towns and invited the local populace to lielp themselves. Loaves of
bread were placed in automobiles parked along the street. The result
of this activity was elimination of many small bakers and control of
the market by national corporations. Statistics indicate that prices of
bread have increased greatlj^ over the years.

One fact which is very well known is that prices of bread are uni-
form in many areas throughout the countr}' . One of those areas where
a few manufacturers domniated the market to the detriment of con-
sumers was in the Xorthwest. The Federal Trade Commission in 10(il
moved against these large wholesale bakers and Safeway Stores in the
city of Seattle. A partial list of those named in Bakers of Wash'mg-
ton. et al. (Doc. Xo. 8309) is as follows: Euchan Baking Co., Con-
tinental Baking Co., Langendorf United Bakers, Inc., Hansen Bak-
ing Co., Snyders Bakery, Inc., Fortune's Bakery, Safeway, Whole-
some Bakers. I have listed the names of the bakers here involved. One
of them includes a firm, not a baker ; that is, Safeway Stores. In 1 964
the Commission found the leading bakers in the State of Washington



202

guilty of a conspiracy to fix prices. In that month Seattle bread prices
^Yere 4 cents per pound above the national average. After the action of
the Federal Trade Commission the average retail price of bread
dropped 5 cents per loaf, or 15 percent.

Records of the Commission indicate that the price domination prior
to the action was complete. Only one company was allowed to deviate
from the price set by this monopolistic group. The record of the Com-
mission showed that Safeway, the dominant retail outlet in the area,
was permitted to sell its bread for 1 cent less. Strict discipline was
maintained. When necessary, threats of drastic retaliation were made
to anyone who would not keep prices in line. This conspiracy was in
eii'ect during the period ll)r)T-(U. It undoubtedly cost consumers many
millions of dollars.

Another example which attracted my attention was one involving
the National Dairy Products Corp. I believe this is the largest dairy
corporation in the United States. It was charged with violation of sec-
tion 2(a) of the Robinson-Patman Act. It appears that the National
Dairy Products Corp. decided to take over the market in certain areas
in Virginia in 1960. It instituted a drastic program designed to put
existing manufacturers out of business. In a 26-day sale it actually
gave away $516,577 worth of fruit spreads. It sold this conmiodity, in
effect, at half price since for every unit purchased it gave one free. The
FTC notes that during this time National Dairy Products sold its fruit
S])read in other areas throughout the Ignited States at substantially
higher prices.

The result of this activity was the virtual bankruptcy of existing
firms in the area. FTC reported that vigorous competition had
existed — tliat the largest percent of the market controlled by any one
distributor w^as 15.8 percent. The remaining share of the market was
divided ]>etween 13 other distributors. This action of FTC resulted in
a decision in the Court of Appeals for the Seventh Circuit. The court
castigated a member of the Commission who had entered a dissent.
Here is what the court said :

Petitioner —

that is the National Dairy —

Relies upon tlie dissenting Comniis.siuner's .statement in summarizing the Com-
mission's majoi-ity prediction tliat it is safe for a national seller to engage in such
competitive promotions, but only up to tlie p(»int where they do not succeed in
divertinu' sales from other competitors and then holdly urging that this turns
the antitrust laws U])sidf' down. The petitioner's use of such conclusion ignoi'es
the weight of the evidence which supports the Commission's Hndings. The false
premise from which the petitioner's borrowed conclusion is drawn is from the
assumption or finding of the dissenting Connnissioner that petitioner was engaged
in a competitive promotion. Tlie weiglit of the evidence is to the contrary. The
fact is that petitioner's offer was ludimited. It was drastically below actual and
constructive cost and all of the trade could buy all the fruit spread they could
pay for and warehouse during a certain i)eriod of time. It was possilile for and
probable that the trade would stock the fruit spreads of suflBcient quantity for
use in the future and for a long period of time. This practice cannot be classed
as comjietition. It was unf;ur competition and a monopolistic program which
sluit out all competition for the market.



