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NOMINATION OF DONALD F. TURNER TO BE ASSISTANT ATTORNEY 10-c

GOVERNMENT GENERAL, ANTITRUST DIVISION, JUSTICE DEPARTMENT Nyt,

Storage

HEARING

BEFORE THE

SUB I TEE ON ANTITRUST AND MONOPOLY

OF THE

aITTEE ON THE JUDICIARY

MUD STATES SENATE

rR

EIGHTY-NINTH CONGRESS

;FIRST SESSION

PURSUANT TO

S. Res. 40

JUNE 10, 1965

Printed for the use of the Committee on the Judiciary

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1965
JOHN L. McCLELLAN, Arkansas

SAM J. ERVIN, JR., North Carolina

THOMAS J. DODD, Connecticut

PHILIP A. HART, Michigan

EDWARD V. LONG, Missouri

EDWARD M. KENNEDY, Massachusetts

BIRCH BAYH, Indiana

QUENTIN N. BURDICK, North Dakota

JOSEPH D. TYDINGS, Maryland

GEORGE A. SMATHERS, Florida

COMMITTEE ON THE JUDICIARY

JAMES 0. EASTLAND, Mississippi, Chairman

EVERETT McKINLEY DLIIKSEN, Illinois

ROMAN L. HRUSKA, Nebraska

HIRAM L. FONG, Hawaii

HUGH SCOTT, Pennsylvania

JACOB K. JAVITS, New York

SUBCOMMITTEE ON ANTITRUST AND MONOPOLY

PHILIP A. HART, Michigan, Chairman

THOMAS J. DODD, Connecticut

EDWARD V. LONG, Missouri

JOHN L. McCLELLAN, Arkansas

SAM J. ERVIN, JR., North Carolina

EDWARD M. KENNEDY, Massachusetts

S. JERRY COHEN, Staff Director and Chief Counsel

II

1'41'

EVERETT McKINLEY DIRKSEN, Illinois

ROMAN L. HRUSKA, Nebraska

HIRAM L. FONG, Hawaii

44

•

ir
WITNESSES

Page

Turner, Donald F., nominee to be Assistant Attorney General, Antitrust

Division, Justice Department 2

Introduction by Hon. Edward M. Kennedy, a U.S. Senator from the

State of Massachusetts — 1

III
). e
NOMINATION OF DONALD F. TURNER TO BE ASSISTANT

ATTORNEY GENERAL IN THE ANTITRUST DIVISION,

DEPARTMENT OF JUSTICE

THURSDAY, JUNE 10, 1965

U.S. SENATE,

SUBCOMMITTEE ON ANTITRUST AND MONOPOLY

OF THE COMMITTEE ON THE JUDICIARY,

Washington, D. C.

The subcommittee met, pursuant to recess, at 10:12 a.m., in room

5302, New Senate Office Building, Senator Philip A. Hart (chairman)

presiding.

Present: Senators Hart, Kennedy of Massachusetts, and Hruska.

Also present: S. Jerry Cohen, staff director and chief counsel;

Horace L. Flurry, assistant staff director and chief counsel; Dr. John

M. Blair, chief economist; Peter N. Chumbris, chief counsel for the

minority; James E. Bailey, counsel for the minority; Kirkley S.

Coulter, economist for the minority; Walter S. Measday, economist;

Paul S. Green, editor; and Gladys E. Montier, clerk.

Also present: Thomas B. Collins, professional staff member of the

Judiciary committee.

Senator HART. The committee will be in order.

Our hearing this morning is scheduled for the purpose of considering

the nomination of Donald F. Turner, of Massachusetts, to be Assistant,

Attorney General in charge of the Antitrust Division of the Department of Justice, succeeding William H. Orrick, Jr., resigned. The

notice of this hearing was published in the Congressional Record on

May 26.

Senator Hruska, did you have a statement?

Senator HRUSKA. NO.

Senator HART. I am delighted that our colleague on the committee

is at the moment at the witness table. We recognize Senator Kennedy.

STATEMENT OF HON. EDWARD M. KENNEDY, A U.S. SENATOR

FROM THE STATE OF MASSACHUSETTS

Senator KENNEDY. Mr. Chairman, it is an honor for me to present

a Yale man to this committee, Donald F. Turner, the nominee for

appointment as Assistant Attorney General for the Antitrust Division

of the Department of Justice.

Mr. Turner is also a Northwestern man, holding degrees from

Harvard University, was a practicing attorney here in Washington

before returning to Harvard College and the Harvard Law School as a

professor.

