Raleys Super Market, Fairoaks Blvd., Sacramento.
Fred's Market, 2500 West Capitol, West Sacramento.
Castic Market, Eastern Avenue, Sacramento.
50 Grand Market, Highway 50, Pollock Pines (near Plaeerville).
STORES CLOSED â€” 19C7
Handi Mart, Folsom Blvd., Sacramento.
Sunset Fair Market, Arden & Fair Oaks, Sacramento.
Sunset Fair Market, Sunset and Fair Oaks Blvd., Fair Oaks.
Food Fair. Highway 99, Yuba City.
Lee Bros Market, Auburn Blvd., Citrus Heights.
Lee Bros Market, Howe Avenue, Sacramento.
Sav-A-Lot Market, El Dorado.
Elvas Market, 56th & H Street, Sacramento.
Channel Market, Channel Blvd., and Jefferson Rd., West Sacramento.
Stop-N-Shop Market, 20th and I Street, Sacramento.
Olivehurst Market, Highway 99 East, Olivehurst.
Economy Cannery Sales. Broadway Avenue, Sacramento.
Centners Market, 3035 24th Street, Sacramento.
Xorthgate Market, 2210 Northgate Blvd., Sacramento.
Raleys Super Market, 9th Street, Sacramento.
Rickeys Market. 2730 Street, Sacramento.
49ER Market, Highway 49, Grass Valley, Sacramento.
Westside Grocery, Sacramento.
Y Street Market, Y Street, Sacramento.
Risso Market, North California Street, Sacramento.
Food Depot, 1120 H Street, Sacramento.
Bel Air (White Front), Arden Way, Sacramento.
STORES CLOSED 1968
Bazaar Market. Greenback Lane, Sacramento,
(also folded in Wonder World Market)
Scanlon Grocery, 1236 Q Street, Sacramento.
Freeway Market, Howe <& Marconi Blvd.. Sacramento.
Palm Market, Grass Valley Highway & Palm, Auburn.
Comptoms Market, Stockton Blvd., Sacramento.
Little Super. 2000 I Street, Sacramento.
Lee Bros, Yuba City.
Food Mart, 2710 N. Fairfield. North Sacramento.
Budget King. Hayes Avenue. Sacramento.
White Front Food Store, Florin Road, Sacramento.
White Front Food Store, Arden Way, Sacramento.
Giant Food Store. Sacramento.
Giant Food Store, Auburn Blvd.
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Mr. Moss. I think this, Mr. Chairman, will illustrate rather graphi-
cally the fact that the very large opcrat.oi"s â€” and I think we should rec-
ognize that today we are not talking about big versus little; we are
talking about super vei-sus big, in many respects because it takes an
extremely large operator to compete with the super operators of chain
food stores, and 1 assume that that is true in almost all phases of busi-
ness. It is a concentration which causes considerable concern because
it gives to business a unique advantage when it has size. It is not
advantage that is derived from eiRciency, from sounder or more
prudent management. But it is the ability to in etfeet impose a "tax"
upon one area to subsidize a competitive drive in another area. It is also
the case of using tremendous power to impose upon suppliei-s demands
which the medium or the small cannot possibly impose, and demands
which f rexiuently are on their face a violation of law.
The attoi'ncy general of California in investigating the matter of
just one connnodity, milk rebates, for the year July 1967 to July 1968
discovered that Foremost Dairies â€” ^that is one of the largest processors
and distributors of dairy products â€” paid Lucky Stores over $4.4 mil-
lion in illegal rebates. The attorney general of California also dis-
coxered that significant rebates were being made to the other two chains
I mentioned earlier.
Now, this is not competition. This is the very antithesis of compe-
tition. It destroys com,petition. And the frustrating thing for the
grocery operator, or for the merchant adversely afl'ected by these prac-
tices is the fact that it takes so long to get relief from the agencies of
Govermnent. I have been rather intimately tied in with the matter of
trying to get some action in northern California. We brought these
matters to the attention of the Justice Department and the Federal
Trade Commission in 1966. It took 6 months to get any attention on the
problems and approximately another 6 months to decide which agency
had jurisdiction, the Justice Department or the Federal Trade Com-
mission. Once decided that the Federal Trade Commission would
investigate, it took up another 6 months to start the investigation.