203

I have analyzed this case, Mr. Chairman, in some detail to refute
a number of charges which have been brought to the Federal Trade
Commission activity and the law itself. This, I think, is a fairly typical
example of what happened in many areas throughout the United
States when a great national corporation came into an area and began
what we call systematic dumping into a market to destroy small busi-
nessmen. Ultimately, I think consumers paid through the nose once
the national corporation got control, entire control, of the market.

Xow I will refer to a particular member of the Commission, whom
the court was talking about in this case.

This member of the Commission who was castigated by Judge
Holder had become notorious for his dissents. He has consistently dis-
agreed with the other members of the Commission. Some years ago
our national president, whose attention had been called to this matter,
directed me to make a study of the dissents of this particular mem-
ber. I have attached a list of these dissents, together with docket num-
ber, as an appendix to this statement (app. A). This list only includes
Rolunson-Patman Act cases during the years 1961-65. This informa-
tion may be of some interest to the committee.

Anotiier case which attracted our attention pertains to the drug
industry which has received so much publicity during the last few
years. Included among those charged in this proceeding, docket Xo.
^211, are the following: American Cyanamid Co., a corporation ; Bris-
tol-Myers Co., a corporation ; Bristol Laboratories, Inc., a corporation;
Chas. Pfizer & Co., Inc., a cor])oration: Olin Mathieson Chemical
Corp., a cor]>oration : and the T'pjolm Co., a corporation. They are
the leading drug manufacturers in the United States. Several of the
names, no doubt, the committee will recognize.

The Commission charged these companies, under section 5 of the
Federal Trade Commission Act, with Hxing prices. The Commission,
by a vote of 3 to 2, found these companies guilty of jDrice fixing. How-
ever, when the case reached the circuit court, the court sent the case
back to the Commission because Commissioner Rand Dixon had pre-
viously been involved in a drug investigation when lie was counsel and
statl' director of the Kefauver committee. The court barred Dixon from
participating in a reconsideration of the case. The vote on the next
round was 2 to 2, which made it impossible for the Commission to
take action against the price fixers who had been found guilty in the
previous action.

According to the Commission, on September 29 in 1967, "Since there
is not a majority of the participating Commissioners favoring such
action, however,'the portion of the complaint which charges respond-
ents with fixing prices must be dismissed." It is perhaps significant
that the Commissioner who has attracted so much attention for his
disagreements with the majority was one of the two who ])locked
enforcement of the previous order.

The action of this Commissioner, however, was ineffectual in saving
the offending drug corporations from what, in our view, is economic
justice. It happened that the Department of Justice became interested



204

in the violation of these very same companies of section 1 of the Sher-
man Act. This became one of the most famous cases in history. It was
found that prices charged by these companies were many times what
the price would have been had there been competition in the industry.
Prices drastically fell after the action of the Department of Justice
which found the'^five companies guilty. Moreover the final proceedings
were such that the offending companies were liable for treble damages.
According to one report these five companies agreed to reimburse
wholesalers, manufacturers and Government bodies in the amount of
$120 million because of their overcharges.

Mr. Wertheimer. Mr. Chairman.

Were the issues involved in the Justice Department case the same
issues that were involved in the FTC case ?

Mr. McDonald. Absolutely the same facts and the same prices.

Mr. Wetheimer. Were the charges the same ^

Mr. McDonald. The charges were entirely different — well, I would
not say that, because section 5 can include price fixing and monopolistic
practices. The Sherman Act, as you know, is monopoly and conspiracy.
So I would say it is the same case except a different law was applied.

Mr. Wertheimer. In other words, you are not saying that the law
tliat the FTC did not apply was then applied by the Justice Depart-
ment ?

Mr. INIcDoNALD. Xo ; it was the Shennan Act, Justice applied.

Mr. Po-mN. Well, Mr. Chairman, in effect, it has been held, of
course, tliat anything you can do with the Sherman Act you can do
with section 5 at an incipient level, so in a sense, the greater, the
Sherman Act, would include the weapons available in this sense, at
least, under section 5 ?

Mr. McDonald. That is correct.

Mr. Hungate. You may proceed, please.

Mr. McDonald. It is reported that other groups also will bring
private suits against these companies.