He has been recently the visiting professor at Stanford University;

he is a man who is extremely highly regarded and well respected in the

1
2 NOMINATION OF DONALD F. TURNER

State of Massachusetts for his knowledge and contributions in this

very important field.

It is a very deep pleasure and considerable honor to me to present

Dr. Turner to this committee, a constituent of mine from Lexington,

Mass.

Dr. Turner.

STATEMENT OF DONALD F. TURNER, NOMINEE TO BE ASSISTANT

ATTORNEY GENERAL IN THE ANTITRUST DIVISION, DEPARTMENT OF JUSTICE

Senator HART. Thank you, Senator. We have a summary biography of the man you just introduced.

The senior Senator from Massachusetts, Mr. Saltonstall, has by

return mail, dated May 7, formally notified the committee that he

is in favor of this appointment.

We realize that you were not talking with tongue in cheek when you

said it is an honor to present him.

I think it would be in order at this point in the record to have printed

the summary biography to which I referred.

Professor, this biography has been corrected by you, I understand.

Mr. TURNER. That is correct, Senator.

Senator HART. It reflects accurately the chronology that it seems

to outline?

Mr. TURNER. Yes.

Senator HART. I notice that included in your experience is a period

of two years as a law clerk in the Supreme Court. For whom, may I

ask, were you clerk?

Mr. TURNER. I clerked for Mr. Justice Tom C. Clark.

Senator HART. I should indicate for the record that you are accompanied not alone by the Senator from Massachusetts, but the

Deputy Attorney General, Mr. Clark, is here.

(The biography summary follows:)

DONALD FRANK TURNER

Born: March 19,1921, Chippewa Falls, Wis.

Education: 1937-41, Northwestern University, B.A. degree. 1941-43, Harvard

University, M.A. degree. 1946-47, Ph. D. degree. 1947-50, Yale University,

LL.B. degree.

Bar: 1951, Washington, D.C.

Experience: 1942-46, U.S. Navy lieutenant. 1947-50, instructor in economics,

Yale University. 1950-51, law clerk, U.S. Supreme Court. 1951-54, Cox,

Langford, Stoddard & Gutler, Washington, D.C., associate attorney. 1954 to

present, Harvard Law School, assistant professor and professor of law. 1964-65,

visiting law professor, Stanford, University.

Marital status: Married, two children.

Office: Harvard Law School, Cambridge, Mass.

Home: 21 Robbins Road, Lexington, Mass.

Senator HART. I would like to be direct in the record with respect

to just what in your distinguished background you have established

clearly. You have a brilliant mind and you have demonstrated a

willingness to serve in the Department of Justice and this is laudatory.

I am sure the IQ of the Department will be even higher.

You were the author of a Harvard Law Review article not too

long ago, the citation of which I have for the record-78 Harvard

Law Review, 1313. This is a rather long article of 80-odd pages.
NOMINATION OF DONALD F. TURNER 3

I suspect that it has been more carefully reviewed in the last several

weeks by those interested in antitrust than perhaps any other current

best seller.

Mr. TURNER. Perhaps the safest thing to say is that the article was

written not by me but by another man with the same name.

Senator HART. With an answer like that already given, there is no

attempt to clarify the point that I have in mind. I am sure you

would be able to run me around in circles.

It is to the point of the seriousness of conglomerate mergers. I

would not presume to paraphrase the point that you were making,

as I understand that point from the article. But clearly, the

suggestion is made that the greatest concern should be directed toward

the horizontal merger and next the vertical and last the conglomerate.

This subcommittee—and with Senator Hruska here, I am sure it

will become evident that there is not unanimity within the committee

concerning the answer that should be written from the data that has

been developed—but the subcommittee, without any inhibition from

any member, has genuinely been making an effort to assemble all of

the data on economic concentration on which a solid judgment can be

made with respect to where we are headed and whether that direction

is one that we should seek to change or not.

Now, as I read the materials thus far developed by the subcommittee on concentration, whatever rule of thumb we may apply, there

has been an increase since 1947 of some 8 or 10 percentage points in

the concentration in manufacturing assets by the top 100 or 200

companies. Dr. Mueller, of the Federal Trade Commission, in this

series of hearings suggested that by 1975, if the trend continued at

this rate, he would anticipate that the 200 largest would hold about

two-thirds of manufacturing assets in this country.

The increase in overall concentration, I feel, has come importantly,

if not largely, through conglomerate mergers. If this data would

confirm my summary of it, would it not suggest that a very high

degree of concern should be entertained by the Antitrust Division

with respect to conglomerate acquisitions?

