paid or agreed to be paid by the buyer as distinguished from the amount realized by the seller. Yet, the true price received by the seller would seem to be what is left after deducting actual freight or the cost of other transportation allowances which may or may not reflect or represent the amount which the purchaser agrees to pay. The question then arises as to whether or not the definition would foreclose the Court from determining the true price. In this connection it is to be noted that the proposed definition would be applicable to all other provisions of section 2 of the Clayton Act which contain the word "price" but would apparently not be applicable to the provisions of the Federal Trade Commission Act.

The amendment to the Federal Trade Commission Act would have the effect of exempting independent sales made in good faith to meet the equally low price of a competitor from the unfair methods of competition or deceptive acts or trade practices covered by subsection 5 (a). As distinguished from the Clayton Act, no provisions respecting such sales are covered by existing language of the Federal Trade Commission Act.

In view of the decision of the Supreme Court in the Standard Oil case, the Department sees no necessity for the enactment of the proposed legislation; however, if the Congress should decide to enact such legislation, the Department would have no objection to it. If the bill should receive favorable consideration, this Department would consider it preferable to amend subsection 2 (b) of the Clayton Act rather than to create an entirely new subsection. Also, it is believed that the language of the legislation should make perfectly clear that good-faith meeting of a competitor's lower price, services, or facilities is an affirmative defense that must be proved by the one asserting it in conformity with the majority opinion in the Standard Oil case. It is further suggested that the definition of the term "price" be deleted, because such a term is subject to factual determination. Finally, your committee may desire to give further consideration to the practical effect of the proposed amendment to subsection 5 (a) of the Federal Trade Commission Act, and the advisability, if such an amendment is deemed desirable, of making it parallel in language and application to the proposed amendment to the Clayton Act.

The Director of the Bureau of the Budget has advised that there is no objection to the submission of this report.

Yours sincerely,

PEYTON FORD, Deputy Attorney General.

Mr. KEATING. May I inquire about that? Am I not correct that that is a modification in the position of the Attorney General, and am I not correct the last time he recommended against the enactment of the bill we had up last year?

The CHAIRMAN. That was a different bill.

Mr. KEATING. I understand it was different, but dealing with this same subject and introduced by Mr. Walter. I am trying to get this straight in my mind. Did he not recommend against enactment of that bill?

Mr. BERNHARDT. No, sir; the contrary is true. Mr. Bergson, Chief of the Antitrust Division, was in favor of the enactment, and he was in favor of the concept that good-faith meeting of competition should be a conclusive and complete defense.

Mr. KEATING. In other words, he favored the enactment of the bill last year?

Mr. BERNHARDT. In the last Congress.

Mr. KEATING. But in spite of that the President vetoed it. Mr. BERNHARDT. Mr. Bergson, as I recall, favored the enactment of the bill. He suggested certain amendments, which amendments, as I recall, were adopted in toto by this committee in reporting the bill to the House.

Mr. KEATING. The Bergson recommendations were in the bill which was finally enacted?

Mr. BERNHARDT. The Bergson amendments were in the bill which this committee reported to the House. The bill underwent some transformation in the course of conference committee action.

The CHAIRMAN. There were decided changes made in the bill. The committee on conference made a number of changes, deletions and additions, and you may remember that the bill as presented to the House incurred my objection as a result of the compromise emanating from the committee on conference.

I agreed to the conference and urged the House to support it. I was one of those who felt it would be better to bend rather than break. It was purely a compromise.

Mr. KEATING. I remember it, but the details of it are a little hazy in my mind.

Mr. WILSON. Mr. Chairman, I notice the Attorney General says if Congress passes the bill they would have no objection to it provided it was made clear that it was only a defense. In other words, the burden of proof was on the party accused. I was just reading the language here.

It seems to me that the language of the bill is absolutely clear. You can only use it as a defense. Therefore the burden of proof is on him to establish that it is not collusive.

The CHAIRMAN. Except that I was dubious about it myself when I read the language. The language is in the negative on the top of page 2, “that a seller shall not be deemed to have acted in good faith," and on line 15, page 2, "that a seller shall not be deemed to have acted in good faith," and so forth.

I do not know what effect the negative would have, but I do not think the author of the bill would object to making sure in the statute the idea that the burden of proof

Mr. WILSON. Under subsection G it reads:

In any proceeding involving an alleged violation of this section, it shall be a complete defense to a charge of discrimination in price or services or facilities furnished for the seller to show that his differential in price, or his furnishing of greater services or facilities, was in good faith to meet the equally low price of, or the equally extensive services or facilities furnished by, a competitor. * * *

The CHAIRMAN. Well, let us not go into the details now as to the exact language. We might do that later, but I think we ought to make sure if and when we report a bill out, that it shall be an affirmative defense that must be borne by the accused.

