Mr. BERGSON. That is right. Supposing you have 10 awfully big companies in this country, all competing, without restraint, for the business of the country. I do not think the antitrust laws would apply there.

The CHAIRMAN. Now, that poses a very important question to this committee, I think, namely that which is involved in the word that we have frequently heard here, "oligopolies", where we have a Big Three or a Big Four or a Big Five. It need not necessarily be a Big Ten.

What are your views with respect to these Big Five's, or Big Four's, or Big Three's?

Mr. BERGSON. When you have an oligopoly situation, you usually find that the competitive forces do not operate. That even though the officials of the company may not sit down and get together and work out production plans, and so forth, they all know pretty well what one another is going to do.

They all fix their own prices in such a way that it reflects the prices of the others.

In such a situation we have monopoly power among the four, and if we feel that the monopoly power exists, even where there are four in the industry, where the four, using a colloquialism, scratch each other's backs, so to speak, we feel that the Sherman Act is applicable. We have brought such a suit against the meat packers. We have a case against the Big Four meat packers.

Mr. KEATING. Is there a numerical limit to an oligopoly?

Mr. BERGSON. No; it is the circumstances that exist.

Mr. KEATING. Could it be 10?

Mr. BERGSON. I doubt very much that it could be 10. It would be rather difficult for them to operate that way. I think it is usually a Big Two or Three or Four. I would not want to say that is the limit, but it would be more apt to happen in an industry of that type.

Mr. MICHENER. One of the newspapermen suggested that we have inserted in the record somewhere your definition in plain simple language of "oligopoly."

Mr. BERGSON. You know that qualification of "plain, simple language" almost tongue-ties me, Mr. Michener.

Mr. MICHENER. The words are significant. [Laughter.]

The CHAIRMAN. Somebody said that the economists-and I presume if you tried to define in plain, simple language "oligopoly" you would be an economist-someone said that the economists are those who make common sense more difficult. [Laughter]

Mr. MICHENER. We would like to have your view.

Mr. BERGSON. My view of an oligopoly is an industry in which two or more companies-probably three or four, maybe five-control, can control, production, and can control prices following principles. of live-and-let-live so far as each other is concerned: where the attitude of one company is, "I am not going to lower my prices and increase my production because my competitor has the power to lower his prices and increase his production to such an extent that I will have to lower my prices more and increase my production to a greater degree. So I will just leave it where it is safe in the knowledge that my competitors have the same feeling about me, and they will do the same thing."

Now, I do not know whether that is plain or simple.

Mr. MICHENER. Then, so the ordinary layman can best understand your using the term, it is quite similar to the symbols used by the shorthand writer, and in order that one might understand the whole meaning of the word, as envisioned by you, if there were parentheses followmg each word, with your statement, then the reader would know what it was all about.

Mr. BERGSON. Mr. Michener, I do not even know what that was about. [Laughter.]

Mr. MICHENER. It just shows how difficult it is for the economist to talk in the language of the average person.

Mr. BERGSON. Well, what I mean is, as simply as possible, a situation where the normal forces that ordinarily set production figures and prices, the competitive forces do not operate.

Mr. MICHENER, That is right.

you are

Mr. BERGSON. Where you have a situation of that kind, and most likely to have it in a monopoly industry or an oligopoly industry, then you have monopoly power, whether it is in the hands of the one or in the hands of the four or the three or the two.

In such an instance we think that the Sherman Act is violated and that we can proceed under the Sherman Act. And we are proceeding in some cases under the act.

Mr. MICHENER. I think I understand.

The CHAIRMAN. In other words, usually where there are oligopolies there is what has been called conscious parallelism

Mr. BERGSON. That is right.

The CHAIRMAN (continuing). And price leadership and price maintenance.

Mr. BERGSON. That is right.

Mr. MICHENER. Would you call the automobile industry an oligopoly?

Mr. BERGSON. I would not like to call any specific industry an oligopoly until I file a case against it. [Laughter.]

Mr. MICHENER. Then any particular industry will have to wait until you file a case to see whether or not the definition-your definitionapplies to the industry.

