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associations even by the same company, Modern Marketing Inc., in that plan as I understood it there was to be a committee of the druggists who would actually fix the price at which products were to be advertised and commonly sold by those druggists.
Now I think that was an unfortunate, a very unfortunate part of the program, and if left out might have made all the difference in the world in the five Commissioners' views of this problem.
Mr. DINGELL. You mean with regard to the committee actually engaging in
Mr. KINTNER. It was a hard case. In the law we have such things as hard cases, and they sometimes make hard law, and this is what happened here.
I have a great deal of sympathy for my former colleagues at the Federal Trade Commission in this situation, and I cannot find in my heart to criticize them too much on it. As I said, I could well have done the same thing myself.
Mr. DINGELL. Would it be fair to say that where there is an element of price fixing, that a joint or cooperative advertising program then does fall within the bane of the antitrust law?
Mr. KINTNER. Mr. Dingell, you could have technical price fixing and yet the Trade Commission, under its assignment from this Congress, might well decide not to issue a complaint because they would feel that the public interest would not warrant the issuance of a complaint.
I think that in effect this is what Judge Loevinger has tried to tell us, although it is dangerous for me to characterize his testimony. I feel that he was telling you that the antitrust agencies ought to have policies which would promote competition and preserve, insofar as possible, independent small business.
Mr. DINGELL. Is it your allegation then that the Federal Trade Commission should apply the antitrust laws that it administers in its own discretion?
Mr. KINTNER. Yes, sir. I think that is what they are there for and is required by their oath of office.
Mr. DINGELL. In other words, what you are saying then is that the Congress should cast a very wide net of the antitrust laws, and then that the Federal Trade Commission should pick which fish they choose to keep and which fish they wish to cast back in the water. Am I right?
Mr. KINTNER. Broadly speaking you are quite correct. If you will note the statute, it deals with unfair methods of competition and unfair, deceptive practices in commerce, and it is left to the agency to fill in the language, the broad language of the statute. Indeed the language of the Sherman Act is even broader.
Mr. DINGELL. What you are saying is that where there is a violation of this law, that the Federal Trade Commission should determine who it should prosecute, who it should turn its back on, even when there are violations?
Mr. KINTNER. That is true. There are many violations that undoubtedly lack public interest, and there is another factor here, and that is the reasonableness of the restraint. You can have restraints of trade that are perfectly reasonable.
Mr. DINGELL. Isn't this then a complete departure from the principle of law that we have always adhered to in this country, that we are a
nation of laws and not a nation of men, and that we administer the laws uniformly, equally, and justly as to all, and without special preference or special favor upon one or another?
Mr. KINTNER. I don't see it that way, sir. I believe that the Congress in this instance, rather than laying down a catalog of instructions to the antitrust agencies, has rather sought to draft a broad framework and to give those agencies responsibility of filling in that framework depending upon the circumstances at the time.
I have in my years at the bar, a quarter of a century, witnessed a great change at various times in the economy, and considerable emphasis on the enforcement programs of the various agencies. Those programs will vary with the problems then in the economy.
I was nearly 14 years at the Federal Trade Commission before I worked myself out of a job in Government, and I have watched considerable changes in policy, considerable changes in the economy. The ingenuity of man in devising new practices that may be violative of the law is great, and some practices that were challenged have been held not to violate the law. This I think is well within the scope of both the antitrust agencies, and indeed if the Congress attempted to lay down a catalog of offenses for all time, it would have a well nigh impossible job to perform, and could do very little else.
Mr. DINGELL. The Supreme Court said in one case:
Any combination which hampers the price structures is engaged in an unlawful activity, even though the members of the price-fixing group were in no position to control the market. To the extent that they raised, lowered or stabilized prices they would be directly interfering with the free play of market forces.
The act places all such schemes beyond the pale and protects that vital part of our economy against any degree of interference. Congress has not left to us the determination of whether or not particular price-fixing schemes are wise or unwise, healthy, or destructive.
I am reading from one of the Supreme Court cases that was cited. this morning. Now this appears to be very clear.
What I am trying to come around to is whether or not you folks seem to need statutory relief, or whether or not you are alleging to us that there is here an error in judgment on the part of the Federal Trade Commission which can be redressed by the courts without congressional relief.