Mr. WILLIS. Mr. Chairman, as I recall Mr. Bergson floundered all over the lot. I do not think his position can be stated as clearly and categorically as our counsel has indicated. I never was able to quite understand exactly what his position was.

Mr. KEATING. I was not a member of the subcommittee that handled it at that time, but my impression was very much like yours.

Mr. WILLIS. I was not either. I did oppose the bill then and I opposed it in Congress.

The CHAIRMAN. The letter of the Attorney General asks that the definition of the "price" be deleted also, the very last few lines, lines 20, 21, and 22, on page 2. I think the letter says that there should be no words indicating the definition of price.

(Note.-The following letter dated July 13, 1951 from the Deputy Attorney General was received in qualification of his earlier letter of July 10, 1951).

Hon. EMANUEL CELLER,

DEPARTMENT OF JUSTICE,
OFFICE OF THE ATTORNEY GENERAL,
Washington, July 13, 1951.

Chairman, Committee on the Judiciary,

House of Representatives, Washington, D. C.

MY DEAR MR. CHAIRMAN: It has been suggested to us that our recent report to you on H. R. 2820 may be interpreted as expressing a preference on our part for a definition of the term "price" different from that presently set out in the bill. We want to take this opportunity to correct any such misinterpretation of our position.

The purpose of our reference to the "price" definition was solely one of pointing out the difficulty and inadvisability of defining the term in any way; we did not intend to suggest an alternative definition. We believe that words or terms such as "price," as used in the antitrust statutes, present questions of fact and not matters of law and for that reason their meaning should be judicially determined in each set of circumstances.

The advantages of a general statute governing antitrust problems were pointed out by Chief Justice Hughes in Sugar Institute, Inc. v. United States, 297 U. S. 553, 600. He said:

the Sherman Antitrust Act, as a charter of freedom, has a generality and adaptability comparable to that found to be desirable in constitutional provisions. It does not go into detailed definitions."

This has proved to be sound policy in antitrust and related statutes. It permits the adaptation of the law to continually changing practices and methods. In the Sherman Act itself the offense is specified but it is not spelled out in detail. It is, however, sufficiently flexible to meet the demands for justice under shifting circumstances. A list of prohibitions would be an invitation to evasion.

In explaining why Congress in 1914 had adopted in the Federal Trade Commission Act the general standards of unfair conduct, Mr. Justice Brandeis said:

"Instead of undertaking to define what practices should be deemed unfair, as had been done in earlier legislation, the act left the determination to the Commission. Experience with existing law had taught that definition, being necessarily rigid, would prove embarrassing and, if rigorously applied, might involve hardship" (Federal Trade Commission v. Gratz, 253 U. S. 421, 436). For the foregoing reasons we should like to make it clear to the members of the Committee on the Judiicary that we consider it undesirable to enact into statute law any definition of a term, such as "price," which is subject to factual determination.

The Director of the Bureau of the Budget was advised that there is no objection to the submission of this additional report on H. R. 2820. Yours sincerely,

PEYTON FORD, Deputy Attorney General.

Mr. KEATING. Now, the gentleman from Louisiana was a conferee on a bill last year introduced by Congressman Walter. I do not want to draw any inferences. I do not know whether they are the same, different, or what they are. Have you studied this?

Mr. WILLIS. I have not studied this bill carefully, but I have read it and I can say that there is a difference between this bill and the other bill.

Now, whether they are saying two things in different words but which will mean the same thing, I am not prepared to say now, but the bill does read quite differently from the one introduced last time. Mr. KEATING. As I remember, I agreed with your position and that of President Truman last time, but I am not sure that this is not quite different.

The CHAIRMAN. That is unusual.

Mr. KEATING. Well, it does not happen too often.

Mr. McCULLOCH. The gentleman always agrees with the President when he is right.

Mr. KEATING. Well, that does not give me much scope.

The CHAIRMAN. Commissioner Spingarn, we will be very glad to hear you. You have a statement. Do you want to read that statement or would you submit that for the record and then give us extemporaneously your remarks?

Mr. SPINGARN. If it meets with the approval of the committee, I would like to make a few brief prefatory remarks and then read the statement. I would like to say first that we appreciate very much the opportunity to appear before this committee.

The CHAIRMAN. Will you state your name.

