self-enforcing provision. The people who bring lawsuits against those
who are violators help enforce the law, and that is one of the good
things in it.
Furthermore, injunctions could be brought in the local courts
against people who were violating the law. There are several ways
of enforcing this law that no other law has. So I am especially ]:»roud
of it for that reason, and I know that tliis connnittee will do exactly
what is right concerning it.
If you will permit me, Mr. Chairman, I would like to file my state-
ment for the record, and then I have another engagement, a very im-
portant one which you know about.
Mr. DixGEi.L. That is the caucus.
]Mr. Patmax. And I would like to yield my time. But if you would
like to ask me any questions, I would be very glad to try to answer
them.
Mr. DiNGELL. Without objection, Mr. Chairman, your statement will
ap])enr in the record in full as if given at this point in the record.
(Mr. Batman's statement follows:)
Statement of Hon. Wright Patman, a Member of Congress From the State:
OF Texas
Chairman Dingell and members of the committee, you know that it is needless
for me to say that it is a pleasure for me to appear before you and to express my
vievrs regarding the subject matter you are studying here today.
I congratulate this committee on its determination and its announcement of
this study of attacks by study groups on our antitrust laws and our public policy
of antitrust. You have stated that these study groups are criticizing the Robin-
son-Patman Act and antitrust laws in general, and the enforcement policies essen-
tial to the survival of small business. This criticism of our public policy of anti-
trust has been made public and is well known. Criticism of this kind is not new,
but this recent criticism is particularly disturbing in that it has involved chal-
lenges through influential voices going beyond the critical reassessment of the
implementation of our antitrust policy to the questioning of the underlying
assumptions of that policy. This new criticism of our antitrust policy seems
motivated by a kind of economic determination holding in effect that sheer size
and absence of free and fair comi)etition in the marketplace must be accepted
as the inescapable price for economic progress.
Of course with that view I disagree, and I believe that a majority of the
Congress and responsible people in government, and, yes, in private life as
well, disagree with the thought that we must compromise our public policy
of antitrust in order to secure economic progress.
Many of these influential persons who would have us to compromise our
public policy of antitrust, make their "advice'" on antitrust policy and what
to do about it available to the President of the United States and to other
leaders in this country. Some of this "advice" has come from self-appointed
advisers in the form of public writings to the effect that sheer size and absence
of free and fair competition in the marketplace is the inescapable price for
eeonomif progress, and that steps should be taken to substitute regulation of
our economy through some vehicle similar to a corporate state, rather than
througli force of free and fair competition in the marketplace.
An attack of that kind on our public policy of antitrust is a bit more subtle
than attacks made by some others. For example, an economist by the name
of Allen Greenspan evidenced greater bluntness in his attack on antitrust. Mr.
Greenspan's advice on what to do about our antitrust policy is evidenced in a
])Ook whi<li was published in November of 1907 of writings edited by Ayn Hand
and entitled "Capitalism: The Unknrncti Ideal."' Chapter 4 of that book attributed
to Mr. Greenspan contains the following statement :
"The Sherman Act may be understandable when viewed as a projection of
the nineteenth century's fear and economic ignorance. But it is utter nonsen.se
in the context of today's economic knowledge. The seventy additional years of
ob.serving industrial development should have taught us something.
"If the attempts to justify our antitrust statutes on historical grounds are
erroneous and rest on a misinterpretation of history, the attempts to justify
them on theoretical grounds come from a still more fundamental misconception."
More recently a conmiittee was named and authorized by President Lyndon B.
Johnson to provide him with advice in the form of a report on ".Vntitrust Policy."
That committee made a report to him on July i^, 19€8, entitled "Task Force
Report on Antitrust Policy." That Report urged drastic revision in our antitrust
jiolicy by cutting it back in many respects and providing for restructuring of
our entire economy to such an extreme that it is obvious such restructuring will
not. as a pra<'ticnl matter, be effectuated (see tlie Congressional Record for May
27, IWn. pages S.'(i42-Sr)Gr)ri) .