Now as I read the situation here, and as I interpret the factual situation and the legal situation on the statements of the witnesses like Paul Rand Dixon, who is I am sure you will agree a very capable lawyer with the Federal Trade Commission.
Mr. KINTER. Oh, yes.
Mr. DINGELL. It appears to me that whenever you get an element of price fixing in cooperative advertising, you have a violation of the antitrust laws.
Now if I am in error in this position, then there is no need for legislative action in this field. What I am trying to find out is whether we have a need for legislative action or whether we would have no need for legislative action, and I am not able to discern that except to infer from your testimony that you do or do not need relief in this area. Mr. KINTNER. Mr. Congressman, there are various elements of price fixing. They vary widely and have over the years, and I would not myself accept your statement that whenever you get an element of price fixing that you have a violation of the law.
I think you have to examine the factual situation, each one, and then after you do that, you have to determine, even if you have a technical price fixing violation, whether it is in the public interest to bring an enforcement action.
Mr. DINGELL. If you are talking administrative discretion as to whether or not you bring prosecution, that is exercised very often. Mr. KINTNER. Oh, yes.
Mr. DINGELL. But you will agree that in instances involving broad general policy like the antitrust laws, it is something that should be exercised most carefully.
Mr. KINTNER. Well, the Supreme Court in the case I mentioned, White Motor, sent that case back to determine the reasonableness of the restraint.
Mr. DINGELL. Your White Motor case is a restraint of trade case, is it not?
Mr. KINTNER. Yes.
Mr. DINGELL. And in the situation we are discussing, it is one involving fixing of prices, am I correct?
Mr. KINTNER. No, I would not concede you are correct. The Iowa plan I would say, as was submitted to the Commission, did involve price fixing.
But I think there are some of these other plans that do not, so far as the facts as I know them have been disclosed, involve price fixing. Yet they are joint cooperative advertising programs in which price is quoted in the advertisement.
I don't think, on the face of it, that the Thifty Liquor Stores plan involves price fixing. Each store features a product and its price. Mr. DINGELL. I did want to explore this with you.
The CHAIRMAN. Lawyers see these matters differently, and each quote from a different context and a different opinion.
Mr. KINTNER. That is quite correct, sir.
The CHAIRMAN. Mr. Avery, any questions?
Mr. AVERY. I would just like to make this observation, Mr. Chair
Mr. Kintner's testimony reminds me a little bit about the enforcement of the prohibition law. It is sort of a matter of judgment, and the reflection of collective opinion in an area as to what constitutes violation of the public interest.
If that is it, I would not agree with the witness that these independent druggists or other independent businessmen could proceed with any degree of assurance in cooperative advertising.
Mr. KINTNER. I would not preclude that possibility. As I point out in my testimony, the situation is clouded.
From my personal standpoint, I am satisfied that the agencies will not challenge a properly conceived plan, and I have so advised my client.
Mr. AVERY. I think you heard Chairman Dixon say this morning, even though he might take this position he could not give any assurance to the industry to proceed on the basis they would not be without prosecution subsequently by another Trade Commission.
Mr. KINTNER. That is true.
Mr. AVERY. And I think the Congress has to look at it from that standpoint.
Mr. KINTNER. That is true, and I think that quite properly your committee should be examining into the whole situation.
The CHAIRMAN. Mr. Robison, any questions?
Mr. ROBISON. No.
The CHAIRMAN. Our counsel, Mr. Mitchell.
Mr. MITCHELL. You mentioned, Mr. Kintner, that you did not believe that the Federal Trade Commission or the Justice Department would challenge various of these cooperative advertising schemes. That is your opinion now?
Mr. KINTNER. Yes, sir.
Mr. MITCHELL. I believe when you were Federal Trade Commissioner it was not challenged and never challenged before that?
Mr. KINTNER. No. As a matter of fact, we were aware of the type of advertising that the grocers engaged in, and that was not challenged, and basically the druggist advertising is the same that the grocers have engaged in.
Mr. MITCHELL. If you felt that way, you probably felt that way before the opinion was given-that it would not be challenged.
Mr. KINTNER. That is correct.