STATEMENT OF STEPHEN J. SPINGARN, FEDERAL TRADE COMMISSIONER, ACCOMPANIED BY JOHN M. BLAIR, ASSISTANT CHIEF ECONOMIST; EVERETTE MacINTYRE, ASSISTANT DIRECTOR, BUREAU OF ANTIMONOPOLY; AND JOSEPH S. WRIGHT, ASSISTANT GENERAL COUNSEL IN CHARGE OF COMPLIANCE, FEDERAL TRADE COMMISSION

Mr. SPINGARN. My name is Stephen J. Spingarn. I am a Federal Trade Commissioner.

We appreciate very much the opportunity to appear before this committee. We did not have that opportunity on the Senate side in connection with the companion bill, S. 719, because the committee reported that bill without any hearings, and it has now been scheduled for floor consideration over there on August 2.

Incidentally I want to say that I have taken the liberty of bringing with me three members of our staff who are here in the first row, Mr. Everette MacIntyre, who is assistant director of our Bureau of Antimonopoly; Mr. Joseph Wright, who is assistant general counsel of the Commission; and Dr. John Blair, who is assistant chief economist. These gentlemen have had a total of about 50 years-you would not believe it from looking at them-of experience.

The CHAIRMAN. You mean to tell me Mr. John Blair is over 50? Mr. SPINGARN. A total, Mr. Chairman. He is the junior partner on the team, I think. About 50 years of experience with the antitrust laws and about 40 of those years with the Federal Trade Commission. I have had 8 months with the Commission, so you can see why I am glad to have them here behind me.

I would like to make a few prefatory and summary remarks. This bill, H. R. 2820, seeks to write into law the decision of the Supreme Court in the Standard Oil Company versus Federal Trade Commission case last January. As has already been mentioned, that was a close decision.

It was a 5 to 3 decision, and actually since Justice Minton, who had agreed with the minority, had written an opinion in the lower court when he was on the court of appeals, which was in accordance with the minority opinion of the Supreme Court, since he, for obvious reasons refrained from participating in the decision, it is safe to assure that the Court lines up 5 to 4 on this matter.

It is worth noting, perhaps, that Chief Justice Vinson was in the minority on this case.

Mr. KEATING. Who were the others on the minority?

Mr. SPINGARN. Justice Reed wrote the dissenting opinion and Justice Black, as I remember, was the other minority member.

The CHAIRMAN. The Chief Justice was on the minority? Mr. SPINGARN. Yes, sir. Now the issue in that case was whether when the Federal Trade Commission brings charges of unlawful price discrimination, and further makes a showing that those price discriminations have resulted or will probably result or may even certainly result or may in fact have already resulted in substantial injury, serious injury, to competition or even destruction of competition, that it is nevertheless a complete defense to those charges for the seller to make a showing that he was meeting competition in good faith.

Mr. KEATING. An affirmative showing.

Mr. SPINGARN. Yes.

Mr. KEATING. The burden rests with him to show that.

Mr. SPINGARN. Under the Supreme Court decision I think that would be true.

The CHAIRMAN. How could there be good faith shown if there was a monopoly?

Mr. SPINGARN. If the inevitable result of the discrimination was monopoly, good faith would still be a defense under that opinion.

The CHAIRMAN. How can good faith be consistent with a monopoly? Mr. STEVENS. Are you not referring to a proceeding under section 2 of the Robinson-Patman Act so it would not be a defense if the proceeding were brought under the monopoly provisions of the Sherman Act?

Mr. SPINGARN. I am not assuming that the monopoly has already ripened, you understand. I am assuming that the Commission makes a showing that the inevitable results of these discriminations if continued will be a monopoly. Nevertheless under that decision good faith would be a complete defense.

The CHAIRMAN. Well, then another action could be brought under another section.

Mr. SPINGARN. After the monopoly had been created. You would be locking the barn after the horse was stolen.

Mr. BERNHARDT. Mr. Spingarn, you used the term, I believe, "substantial injury to competition." Is that term, in your opinion, synonymous with a substantial lessening of competition?

Mr. SPINGARN. I thould have said a substantial lessening of competition.

Mr. BERNHARDT. Then that language and that concept differs in some subtle degree from the term elsewhere used in section 2 (a) of the Clayton Act "injury to competition?"

Mr. SPINGARN. Yes; I suppose that is the acse.

Mr. BERNHARDT. Could you explain the difference?

Mr. SPINGARN. No; I am not sure that I could. I would regard injury, perhaps, as a more serious lessening of competition. I am not sure that I would be right on that. Both terms are used.

Mr. BERNHARDT. And yet, as I understand your statement, which I have had the opportunity to read, the position of the Federal Trade Commission is that they concede that a good-faith meeting of competition should be a complete defense to a charge of price discrimination where there was only injury to competition involved.