It is believed that it would be worthwhile for this committee to closely study,
analyze and report upon that "Task Force Report on Antitrust Policy." It ap-
1>ears that anyone doing that logically will be led to the conclusion that it con-
tains not only ]iroj>osals for relaxing and ctmipromising our present antitrust
policy against the building up of monopolies, but also suggests that what one
could consider doing about a monopoly once it has been built up, amounts to a
proposal to proceed to break it up. Therefore. I would say that a more ant title
for the "Task Force Report on Antitrust Policy" would be "Monopoly : A Report
on Proix)sals for Building Up and Breaking Up Monopolies." For example, this
report did urge rejieal of major provisions of the Robinson-Patman Act, which
of course were designed to prevent the buildup of monopolies.
Those who are urging either complete repeal or substantial revision of the
Robinson-Fatmau Act, or at least some of those who do that, express concern
about the concentration of economic power in the hands of a few large firms.
I also express concern about that matter but I am not unmindful of how some
of this concentration of economic power was achieved. The record.s show very
clearly a large number of firms have used price discrimination as a weapon to
destroy competition. As recently as March 31, 1952, the Select Committee on
Small Business of the United States Senate published a report on "Monopolistic
Practices and Small Business," and on page 8 thereof referred to the practice
of price discrimination and how it is used to achieve monopoly conditions. As I
shall discuss later, the Committee on the Judiciary of the Hou.se of Representa-
tives, as well as the Select Committee on Small Business of the House of Repre-
sentatives, have made a number of reports to the House which contain findings
to the same general effect.
Now I am not opposed to those provisions of our antitrust laws such as
section 7 of the Clayton Act, the anti-merger section. I favor the retention and
effective enforcement of that .section of the law as well as section 2 of the
Clayton Act as amended by the Robinson-Patman Act. The national policy which
relies on competition to regulate and improve the performance of markets
should include, as it does, provisions of law such as the Robinson-Patman Act
to i)rohibit practices which build up monoiK>lies as well as provisions tsueh as
section 7 of the Claytcm Act, the anti-merger section, to l>e usetl to break up
monopolies. Indeed, both of these laws are concerned with concentration and its
effect on competitive performance. The recent surge in the increase of conglom-
erate mergers is resulting in the blurring of boundaries between various industries
and presents a most pressing antitrust problem because of the possible impact
of a large conglomerate concern with respect to its competitive behavior in a
particular industry regarding its sale of particular products in local geographic
markets. It is in such situations where a large conglomerate firm, not subject to
being broken up through enforcemnt of section 7 of the Clayton Act, can sub-
sidize discriminatory pricing practices through charging high prices in some
markets while driving competition out in other markets. The availability of a
prohibition against discriminatory practices is vital to our antitrust policy in
such situations. We must have such laws if we are to avoid significant struc-
tural changes in our industrial economy in which we are seeing the development
of new monopoly power. As I have said, modifications in the structure of our
economy of this kind are not brought about by mergers alone.
Small firms limited to single markets with narrow product lines are increas-
ingly coming into competition with large multi-market diversified firms. Where
such markets power exists, the mere prohibition of further mergers is not enough.
Moreover, the suggestion is made in the Neal report that we not rely upon our
hiws against discriminatory practices to prevent the buildup of such monopoly
power but that we seek a new law to dissolve such market power. I can't believe
that the writers of that report could have been serious in making that suggestion,
which oliviously v.'ill not be effectuated.
As you know, this .so-called "Ta.sk Force Report on Antitrust Policy," which
for convenience is sometimes referred to as the Neal Report, was followed by
a report entitled "The Task Force Report on Productivity and Competition." The
first of these two reports was submitted to President Lyndon B. Johnson on
July 5. 196S and the second was submitted to President Richard M. Nixon on
February IS .19(19. According to information I have received, neither President
Johnson nor President Nixon did more than file these two reports at the time they
were received. Later, however, after there had been .some leak concerning them.
