SEPTEMBER 20, 1954
NEW YORK, Sunday—I have before me a copy of a letter sent to the President by a group of people representing business organizations which seem to be very much opposed to Senator Capehart's Bill S 3646, dealing with freight rates. This bill was referred to the Committee on the Judiciary, and at the close of the session was still pending before the subcommittee.
In writing to the President these organizations say: "We know from long and bitter experience that the enactment of the Capehart bill could seriously weaken the Robinson-Patman Act. The chiselers, the short-sighted operators, need only one loophole through which they would demand and get destructive price discriminations. We find it hard to believe that in these trying days of economic readjustment, when small business is battling to survive, your Administration, Mr. President, would add a new burden of legalized discriminatory advantages favoring the big and the powerful.
"Such a loophole was in the original Clayton Act. Six years of factual investigation by the Congress and by the Federal Trade Commission prior to 1936 made it perfectly clear that this loophole prevented effective enforcement. We had thought that the Robinson-Patman Act had closed this loophole permanently."
I am no business woman, but the people who sign this letter all seem to be representing business groups such as the National Association of Retail Druggists, the National Association of Retail Grocers and the Cooperative League of the U.S.A. They must know something about business and, particularly, small business concerns and their interests.
I made inquiry and was informed that the announced purpose of the Capehart bill was to clarify the Robinson-Patman Act with respect to freight absorption. The opponents consider it simply another proposed loophole through which large manufacturers may stifle competition. Freight absorption means absorbing the cost of freight to distant points in the prices to purchasers at points nearer the shipping manufacturer. This, of course, permits lowering of prices to meet those of competitors in distant areas. But it also permits prices higher than necessary in areas nearer the manufacturer—where, incidentally, competition has in many instances been eliminated. Obviously this device can be employed to great advantage by big manufacturing concerns.
The Capehart proposal stipulates merely "good faith," which means such a practice would be legal even if it is discriminatory to the purchaser in its effects. It would be necessary to prove collusion and conspiracy to fix prices before freight absorption could be ruled out as a form of price discrimination prohibited by the Robinson-Patman Act.
Everyone knows how difficult it is to establish legal proof of conspiracy or collusion, so it looks to me as though this was another effort to help the big man and ignore the little one.