. Yes, sir. Mr. MICHENER. The Kefauver amendments were adopted in the Senate, were accepted in the Senate Mr. JOHNSTON. Yes. Mr. MICHENER (continuing). Without discussion, and all that within a day. Then it came to the House, and the subcommittee of the judiciary, of which I am not a member, gave consideration and reported the bill, which the full Judiciary Committee approved. Then there was the debate on the floor, and the amendments by Carroll practically reinstated, for all purposes, the Kefauver amend ment. Mr. JOHNSTON. That is right. Mr. JOHNSTON. That is my understanding. I think it goes a little further than the Kefauver amendment. Mr. WILSON. In effect it practically nullified the bill. Mr. JOHNSTON. That is right, as far as the Clayton Act is concerned. Mr. WILSON. By stating that you can absorb freight unless you violate the law. Mr. JOHNSTON. That is right, as far as the Clayton Act is concerned. The CHAIRMAN. I do not think it nullified the bill. Mr. JOHNSTON. Well, it does not as far as the Federal Trade Commission Act is concerned. Mr. MICHENER. It just sterilized it, not nullified. Mr. JOHNSTON. Yes, sir. A second problem is presented by the decision in the Rigid Conduit case, affirmed by the Supreme Court by a divided court. So far as that case holds that the independent use of identical pricing methods by competitors constitutes a violation of section 5 of the Federal Trade Commission Act, it is superseded by the O'Mahoney bill. To that extent it seems to me the bill is very effective. Another major problem, of particular importance to trade associations or other organized groups, is presented by the practice of the Federal Trade Commission of inferring agreement from the mere fact of uniformity, where competitors have such contacts, through trade groups or otherwise, as makes such agreements possible. Uniformity in price of a standardized commodity is a normal phenomena which may and frequently does result from the free play of competitive forces. Buyers will pay no more for the goods of one seller than they will for the goods of another. The reduction in price by one seller of such homogeneous goods in any given market forces the prices of all sellers to the same level. Likewise a price advance of one seller, which is usually dictated by rising cost factors, is followed by all others, because a failure of any seller to advance with the | market merely throws the entire market back to the original level at which profit margins have become inadequate or nonexistent. Now, of course, uniformity in price is a fact to be considered by the Commission or the Court in determining the existence of an agreement to fix prices. Yet uniformity alone, where the economic fac tors referred to above clearly exist, should not be enough to establish agreement. Nevertheless in practice the Commission, and the Courts on appeal, largely, and in some cases entirely, ignore the economic factors which inevitably bring about uniformity in price in certain industries and predicate the conclusion that an agreement existed upon the record of uniform prices in certain markets and during certain limited periods of time. As a result of this cavalier method of establishing price agreements, every industry for which a trade association has been formed that deals in a thoroughly standardized commodity is, for all practical purposes, without a defense where charged with violating section 1 of the Sherman Act. Upon any general revision of the antitrust laws, some method should be devised of placing reasonable limitations upon the establishment of guilt by inference. I have two specific recommendations which have an indirect bearing on this subject. The first is that appeals from Federal Trade Commission orders should be liberalized. At present courts of appeal. faced with the examination of a long involved record, quite naturally fall back on the provision of the Federal Trade Commission Act which makes the Commission's findings of fact conclusive on appeal and accept the Commission's conclusions without too close a scrutiny of the record. There is no sound reason today why, on an appeal from a Federal Trade Commission order in an antitrust case, the appellant tribunal should not have the same right to review the record as is accorded in a like case on an appeal from a district court decree. The fiction that in deciding the facts in an antitrust case the Commission acts as a body of experts is, in my experience, just what I have de scribed it-fiction. If facts and not mere theories and inferences are to determine the findings which support the order, then the average district judge is certainly as well qualified by training and experience to decide the issues as the Commission or one of its examiners. I submit, therefore, that the court of appeals should be given the same right to review the Commission's findings of fact in an antitrust case as it now has to review the facts supporting an equity decree entered by a district court. Mr. KEATING. Are the Federal Trade Commission orders reviewed under the Administrative Procedure Act, or are they reviewed under separate Mr. JOHNSTON. No; they are reviewed by the provisions of section 5 of the Federal Trade Commission Act. Mr. KEATING. Do you feel that what you have said as applying to the Federal Trade Commission orders should apply to all orders of administrative bodies? Mr. JOHNSTON. Well, I would rather think so; but, frankly, as you know, that change was made quite recently with respect to the appeals from The Tax Court-that are now reviewed to the same extent that a judgment of a district court in a case tried without a jury may be reviewed. That