Mr. BERGSON. I think the industry knows pretty well itself, and I understand that in the automobile industry, for example, the head of one company has stated to his board of directors that he does not want his particular company to get beyond a particular size because if "we get beyond a particular size and a couple of others are pretty close to that," he said, "We may be subject to attack under the antitrust laws." There is a conscious effort there to stay out of the oligopoly situation, which is one of the benefits of the antitrust laws.

If we did not have the antitrust laws, I do not know whether he would have that feeling of self-restraint, shall I say, rather than using the word "restraint."

Mr. McCULLOCH. Did I understand you to say that you have instituted some suits in the meat packers' cases?

Mr. BERGSON. Yes, sir, Mr. McCulloch.

Mr. McCULLOCH. With respect to this general discussion on the part of Mr. Michener and the chairman, could you briefly tell me what evils you seek to end by those suits or that suit, as the case may be?

Mr. BERGSON. Yes. We seek in that suit to avoid primarily two things: the four major packers have such purchasing power of their

own that they, by the exercise of that power, are able to control the price that they pay to the cattlemen when they buy the raw material and control it pretty much to their own liking.

Mr. KEATING. Also, to the liking of the cattlemen; is that not so? Mr. BERGSON. At the present time or a year or so ago, but what may be good for the cattlemen today may be awfully bad for them tomor

row.

Mr. McCULLOCH. It is not quite good today, is it?

Mr. BERGSON. I do not know exactly what the facts are today, Mr. McCulloch.

On the other hand, having so much of the meat for sale themselves, they are able to control the price to the consumer.

Mr. McCULLOCH. In the preparation of the facts for your case, did you ascertain the number of small independent packers in America? Mr. BERGSON. Yes; we did.

Mr. MCCULLOCH. How many are there, approximately?

Mr. BERGSON. I cannot tell you offhand. I do not have the figures at my fingertips.

We filed that case last September, almost a year ago, and I knew them at that time, but I am not sure now.

Mr. McCULLOCH. Do you have available statistics

Mr. BERGSON. We can get those for you, Mr. McCulloch. I would be very happy to do that. We can get you statistics as to the number of independent packers that there are and the percentage of the business which they have, which, I am sure, you will find very small. Mr. McCULLOCH. All right.

Do you have at your command now the number of failures in the independent field?

Mr. BERGSON. I think we can get those for you, some who failed, some of whom were bought up by the major packers and some of whom failed because they could not get the raw materials as a result of the control that the majors had.

Mr. McCULLOCH. And also as a part of your preparation of this case, I presume you studied the average

Mr. BERGSON. Of course, I would not like to give you all the evidence that we have, because we would like to keep it for the trial of the case, but we will give you what we can.

Mr. McCULLOCH. I am properly reprimanded. You may proceed. [Laughter.]

The CHAIRMAN. I do not want to go beyond the foursquares of your complaint, and I do not want to pry into your evidence in the Packers case, but do you charge in that complaint in that case that the Big Four-is it not?

Mr. BERGSON. The Big Four.

The CHAIRMAN. The Big Four packers constitute a conglomerate, what we call a conglomerate monopoly, that is, where they go backward and forward in the sense that they have bought out and merged with their sellers, such as the ranchers and breeders of cattle Mr. BERGSON. You mean a vertical monopoly?

The CHAIRMAN. Or a vertical; and/or that they have also acquired and merged with their customers, like the leather products manufacturers and soap makers, to whom they previously sold the skins or may have previously sold the tallow and the grease that comes from the cattle?

Mr. BERGSON. We do allege some of that, Mr. Chairman.

I do not know whether we allege every instance that you mention. Also, you must bear in mind that the four major packers are now under injunction against certain types of acquisitions and mergers as a result of a decree that was entered against them in the twenties, which has not proven to be effective.

They have been subject to antitrust action since 1890, I guess, and all sorts of injunctive provisions have been imposed upon them without any effect whatsoever, and the reason for our suit now is that we finally reached the conclusion that injunctive relief just will not do any good; that the only way to open this situation up to competition is to dissolve the packers, and we have asked that they be dissolved into 14 separate companies.

The CHAIRMAN. In that old decree they were precluded from going into many divers industries and businesses.

Mr. BERGSON. They were precluded from going into the wholesaling end, and so forth.

The CHAIRMAN. Well, could they not be cited for contempt of court in that regard?

