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The third reason advanced in support of the bill is that “even-banded enforcement requires [the] notification (provided in the bill]. With that requirement incorporated in the statute, the company that tries to obey the law and seek advance clearance from the Department of Justice or the Federal Trade Commission will no longer stand by and watch its competitor who chooses to remain silent consummate a merger and thereafter rely on the natural indisposition of the enforcement agency to bring a suit to unscramble the commingled assets at some later date.” (Page 3.) Here again this statement has no application to airline mergers. Section 408 of the Civil Aeronautics Act requires that a public hearing be held in every proposed merger case. That section imposes upon the Board the duty of notifying all other persons, in addition to those involved in the merger, “known to have a substantial interest in the proceeding,” of the time and place of the hearing. Interested airlines have the right to intervene in the proceeding and to have a full hearing on any claim that the merger would restrain competition or jeopardize their operations. As anyone who is familiar with section 108 proceedings knows, interested airlines do not "stand by." They are active and vocal parties to the proceeding.

In summary, the airline industry agrees completely with the Civil Aeronautics Board that however necessary the proposed legislation may be for unregulated corporations, it is completely unnecessary, insofar as the airlines are concerned. Therefore, we urge the committee to include a provision similar to paragraph (10) of H. R. 2143 in any bill which it reports dealing with premerger notification and waiting periods.

The CHAIRMAN. I wish to announce that succeeding witnesses will be heard on March 20, 21, and 22.

We will adjourn this subcommittee for the continuation of the hearings on H. R. 2143 and kindred bills until March 20.

(The subcommittee adjourned the hearing at 12:10 p. m., until March 20, 1957.)




Washington, D.O. The subcoinmittee met, pursuant to recess, at 10:30 a. m., in Room 346, Old House Office Building, Emanuel Celler (chairman) presiding.

Present: Representatives Celler (chairman), Rodino, Rogers, Keating, McCulloch, and Miller.

Also present: Herbert N. Maletz, chief counsel, and Samuel R. Pierce, Jr., associate counsel.

The CHAIRMAN. The committee will come to order.

We are resuming today consideration of the premerger notification : bills, H. R. 2143 and H. R. 264.

Our first witness is the representative of the National Association of Manufacturers, Mr. Ernst W. Farley, Jr.



The CHAIRMAN. Mr. Farley, we will be glad to hear from you.
Mr. FARLEY. Good morning, Mr. Chairman.

I have associated with me this morning Mr. Harvey M. Crow, associate general counsel of the NAM, and Mr. George Hagedorn, associate director of the research department.

My name is Ernst W. Farley, Jr. I am president and general manager of the Richmond Engineering Co., Inc., Richmond, Va., and chairman of the Industrial Problems Committee of the National Association of Manufacturers. I appear today on behalf of that association and my testimony is directed to H. R. 264 and H. R. 2143.

The NAM is a voluntary membership association composed of over 21,500 member companies located throughout the Nation. Included as members are the entire range of enterprises from the smallest to the largest manufacturers of an infinite variety of products. In fact, 83 percent of the association's members employ less than 500 persons and thus come within generally accepted definitions of small business. Clearly, therefore, NAM is interested in and concerned with the bills


being considered by this subcommittee and we appreciate this opportunity to express our views thereon.

The so-called premerger notification bills, H. R. 264 and H. R. 2143, both have the same basic objectives. They would require corporations meeting certain dollar standards to report and furnish extensive information on proposed acquisitions of stock, other share capital or assets to Federal agencies and prohibit consummation of such transactions for a stipulated period.

Although these bills are similar, there are at least two significant differences relating principally to the length of the mandatory waiting period and the types of transactions which would be exempt from their requirements. Our comments, however, are in the main directed to H. R. 2143 since it more closely resembles the bills heretofore reviewed by the association and because our views on this proposal are also generally applicable to H. R. 264. While our comments are primarily concerned with the impact which enactment of either of these bills would have on manufacturers, they are also generally applicable to all corporations affected thereby.

The principal provision of H. R. 2143 would amend section 7 of the Clayton Act so as to require a corporation proposing to acquire the stock, other share capital or assets of another corporation to notify Federal agencies where the combined capital structure of the parties exceeds $10 million. Such notice would have to set forth “the names and addresses, nature of business, products or services sold or distributed, total assets, net sales, and trading areas of both the acquiring and the acquired corporations." After that notice, a 60-day waiting period must expire before the merger or acquisition could be consummated.