President Nixon released them without comment. For convenience, a ninnber of
people have referred to the second of these reports as the "Stigler Report."
In your press release of August 11, 1969 in which you first announced that
this Committee would hold hearings on this subject, it is noted that you stated
that "the reports of these study groups suggest that this policy is anti-competi-
tive rather than protective of our economic system". I agree with that general
appraisal of those reports.
Quite recently, September ITt, 1969, President Nixon received a "Report of
the American Bar Association Commission to Study the Federal Trade Com-
mission." A review of that report reveals that some members of that American
Bar Association Commission held views that perhaps some of our antitrust
effort should be revised or cut back. However, I add my voice to yours, Mr.
9
Chairman, in commending the American Bar Association on tlie Federal Trade
Commission in not joining "those extremist critics who have recently called
for either repeal of the Robinson-Patman Act or sharp curtailment of its enforce-
ment." I'erhaps some of the members of this American Bar Association Com-
mission had acquired some knowledge and some exijerience regarding the facts
involved in the situation on which they were reporting. It appears that this
cannot l)e said of those who prepared the Neal Report and the Stigler Report
to which I have referred. And. Mr. Chairman, you and I know how valuable
it is to have some knowledge of the facts involved in these situations to which
we commit ourselves for study and consideration. Perhaps it is easier to dismiss
situations without any knowledge of the facts, but I rei)eat, it is more valuable
and useful to an adequate and appropriate consideration of the situation to
have knowledge of the relevant and material facts involved.
I have given close study to what members of a number of these study groups
have written and said about our public policy of antitrust, and I have noted
that they have substituted for an analysis and citation to the facts involved in
situations references to the writings and arguments made by members of other
study groups who were also without knowledge as to the facts involved. The
continual repetition of this practice perhaps has led some members of these
study groups to actually believe the arguments they are making about the facts
to be true. In any event, my plea to you today is that we should not surrender
to those arguments without knowing what the facts are. For example, when
it is said that price discrimination in the sale of goods and merchandise
promotes competition, and that laws to prohibit practices of price discrimina-
tion are anticompetitive, I say we should test that argument against the
facts and not against another argument to similar effect.
In following this line of thought I take advantage of this opportunity to
make reference to the factual situations which were studied by the Congress
before it considered and acted upon proposals for amending and strengthening
Section 2 of the Clayton Antitrust Act in 1936.
Prior to consideration of that matter by the Congress the Federal Trade Com-
mission has made a six-year investigation, study and report of the facts involved
in discriminatory acts and practices in the .sale of food and food products through
chain stores and other outlets. The Commission reported in Senate Document
No. 4 of the 7-ith Congress, December 1934, that the law as it then existed had
been interpreted so as to permit destructive price discriminations, and that the
practice of destructive price discrimination was rampant in the food distribution
industry. The Commission rejected suggestions which had been made to the effect
that the Sherman Antitrust Act be relied upon and used to halt destructive price
discriminations. Instead the Commission proceeded to recommend to Congress
that Section 2 of the Clayton Antitrust Act be amended and strengthened by
eliminating certain nullifying provisions which exempted discriminations involv-
ing quantity purchases and those exempted when made in good faith to meet
competition.
The report of the Fetleral Trade Commission was carefully made and con-
sidered by the Congress as were reports made by a special committee of which I
was Chairman, after we had studied the facts. Out of all of these considerations,
Senator Robinson (D.-Ark. ) and I introduced bills proiMJsing to amend and
strengthen Section 2 of the Clayton Antitrust Act. These bills were considered by
the Judiciary Committees of the Hou.se and the Senate. The Judiciary Committee
in its report to the House on the bill I introduced contained the following
statement :
"Your committee is of the opinion that the evidence Is overwhelming that price
discrimination practices exist to such an extent that the survival of independent
merchants, manufacturers, and other busines.smen is seriously imperiled and
that remedial legislation is necessary." (See Hou.se Report No. 2287, 74th Con-
gress on H.R. 8442).