Mr. BERGSON. They would be where we have clear evidence of it. The CHAIRMAN. Have they violated those old decrees?

Mr. BERGSON. I would say that they have to a certain extent, but that is only one of the issues that is involved in this case, and since the citation for contempt would result only in a fine and would not do anything to open up the competitive situation, we thought that the best course to follow was to try and bring this monopoly case and get these companies broken up, if we possibly can, to such an extent that we would get 14 effective competing units. This would be to the advantage of the cattle raisers and to the advantage of the consumers and to the advantage of small-business men who want to get into the packing business.

The CHAIRMAN. Has a criminal suit been started likewise?
Mr. BERGSON. No, sir.

The CHAIRMAN. This is a civil suit?

Mr. BERGSON. This is a civil suit. It has been my position since I have been in the Antitrust Division that criminal cases are not effective except in cases where we can show price fixing or willful, conscious, deliberate violations of the Sherman Act.

The results that accrue to the economy of the country are best obtained by civil action and not by criminal action.

The CHAIRMAN. Is that due to the low penalties-low criminal penalties-involved in the statute?

Mr. BERGSON. No; I do not think so. It is because in a criminal case all you can get is a fine or imprisonment, and whatever chastising effect the fine and imprisonment may have.

But if you have a concentration of power, you do not get that broken up by a criminal case. All you do is to get the fine or, sometime we hope, imprisonment in an appropriate case.

The CHAIRMAN. You do not get imprisonment except in rare cases where there is fraud or the violation of some other statutes

Mr. BERGSON. That is right. We have never gotten it in a strict or true antitrust case.

The CHAIRMAN. So that the penalties do not act as a deterrent at all? Mr. BERGSON. Well, they do to a large extent, I think, in price

fixing cases. I do not think anybody wants to be indicted or anybody wants to be convicted. So they act as a deterrent to that effect and to that extent, but they do not have the prospective effect that a civil case has.

In a civil case we can get an injunction against particular practices which we think and hope will open up a particular industry so that competition will begin in that industry, or we can get divestiture or divorcement, as we got in the movie cases just the other day.

The CHAIRMAN. Well, do you not think that the limitation of a $5,000 fine was such a piddling amount that it acts as no deterrent? Mr. BERGSON. I agree that $5,000 is a sum which is inadequate as a fine, and I certainly would recommend that you increase that fine. Mr. KEATING. What figure?

Mr. BERGSON. I recommend $50,000.

Mr. KEATING. You are modest. We had a witness here the other day who recommended-—

The CHAIRMAN. Millions.

Mr. KEATING. Was it a million or a billion?

The CHAIRMAN. He said millions, but he also said that the fine should be a fine day by day for every violation; each count should be separately considered and the fines made cumulative.

Mr. BERGSON. I do not know how you prove whether a violation occurs on each particular day. It is difficult enough, I might say, to prove that a violation has occurred in most of these cases.

In numerous instances, Mr. Chairman, we have more than one count in a particular case, and in one case that I recall, one that we won last fall, we had five counts, and the fines assessed against each company were $25,000.

If you increased it to $50,000, it could have been a quarter of a million dollars. I think $50,000 is an adequate fine, in most instances. Mr. KEATING. $50,000 for any one count?

Mr. BERGSON. On each count.

Mr. KEATING. You started to define-do a little defining there, and there is another phrase that I would like to have defined, and that is this phrase "cutthroat competition.'

I have had people in business say to me that cutthroat competition was not a good thing. Competition is a good thing, but not cutthroat competition. Now, do you use that phrase in your work, and if so, what does it mean?

Mr. BERGSON. Well, I do not know whether we use the phrase "cutthroat competition," but I do know that I could give you a definition of it which, I think, would indicate the type of competition which would be bad.

We had it in the A. & P. case. When prices are cut for the purpose of driving a competitor out of business so that when the competitor is out of business you can go back and raise your own prices, that is cutthroat competition.

It is a monopolistic practice, and it is a violation of the Sherman Act. Now, you may have competition, not because you want to drive your competitor out of business, but because you want to sell more goods-you can sell your goods at a cheaper price if you produce more, and you can pass the benefit on to the consumer. That is good competition. I do not know whether your witness or your inquirer would consider that cutthroat competition or not, but I certainly would not.