Mr. TURNER. Let me say several things.

First, let me restate a couple of points with regard to my article.

The comparison that I drew early in the article, among horizontalvertical-conglomerate mergers, was sort of a preliminary introductory

kind of assessment on a crude basis which I would take to be_modified

by my later discussion.

One of the problems is one of definition. What is a conglomerate

merger? Actually, most mergers that we call conglomerate have very

pronounced horizontal and/or vertical elements in them. In the

balance of my article I did suggest several situations in which I thought

that the threat of anticompetitive consequences was sufficiently

serious to warrant striking those classes of mergers down. And with

regard to those classes of conglomerate mergers I would say that at

least some of them, not all of them, but at least some of them, the

potential adverse consequences I felt were as serious as the ordinary

classic variety of horizontal or vertical merger.

Now, the one thing that I did not make any endeavor to estimate,

and I did not have the information on which I could have estimated it,

was how quantitatively significant those classes of conglomerate

mergers were. And I would be quick to say that if, quantitatively
4 NOMINATION OF DONALD F. TURNER

speaking, those classes of conglomerate mergers which I thought have

reasonably serious threats to competition, if they were quantitatively

more significant than other classes of mergers, then, of course, the

Antitrust Division ought to direct a good part of its resources to them.

Senator HART. All right.

Mr. TURNER. I have not had the opportunity, sir, to study the

materials that have been developed before your committee and I

will certainly find that opportunity quite rapidly.

Senator HART. Well, that, Professor, really is the most any of

us could ask—an assurance that you would consider the data that

has been and will be developed.

Again, this is an individual point of view on the subject, but I

think that it reflects not just an overall increase—an increase in

overall concentration—but the share that this group has in individual manufacturing industries—this is the thing that very frankly

alarms me. I think this is the new dimension that the study of the

committee is making.

Mr. TURNER. I would like to add one other point which I believe

I made in my article, and that is, insofar as raw concentration of

assets is concerned, if this deemed to be a problem beyond the dimensions of normal antitrust considerations, different kinds of

legislation, it seems to me, would be more appropriate.

Senator HART. The uses, nonetheless, to which this power of

concentration can be put, and I include in this reciprocity—which

in your article 

in, 

a rather minor reference—practices, m other

words, engaged in, within existing law, are, I am sure, going to be

the concern of the Division.

Mr. TURNER. Yes.

Senator HART. Whatever we do or do not do about legislation.

Mr. TURNER. I didn't spend many pages on reciprocity, but I

think I did say I though it was a very bad competitive tactic and had

to be taken into account in considering conglomerate mergers. 

Senator HART. Yes, you make clear there is no economic justification for it.

Mr. TURNER. I just, from an antitrust standpoint, attempted to

define the conditions under which I thought the threat of reciprocity

was sufficiently serious to warrant blocking the merger.

Senator HART. We have all been helped from a nongovernmental

source on this question of reciprocity. Yoy may have noticed a

very thorough article in Fortune magazine—I will give the citation

to that if you want it. It is on this business of reciprocity, in fact,

if not in theory.

Mr. TURNER. Yes, sir.

Senator HRUSKA. In regard to reciprocity, Mr. Turner

'

in your

article you discuss the Consolidated Foods case. I understand your

discussion was prior to the Supreme Court decision on that case.

It was pending in the circuit court at that time?

Mr. TURNER. It was pending in the Supreme Court, sir.

Senator HRUSKA. In the Supreme Court—it had been decided by

the U.S. court of appeals.

Mr. TURNER. Yes.

Senator HRUSKA. Ignoring that fact for a moment, you did point

out there was a grave doubt that the reciprocity policy allegedly

followed by Consolidated had any great effect in gaining sales. One
NOMINATION OF DONALD F. TURNER 5

of the quotes is this, that Consolidated testimony was pointless to

exert pressure on national suppliers is more than plausible. To refuse

to carry national brands to commend widespread consumer acceptance would probably cost Consolidated far more money at the retail

level than it would gain from even greatly increased sales of onion

and garlic, which was the commodity in question.

Do I understand that you believe a merger such as this one should

not be blocked merely because it opens the door to the use of reciprocity policy when such a policy is likely to be ineffective in practice?