Now, I don't blame the Federal Trade Commission, because I think
much of this responsibility is that of tilie Congress for failing to staff
these agencies to meet the heavy demands placed upon them, because
the failure to statf in the instance of the northern California mvestiga-
tion was a. failure to have available the manpower necessary to do
Now, we have secured a one-man detail to concentrate upon this case,
and he is trying to sift thix)ugh literally thousands of documents which
he has obtained by process of subpena. It is almost an impossible task.
The most optimistic view would be that another 2 or 3 years perhaps
would elapse before any meaningful remedy would be obtained.
Now, the grocers in my area have filed antitrust suits and I under-
stand that that is also true in Denver, Colo., and in Houston, Tex.,
in an effort to see if they can through the courts obtain relief from
But it seems to me, Mr. Chairman, that it is extremely important
that the committee evaluate the Robinson-Patman Act â€” and I rather
vividly recall when that act became law, I was engaged in merchan-
dising myself. I know that it gave substantial assistance to the smaller
merchant. I know that it made it possible for him to have a sense
of assurance that he could buy on a competitive basis and that the
real forces of competition, the ability to better serve could be brought
into play, the ability to better manage could be brought into play,
and that these would have importance, that he would have an oppor-
tunity to grow.
That opportunity is going to be denied if the real estate of strength
is slieer size and economic power, reaching the point where for all
practical purposes as I indicated in my first comments there is the
ability to "tax"' one area of a nation or of a State or of a community
to support operations in another. This should not be permitted.
I think that an inefficient business operation has no right to expect
l)rivilege under the law. But I think an efficient business operation
luis the right to compete on equal grounds, as nearly equal as it is
]>ossible to fashion them by the intent of the Robinson-Patman Act.
I think it is clear tliat it is not being applied today. It is being evaded
constantly by devices which are â€” ranging from rebates to special
prices, from packages to advertising. You name it, it is there. And as
one loophole is closed througli some enjoinder by the courts or by
the Federal Trade Commission another is devised. In this business
of merchandising there is a very resourceful group of people engaged
today, and it is a rough and bruising battle. It is a battle where the
best operations among the small have to be well managed or tliey
cannot possibly survive even if they are competing in marketplaces
Avhere they buy on equal terms because markup or margins are not
large. They're very small.
Mr. Oliairman, t would be pleased to try to respond to any questions.
]Mr. DiNGELL. Mr. Conte.
Mr. Conte. I certainly want to commend the gentleman from Cali-
fornia for his excellent presentation here today and for the interest
he has taken on behalf of the small businessman.
Mr. Moss. Thank you, sir.
Mr. DiNGELL. Mr. Horton.
]Mr. HoRTON. Mr. Chairman, thank you. I too want to commend my
colleague from California, and I consider him one of the most con-
scientious, talented, and dedicated Members of tliis House. I have
served with him for several years on the Government 0])erations Com-
mittee, and I serve with him on the Foreign Oporat ions-Government
Information Subcommittee of which he is the chairman. I have tlie
highest respect for his industry and his concern. I think you have
underscored some of the points that set off these hearings and ]nit
thom off to a good start â€” tliat is namely that the act is being evaded,
it is not being effective and it is not doing the job it was intended to
do. You have given us some good concrete examples which I am sure
you have spent a great deal of time following up and I want to thank
you for cominff and giving us this information.
Mr. ]Moss. I want to tliank you, and I assure you that the personal
stnteraents vou have made are reciprocating with "you.
Mr. HoRTOx. Thank you.
