Another interesting viewpoint recorded in the TNEC report may be found in the following statement made by Alfred P. Sloan, of the General Motors Corp., to a meeting of the company's sales committee, held July 29, 1925:

General Motors should be more progressive in this and other directions. In practically all our activities we seem to suffer from the inertia resulting from our great size. It seems to be hard for us to get action when it comes to a matter of putting our ideas across. There are so many people involved, and it requires such a tremendous effort to put something new into effect, that a new idea is likely to be considered insignificant in comparison with the effort that it takes to put it across.

I can't help but feel that General Motors has missed a lot by reason of this inertia. You have no idea how many things come up for consideration in the technical committee and elsewhere that are discussed and agreed upon as to principle well in advance, but too frequently we fail to put the ideas into effect until competition forces us to do so. Sometimes I am almost forced to the conclusion that General Motors is so large and its inertia so great that it is impossible for us to really be leaders.

Perhaps it would be safest for us to let the other fellow take the initiative and then be satisfied to follow him as best we can. It seems a pity, however, that, with our resources and ability, we can't be a little more aggressive.

STATEMENT OF SHERMAN P. LLOYD, SECRETARY AND COUNSEL, UTAH RETAIL GROCERS ASSOCIATION

Mr. BALLINGER. State your name for the record.

Mr. LLOYD. My name is Sherman P. Lloyd, secretary and counsel for the Utah Retail Grocers Association.

Mr. BALLINGER. You have a statement you wish to make to the committee?

Mr. LLOYD. Yes, I do.

Mr. BALLINGER. Will you proceed to make it.

Mr. LLOYD. Mr. Chairman, and gentlemen of the committee: My name is Sherman P. Lloyd. I am secretary and counsel for the Utah Retail Grocers Association, the official trade association representing the independent retail grocers of Utah, and at present consisting of an active membership of between 500 and 600 retail food stores. This association is affiliated with the National Association of Retail Grocers, with offices in Chicago and in Washington, D. C. I should like to preface my remarks by stating that the Utah association wholeheartedly supports the action of the national association as represented by Rose Marie Kiefer, national secretary-manager in Chicago, Mr. Tyre Taylor, national counsel, with headquarters in Washington, D. C., and such other representatives as may be authorized.

The national association represents over 50,000 small-business men-retail grocers-and our first request of you gentlemen is that, in your deliberations in Washington, you give the most careful attention to testimony presented by the National Association of Retail Grocers, for they represent the main streets and the neighborhoods of America. They represent the typical small-business man who works out his own salvation without benefit of experts.

Independent retail grocers and their associations have neither the advantage of being exempt from the Sherman antitrust act, as have associations of employees in labor unions, nor do they, as a group of store owners, have the advantage of being interpreted as a single "person" under the law. Thus, while a single corporation-owning,

for example, a thousand stores-may, by the threat of withdrawing its patronage from a supplier, eliminate any practice of such supplier which it may consider unfair or illegal, not even two of the independent grocers can legally unite for the same purpose. Thus, the owner of 1,000 supermarkets may, in effect, blacklist a supplier.

But two owners of two small neighborhood markets may not. As a matter of fact, it is unwise for an association representing these two independent grocers to even disseminate information regarding a practice of questionable legality because of the danger of encouraging a boycott by these two grocers of such practice which might later be proved legal, although inequality of bargaining power between the owner of one or very few stores, and the owner of many stores, because it emphasizes the necessity of public enforcement of violation of illegal practices if such practices are to be eliminated at all.

The testimony which I offer will not be long. It is the feeling of the members of the association which I represent that most of the discriminations and monopolistic practices which can be reached at a national level, are already covered by such legislation as the Robinson-Patman Act; and, if present legislation is enforced properly, the small-business man, including the independent retail grocer, will benefit very materially.

We should like to point out, in this connection, that during and shortly after the war years competition was largely eliminated, many goods were in short supply, and retail buyers were in no position to request or secure favors from their suppliers. Consequently, the protection afforded to independent retailers by such laws as the RobinsonPatman law was not needed so urgently.

In the past year or two, however, the weight has shifted; much new competition has sprung up, supply of goods has increased, and retail buyers are again in the position where they can return favors as well as receive them. Since it is human nature to make the best deal possible, we are once again in the position where the weight of size and volume is being thrown around in efforts to secure these good deals which may hasten the trend to monopoly unless the public, through its elected representatives, checks this trend in the interests of the public welfare. I would like to review briefly the problems which independent retail food dealers have in their attempts to compete on an equal basis with big business. These matters are all covered by the Robinson-Patman Act.