The acquiring corporation, where subject to the jurisdiction of the Federal Trade Commission, would notify that agency and the Attorney General. Those corporations subject to the jurisdiction of the Federal regulatory agencies would be required to notify the appropriate agencies and the Attorney General.

Even standing alone, this portion of H. R. 2143 demonstrates that its scope is far beyond simple notification to Federal agencies of proposed acquisitions and the furnishing of information in connection therewith. To the contrary, the enforced 60-day waiting period indicates antagonism toward all corporate mergers, not specifically exempt, and introduces a new, novel and, to us, objectionable approach to antitrust administration.

The CHAIRMAN. Do you want to use the word "antagonism"; does it have an exceptional meaning, as you use it there, or do you mean that the authors of the bill have antagonism to something!

Mr. FARLEY. It could be suspicion, implied suspicion, rather than antagonism.

The CHAIRMAN. Do you really mean suspicion, then?
Mr. FARLEY. It indicates that to me, yes.

Mr. KEATING. Did you read my statement made in the opening of these hearings?

Mr. FARLEY. No, sir.

Mr. KEATING. There was certainly no suspicion in my mind as to mergers. Many mergers are desirable.

The CHAIRMAN. And in the revised version of the bill that I offered, we made many, many exceptions. I certainly didn't intend, and I am sure my colleague, the distinguished gentleman from New York, Mr. Keating, did not intend either antagonism or suspicion.

However, we will let the matter pass.

Mr. Farley. Section 7 of the Clayton Act only prohibits those acquisitions the effect of which may be substantially to lessen competition, or tend to create a monopoly." In fact, as a general propo

. sition, a showing of adverse competitive effects has traditionally served as the keystone to antitrust philosophy and enforcement.

H. R. 2143, on the other hand, disregards competitive implications and in lieu thereof substitutes a dollar standard to serve as the sole criterion for barring acquisitions for a period of 60 days. Hence, acquisitions involving corporations meeting an arbitrary dollar standard would be per se suspect.

Indeed, legislation of this character would doubtless be construed by the enforcement agencies as the equivalent of a congressional finding of fact that any merger or acquisition meeting the dollar standard is prima facie unlawful.

We feel that this represents an unwarranted and unfortunate departure from the basic concepts of our antitrust statutes, that only those activities having a substantial adverse economic effect are to be proscribed

Mr. KEATING. Are you a lawyer, Mr. Farley?
Mr. FARLEY. No, sir.

Mr. KEATING. Is this your language, that it would be equivalent to a finding of fact, that any merger meeting the dollar standard is prima facie unlawful?

Mr. FARLEY. No, sir. Mr. KEATING. What makes you think that? Mr. FARLEY. Because it strikes me as being that, sir, in the hands of a Government regulatory agency.

The CHAIRMAN. Well, for example, there is some colloquy between myself and the Attorney General on that score. I stated on page 74 of the hearings:

The CHAIRMAN. Objection has been made to the premerger notification on the basis that “the bill would no doubt be interpreted by the enforcement agencies as the equivalent of a congressional finding of fact that any merger or acquisition meeting the dollar standard prima facie was unlawful.”

Mr. KEATING. Whose statement was that?
The CHAIRMAN, I will check on that.
Mr. KEATING. That was in the Senate hearings?
The CHAIRMAX. Senate hearings, on page 209.

Mr. MALETZ, Mr. Chairman, that was a statement by Mr. Harvey M. Crow, associate general counsel, National Association of Manufacturers.

The CHAIRMAX. I will appreciate your comment on that, if you care to make

Mr. BROWNELL. All I can say, Mr. Chairman, is that as long as Judge Hansen and I are around it would not be interpreted that way.

Mr. FARLEY. I don't doubt that that is a correct statement. But there is no assurance he will always be around.

Mr. McCULLOCH. Mr. Chairman, I suppose it would serve a useful purpose to have the record show that we, as members of this subcommittee, certainly do not agree with the witness' conclusion.

The CHAIRMAN. I think it would be well to have the record show that.

Mr. Farley. Mr. Crow, would you care to comment on that ? Mr. Crow. If the Chairman desires, I would be happy to.


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