Mr. MITCHELL. Very frankly then, why would you submit to them the hardest and most difficult opinion on a matter that you had already pretty well settled in your mind, and on which there was no issue?
Mr. KINTNER. As before indicated, I did this under express direction of the NARD. I, in submitting an advisory opinion, don't like to ask government for formal advice, because it has to be conservative advice, and that is what was given here.
But if I formally ask the Government for advice, I want to be reasonably sure in my mind that I will get the answer that I think is correct and so apart from other considerations, it was my feeling that part of this Iowa plan was incorrect, but had the opinion pointed out the vices of the particular plan, I think that it would have been relatively easy to have shored up that plan or other plans, and made them quite legal.
Mr. MITCHELL. Don't you feel that the opinion as given by the Federal Trade Commission for the benefit of the industry was the worst opinion that you could have expected to have received?
Mr. KINTNER. No, not necessarily. I guess one could conceive of opinions which might be worse.
Mr. MITCHELL. Well, it wasn't favorable to the industry; was it? Mr. KINTNER. The broad language was the difficulty.
Mr. MITCHELL. It wasn't favorable to the industry, was it?
Mr. KINTNER. No, sir.
Mr. MITCHELL. It was not a favorable reply.
Mr. KINTNER. No, sir.
Mr. MITCHELL. Then you still feel that there will be no challenge to this cooperative advertising, and after that decision you are advising your people to that effect?
Mr. KINTNER. This is correct. I feel this after discusions at both agencies.
Mr. MITCHELL. That is all, Mr. Chairman.
The CHAIRMAN. And the hearing of this committee has probably amplified your position?
Mr. KINTNER. Yes, sir; it has certainly fortified my position.
Mr. DINGELL. Mr. Chairman, let me ask this question.
Mr. Kintner, in view of this hearing, am I to assume it is your feeling that cooperative advertising can be continued and proceeded with by the small businessmen then?
Mr. KINTNER. Oh, yes.
Mr. DINGELL. So then it becomes plain from this that there is no need for legislation in this field.
Mr. KINTNER. I agree with Mr. Avery, and I pointed out in my statement, and I agree with the Chairman, that the opinion has clouded the issues and raises uncertainties.
I think that Chairman Dixon indicated that this morning. But so far as I am concerned in the foreseeable future I will, until I have other reason to think that the policy has changed, continue to advise my client, the National Association of Retail Druggists, that properly conceived cooperative advertising plans by independent retail druggists can be developed and used without the danger of challenge from either the Federal Trade Commission or the Department of Justice.
Mr. DINGELL. Mr. Kintner, you mentioned that properly conceived plans can be continued. What elements go into a properly conceived plan, apart from that which is prohibited by the advisory opinion of the Federal Trade Commission?
Mr. KINTNER. I Could not at this point recount for you the possible ingenuities that might be applied, except to indicate as I have tried to indicate here, that one possible solution would be price advertising in conjunction with the name of the individual advertisers who join in the ad.
Mr. DINGELL. As you mentioned in the Thrifty case.
Mr. KINTNER. Yes, sir.
Mr. DINGELL. All right, that I assume would be an appropriate and acceptable manner of advertising.
Now do you concede, however, that when you place an element of price fixing into these, that the advertising then does fall within the ban of the antitrust laws?
Mr. KINTNER. It may constitute a technical violation.
Mr. DINGELL. We are not talking technical violation. Violations, Mr. Kintner, are violations of law, aren't they? You have been a law enforcement officer and a member of the bar and a Government official for a long time.
Mr. KINTNER. Yes, sir.
Mr. DINGELL. You are not one who would come out in favor of technical violations of law, are you? You are not here before this committee to endorse that, are you?
Mr. KINTNER. I was a prosecuting attorney, and I hope a fairly successful one, a long time ago in my State of Indiana, and I worked hard and long for the Federal Government, the Trade Commission, in a law-enforcement capacity, and I recognized in both capacities, and I think that the Trade Commission's staff and Commissioners recognize now, that not every so-called technical violation of the law needs to be challenged by the agency and made the subject of a ceaseand-desist order.
Mr. DINGELL. Mr. Kintner, a long continued practice of technical violations generally requires corrective action, does it not?