Mr. Dtngell. Mr. Moss, tlie committee is grateful to you for your
most helpful statement. The Chair is well aware of your long and
persistent interest in this and the great efforts and the great lengths
you have gone to to secure assistance for the constituents that you so
ably serve in California with regard to this problems. And the Chair
wishes to commend you for a very fine and very helpful statement.
The Cliair will say that it is a particular pleasure to have an old
friend, one whom I sit next to on another committee, before this sub-
connnittee. As I am sure all are well aware, you are one of the most
able members of the Interstate and Foreign Commerce Committee
and they have decided there, in the sight of the occupant of the Chair
of this subcommittee, a most enviable and courageous record and it
is certainly a ]:Â»rivilege to welcome you here today.
Mr. Moss. Well, thank you, Mr. Chairman. I intend to leave this
committee and go downstairs to try to protect 3'our interests in that
other committee as we mark up another bill.
Mr. DixoELL. Off the record.
(Discussion off the record.)
Mr. Moss. Thank you.
]\Ir. DixGELL. Thank you so much.
The Chair is happy to welcome at this time a very distinguished
practitioner in the antitrust field, a former Chairman of the Federal
Trade Commission, and very distinguished one, one for whom the
Chairman has considerable respect and regard, Mr. Earl Kintner. Mr.
Kintner, it is certainly good to have you here. The Chair notes that
you hiwe someone Avith you. If you would identify him for the record,
we will be happy to recognize j^ou for such statements as you may wish
TESTIMONY OF EARL W. KINTNER. COUNSEL, NATIONAL ASSOCI-
ATION OF RETAIL DRUGGISTS, ACCOMPANIED BY JACK L. LAHR
Mr. Kintner. Thank you, Mr, Chairman. I am accompanied by
my law partner, Mr. Jack L. Lahr, who has for many years worked
with me on the legal problems of the corner drugstore.
I am here in my capacity as Washington counsel of the National
Association of Retail Druggists, which welcomes the invitation of
â€¢your subcommittee on the Robinson-Patman Act of 1936 â€” its rationale,
implementation, and enforcement.
The NARD is a trade association of apioroximately 36,000 independ-
ent retail druggist owners, filling approximately 75 percent of out-
of-hospital prescriptions throughout the United States. XARD rep-
resents small business, in the sense that its members constitute owner-
operated neighborhood drugstores engaged in competition not only
with each otlier, but with large drug chains, and in many areas, gro-
cery chains which have added prescription departments. This is cou-
pled with emerging intertype competition in varying degrees from
such governmental programs as those of tlie Office of Economic O])-
portunity, union pharmacy programs, mail order prescription drug
organizations, and over the years, physician dispensing of drugs.
The business of XARD members is twofold : (1) selling prescription
drug needs of the consumer and (2) selling "up-front"" product lines
varying from over-the-counter health and beauty aids, to a range of
general consumer goods. The first category constitutes a public trust,
as pharmacists are highly trained professional personnel, subject to
state licensing requirements and standards comparable to other pro-
fessions. The second category constitutes general retail business ac-
tivity. Both categories involve the resale of products which common-
ly fall within the jurisdictional standards of the Robinson-Patman
The functional role of NARD members in the drug industry con-
stitutes an illustration of economic imbalance, to the extent that the
sellers to NARD members are of considerably greater economic size
than are the druggists' chain-store competitors. Whether it is a drug
wholesaler selling in trading areas defined by cities or larger, or drug
manufacturers with a national distribution, the retail druggist with
its tradiing area defined by neighborhoods, and its annual average
gross income in six figures, is no economic match. In Robinson-Pat-
man parlance, the NARD members lack the economic power to secure
price, service and allowance concessions from sellers. Rather they are
the competition which is discriminated against, to the extent price,
service, and promotional allowance discrimination takes place in the
We have therefore a situation where independent retail druggists
stand much like the independent grocers of the 1930's in terms of being
potential benefactors of vigorous and even-handed enforcement of the
Over the years, there has been developed a considerable body of
criticism of the Robinson-Patman Act, both from the standpoint of
statutory language and policy goals, as well as the FTC enforcement
policies. Most" recently, the Neal ^ and Stigler - Reports, and to a lesser
degree the American Bar Association Commission Report on the FTC ^
have leveled such criticism at the act itself, as well as its enforcenient
by the Commission. In this light, it will be useful to assess experience
of the independent retail drug industry under the act.