Farmers Union, over a long period of time, has been interested in
getting the Federal Trade Commission to carry on a consumer dollar
study. We have felt for many years that middlemen and distributors
have taken an undue share of the consumer's dollar. The share of the
farmer has declined over the years. As long ago as 1949 the Farmers
Union sponsored a resolution introduced by Senator Langer, of North
Dakota, which would authorize the FTC to make a study of farm
commodities from point of production to consumer. Food companies
apparently blocked approval of this effort by Senator Langer. Fur-
thermore,' riders were attached to the FTC appropriation bill to the
effect that no i:>art of the funds were to be spent in a food investiga-
tion. Senator Dirksen and others were reported to have blocked ap-
proval of the food resolution.

Years later, the Chairman of the FTC sought approval from the
Congress of the sum of $50,000 to finance an investigation based on a
questionnaire to be sent to national corporations. This roused the ire
of members of the Appropriations Committee who, it was reported.



205

rebuked the Chairman and attached a rider to the appropriations bill
that no money was to be used for the purpose requested. This also
involved the food investigation.

Some time later, Senator McGee introduced a resolution to au-
thorize the FTC to make another consumer dollar investigation. This
resolution was referred to the Judiciary Committee, but got nowhere
because, I presume, of the opposition of food companies who did not
want the public to know what share the middlemen were extracting
from the farmer and consmner.

Later we advised Senator McGee to withdraw his resolution and
rephrase it. The second version of the McGee resolution authorized
the President to appoint five members from each congressional body
and five from the public to investigate food marketing. This resolu-
tion passed both Houses and resulted in an excellent study entitled
"Food From Farmer to Consumer — Eejiort of the National Com-
mission on Food Marketing, June 1966.-' I bring these facts out because
it has been contended that the Commission is soft on big business, that
it has showed little interest in the consumer.

Among those food companies which the FTC has moved against is
the Xational Tea Corp. I have attached a chart (app. B) showing the
comiections of this great food corporation. Although the chart is sev-
eral years old, I believe it is accurate except for the fact that National
Tea has now become the fourth largest food chain in the Ignited States
instead of the fifth largest. It has connection with — it is a subsidiary
in fact — the worldwide George Weston interests which constitute the
biggest food business in the world. The Weston interests, at the rime
my survey was made, reached into nine countries on four continents
and was reported to be moving into undeveloped countries.

We were particularly interested in National Tea because of market
manipulation in National Tea's feedlot in 1962-63. I have a chart here
which, although somewhat out of date, indicates how National Tea
manipulated livestock markets, depressed the price of livestock by one-
third with no corresponding decrease in prices to consumers. Although
we did not agree with the final opinion which was written liy tlie
Chairman of the Commission, we felt that the action and conclusion
were meritorious in a great degree. At least it stopped Nation;) 1 Tea
from making any more illegal acquisitions and dominating food mar-
kets. It is perh;ips significant that the same Commissioner who dis-
sented in other cases referred to also dissented in this one.

This, Mr. Chairman, concludes my presentation. I call your attention
to appendices which I have listed. In one appendix are the companies
whose activities have been challenged by the Federal Trade Commis-
sion who were listed on Fortune magazine's 500 largest corporations
in the United States. There is other information listed there also.

Mr. HuNGATE. Mr. McDonald, without objection, the attached ap-
pendices A through I, inclusive, to your statement, will be accepted and
made part of the record.

There is no objection. It will be so accepted.
(The appendices referred to follow :)



36-138 — 69 — pt. 1 14



206

Attachments to Statement of Angus McDonald, Director of Research,

National Farmers Union

CONTENTS
Appendix A — Elman Dissents.
Appendix B — National Tea Chart.
Appendix C — Companies charged by FTC with violation of Section VII of the

Clayton Act during the period 1061-1969.
Appendix D — Companies charged by FTC with violation of Section V of the

Clayton Act during 1963-1969.
Appendix E — Orders to Cease and Desist for period 1962-1969.
Appendix F — Elman correspondence on Quaker Oats case.
Appendix G — Final Orders in Contested Cases for 1961-1969.
Appendix H— R-P Complaints from 1961-1969.
Appendix I — Geographic location of law clerks to FTC 1966-1969.