change was made last year. I am not sufficiently familiar with all of the other commissions and appeals therefrom to properly answer your question, but I would feel that way as a lawyer. Mr. KEATING. If something were done along the lines you suggest— and I am not expressing a viewpoint one way or the other-it would result in a different method of reviewing Federal Trade Commission orders from other orders in administrative bodies, as I understand it. The CHAIRMAN. Such as the Interstate Commerce Commission and the Federal Communications Commission, the Civil Aeronautics Board, and so on. Mr. JOHNSTON. I do not know. I am not familiar enough with those statutory provisions to say whether all of those contain a provision that the findings shall be deemed conclusive. That, of course, is the thing that really stops the court of appeals when you get up there with a long record, and the court sees that record before it and he says, "Oh, well"-and it is quite natural; I suppose we would all do it if we were sitting up there with a mass of work to get through with-"the act says that the findings of the Commission shall be conclusive. The Commission finds there was an agreement; the Commission finds there was a violation; that ends it." Now, it is going to be difficult enough, I grant you, to get them to review the facts if they had the power to review the facts. The CHAIRMAN. How long would it take for the courts then to review all of these voluminous cases if you had to put another burden on the court to go into the facts? Mr. JOHNSTON. Sir, today they are supposed to look into the record to determine whether or not there was any substantial evidence. The CHAIRMAN. Yes, but if you could open it up in the way you indicate and you would have cases that would be interminably longMr. JOHNSTON. Oh, no. It would not change the situation unless you assume that the courts would take more time than they take today. Mr. KEATING. We just created 27 new judgeships, and that would give them more time. Mr. JOHNSTON. But I do not think it would change that, Mr. Chairman, at all, because I am not suggesting that they pass on the facts de novo. I am merely suggesting that they have the same right to review that they have now of an equity decree in a district court. There the court of appeals, when that decree goes up, has the right to look at the facts and see whether or not those facts support the decree of the court below, and they are not precluded by any limitation upon their power of review. They do not examine the facts anew; they accept the decision of the court below ordinarily, unless they can find, of course, that the court below clearly misinterpreted the facts. The CHAIRMAN. We have had criticism expressed by those who have appeared before us directed against the endless delays on these appeals from orders of the Federal Trade Commisison, and the actions of the Department of Justice in operating under the Sherman Act and the Clayton Act, and we have requested Chief Justice Vinson to place the matter on the agenda of the next Judicial Conference of the United States so as to get some recommendations so that we probably will expedite consideration of these appeals. Now, you have offered a suggestion this morning which I think might also well be directed to Chief Justice Vinson to see what his opinion is, and that of his associates on the Supreme Court Bench, as ! well as the opinions of the circuit judges, the senior circuit judges, in regard thereto.. Mr. JOHNSTON. My experience, if I may draw on that, sir, is that there has been no great delay in the appeals except for the fact of printing the record. For instance, in the Cement case, I think it took almost a year to get that record printed. That was the delay really in that case. Of course, it was a tremendous record. I do not know how many volumes there were. It stood higher than this table, and it was a big printing job. In all the cases that I have been in the only delay that I have found is that delay in getting the record printed. My second suggestion is somewhat more radical. Why should the Federal Trade Commission have the right to enforce the Sherman Act? It can be demonstrated, I believe, by reference to the debates in Congress at the time the Federal Trade Commission Act was passed, that Congress did not intend to confer that power on the Commission. The Supreme Court has definitely held, however, that a violation of the Sherman Act may be treated by the Commission as an unfair trade practice, contrary to section 5 of the Federal Trade Commission Act, and restrained by a cease-and-desist order. Thus the Commission, in effect, has concurrent jurisdiction with the district court, which may afford the same relief by equity decree. Why should one group of defendants charged with violating section 1 of the Sherman Act be compelled to try their case before an examiner, under the Commission's rules of evidence, and with only a limited right of review, whereas another group for the identical offense present their defense to a district court, under the established rules of evidence, with a direct appeal to the Supreme Court of the United States? If we are going to streamline the antitrust laws, then I respectfully suggest that in the interest of uniformity of practice and avoidance of conflict between the Department of Justice and the Commission, the prosecu tion of all violations of the Sherman Act, civil and criminal, be left in the hands of the Attorney General and the district courts. The Commission will still have ample scope for its activities in handling cases arising under the Federal Trade Commission, Webb-Pomerene, and Clayton Acts. |