Mr. TURNER. My position was, sir, and is, that I think the threat

of reciprocity has to be sufficiently serious that a substantial share

of the market may be foreclosed and in that particular case the evidence—the evidence that was recounted in the opinions of the Commission and the court of appeals—did not seem to me to be sufficient

to establish that. The Supreme Court was satisfied that there was

sufficient evidence of record to support the Federal Trade

sion's conclusion, and as I read the opinion, that was

which the opinion of the Commission was affirmed.

deference to the finding of the Government administra

the basis of evidence of record which, as I indicated

I had not myself examined.

Senator HRUSKA. In your article you also comme

cized, as I remember, several of the antitrust cases recent

Government which rested on allegations that cornpetitio

injured by the increased company efficiency which flowed fro

mergers.

I remember that you commented on this as being in that Foremost

Dairy case as not being only bad law, but bad economics. Why

would it be bad economics, Professor Turner?

Mr. TURNER. Well, sir, I believe one of the major purposes of

protecting competition is to insure that our economy will obtain the

benefits of competition and one of the principal benefits of competition is increased efficiency.

Senator HRUSKA. That inures to the customer, does it not?

Mr. TURNER. It inures to everybody.

Senator HRUSKA. To the customer, to the consumer. We are

interested in them, also, in addition to the companies, are we not?

Mr. TURNER. Yes, sir; that is correct; and that is why I felt it

was not appropriate for the Government to attack merger on the

basis that it would promote efficiency.

Senator HRUSKA. Yet that Foremost Dairy Company case is pretty

much the law of the land now and the most recent view of the Supreme

Court, is it not?

Mr. TURNER. I would not be so pessimistic. This sentence that

in the Foremost Dairy opinion was but one sentence in the opinion.

The very brief discussion in the Supreme Court opinion in the Brown

Shoe case that I referred to is rather ambiguous. I would say that

the law has not firmed up in this respect.

Senator HRUSKA. Do you think that maybe in later decisions they

may square around on that a little bit?

Mr. TURNER. I hope so.

Senator HRUSKA. In your discussion of predatory pricing you point

out there have been very few cases actually proved of such a practice,

even in the A. & P. case. Professor Adelman has shown that the

49-507—,65--2
6 NOMINATION OF DONALD F. TURNER

Government's case was wholly inadequate in this regard. We have

been holding lengthy hearings on these conglomerate mergers and as

the chairman indicated we have been told by some witnesses that

such conglomerate mergers are dangerous because they have the

power to engage in such predatory pricing. Do you consider that

there is any such danger to be feared?

Mr. TURNER. I have seen little or no evidence of that.

Senator HRUSKA. Of course, a company does not have to get into

conglomerate mergers and still possess that kind of power.

Mr. TURNER. Well, one of the difficulties of that theory is that

anybody who has money and a deeper pocket has the power to indulge

in predatory pricing—the capacity to indulge in predatory pricing.

The question is whether rational men are going to do this and if so

under what circumstances, and as I indicated in my article, I see very

little evidence that businessmen have resorted to this practice. It

does not make sense except in very limited situations and even in those

situations whereit makes economic sense, it is such a plain violation

of the antitrust laws that people are at least under some inhibitions

not to do it.

Senator HRUSKA. In the field of mergers and in the field of growth

which we have in the mergers the chairman has indicated that there

has been an increase since 1947 of a given number of percentage

points. There are some of us who believe that measurement should

not be from a trough to a peak, but there should be a measurement

from a peak to a peak over a period of years and perhaps a little bit

longer in terms of years.

It is my recollection that if we started that measurement for

example in 1931 to 1959 or 1961, that if anything, there would be

just about a draw and no increase at all in some fields, an increase

of concentration in some fields, and in some fields a decrease. So

that it probably would be pretty neutral rather than an increase.

Are you familiar with that conflict among economists and the differences expressed by them?

Mr. TURNER. I am aware there is a conflict and there has been a

running conflict for a long time. I am not really able, sir, to evaluate

those conflicting contentions.

As I told Senator Hart, I have not studied the more recent data

and whereas I consider myself as having a fair economics background, I am not really a card-carrying economist and I would have,

I think, limited capability myself of making a full statistical evaluation. I would have to rely more on other people.

Senator HRUSKA. You wrote a book one time, Professor. You

are a coauthor—is that the way we put it?

Mr. TURNER. That is correct.

Senator HRUSKA. The book is "Antitrust Policy—An Economic

and Legal Analysis," by Carl Kaysen and yourself, published by

Harvard University Press, 1959.

In that book there is set out a model statute that is called draft

antitrust law, and the object of the law would be to deal with unreasonable market power injurious to trade and commerce.