Appendix A



.Ta^ies G. Patton.



February 9, 1965.



Dear Jim: Responsive to your suggestion that I make a cursory survey of
enforcement of the Robinson-Patman Act. particularly Sec. 2(a) during the
last five years, I have reviewed Robinson-Patman cases in which Commissioner
Elman participated. The attached table is a partial result of this work.

Since Commissioner Elman seems to usually differ with the other comniis-
sioners. I have indicated his position in every instance. With some exceptions
he was the lone dissenter. My tabulation indicates that out of a total of 29
Robinson-Patman cases Mr. Elman dissented 14 times, joined with the majority
in dismissing charges 9 times, and joined with the majority only 5 times in
enforcing the Robinson-Patman Act. In addition Elman wrote one opinion in
which he was joined by the majority which withheld an order.

My off-hand conclusion is Commissioner Elman is not exactly enthusiastic
about enforcing the Robinson-Patman Act.
Sincerely,

Angus McDonald.



Docket No.



Commissioner



Position



Industry



7121 Elman Dissented.

7136 do Dismissed.

7207 do. - Dissented .

7225 and 7496 do. do. .

7409 do Dismissed.

7421,7420, 7631, and 7539 do Dissented.

7462 do do...

7474 _...do_. ...do...

7514 do Concurred.

7559 do Dismissed.

7604 do Dissented.

7630 do Dismissed .

7634. do. Dissented.

7708 do do....

7733 do Dismissed.

7743.. do ...do...

7813 do Concurred.

7815 do do

7817.. do. ...do. ...

7848 ..do Dissented.

7850 do do ...

8068 do... Dismissed.

8070... _ -do Concurred.

'8112... do Dismissed.

8183 do Dissented.

8513 do.. do

8514 do Dismissed.

8543 do Dissented..

Jan. 2, 1963.... ..do do....



. Groceries.

. Flour.

. Woodenware.

. Canned fruits and vegetables.

. Household appliance and electric

shavers.
. Carpets.
. Molasses.
. Milk.

. Water and gas works products.
. Typewriters.
. Automotive products.
. Baker products.
. Textiles.
. Sunshine Biscuits.
. Candy.
Do.

Shower curtains and accessories.

Cosmetics.
. Biscuit products.
. Printing equipment and supplies.

Automotive equipment.

Food.
. Plumbing fixtures.

Oat flour.

Gasoline.

Luggage.

Automotive equipment.

Auto equipment.

Apparel industry.



207



rtPPHiimE B



CtORGE WESTON UD. - OPERATING AND HOLDING CO.



Canadian biscuit company operatinR
throughout the United States and Canada



Perrln InvestTpen f s ^ Ltd .

A holding co.-pany for various
I Weston Lnteiests. Owns 55.77. of
{ Lob law Companies, Ltd.

w

Lcblaw _ Co n:p ? nlea Ltd.

A holurng ccmpeny. Owns 37 .9T1
of Lob law Groceterias Ltd.

Lobl.nj G roroterta ': Ltd.

Operates 2Jt grocery stores in
Ontario and Western Canada. Owns
DFC Inc. an Aicericea Holding Company

DFC Inc.

A holding ccmpflny cwned by Loblau
Groceterias Ltd., that has controlling
interest in National Tea and Lob law Inc.



National Tea



[ 5th largest chain.
Operat«^s about 1000
stores In 10 states.



Lohlaw I nc. , U. _ S .
IJth largest chain.
Operates abour 170
stores in A states.



Canadian Hanufaetortea and other subsidiaries
/ E. J. Hamilton & jori (biscuits)

' Dr. Jackson Foods (uncocUed cereals, other foods
F, Marveii's (biscuits .and potato chips)

/ McCormlck's (biscuits, cor.iect ioncry)
0] William Niclson (cocoa, chocolates, ice cream)

I Canada's lar^'-st ice crean -naker.
! Paulln Chambers (biscuits ar\(i confectionery)
Waston Bakeries (bread and caU?)
Westfair Foods (wholesale distributors of fruit

and groceries)
Willard's Chocolates (chocolates & confectionery
* ...........