The Robinson-Patman Act provides that it shall be unlawful to discriminate in price, except for differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from differing methods or quantities, and except for bona fide price changes in response to changing market conditions.

The principal monopolistic practice aimed at by this section is the granting of discriminatory discounts. We feel that this law has done much to eliminate unfair discounts, but great and continual vigilance is necessary by the Federal Trade Commission. We have been greatly heartened by the recent decision of the United States Supreme Court in the Morton Salt case, where the Court rules invalid discounts over 5 cents per case. Morton had been giving discounts up to 25 cents per case. As a result of this decision, however, we have received

reports that the interstate chains will seek to amend the RobinsonPatman Act to make the larger discounts permissible. We call your special attention to this threat. We feel that the Supreme Court has very well interpreted, in its decision, the intent of the Legislature in prohibiting monopolistic practices. If the small merchant cannot own his merchandise on a competitive equality with his interstate-chain competitor, it stands to reason that he cannot compete successfully and he will be wiped out. Discriminatory discounts would be one of the surest means of eliminating the small-business man.

I would like to give you an example of discounts, which, for all we know, may be entirely legal but which still work a great hardship. They are in the coffee business, where the majority of coffee suppliers deliver direct to retailers. A typical discount structure provides for a 12-cent-per-pound discount on purchases of 56 pounds, à 1-cent-perpound discount on purchases of 288 pounds, and a 114-cent-per-pound discount on purchases of 1,200 pounds and over.

Coffee is one of the most competitive items in the grocery store. Most consumers watch the price of coffee with an eagle eye. Therefore the small grocer, to be competitive, must purchase 1,200 pounds of coffee to own his merchandise at the same price as the chains. That means $600. But that isn't all. He must stock 8 or 10 brands; so his coffee investment alone would be over $6,000, provided he had a place to put it so he could compete with the chains. Maybe even that wouldn't be so bad, provided he were protected when prices go down. But he doesn't have a warehouse, such as the chains; so he is not given warehouse-stock protection. And if prices go down, as they must some day, the inventory loss may ruin him.

This warehouse-stock protection is another favor for which small merchants cannot compete and which, in our opinion, should be given to all retailers, whether or not they also qualify as wholesalers. For example, the soap companies protect the owner of wholesale warehouse stocks against declines; but the merchant who buys up a quantity ahead, so as to qualify for a discount-but buys as a retailer-must take the loss himself. The president of the Salt Lake Butchers and Grocers Association, an average-sized independent grocer, who couldn't get here this morning because his butcher is on vacation, states that his entire store profits for the second quarter of 1947 were wiped out as a result of the soap-price decline. The chains, owner of wholesale warehouses, took their retail supplies as they needed them in current-demand quantities, and were protected on the soap they left in the warehouse.

The national association has recently adopted a resolution aimed at a possible solution of this discount problem. The resolution reads as follows, and we urge your support of it, for it provides the one practical way of properly studying this involved problem:

Whereas the Federal Trade Commission has been empowered by Congress to fix and establish quantity limits, beyond which quantity-price differentials are not to be permitted, when it finds upon investigation that available purchasers in greater quantities are so few as to make the discount unjustly discriminatory or promotive of monopoly; and

Whereas this association, at its forty-eighth annual convention, petitioned the Federal Trade Commission to undertake a comprehensive investigation into the economic aspects of quantity discounts in those instances where only a few very large buyers are benefiting from price differentials which are unjustly discriminatory against smaller competitors; and

Whereas the need for a careful investigation into the economic effect of all quality discounts has since become increasingly apparent, such need beink indicated especially by a recent decision of the Supreme Court in which it was held, among other things, that competition may be injured by a discriminatory discount on a product which constitutes only a minor part of the grocers' total stock in trade; and

Whereas it is clear that in an industry such as the grocery business, involving thousands of items, the Commission cannot reasonably expect to fulfill its obligation to prohibit all quantity discounts which are discriminatory or promotive of monopoly, with a minimum of confusion and injury to the trade, without the precise and detailed information which can be assembled only through some such thorough over-all inquiry: Therefore be it

Resolved, That the Federal Trade Commission be and hereby is respectfully requested to conduct an investigation into the economic effects of quantity discounts in the food industry; and be it

Further resolved, That the secretary-manager is hereby instructed to send a copy of this resolution to each member of the Federal Trade Commission and to offer the Commission the full cooperation and support of this association in the conduct of such investigation.