Mr. Chairman, I ask permission that the text of this bill be placed

in the record at this point because I am going to direct a question or

two on it.

Senator HART. It will be printed.
NOMINATION OF DONALD F. TURNER 7

(The draft antitrust law is as follows:)

DRAFT ANTITRUST LAW

"SECTION 1. UNREASONABLE MARKET POWER INJURIOUS TO TRADE AND COMMERCE. Possession, by any one or more persons, of unreasonable market power

in trade and commerce among the several States or with foreign nations is hereby

declared to be injurious to such trade or commerce."

Comments.—This is simply a declaration of policy, in preface to provisions

providing for proceedings against unreasonable market power.

"SECTION 2. MARKET POWER DEFINED—UNREASONABLE MARKET POWER. (a)

For the purposes of this Act, market power shall mean the persistent ability of

a person, or of a group of persons whether or not acting pursuant to agreement

or conspiracy, to restrict output or determine prices without losing a substantial

share of the market, or without losing substantial profits or incurring heavier

losses, because of the increased output or lower prices of rivals. Evidence of

market power may include, but shall not be limited to:

"(1) persistent failure of prices to reflect substantial declines of demand

or costs, or to reflect substantial excess capacity;

"(2) persistence of profits that are abnormally high, taking into account

such factors as risks and excess capacity; or

"(3) failure of new rivals to enter the market during prolonged periods of

abnormally high profits or of persistent or recurring rationing."

Comments.—The core of market power is the possession of a substantial range

of price and output choices, not decisively affected by the response of rivals or

would-be rivals. It may be held by a single corporation, or it may be held by

several corporations who are able to, or sometimes economically compelled to,

behave jointly in such a way as to enhance their profits and/or positions over what

would be attained if they competed against each other or if others were able to

compete effectively against them. The draft definition specifically states that

proof of agreement or conspiracy is not an essential ingredient of "group power."

Indeed, the principal purpose of the statute is to cover oligopolistic industries in

which effective "shared" market power exists without the ingredient of agreement

essential to a Sherman Act charge. The definition technically covers the largenumbers cartel case as well, and in this respect is somewhat redundant. However,

we think the coverage is desirable in order to eliminate the possibility that defendants could evade the statute of pointing to minor agreements of one sort or

another and arguing that the statute covered wholly noncollusive market power

only.

Market power is defined as the ability to restrict output or to determine prices

either without losing a substantial share of the market or without losing profits or

incurring heavier losses. This reflects the fact that sellers with market power

usually have a choice between earning high unit profits on a small volume of sales,

or lower unit profits on a higher volume of sales. Thus, the mere fact that

defendants cannot raise prices without losing a substantial share of the market

does not disprove the existence of substantial market power.

The categories of evidence are not exclusive, but probably indicate the most

common indicia of substantial market power. The term "abnormally high

profits" is admittedly imprecise, but we believe that it is workably determinable

in most specific instances. It is often possible to say that profits are abnormally

high without determining precisely what normal profits would be. Some cases

would be clear, as, for example, a firm or group of firms persistently earning

positive profits of any amount during a prolonged period of excess capacity.

"(b) Market power, as defined in section 2(a), shall be conclusively presumed

where, for five years or more, one company has accounted for 50 percent or more

of annual sales in the market, or four or fewer companies have accounted for 80

percent of sales."

Comments.—We have discussed the pros and cons of this provision in chapter III.

We think it highly likely that this arbitrary definition would cover some situations

in which substantial market power did not in fact exist, most likely in declining

industries. However, we are inclined to favor it on the ground that it would

simplify proof in a large number of cases where fuller study would substantiate

the conclusion that these percentage figures would suggest; and on the ground that

the enforcement agency, particularly with inevitably limited resources, would

have the commonsense to avoid inappropriate proceedings.
8 NOMINATION OF DONALD F. TURNER

"(c) Market power shall be deemed unreasonable unless shown by defendant

or defendants to have been created and maintained, entirely or almost entirely,

by one or more of the following:

"(1) such economies as are dependent upon size in relation to the market;

"(2) ownership of valid patents, lawfully acquired and lawfully used:

Provided, That, on a showing that market power has been created and maintained by patents, the Government shall have the burden of showing invalidity, unlawful acquisition, or unlawful use;

(3) low prices or superior products attributable to the introduction of

new processes, product improvements or marketing methods, or to extraordinary efficiency of a single firm in comparison with that of other firms

having a substantial share of the market."