NON-F] Sotrervlllc Industries (printed packaging mate-
o' rials; autoir.olive and appliance components
Ci rcade from pjnel bodrd nd plastics.

D' Eddy Paper (pulp and paper board products)



* P^'^crsi.^ied Companies of America

Forrced in June, 1963 to acquire control of
Fine Fair from Associated British Foods, also a
Urr-ton-cgntroiled crcr.pany. Fine Fair opf-races a
chain of 275 supermarkets, 600 independent grocery
scores and 5 department stores in the United King-
dom with estimated sales volume of $250,000,000.



208



GEORGE WESTOM LTD. - OPERATING AND HOLDING CO. (CONT.)



U. S. Subsidiaries

Weston Biscuit Co., Inc.

Operates plants in 6 U. S, elites:
Michigan, New Jersey, Virginla((Scutharn
Biscuit Co.), California, U'ashingtcn
(American Superior Biscuit Cc), and Texas



Weston - Controlled Companies

Ajstralla
Tip Top Bakeries

United Kingdom
see typed list

Operates 103 supermarkets in Gernany.
Also operates in Ireland and France.



Source: As compiled froia: Standard and Poor's Corp., 0-T-C and Regional Exchange
Stock Reports, Vol 29, No. 114 and 129. p. 4444; 1963 Moody's Industrials;
Tme. October 26, 1962, p. 26; S:iN October 14, 1963; V.'ho Owns Whon
(Interr.aticnal Director>', 1961).

Appendix C

The followiug companies have been charged by the Federal Trade Commis-
sion with violation of Section VII of the Clayton Act during the period 1961-1969.
The list includes only those on the Fortune list of the largest 500 industrial
corporations :



Corporation



Docket

No.



Date

of
filing



Martin-Marietta Corp 8280 1961

Kaiser Industries Corp.. 8347 1961

General Foods Corp 8600 1963

Frito-Lay, Inc. 8606 1963

Georgia Pacific Corp. C-751 1964

United States Steel Corp 8655 1965

Mead Corp C-880 1965

St. Regis Paper Corp... C-917 1965

Endicott-Johnson Corp.. C-1009 1965

Consolidated Foods Corp C-1024 1965

Dean Foods Co. and Bowman Dairy

Co 8674 1965

Crown Cork & Seal Co 8687 1966

Phillips Petroleum Co C-1088 1966



Corporation



Docket
No.



Date

of

filing



American Bakeries C-1111 1966

W.R.Grace... C-1182 1967

Bendix Corp 8739 1967

Rexall C-1252 1967

Continental Oil C-1270 1967

Stanley Works 8760 196S

Maremont.. 8763 1968

Standard Oil of Indiana C-1171 1968

Kennecott Copper.. 8765 1958

Vulcan Materials C-1409 1968

Allied Chemical....'. 8767 1968

Occidental Petroleum C-1450 1968

Burlington Industries... C-1473 1959



209



Appendix D



The following companies have been charged with violation of Section V of
the Clayton Act during the period 1963-1969 :



Corporation


Docket No.


Corporation


Docket No.


American Cyanamid

Atlantic Refining


7211

7471


Pure Oil Co


6640


Quaker Oats Co


8112


Bakers of Wasfilngton

Balfour Inc


8309

8435

8512

6487


Rubber Manufacturers Association

Stiell Oil Co


7505
8537


CBS

Firestone Tire/Shell Oil . .


Sun Electric Corp

S & H.


8659
8671


General Electric


C 1251

7134

6156

8742

_ C1177


NAWCAS


8691


Searings Inc


Texaco, inc /B F Goodrich


6485


Luria Bros

National Work Clothes Rental


Texaco, Inc

Humble Oil Co i.


