sel for the previous association at the hearings this morning whether he had given some thought to the question of an amendment to the Automobile Dealers Day in Court Act and whether or not it would not be sufficient and adequate to the purpose at hand simply to amend that Day in Court Act by broadening it to include other products in addition to automobiles.

I hasten to say in respect of that most incisive question, that such an amendment to the Automobile Dealers Day in Court Act would indeed be a great step forward because it would be some step. There is no doubt that it would be an important step. Moreover, I am familiar with the recently decided case to which Mr. Chumbris referred, which within the confines of the industry I represent, is surely a landmark decision, particularly since it comes from a court of appeals of high respect and importance and seems to reverse certain trends in the Tenth Circuit Court of Appeals. And we read that case with great interest, particularly since several members of our association have suits pending against franchisors for being cut off, which suits we hope will be helpfully affected by the very decision in the Semke case to which Mr. Chumbris very appropriately referred in asking appropriate amendments under the Automobile Dealers Day in Court Act.

Moreover, while the damages allowed in that case were very slight considering the difficulties that the plaintiff was involved in, the big thing in that case is the decision by the court that clearly established that the Automobile Day in Court Act creates a new cause of action and is not merely a remedy for breach of contract. Therefore, if all we could get, if all this committee could get Congress to do would be the kind of thing that Mr. Chumbris suggested this morning, we would say: "Wonderful. Let us do that at least." But S. 2321 is a lot better. S. 2321 takes advantage of the experience that we have had since the Automobile Dealers Day in Court Act came into existence. We are no longer today back in 1956, which, I think, was the year in which the Automobile Dealers Day in Court Act was enacted. This is 11 years later and it has been a very hard 11 years under that statute for the automobile dealers and it has taken 11 years to get the Semke case and we have learned a great deal in that time. S. 2321 is a Day in Court Act. That is what it does. It gives a dealer a day in court but it goes a little further than the Automobile Dealers Day in Court Act, because it says a little more about what that day in court will afford him, maybe, and it certainly does not give us the millennium.

There is not any doubt that section 6, I think it is, which provides that there shall be a defense, that the last sentence which provides for the complete defense provision, certainly will curb too much enthusiasm on the part of franchisees, but maybe it is a wise, cautionary provision in the initial act. You have to start somewhere. But, I urge the committee not to start way back in 1956. Surely, an amendment extending the 1956 act to all other products or to other products, is better than not extending it, and better than not doing anything; but if you are doing it, why not do it with the benefit of what has been learned in the intervening period and go as far as 2321 goes. It is no panacea for all problems of the dealers by any means, but it makes some reasonable forward step and does so without being as complicated, if I may be permitted with all the respect in the world to use that word with respect to 2507, which I have not studied with the same

care but which I have had an opportunity to read. I think that is a much more difficult bill to get off the ground. It is a much more complicated bill and it does not meet many of the problems as directly as 2321 would do.

I am sorry again to make the answer so long.

Senator HART. It is a good answer.

Mr. Cohen?

Mr. COHEN. No questions.

Senator HART. Mr. Chumbris?

Mr. CHUMBRIS. He has already answered my questions.

Senator HART. Gentlemen, you have been very helpful. I appreciate very much, Mr. Hellring, the way you fashioned the testimony.

Mr. HELLRING. Thank you very much, Mr. Chairman, for permitting us to appear.

Senator HART. This enables us to conclude this morning, the testimony having been received from all who were scheduled. We will adjourn, to resume in this room at 10 tomorrow.

(Whereupon, at 11:50 a.m., the hearing was recessed, to reconvene at 10 a.m., Wednesday, October 11, 1967.)

FRANCHISE LEGISLATION

WEDNESDAY, OCTOBER 11, 1967

U.S. SENATE,

SUBCOMMITTEE ON ANTITRUST AND MONOPOLY OF THE COMMITTEE ON THE JUDICIARY, Washington, D.C. The subcommittee met, pursuant to recess, at 10 a.m., in room 1318, New Senate Office Building, Senator Philip A. Hart (chairman) presiding.

Present: Senator Hart.

Also present: S. Jerry Cohen, staff director and chief counsel; Charles E. Bangert, assistant counsel; Peter N. Chumbris, chief counsel for minority; James S. Schultz, minority counsel; Patricia Bario, editorial director; and Gladys Montier, clerk.

