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of any proposed resale price that is going to be legally enforced through the public courts.

We trust that your subcommittee will explore less dangerous and dubious routes to the preservation of small business than the one under consideration in H.R. 3669. Such measures might include, for example, strengthening of Federal Trade Commission powers to deal with genuinely predatory price cutting, and we feel certain that constructive programs in such fields as tax benefits, loan programs, encouragement of pooled purchasing arrangements, and other means of improving the competitive capacity of small business could be developed or strengthened.

Mr. Chairman, this concludes our statement on the proposed Quality Stabilization Act. We thank you for this opportunity to be heard before you.

Mr. STAGGERS. We are glad to have you, Mr. Fair.
Do you have any questions, Mr. Dingell?

Mr. DINGELL. No questions, Mr. Chairman.

It is a pleasure to welcome Mr. Fair to the Committee. He is a former constituent and a longtime friend of mine; so it is very pleasant for me to see Mr. Fair here this morning.

Mr. Fair. Thank you very kindly, Mr. Congressman.

Mr. STAGGERS. Mr. Van Deerlin.

Mr. VAN DEERLIN. Even though he is not a constituent of mine, I

have no questions for him.

Mr. FAIR. Thank you.

Mr. STAGGERS. We thank you, Mr. Fair, for appearing.

Mr. FAIR. Thank you, Mr. Staggers.

Mr. STAGGERS. Our next witness is Mr. Angus McDonald. Mr. McDonald, would you identify yourself for the record, sir?

Mr. MCDONALD. I am Angus McDonald, assistant director of legislative services, of the National Farmers Union, the legislative office here, in Washington.

I have a brief statement, Mr. Chairman. I think I can get through with it in a very few minutes.

Mr. STAGGERS. Fine. You may proceed.

STATEMENT OF ANGUS MCDONALD, ASSISTANT DIRECTOR OF LEGISLATIVE SERVICES, NATIONAL FARMERS UNION, WASHINGTON, D.C.

Mr. MCDONALD. The National Farmers Union throughout its 63year history has consistently supported the antitrust laws.

Our organization at county, State, and National conventions has affirmed and reaffirmed its support of the Sherman Act, the Clayton Act, and the Federal Trade Commission Act and has reiterated its opposition to any proposal which would weaken these laws.

Over a period of years this witness has appeared at congressional hearings pointing out the need for strengthening our antitrust laws and the economic plight of the farmer because he has not enjoyed the benefits of free competition. The farmer must take whatever is offered to him in the marketplace. He sells in a free market and because in many instances prices of items necessary for production are fixed by

gigantic corporations he has received a disproportionate amount of the Nation's income. General per capita income of the farmer is about one-half or a little more than one-half of those living in cities and

towns.

We find it impossible to support any price-fixing device no matter how attractive, no matter how beneficial it may appear to certain economic groups. Competition is the lifeblood of our economy and any restraint of it will redound to the disadvantage of consumers and in the long run to the disadvantage of those temporarily enjoying its benefits.

This legislation opens wide the door to control by large corporations and affords an easy opportunity in industries where a few companies control the production and manufacture of a product to fix their prices. It is well known that the proving of conspiracy or collusion is very difficult and in many instances impossible. Because of the development of our economy the economic power of great combinations is more of a threat to competition than ever in history.

The files of the Department of Justice and the Federal Trade Commission and the records of the courts are replete with instances of price fixing by one huge corporation which tended to create a monopoly and collusive activities of a group of corporations which tended to substantially destroy competition. The passage of the RobinsonPatman act in the thirties was an attempt to plug up a loophole in the Clayton Act and nip monopoly in the bud.

This law, together with the Federal Trade Commission Act which the Farmers Union has supported over a period of many years, has in part remedied the dilemma in which small retailers find themselves when confronted with unfair and discriminatory practices. We have supported, and support now, legislation which would strengthen these laws and prevent unfair and destructive competition at the retail level.

The small retailer, we fear if this bill were enacted, would be relieved of his most important weapon in his fight against large retail competitors. No doubt enactment of the bill would be followed by an increase in private brands by the large companies. The large distributor under a fair trade law would be able to offer his customers comparable products of his own private brand. The small independent retailer, on the other hand, having no private brand to offer, would lose customers by having them tolled away by the large distributors. The small retailer must not be denied the opportunity to reduce his prices in order to retain and attract customers.