Comments.—The "justifications" of market power, which defendants have the

burden of establishing, closely resemble those suggested by Judge Wyzanski in

United Shoe. The first and second are fairly obvious. The third deserves some

elaboration. We believe that some defense of this kind is essential in order to

protect the kind of behavior that competition is thought to foster. On the other

hand, we have incorporated some limitations. Low prices or superior products

are a justification only if attributable to factors specified. The efficiency justification is available only to a firm having substantial competitors in its market; in

other cases, there is no satisfactory standard of comparison.

"SECTION 3. JURISDICTION OF ECONOMIC COURT--DIVISION AND DIVESTITURE. (a) The Economic Court is invested with jurisdiction to prevent and

restrain injuries to trade or commerce resulting from the possession of unreasonable

market power; and it shall be the duty of the Industrial Reorganization Commission to institute proceedings in equity before said court to prevent and restrain

such injuries. Pending determination of the case, the court may at any time make

such temporary restraining order or prohibition as shall be deemed appropriate in

the circumstances.

"(b) On a judgment that defendant or defendants possess unreasonable market

power, the court shall, to the extent that such relief is feasible, order the division or

divestiture of assets of defendant or defendants, and, whether or not division or

divestiture of assets is ordered, the court may grant such other or further relief

as shall be deemed appropriate in the circumstances: Provided, That:

"(1) the court shall not approve a plan involving division of the assets of a

single plant;

"(2) in determining the feasibility of division or divestiture of assets, the

court shall take into account any probable permanent loss of substantial

economies intrinsic to the defendant company or companies as currently

constituted;

"(3) the court shall not order division or divestiture of assets where defendants show that such relief would not materially improve the competitive

conditions which other relief, proposed by defendants, would achieve; and

"(4) the court shall not approve a proposed plan of divestiture or division

of assets where defendants show that one or more companies resulting from

the plan would lack reasonable prospects for survival under the competitive

conditions likely to prevail."

Comments.—Structural reorganization of one or more firms, and creation of new

independent companies, would be the usual and normal remedy for unreasonable

market power

'

rather than a last resort. Defendants have the burden of showing

that structural reorganization is inappropriate, or that any proposed plan is not

feasible, except in the "single plant" case. Whenever it is apparent from evidence

received on market power that some reorganization is feasible—which is likely to

be the usual case—the court should not allow defendants to pursue the purely

negative role of objecting to specific plans proposed by the enforcement agency,

but should direct defendants to submit a specific plan or plans of their own.

"SECTION 4. AMENDMENT AND REPEAL OF EXISTING LAW. (a) Section 1 of

the Sherman Act (26 Stat. 209, 15 U.S.C.). Section 1, as amended, is hereby

amended to read in its entirety as follows: 'SECTION 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restrain tof trade or commerce among the several States, or with foreign nations, is declared to be unlawful.'

"(b) [Similar amendment of section 3, covering trade and commerce in and with

the District of Columbia and the Territories.]

"(c) Section 2 of the Sherman Act (26 Stat. 209, 15 U.S.C.). Section 2 is

hereby repealed.
NOMINATION OF DONALD F. TURNER 9

"(d) The McGuire Act (66 Stat. 632, 15 U.S.C. 845) is hereby repealed."

Comments.—The amendment of sections 1 and 3 of the Sherman Act removes

criminal penalties. The amendment of section 1 also repeals the Miller-Tydings

Act. Parts of section 2 of the Sherman Act are reinstated in section 5 of the

draft act.

"SECTION 5. SPECIFIC RESTRAINTS PROHIBITED—CRIMINAL PENALTIES. (a) It

shall be unlawful for any person, in or affecting commerce among the several states

or with foreign nations, to agree or conspire with actual or potential competitors

for the purpose or with the effect of:

"(1) fixing or substantially affecting the price of any goods or services;

"(2) dividing or sharing the market for any goods or services;

"(3) fixing or limiting the production of goods or services; or

"(4) boycotting any other person or persons, whether competitors or not.

"(b) It shall be unlawful for any person to attempt to monopolize, or conspire

with any other person or persons with an intent to monopolize, any part of the

trade or commerce among the several States or with foreign nations.

"(c) It shall be unlawful for two or more competitors, in or affecting commerce

among the several States, or with foreign nations, to agree, through a trade association or otherwise:

"(1) to abide by reported list prices;

"(2) to report offers at which no sales are made;

"(3) to inform each other of the individual buyers and sellers in all transactions;

"(4) to refuse to make reports, submitted, to each other, available to

buyers or buyers' trade associations;

`(5) to submit books and accounts to the inspection of any member of

the group or representative thereof; or

"(6) to report transactions to each other, or to a representative of the

group, within a period of seven days or less after said transactions take

place.