To remedy that situation Congress passed the bills that Senator Robinson and
I had introduced and consequently the legislation became known as the Robinson-
Patnuni Amendment to the Clayton Act. That legislation was approved June
19, 1936.
Later, in 1956, the House Committee on the Judiciary, after investigating and
reporting upon a related matter, stated :
"Price discriminations favoring preferred buyers present a danger to the com-
petitive enterpri.se system which is inconsistent with the policy of the price dis-
crimination statute." (House Report 2202, 84th Congress).
10
I have fited these instances of findings by the Congress based upon studies
-of evidence reflecting factual situations to demonstrate the fallacy of the argu-
ments now being advanced by various study groups that our antitrust laws which
prohibit price discriminations are laws aimed at comjjetitive practices, and tliat
we should repeal or weaken these laws to permit these jtractices to be resumed
nnd continued. Let me reiterate that arguments to this effect are clearly without
basis in fact, and that those who make the argument are without knowledge
i-egarding the facts; but that Congress which enacted the laws, acted only after
careful investigation, study and ccmsideration of the relevant facts.
I do not suggest that we should close our eyes and our minds to further study
of evidence which reflects the facts in any situation, and if this Committw
would care to do so and time would permit, a review of l)usiness practices <iud
discriniinatory acts, including a review of the economic significance of those
particular acts and practices would be in order. But let us not take the argu-
ments from someone who does not know what the facts are concerning the
economic significance of these acts and practices. Instead, let us get the small
businessmen in here who experience the efl'ect of these acts and practices. Have
them to inform the Conuuittees of the Congre.ss regarding the facts, showing
the effects of these practices. Let us not close our eyes and minds to considering
only the arguments of theorists, and then cmly those theorij^ts who have their
own particular axes to grind.
I trust you will bear with me for a f("w minutes to refer to several of rhe
situations which we considered in 1935 and 1930, and upon which we based our
judgment that subsections 2(c), 2(d) and 2(e) should be included as provisions
in the amendments to Section 2 of the Clayton Act. I suggest this because
attacks made on our public polic.v of antitrust include specific attacks on these
mentioned subsections ( c ) , ( d ) and ( e ) .
Before we thought about including anything in the law which resembled the
provi.sions now included in subsection 2(c), we had before us much evidence
of many examples of abuse and unfairness in the buying and selling of mer-
<'handise. For example, there was presented to us evidence that field bi'okers
located at or near pi-oducing points of fresh fruits and vegetables had been
operating so as to secure some producers' agreements to represent the pro-
ducers in the marketing of the producers" crops for a certain brokerage fee.
'Then some of these field brokers, once having entered into such agreements with
the producers, went to the buying agents for some of the large buyers and in-
formed such buyers that they now had under their control the marketing of large
-quantities of produce. They then proceeded to enter into arrangements with
the representatives of the buyers for the buyers to pay a brokerage fee in con-
sideration of the field brokers' agreement to serve the interest of the buyers in
â– delivering to the buyers the produce for which in the marketing they were sup-
po.sed to be representing the producers. We found that in a number of these
situations the producers did not fare so well. That is whar I have meant when I
:said that we discovered abuses and unfairness.
Therefore, such double-dealing was outlawed through the provisions of sec-
tion 2(c) of the Robinson-Patman Act. Now, some of the critics of that provision
of the law want it repealed ; other critics who do not have the courage of their
convictions, instead of advocating repeal, simply say "do not enforce this pro-
â– vision of the law unless you can prove in each instance that someone is really
•.injured by the action which is prohibited by the law." This abuse or unfairness
and double dealing should not require that the victims have been injured Ix^fore
you proceed against the unfair act That is what Congress determined in 1936 ;
that is the way it should be determined today.