The legislation, if enacted, would be very difficult to enforce and would result in a multitude of lawsuits and a great increase in the burdens of antitrust agencies. We believe that considerable progress has been made in recent years in enforcement of antitrust laws and that despite much criticism the antitrust authorities have accomplished a great deal in preventing or breaking up price-fixing practices and combinations.

If the bill were enacted we believe groups not affected by brand names or trademarks would ask Congress to allow them to carry the same kind of practices which are authorized under this bill. Passage of the legislation would undermine all our antitrust laws and possibly lead to their eventual abandoment. Apparently the atempt to legal

ize fair trade by means of State laws has not been successful. State courts in case after case have denounced these laws as contrary to the public interest and as legislation which would benefit minorities at the expense of the masses of consumers.

Doubts of the constitutionality of the legislation have also been raised. While we do not attack the legislation on its inconsistency with the Constitution of the United States, it would appear to the layman that a person who has purchased a product should have the right to dispose of it in any way he sees fit. This legislation would make every sale of a brand or a trademarked product a conditional sale, subject to control by the manufacturer. As pointed out, there is little doubt that the legislation would result in much litigation. Your attention is called to the following excerpts from court decisions:

COLORADO

Legislation of this kind evidences the ability of organized minorities to induce legislation for their special benefit at the expense of the unorganized purchasing masses * * *. We have not yet arrived at the place in a free America where the many must yield to the few, so that the latter may make increasing profits at the expense of those who still believe in the principle of free and competitive trade and commerce, untrammeled by legislative fiats (Olin Mathieson Chemical Corp. v. Francis, 301 P. 2d 139 (1956)).

OREGON

Regardless of how its true nature may be camouflaged by high-sounding terms such as "free and open competition," "unfair competition," "protection of good will," et cetera, it is a matter of common knowledge that it is a price-fixing statute designed principally to destroy competition at the retail level. Protection of the "good will" of the owner is simply an excuse and not a reason for the law * * *. Pressure for the passage of these acts came not from manufacturers or other trademark owners but from distributors-first and foremost the retail drug associations and then other retail and wholesale distributors.

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It is plainly apparent that the consumer is not benefited, but on the contrary is harmed by the operation of the Fair Trade Act. The consumer is the public. He is compelled to pay a higher price for a given commodity in order that the retailer may be guaranteed a higher fixed, and often unreasonable, profit * * *. It is obvious that the whole scheme *** is one for private, rather than public, gain, a scheme fathered by highly organized groups, interested not in the public weal, but only in their own selfish ends. (General Electric Co. v. Wable, 296 P. 2d 635 (1956)).

FLORIDA

Except in times of economic emergency such inflexible price arrangements which the act sanctions are not in line with our traditional concepts of free competition, which have traditionally been the yardstick for the protection of the consuming public (Miles Laboratories, Inc. v. Eckerd, 73 So. 2d 680 (1954)).

ARKANSAS

It is frightful to think a device so easily concocted could destroy the constitutional bulwark protecting our personal liberties and the public welfare *** The principal objective *** is the protection of profit margins for retailers and distributors unwilling or unable to meet the pressure of competition (Union Carbide & Carbon Corp. v. White River Distributors, Inc., 275 S.W. 2d 455 (1955)).

MICHIGAN

Can it be said that by the process of reducing prices neither war, destruction or evil are visited upon the public health, safety, morals or the general welfare? *** Such is not the concept upon which America's competitive economy was developed (Shakespeare Co. v. Lippman's Tool Shop Sporting Goods Co., 54 N.W. 2d 268 (1952)).

SOUTH CAROLINA

It is difficult to find any justification for this legislation based upon considerations of the public health, safety, morals, and general welfare (Rogers-Kent, Inc. v. General Electric Co., 99 S.E. 2d 665 (1957)).

LOUISIANA

It also cannot be seriously disputed that the right of an individual to engage in a lawful business and to fix the prices at which he disposes of his own property is guaranteed by the due process clauses of both the State and Federal Constitutions (Dr. G. H. Tichenor v. Schwegmann, 90 So. 2d 343 (1956)).

Fixing prices at the retail level would tend to restrict consumption and indirectly aggravate the unemployment problem since full employment is dependent on maximum production and distribution. This administration is racking its collective brains to find a way to solve the unemployment problem. Many feel that the source of this problem is the result of inadequate purchasing power. It is obvious that the freezing of prices at the retail level would reduce consumption, particularly in the low income groups. It would, in particular, result in hardships on farmers whose income has been a chronic problem for many years.

