Mr. STAGGERS. I want to thank my colleague. Mr. Dingell, do you have any questions? Mr. DINGELL. I am delighted to see my old friend present here before the subcommittee. I am always sorry to see him on the other side of a piece of legislation. The gentleman expressed a great deal of concern about the little businessman. I was wondering if he wanted to endorse a section of the bill that authorizes the manufacturer or wholesaler to fix the prices at the wholesale and retail level in competition with little businessmen, rather on the little businessman with whom that manufacturer is in competition? Mr. FRIEDEL. Where do you read that into the bill? All rights and remedies provided in paragraphs (7) to (17), inclusive, of this subsection, to owners of a brand, name, or trademark, shall be also available to any owner of a brand, name, or trademark who, in the sale of goods identified by such brand, name, or trademark, shall compete, at any level of distribution, with any reseller offering such goods. Now, I was wondering if you happen to think it is a good idea that a manufacturer should have the power to fix the prices of his little wholesalers and retailers and at the same time compete with them. Do you endorse that practice? Mr. FRIEDEL. I cannot follow your thought. Mr. DINGELL. I know you are familiar with your bill, and I just wanted to decided whether you endorsed this particular section in your bill. Mr. FRIEDEL. I endorse the whole bill, but I have a different interpretation than you have. I do not think this affects the small businessman. This will protect him and benefit him. Mr. DINGELL. I see. It protects him and benefits him to have the manufacturer who competes with him fix his price. That benefits him? Mr. FRIEDEL. What do you mean by the manufacturer competing with the small businessman? That I do not read. Mr. DINGELL. Here it says-maybe you would like to construe this section, because it is your bill. It says here that he will have the right to fix prices. Mr. FRIEDEL. Where do you see that? Mr. DINGELL. It is on line 14, page 8, of the bill. Mr. FRIEDEL. Line 14? Mr. DINGELL. Page 8. Mr. FRIEDEL. I want to see the word "fix." Mr. DINGELL. It says "all rights and remedies provided in paragraphs (7) to (17)." That means fixing prices. Mr. FRIEDEL. That is your interpretation. Mr. DINGELL. That means recalling goods. Mr. FRIEDEL. That is your interpretation. It does not say in the bill "fix prices." Mr. DINGELL. Let me read this again: All rights and remedies provided in paragraphs (7) to (17). That is the right to recall goods, to sue, to inflict upon the small businessman a permanent injunction for violating prices and so forth 99-685-63- -3 fixed by the manufacturer, to extract from him court costs and attorney's fees, will belong to owners of a brand, name, or trademark, shall be also available to any owner of a brand, name, or trademark who, in the sale of goods identified by such brand, name, or trademark, shall compete, at any level of distribution, with any reseller offering such goods. Now, this 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, I respect you Mr. DINGELL. I am not referring to the fact Mr. FRIEDEL. I respect your thoughts and your views. 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. DINGELL. Do you think it is fair? 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. FRIEDEL. I thought that is what you were trying to discuss. 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. FRIEDEL. Would you just explain? I do not know of one little county, city, or any place in the whole United States that could have a manufacturer say to a wholesaler-evidently, you are speaking of one outlet-"I am going to fix all your prices." I do not know of any place in the whole United States where that could be done. Mr. DINGELL. Then you do not think that that is proper? Mr. FRIEDEL. Absolutely not. Mr. DINGELL. I see. You do not think that it is proper that a manufacturer should fix the prices of wholesalers and retailers with whom he is in open competition, do you? Mr. FRIEDEL. Do not forget there are four or five different Mr. DINGELL. I am asking a different question. Mr. FRIEDEL. It is permissive legislation. Mr. DINGELL. I know it is permissive. Mr. FRIEDEL. Right, and that is the only way I can answer that. 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 to say 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. Does he have competition? Mr. STAGGERS. We will assume there is. 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. GLENN. No questions of our very capable colleague. Mr. STAGGERS. Mr. Van Deerlin? 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 percent of the housewives of America are for this, why, there is no point in further discussion. Mr. STAGGERS. Mr. Keith? Mr. KEITH. No questions. 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. CURTIN. No questions. Mr. STAGGERS. Thank you very kindly. Mr. STAGGERS. At this time I would like to call on our colleague, Mr. Glenn from New Jersey, who is a member of this subcommittee. He also has introduced a bill now being considered by the committee. I would like him to give his views on the bill. 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. (Mr. Glenn's complete prepared statement follows:) STATEMENT OF HON. MILTON W. Glenn, REPUBLICAN, OF NEW JERSEY Mr. Chairman and members of the subcommittee, before this subcommittee is H.R. 3669, sponsored by the Honorable Oren Harris, the chairman of the House Interstate and Foreign Commerce Committee, and perhaps 25 additional identical bills, including my own. 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. STATEMENT OF HON. JOHN JARMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OKLAHOMA Mr. JARMAN. Mr. Chairman and members of the subcommittee, I want to thank you for extending me the opportunity of testifying in behalf of the quality stabilization bills now pending before you. As you perhaps know, I introduced one of these bills, H.R. 4703, as did many of our colleagues, including our distinguished committee chairman, Hon. Oren Harris. Let me explain briefly my position with respect to the legislation now before you. We have seen of late, Mr. Chairman, that more and more independent, locally owned businesses are encountering serious financial difficulty. Much of this has been caused by unfair competition on the part of chain and other discount establishments. Frequently, wellknown, brand-named merchandise bearing a time-honored trademark, is offered for sale to the public at a retail price which is far less than the price at which the independent merchant can obtain the same product at wholesale. These drastically discounted brand-named items then are used as bait merchandise to attract the public. Followup sales of other merchandise, often of shoddy and inferior unbranded variety, are then made to the buyer who has been attracted. In order to correct this serious situation, the bills before you would empower the owner of products identified by his trademark or brand name to prevent distributors handling his products from using such methods in reselling the trademarked or branded products, and thus damaging the mark or brand and associated goodwill. Whenever a trademark or brand name owner discovers his products being used by a distributor in any scheme involving mispresentation, bait merchandising, or sales at other than the established price, he may revoke the offending distributor's right to use his mark or brand in reselling such goods. In addition, the trademark or brand name owner is entitled to injunctive relief, if the offending distributor disregards the notice of revocation and continues the challenged sales practices. In this light, this legislation is seen as merely an extension of our trademark and copyright laws-an extension enabling a trademark or brand owner to protect his property rights through the channels of distribution. Certainly, if we accept the right to own property and the corresponding right to protect such property, then we must accept the objective of quality stabilization-protection of valuable investments in trademarks, brand names, and goodwill from ruinous marketing tactics. Another aspect of this bill relates to the question of protecting the individual consumer. A very high proportion of trademarked merchandise is of a kind that requires continuing service on the part of the retailer. I think that all of us are familiar with the shabby tactics of many discount organizations that saddle the purchaser with a piece of goods which does not operate properly or, perhaps, with a perfectly sound piece of merchandise, which in the normal course of operation requires maintenance and service. In either instance, too frequently the "quick buck" merchant simply is not there to give the consumer the maintenance and service backup that he deserves. The independent smalltown merchant can be depended upon to give this service. He is a part of the community. These are his friends |