Mr. KELLY. No; far too high. Mr. BALLINGER. I would like to ask you a question, Mr. Kelly. You are acquainted with how the D. C. L. operates in Great Britain. Do they sell to wholesaler, and wholesaler sell to retailers? Mr. KELLY. I am not very well acquainted with their principle of doing business in the United Kingdom. All my business experience with the D. C. L. has been between the United States and Canada. Mr. BALLINGER. Very well. Then I won't ask these questions of you. Dr. LUBIN. Mr. Chairman, may I ask the witness a question? Dr. LUBIN. These distributors are purchasers of the products of the D. C. L. They make an outright purchase and distribute the products after they make the purchase. Mr. KELLY. They make the purchase in England and pay for the goods in England, and the goods then belong to them? Dr. LUBIN. Is there anything in any of the contracts or any practices in existence which have anything to do with determining the amount that they must sell or purchase in a given year? Mr. KELLY. Yes. I believe the minimum is 100,000 cases per annum. Dr. LUBIN. Is there any maximum limitation of the amount they may purchase ? Mr. KELLY. No maximum. The VICE CHAIRMAN. Do you solemnly swear, in the testimony you are about to give, to tell the truth, the whole truth, and nothing but the truth, so help you God? Mr. NEWMÁN. I do. TESTIMONY OF JOSEPH H. NEWMAN, PRESIDENT, BROWNE VINTNERS CO., INC., NEW YORK CITY Mr. BUCK. State your name and business. Mr. NEWMAN. Joseph Newman, president of Browne-Vintners Co., Inc. Mr. Buck. Mr. Newman, does Browne-Vintners Co. hold the sole agency or sole distributors contract on White Horse Scotch whisky? Mr. NEWMAN. They do. Mr. BUCK. How do you market that whisky in the United States? What is your marketing policy? Mr. NEWMAN. Selling it to the different wholesalers through the country. Mr. BUCK. Do you market it under resale price maintenance agreements? Mr. NEWMAN. In some of the States. Mr. NEWMAN. Well, probably half a dozen, where they have fairtrade contracts. TYPICAL SOLE AGENCY CONTRACT Mr. BUCK. I hand you an agreement and ask you if that is one of the typical agreements or is the typical form of the agreement used by your company? Mr. NEWMAN. That is correct. Mr. BUCK. May I file that for the record ? Mr. NEWMAN. Yes, sir. Mr. BUCK. I ask that it be received. The VICE CHAIRMAN. It will be admitted. (The agreement referred to was marked "Exhibit No. 421” and is included in the appendix on p. 2703.) Mr. Buck. Mr. Chairman, I would like also to submit a copy of an agreement, one of the contracts under which these sole distributor agencies are created. Some of these contracts, however-I think all of them—set forth the price at which the distributor buys the whisky, and I understand that that might cause some uneasiness in the trade, and at least it is a matter that they wouldn't want put in. Mr. NEWMAN. Yes. Mr. BUCK. So I submit it to the committee whether they think the price schedules under those circumstances should be omitted from the agreement or not. The VICE CHAIRMAN. As I understand it, you propose to submit the document with the suggestion that there is objection on the part of the trade to having their price schedules incorporated. Mr. BUCK. Yes, sir. The VICE CHAIRMAN. Do they want to make any further showing of protest than to indicate that protest and let the committee have it? Mr. NEWMAN. No. The VICE CHAIRMAN. You be certain, so in the completion of the record it won't be overlooked. Mr. Buck. I will. The VICE CHAIRMAN. I assume that these gentlemen who are attending the hearings will see to it.1 Mr. BUCK. Mr. Newman withdraws his objection to this particular contract; and I will say to the trade, those that are present, that unless they object, the committee might consider this as a typical contract to a sole agency or distributor, if that is satisfactory to the committee. The VICE CHAIRMAN. That'is satisfactory to the committee; but I think it should appear at this point and be very clear that if it is contended by any of the gentlemen here who represent other concerns that this contract is not typical, at this point in the record would be the proper place to indicate their lack of agreement. . Mr. Guy MASON (Washington, D. C., counsel, Park & Tilford). I make that reservation for Park & Tilford. 1 Referring to counsel for various witnesses. The VICE CHAIRMAN. You make the reservation that it is not typical? Mr. Mason. For the time being, for Park & Tilford. Mr. GEORGE R. BENEMAN (Washington, D. C., counsel, Schenley Import Corporation). On behalf of Schenley Import Corporation, we, of course, have never seen that contract. The VÍCE CHAIRMAN. Are you making this to save the point or because your examination of the document indicates that it is not typical? Mr. BENEMAN. I am making the point, Mr. Chairman, because I have never seen that document.1 The VICE CHAIRMAN. You reserve the point because you have never seen it? Mr. Mason. That is the basis of my reservation. The VICE CHAIRMAN. I think it would be, unless you gentlemen are very attentive on this inquiry at the moment, a good time to examine that record and then see whether or not you have more objection than that which would be purely technical. Mr. BUCK. Mr. Chairman, on that point, those who feel this is not a typical representation of the contract, I would suggest file their individual contracts for the record. The VICE CHAIRMAN. That is a good suggestion, and let them all come in at