That concludes my statement, Mr. Chairman.
Mr. STAGGERS. Thank you, Mr. McDonald.

Any questions, Mr. Dingell?

Mr. DINGELL. Mr. Chairman, no questions, except to commend Mr. McDonald for a very fine statement and for very rare patience manifested during this hearing. I am personally deeply grateful to you. Mr. MCDONALD. Thank you. Mr. Chairman, we appreciate those kind remarks.

Mr. STAGGERS. Just a moment, will you, please? Maybe the others might have some questions, Mr. McDonald.

Mr. Glenn.

Mr. GLENN. I have no questions.

Mr. STAGGERS. Mr. Van Deerlin.

Mr. VAN DEERLIN. No. Thank you, Mr. Chairman.

Mr. STAGGERS. Well, thank you very kindly for appearing.

Our next witness is Mrs. Sarah H. Newman.

Mrs. Newman, would you identify yourself for the record, please? Mrs. NEWMAN. Yes.

Mr. STAGGERS. And proceed.

STATEMENT OF SARAH H. NEWMAN, GENERAL SECRETARY, THE NATIONAL CONSUMERS LEAGUE

Mrs. NEWMAN. My name is Sarah H. Newman. I am general secretary of the National Consumers League and appear here today in opposition to H.R. 3669, a bill to legislate retail price fixing on a nationwide scale by manufacturers or owners of any trademarked items, without any control over the setting of those prices.

The trademark law grants to the owner of a trademark certain specific rights. These rights are the exclusive use of the trademark and effective protection against unfair competition, and against deceptive and misleading use of such marks in commerce.

Nothing in the Trade Mark Act grants the trademark owner the right to control the resale price of the trademarked goods once it has been sold by the trademark owner. If the Congress feels the Trade Mark Act should be amended to give this additional monopolistic control to trademark owners, then it should be done more directly, as an amendment to that act. Even the patent laws of the United States (which are among the strongest in the world) do not grant resale price fixing powers to patent owners. Once a patented product is sold to a retailer, the retailer is free to decide for himself what price to charge the consumer. This is in accord with our long established principles of free competitive enterprise. Adoption of H.R. 3669 would result in elimination of competition at all levels of distribution and is totally inconsistent with our antimonopoly concepts.

The proponents of this legislation do not emphasize the pricefixing aspects. Indeed, by referring to this as a bill to promote quality and price stabilization, they attempt to create a totally misleading picture of the purpose of this bill. This is a true example of what consumers call "misleading labeling." There is nothing in this bill which would stabilize quality or prices. The only result this legislation would accomplish would be higher prices for consumers and not even stabliized higher prices since the manufacturer could change prices whenever he wanted to.

I am certain that before these hearings are over, you will have received many illustrations of how such legislation affects prices. In previous hearings, the league has presented figures comparing the prices of identical items sold in Washington and in our neighboring State, Maryland (a fair trade State), often even in outlets of the same chain of stores. In each case, the price charged in the "fair trade" State (Maryland) was higher than the price in the District of Columbia. In 1958, a Washington Star ad showed that Peoples Drug Stores in Maryland were forced to charge $100.22 for a group of 17 items which it sold in its District of Columbia stores for only $71.43. This is an increase of 40.5 percent due to fair trade legislation. Estimates in the past have presented figures showing that the cost to consumers could be anywhere from $1 to $10 billion a year. And you have heard even higher figures per year this morning.

For the Congress of the United States to give manufacturers a right to fix prices which might result in such tremendous costs to the consumer, without reserving for itself any jurisdiction over the establishment of these prices, would be anti-consumer legislation of the worst kind. When in times of emergency the Congress has adopted price-fixing legislation, it has reserved for itself the right to take part in the setting of the fixed prices. Under this bill, with no present emergency, it would abdicate such rights, while giving the manufacturer sole jurisdiction over the retail price.

Proponents frequently use the argument that small business needs this type of legislation to survive. The National Consumers League is not opposed to helping small business, but we contend that this legislation would not really benefit small business. The large retailers, who are the cause of the dilemma facing small business, can easily use this legislation to increase their "take" of the consumer's dollar., A large retail chain can buy the same product as a fair trade productfrom the same manufacturer-but under its own house label, and then

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