Senator HART. The committee will be in order.

Our session today, unfortunately, will be interrupted. Again, the full Committee on the Judiciary has been told to meet at 10:30. Under our rules, we are not permitted to sit from that point on until the full committee has completed its business. We will do the best we can in terms of accommodating that problem.

Our opening witness today is someone from whom the subcommittee has heard before and always has benefited from. I want to welcome the executive secretary and general counsel of the National Congress of Petroleum Retailers, Mr. William Snow. I understand you are accompanied by others. If you will all come up to the table, please. STATEMENT OF WILLIAM D. SNOW, GENERAL COUNSEL, NATIONAL CONGRESS OF PETROLEUM RETAILERS, INC.; ACCOMPANIED BY JACK HOUSTON, EXECUTIVE SECRETARY, GEORGIA ASSOCIATION OF PETROLEUM RETAILERS, INC.; WILLIAM D. TUCKER, EXECUTIVE SECRETARY, ALLIED GASOLINE RETAILERS ASSOCIATION OF FLORIDA; CLIFFORD R. HINES, PITTSBURGH, PA.; JOSEPH GROM, JR., PRESIDENT, KENTUCKY GASOLINE DEALERS ASSOCIATION, INC.; PHILIP PETERS, PITTSBURGH, PA.; AND JOHN BOUCH, BREEZEWOOD, PA.

Mr. SNOW. Thank you, Mr. Chairman.

Senator HART. The committee was given prepared statements. These statements will be printed in full in the record as though given in full. You can make the presentation any way you wish.

Mr. SNOW. Thank you, Mr. Chairman. I am William D. Snow, general counsel and executive director of the National Congress of Petroleum Retailers. We are a trade association, made up of State and

regional associations in 40 States, the District of Columbia, and Puerto Rico. Some of the representatives of our member associations are here with me to present the reasons for our support of S. 2507 and S. 2321, those amendments which we think would be desirable, and the fact pattern of our interest.

As you know, the Federal Trade Commission conducted extensive hearings in the gasoline marketing and one of their conclusions was that service station retailers are in reality economic serfs of the supplier. If economic serfdom can exist in one industry it can be extended to others. We are dealing with the situation in which independent retailers are no longer in the same position as when suppliers competed among themselves for their business. We had on one end of the scale, independent retailing, on the other, company stores. Today we have in between the control distribution system of large suppliers, where the retailers, whom they choose, are structured into a type of control even before the relationship is established. The essence of this is that these retailers are performing the functions of employees, though without the right of employees for collective bargaining. Stating the problem this way, an additional solution to those proposed in the bills being considered is suggested. If the retailers who are structured into this system of control are used in place of employees and are controlled in the same way as employees, might not some of the problems to which these bills are directed be solved if they had, where the relationship is so controlled as it would be if the retailer were an employee, might not the instrument of collective bargaining be a valuable solution?

The type of language which would provide this would be that in relationship between those covered by either of these bills, where the matter of contractor relationship pertains to actions by the franchisee which would be the subject of collective bargaining if he were an employee, that he should have the same rights as if he is an employee to bargain collectively about these conditions.

We also, with respect to 2321, have suggested some amendments that the coverage in the term franchise should be broad enough to include leases. If an oil company has a contract and a lease with one of its dealers, it can put him out of business either by canceling the lease or contract. So the franchise should be broad enough to include this, and also the agency contracts, which are frequently used, whereby the dealer is only the agent of the supplier rather than-an independent businessman rather than a buyer, a purchaser for resale of the product. He is commission agent for their sale. A contract of this type will be introduced by one of these witnesses.

Another point of concern in that bill is the fact that the defense allowed at the end of section 6 does permit the showing of the breach of condition of the agreement. It says "lawful condition of the agreement to be shown as a defense." We think this should be restricted to a substantive provision such as payment of rent in a lease and it should not apply to portions of the agreement which are efforts to control the business of the franchisee unless the franchisee has some manner of negotiating about them as suggested through the collective bargaining device.

My statement presents other matters which represent our reasons for supporting this bill. The problem is real. When the Federal Trade Commission says that retailers, service station retailers, that the essence