6898
8544


Pacific-Gamble- Robinson


Koppers Co _


8755



Appendix E

CEASE AND DESIST ORDERS ISSUED, FISCAL YEAR 1962



Name



Docket



Date issued



Aluminum Co. of America (2d) 8175

Robilio&Cuneo, etal.(2d) 8294

New England Confectionery Co. (2a) _ -.. 7732

Bill the Distributor, etal. (2c) ._._ 7379-OP

Grabler Manufacturing Co., inc. (2d) _ -. 7838

M. DegaroCo.,etal.(2c) 8066

Chemway Corp.(2a) 7815

Kimbriel & Co., Inc. (2c) ._._ -.-. 8317

Pride O'Texas Citrus Association, Inc. (2c) 8359

LanninSalesCo. (2c) - C-54

Eichon Pr3duceCD.,6!al.(2c) 8064-OP

AutomotiveJobbers, Inc., etal. (2f) 7590-OP

Mueller Co. (2a) __._ _. - 7514-OP

George C. Palmer Brokerage Co. (2c) C-64

Eustis Fruit Co. (2c) C-66

Alamo Fruit & Vegetable Co. (2c) C-67

Shreveport Macaroni Manufacturing Co. (2d) 7719

The Regina Corp. (2d). - - 8421

Mission Citrus Growers, Inc. (2c)-. - _ - -.. C-69

Lake Charm Fruit Co. (2c) - -.- C-75

Lake Region Packing Association (2c). C-76

American Stratigraphic Co., etal. (2a) 8417

Minute Maid Corp., et al. (2c) -.. - 7517

Bridgeport Brass Co., Inc. (2d)_ -.- 7842

United Farmers of New England, Inc. (2a and 2d) 8406

Vanity Fair Paper Mills, Inc. (2d)... -. - 7720

Sofskin, Inc. (2d) - C-109

0. P. Hesser Broker(2c) .- C-116

Quaker Oats Co. (2d) - 8I19-OP

0. E. M. Products Co. (2c) C-127

Edinburg Citrus Assosiation (2c) Jt C-131

Tri-Valley Packing Association 7225

(Files were consolidated into D. 7225-2a, 2d). - - - 7496

National Retailer-Owned Grocers, Inc. (2c) 7121

California Fruit Exchange (2c).- - C-136

Brown & Loe, Inc. (2c) C-138

Wesco Products Co. (2a) C-146

H.S.D. Publications, Inc. (2d) - C-150

National Police Gazette (2d) C-151

Arrow Food Products, Inc. etal. (2a, 2d, and 5) 8212-OP

Williams Press, Inc. (2d) -.- C-155



Nov. 1, 1961— consent.

Nov. 6, 1961 — consent.

Nov. 7, 1961 — consent.

Nov. 13, 1961.

Nov. 29, 1961— consent.

Dec. 8, 1961— consent.

Dec. 15, 1961.

Dec. 27, 1961— consent.

Do.

Do.
Jan. 3, 1962.
Jan. 4, 1962.
Jan. 12, 1962.
Jan. 17, 1962— consent.
Jan. 24, 1962— consent.

Do.
Jan. 24, 1962.
Feb. 2, 1962— consent.

Do.
Feb. 12, 1962— consent.

Do.
Feb. 23, 1962— consent.
Mar. 7, 1962— consent.

Do.
Mar. 22, 1962— consent.
Mar. 21, 1962.
Apr. 2, 1962— consent.
Apr, 15. 1962— consent.
Apr. 25, 1962.
Apr. 26, 1962— consent.
May 8, 1962— consent.

May 10, 1962.
May 14, 1962.
May 16, 1962— consent.

Do.
May 29, 1962— consent.
June 19, 1962— consent.
June 22, 1962— consent.
June 26, 1962— consent.
June 28, 1962— consent.



210

ORDERS TO CEASE AND DESIST, DIVISION OF DISCRIMINATORY PRACTICES, FISCAL YEAR 1963



Name



Docket Date issued



Exchange Distributing Co. (2c) - 8061-OP

Johnson Publishing Co. (2ci)... C-157

Gernsbacl^ Publications, Inc. (2d) C-158

Mercury Press, Inc. (2d) C-159

Feature Publications, Inc. et al. (2d) C-160

Ballantine Books, Inc. (2d).. C-161

Ideal Publishing Corp. (2d) C-162

Flying Eagle Publications, Inc. et al. (2d) C-163

Paperback Library, Inc. (2d) C-164

The Ring, Inc. (2d) ..- C-165

Berkley Publishing Corp. (2d) ._ C-166