First of all, the act has functioned in the drug industry primarily to
prevent national manufacturers from providing price, service and al-
lowance price discriminations to favored buyers, most commonly the
direct-purchasing retail drug chain. This deterrence is consistent with
the basic congressional purpose for enacting the Robinson-Patman Act.
NARD's experience has been that drug manufacturers and whole-
salers are keenly aware of the requirements of the Robinson-Patman
Act, which has engendered, in large measure, compliance with the act.
The most conspicuous exception in recent years has arisen in efforts
to grant discriminatory price concessions to institutional health-care
resellers to the public. This, it must be acknowledged, is a new and
emerging form of competition in the retail drug industry.
Second, if anything, the independent retail druggists of the United
States have suffered from insuiRcient, misdirected or sporadic enforce-
ment of the Robinson-Patman Act.
During the period from April 1967 to April 1968, this committee,
under your able chairmanship, Mr. Dingell, conducted extensive hear-
1 White House Ta.sk Force Report on Antitrust Policy, July 5, 1968 (released May 21,
1969!), reprintert nt No. 411 ATRR. May 27, 196S. See p. 291.
3 Report of Nixon Tasli Force on Productivity and Competition reprinted at No. 413
ATRR X-1. .Tnne 10. 1.9Â«9. See p. 271.
a Report of the ABA CommLssion to Study the Federal Trade Commission, reprinted at
No. 427 ATRR, Seqitember 16, 1969. See p. 333.
ings which involved Robinson-Patman problems and enforcement in
the drug distribution industry. The committees recommendations were
strong and unequivocal that more vigorous enforcement of the Robin-
son-Patman Act by the FTC was necessary ^ â€” and I quote in a foot-
note a statement from your report which I ask be made a part of the
Mr. DiNGELL. Without objection, so ordered.
Mr. KiNTNER (continuing). Particularly with repsect to drug price
discriminations favoring non-Government health-care institutions
competing in the marketplace with community drugstores.^ A fair
reading of this testimony and the committee report dramatically illus-
trates how huge discriminatory price concessions to upward of 50
percent, have been granted in multiple trading area ^ renderin it vir-
tually impossible for disfavored retail druggists to engage in precsrip-
tion drug price competition.
There is no public record of Commission action against even the
most flagrant offenders. In California, the State legislature moved
ahead on its own and enacted legislation effective January 1, 1969, gen-
erally aimed at curbing State health-care institutional drug purchases
which ''are not available on the same terms and conditions to all pro-
viders of prescription services." * The latter is a quote, and I cite in a
footnote the references to the law.
The California development is interesting because tliis State legis-
lature was confronted with a prescription drug price discrimination
problem in the econmoic climate of the late 1960's, not the depression
era of 193(5 when the Robinson-Patman Act was enacted.
Third, the importance of the Robinson-Patman Act to small busi-
ness has been dramatically underscored by the Supreme Court in its
landmark decisions in the Fred Meyer ^ case and in Perkins v. Stand-
ard Oil Company.^
I predicted in my public speeches that Fred Meyer would become
the law of the land, and I was highly pleased that the Supreme Court
did make it the law of the land. I think it is a landmark decision which
will, if properly followed, result in a much better, more practical
enforcement of sections 2(d) and (e) of the Robinson Patman Act.
And in Perkins v. Standard Oil, I had the privilege of taking that case
1 "More vigorous action Is required at the earliest possible time on the part of the
Federal Trade Commission to enforce the Robinson-Patman Act and other statutes adminis-
tered l>.v it If small business drusj wholesalers and retail pharmacists are to continue their