There are other pertinent provisions of the Robinson-Patman Act which we should like to mention because of the importance of their proper enforcement to prevent monopolistic practices.

The act provides that it shall be unlawful to pay or receive a commission, brokerage, or other compensation, or anything in lieu thereof, to the other party to the transaction, or to an intermediary directly or indirectly controlled by the other party.

This section has, in our opinion, fairly effectively eliminated bribes and has plugged a loophole through which unfair concessions formerly passed. We have no definite proof of violations of this section.

The act provides that it shall be unlawful to pay anything to a customer as compensation for services or facilities furnished by such customer unless such payment is available on proportionally equal terms to all other competing customers.

This section is aimed at unfair advertising and display allowances, and although it is very difficult to prove violations of this section it is the feeling of members of this association that there are many violations at the present time. This is one section that independent grocers are going to pay increasing attention to for it represents a loophole through which suppliers can pass favors, under pressure, without being too concerned as to whether the retailer who gains the concession actually uses it in advertising. Also, the small grocer who does not advertise, or does not have room for large display suspects that advertising allowances may provide a convenient method to get around the law.

Finally, the act provides that it shall be unlawful to discriminate in favor of one purchaser against another by furnishing any services or facilities not accorded to all purchasers on proportionally equal

terms.

This section is designed to eliminate such practices as delivering to one customer, while requiring his competitor to pay freight; of furnishing demonstrators only to favored customers, and so forth. Because of the danger of two or more persons combining to eliminating questionable practices, we again emphasize the necessity of proper surveillance by the Federal Trade Commission. Here in Utah, as in many other States, we have a State Unfair Practices Act which is patterned after the Robinson-Patman Act. We have an additional feature, however, that is that it is made an unlawful act to

sell any item at less than 6 percent above invoice cost or replacement, whichever is lower. I believe Utah is the only State, at least one of the very few, which has a State trade commission to enforce the law. The retail grocers of the State feel that the law is a good one, and that is being enforced about as well as such a State law can be enforced. Mr. Ballinger, of your committee, has indicated a desire to have more information concerning the Utah Unfair Practices Act, both because of its similarity to the Robinson-Patman Act, and because of its enforcement by a State trade commission.

I am therefore pleased to introduce to you Mr. Parley W. Hale, executive secretary of the trade commission, who will explain the law briefly and answer any questions you may have concerning it.

Mr. BALLINGER. Before calling the next witness, I should like to ask some questions of this gentleman.

Is it your feeling that the existing antitrust laws are sufficient to protect your interests if enforced?

Mr. LLOYD. If properly enforced, they will be extremely helpful. We feel there has been an enforcement and that it has been a great help.

Mr. BALLINGER. Do you have any criticism of the enforcement of these laws?

Mr. LLOYD. That does not mean necessarily that we have no criticism, because we do not have sufficient information regarding the enforcement processes. We have seen the mere fact there is a law on the books and there is an enforcement agency which prevents many from starting in the first place. We are fearful of continued attacks on these laws and on the enforcement agencies. We are fearful they can render the laws null and void. That is the thing we would like to caution the Congress concerning.

Mr. BALLINGER. Has your association experienced any difficulties with delay in the prosecution or enforcement of these laws.

Mr. LLOYD. So far as the Federal law is concerned, we have not as yet, as retail grocers, lodged any complaints. One of the reasons is we have been able, whenever we felt an actual illegal practice did exist, to stop it. After all, what we want is not so much enforcement as compliance that we have been able to build up by proper publicity. If we run into what we consider an illegal practice, we have been able to stop it, we have not reported it, but there is a feeling these cases, if they ever go to the Supreme Court, will take years and expensive litigation. The retail grocers, as a group are not able to employ that type of litigation.

Mr. BALLINGER. Have you considered the question of whether more money is needed to enforce the antitrust laws, that we would get better enforcement if the enforcement agencies had larger appropriations?

Mr. LLOYD. We are not familiar with the details of that sufficiently to reply to that question. We will say this, we have confidence in the findings that our national association makes on that situation and any statement of the National Association of Retail Grocers regarding that will be supported by us wholeheartedly here.

Mr. BALLINGER. Do you retail grocers in this State here have any buying agency? For instance, do they get together and own a corporation that does the purchasing for the group so that they may obtain maximum discounts?