this point, if it can be arranged. I mean physically at this point. Mr. Mason. Speaking for Park & Tilford, we have no objection to the contract going in. We do wish to exclude, if possible, short of going to jail for contempt, our price list. Mr. Bück. Mr. Mason, will you file a copy of Park & Tilford's contract and take out your price list? Mr. Mason. We will be glad to do so, and we will furnish the price list confidentially to the committee or to the Federal Trade Commission.2 Mr. Buck. Will all you gentlemen who declare this not to be a typical contract do the same thing? The VICE CHAIRMAN. Now, we understand clearly that this is to go in, and their own trade contracts are to go into the record. In addition to that, their respective price lists are to be furnished for the information of the committee or the Trade Commission. Mr. BUCK. That is right. (The Browne-Vintners agency contract was marked "Exhibit No. 422” and is included in the appendix on p. 2705.) ) Mr. Buck. Do you have, on behalf of Browne-Vintners Corporation, any other sole-agency contracts for any brands of Scotch whisky? Mr. Buck. I may say that I have consular invoices on these goods, on most of the contracts already furnished on subpena duces tecum, but I would prefer that they put them in voluntarily. I think that would be more agreeable to the industry. Mr. NEWMAN. We have not. 1 Counsel for Schenley Distillers Corporation, after reading the agreement, subsequently returned it to the committee clerk with the statement that it is substantially typical of the Schenley Import agreement. 2 Later submitted by Mr. Mason. See p. 2612, infra, and appendix, pp. 2709 and 2711. The VICE CHAIRMAN. Whoever has charge of this record will see if they do come in that they come in right at this point, so they will not be distributed. Mr. BUCK. That is right. Mr. Newman, do you have the same arrangement in respect to advertising of your brand of Scotch in this country? Does the foreign factory contribute to the sales promotion in the United States ? Mr. NEWMAN. They do. Mr. BUCK. Would you care to say to what extent they contribute to the sales promotion of White Horse? Mr. NEWMAN. £35,000. Mr. NEWMAN. We are. Mr. Buck. That dollar a case, of course, is charged in your price made to wholesalers and consumers on the goods? Mr. NEWMAN. Quite right. Mr. BUCK. And you are obligated under the contract to make that distribution. Mr. NEWMAN. That is right. Mr. BUCK. Are you obligated under the contract to take and dispose of a specific amount of whisky each year? Mr. NEWMAN. One hundred thousand cases. The VICE CHAIRMAN. May I ask one point before we get further away: Do you have any contracts or agreements that supplement this written contract that you turned in? Mr. NEWMAN. No, sir. The VICE CHAIRMAN. It covers—well, your answer is comprehensive; there is no other. Mr. BUCK. That is all. Mr. Davis. Mr. Chairman, I don't recall that he has stated, but I wish to ask the witness whether his company is affiliated with any other company engaged in the liquor business. Mr. NEWMAN. We have a subsidiary company, the Wilson Distilling Co. Mr. Davis. Is your company owned or controlled by any company or corporation engaged in the liquor business? Mr. NEWMAN. No, sir. Mr. Davis. You have the one subsidiary, only? Mr. O'CONNELL. Mr. Newman, I understand from your testimony that you, by virtue of the contract, are the British D. C. L. exclusive agency? Mr. NEWMAN. We have our contract with the White Horse distilleries. Mr. O'CONNELL. Which is a subsidiary of the D. C. L. ? Mr. NEWMAN. Correct. Mr. O'CONNELL. And is there any provision in your contract with White Horse Distilleries relative to the resale price of the liquor you buy? Mr. NEWMAN. None whatever. Mr. O'CONNELL. I also understood you to say that some States by contract between your company and the distributors or retailers Mr. NEWMAN (interposing). Retailers. RETAIL WHISKY PRICES FIXED Mr. O'CONNELL. By contract with the retailers, you fix the resale price at which your whiskies may be sold to the public; is that correct? Mr. NEWMAN. Correct. Mr. O'CONNELL. I understood you to say in only about six States, is that true? Mr. NEWMAN. Approximately right. Mr. O'CONNELL. There are resale price maintenance laws in many more States than that. Mr. NEWMAN. There may be. Mr. O'CONNELL. What is the policy of your company with regard to taking advantage of resale price maintenance laws in States where they exist ? Mr. NEWMAN. We follow our own ideas about it. If we think it is good policy to put it on fair trade we do. Mr. O'CONNELL. You wouldn't be able to tell me even generally what standards you would apply in determining whether or not a particular State needed that particular type of treatment. Mr. NEWMAN. No; I couldn't. Mr. O'CONNELL. In States where you have decided that you should take advantage of a resale price maintance law, you, I take it, determine on some basis or other what the resale price will be. Could you tell me even in a general way how you would arrive at the price that you fixed ? Mr. NEWMAN. Well, it is according to the mark-up of the retailers in different States. Mr. O'CONNELL. That is a little bit vague. Could you be more specific? Mr. NEWMAN. That is as near as I could give it to you. Mr. O'CONNELL. And the amount of the mark-up that you would permit in a State where there was a resale price maintenance law would depend upon the amount of mark-up that you thought was 124491-39-pt. 9—13 |