Considerations not unlike those I have enumerated in discussing subsection
2(c) apply with equal force to subsection 2(d) and 2(e). In other words, in
1935 and 1936 we found abuses and unfairness in the granting of advertising
allowances and promotional services on a disproportionate and discriminatory
basis and we concluded as we did about the pseudo brokerage that these dis-
proportionte and discriminatory advertising allowances and all allowances for
promotional services should be prohibited. That is the rationale underlying sub-
sections 2(d) and 2(e). Moreover, the language written into subsections 2(d)
and 2(e) is such that cooperative advertising allowances and allowances for
promotional services may be made, but only on proportionately equal terms to
the large and the small alike if they are in competition with each other. But some
of these critics of our public policy of antitrust think that is wrong. They think
11
that we should not be so specific in our effort to insure fairness and equality
under this law. I urge you to go deeply into this matter and when you do I am
satistied rhat you will see how fallacious these arguments are which are for the
repeal or nioditi cation of subsections 2 (c), (d) and (e) of Section 2 of the Clay-
ton Act as amended.
Before concluding my testimony and my remarks to you here today, I would
be remiss if I should fail to mention the Federal Trade Commission. As you
know, it has been under severe attack and criticism. It is my view that these
criticisms should not bo considered in a vacuum ; they should be considered ob-
jectively and in the context of the full record of vrhat the Federal Trade Com-
mission is and what it has been doing. Also, in that connection, we should con-
sider who are the critics — what are their motives — what do they know about
what the.v are saying, and how objective are they in what they are writing and
saying. When we get the answers to all of those questions, I am confident that
we are likely to have before us a picture somewhat different from some of the
pictures which have been painted recently of the Federal Trade Commission. Of
course, even in a true picture of the Federal Trade Commission, we will perhaps
see some faults — no one is infallible- — but in that picture when we see the Com-
mission in its true light, I am confident we will see much more good than we will
see fault in it.
The Federal Trade Commission was conceived by a great American — Woodrow
Wilson. It was conceived as an agency to act in thle public interest in helping
to promote and preserve free and fair competition in the marketplace. It is my
view that when you review the record of the Federal Trade Commission over the
history of its 55 years of service to the public, you will find good reason to applaud
what it has done in the public service.
From time to time, as the Commissioners acted in the public service, the Com-
mis.sion has been subjected to strong criticism from those against whom it was
acting or from those who had some privity of interest with or sympathy for those
against whom the Federal Trade Commission was acting. This is a history that
isn't new and is not confined to the last year or the last few years. For example,
upon the close of World War I the Federal Trade Commission was directed to
investigate the "beef trust." The Commission made its investigation, study and
report upon that problem and good results came from its report. Among those
results was the disposition of a suit brought against meat packers. That suit
was settled in 1920 by what has come to be known as the Meat Packers Consent
Decree of 1920. That decree prohibits meat packers from engaging in retail
distribution of their products. At the same time, the Federal Trade Commission
made a report in which it recommended legislation aimed at prevention of re-
currences of acts and practices which prompted the Meat Packers Consent Decree
of 1920. Out of those recommendations developed the Packers and Stockyard
Act of 1921. providing for the regulation of the marketing of cattle and live.-tock
products.
Despite all of the commendable work done by the Federal Trade Commission
in that instance, it was promptly assailed on the floor of the United States Senate
by one or two who insisted that the Federal Trade Commission was infested with
Bol.sheviks and that they were responsible for the Commission's report and rec-
ommendations regarding the "beef trust." Fortunately, the Commission survived
that criticism and those attacks.
At the turn of the 1930's the Commission was again under severe attack. It
was engaged at that time in .some very important work in investigating public
utilities and in making other investigations of important industries. Out of these
investigations, studies and reports the Commission made recommendations for
improvng our laws. A number of those recommendations were approved by the
Congress, including legislation which established the Securities and Exchange
Commission, and the laws it administers.
Some of the criticism that was experienced in that period of time came from
within the Commission, as well as from without. One of those members had been