"(d) It shall be unlawful for a patentee or for any person purporting to exercise

rights granted to a patentee;

"(1) to license the sale, or the manufacture and sale, of patented products,

of products incorporating the patent, or of products involving a patented

process, on condition that the licensee abide by price restrictions imposed

by the licensor;

"(2) to license on condition that the licensee assign future patents to the

licensor, or grant exclusive licenses under future patents to the licensor; or

"(3) to participate in cross-licensing or patent-pooling arrangements

containing any restrictions on the participants other than restrictions on

fields of use.

"(e) The several district courts of the United States are invested with jurisdiction to retrain violations of this section.

"(f) Every person who shall willfully violate any provision of this section -

shall be deemed guilty of a misdemeanor, and on conviction thereof shall be

punished by a fine not exceeding $50,000, or by imprisonment not exceeding

one year, or by both said punishments, in the discretion of the court."

Comments.—This action sets forth per se offenses. Subparagraph (b) limits

existing section 2 of the Sherman Act to cases involving specific intent.

"SECTION 6. PRIVATE SUITS. (a) Possession of unreasonable market power

as defined in this Act, shall not be deemed a violation of the antitrust laws for

the purposes of private suit under sections 4 and 16 of the Clayton Act (38 Stat.

731, 15 U.S.C. 15, 26); nor shall a final judgment or decree as to possession of

such power be deemed a final judgment or decree under the antitrust laws for

the purposes of section 5 of the Clayton Act (38 Stat. 731, 15 U.S.C. 16).

"(b) Violations of sections 1 and 3 of the Sherman Act as amended by section 4

of this Act, and violations of section 5 of this Act shall be deemed violations of the

antitrust laws for the purposes of private suit under sections 4 and 16 of the

Clayton Act; and final judgments or decrees as to such violations shall be deemed

final judgments or decrees under the antitrust laws for the purposes of section 5

of the Clayton Act: Provided, however, That, except as to private suits based on

willful violations of section 5 of this Act, recovery shall be limited to actual

damages and the costs of suit, including reasonable attorney's fee."

Comments.—This section is self-explanatory. No private suit may be based

on a violation of the unreasonable market power prohibition. Recovery of triple

damages is limited to the per se offenses.
10 NOMINATION OF DONALD F. TURNER

Senator HRUSKA. It is not too long.

In section 2 of the bill, which is found on page 267, you get into the

field of trying to establish limits on sizes of companies. The text

of that section reads as follows: "Market power, as defined in section

2(a), shall be conclusively presumed where, for five years or more,

one company has amounted for 50 percent or more of annual sales

in the market, or four or fewer companies have accounted for 80

percent of sales."

Now, do you still think today that that would be a good criterion

upon which market power of a suspect character should be determined?

Mr. TURNER. I think you have to separate the last sentence,

Senator, into two parts, one, whether there is market power; and

two, whether it is suspect or should be subject to corrective measures.

On the first point I think that is a reasonably fair presumption.

It of course would not be true in all cases. I think it would be true

in most, and we suggest—Mr. Kaysen and I suggested—that as a test

because we felt that as a practical matter it is extraordinarily difficult

to get a much better impression in a lot of situations as to whether or

not there is market power by introducing additional volumes of

evidence. We suggested it more as a rule to promote administration

rather than a rule that would accurately indicate from an economic

standpoint and in any individual case whether there is market power

in fact—whether market power in fact existed.

The second question as to whether market power, when found to

exist on this or any other basis, should be dealt with was of course the

subject of our proposal here. I have not thought about this for quite

a while since we wrote this book. When we proposed this, we proposed this as a legislative recommendation, of course. We proposed

it as a legislative recommendation because in our opinion existing

antitrust laws were not adequate to cope with all of the situations of

what we thought were unreasonable market power and a statute of

this kind would fill that gap.

Now, as I say, this was a legislative proposal and we advanced it

not with 100 percent confidence that it would be appropriate. It

essentially was an academic recommendation and academics I think,

typically and with good reason, if I may say so in our self-defense,

look upon it as our principal job to propose what we think would be

appropriate economic policy with rather minimal regard to political

considerations.

And I would be inclined, I think, writing this book again, to come

out about the same way as an academician.

The only reason I hesitate is that there are alternatives, longrun

alternatives to a statute of this kind, one of which we suggested in our

book, principally built around a very strong antimerger policy which

does minimize the disruptions that would be caused by restructuring

existing concentrated industries.

Now as we indicated, a strong antitrust merger policy coupled

with st:rong antitrust enforcement in other respects might possibly,

over the course of time, coupled with economic changes that take

place in the economy, lead to a deconcentration of a lot of industries

that are currently heavily concentrated.

We felt, when we wrote this book, and I think we were guessing

about it as much as anybody is guessing, because you cannot know

for sure about things like this—we felt that that as a practical matter
NOMINATION OF DONALD F. TURNER 11

would not be a satisfactory alternative. That is why we proposed

this statute. And I think, as I say, as an academician, making

legislative recommendations that I would come out about the same

way now.

Senator HRUSKA. You prefer a strong antitrust policy and enforcement in other respects. In what other respects, other than size?

Mr. TURNER. I mean the usual regulations of conduct, prohibition

of price fixing agreements, prohibition of unduly restrictive patent

licensing arrangements.

Senator HRUSKA. Territorial?

Mr. TURNER. Territorial restrictions—that sort of thing; that is

right.

Senator HRUSKA. This definition which is contained in section 2,

how close does that get to the idea that bigness is badness—something

that we have heretofore sort of shied away from in judicial decisions

in all of our pious statements. How close is bigness to badness?

Mr. TURNER. I think it is quite a ways away from it, Senator,

for this reason that we have three very important exceptions here.

We would not: strike down—it is over on page 268—we said the

market power shall be deemed unreasonable unless shown to have

been created and maintained entirely or almost entirely, by one

or more of the following. Now, these are situations in which we

would not apply the remedy of dissolution. First, such economies

as are dependent upon size in relation to the market. In other words,

if the size is required by efficiency considerations, we would do nothing

about that.

Second, ownership of valid patents, lawfully acquired and lawfully used, and finally low prices or superior products attributable

to the introduction of new processes, product improvements or marketing methods, or to extraordinary efficiency of a single firm in

comparison with that of other firms having a substantial share of

the market.

In other words, I think it is fair to say that we would not contend

that bigness is badness and where such relevant policies as the patent

law are involved, we would not think that is bad. We would not do

anything about it. But where you had market power which was

excessive in relation to economic considerations, we thought it would

be appropriate to do something about that.

Senator HRUSKA. Do you not, in the case of patents, if there is any

showing now of market power having been created or maintained by

patents, that are invalid or that are unlawful or unlawfully used, are

there not remedies available now?

Mr. TURNER. Yes, this is just preserving what the law now is.

Senator HRUSKA. That is why I say, if we have those remedies for

any transgressions of the law which are contained in section 2(c) and

the three subdivisions that you have just referred to, too, what is

really being done in your proposed legislation is saying, "These are

especially bad if they are of bigger size." Why do we have to wait

until companies get to a bigger size if we can invoke the sanctions of

the law which are available right now for illegal and improper activities?

Mr. TURNER. Let me see if I can clarify this, Senator.

This was proposed as supplementary legislation. We were not

proposing this as a substitute for existing antitrust laws. This was
12 NOMINATION OF DONALD F. TURNER

proposed as an additional piece of antitrust legislation. We would,

of course, continue, and indeed, we made several other suggestions of

what we thought would be strengthening amendments to existing

antitrust law of the ordinary variety.

In other words, what this proposal was directed at was business

size yielding market power which was beyond what was necessary to

achieve economies of scale, but which, for various reasons, could not

be reached under existing antitrust law and more specifically this

would refer, I think, to what the economists call an oligopoly industry, an industry dominated by very few firms operating in such

circumstances that they could without collusion pursue noncompetitive policies.

In other words, situations where you get noncompetitive behavior,

and absence of price competition which, if reached by a price-fixing

agreement would be subject to the antitrust law but which could not

be reached if there was no agreement in the usual legal sense. That

was the target of this proposal.

Senator HRUSKA. Now, notwithstanding your suggestion or your

statement that bigness is not badness by your definition, I find it

difficult to follow because in section 2(a) you say you are defining

unreasonable market power. You say for the purposes of this act,

market power shall mean the persistent ability of a person, or of a

group of persons, whether or not acting pursuant to agreement or

conspiracy, to restrict output or determine prices without losing a

substantial share of the market, or without losing substantial profits

or incurring heavy losses, because of the increased output or lower

prices of rivals.

Now, that is a definition, and then you go on with the evidence

that will show what goes into this. Then you say that market power

as defined in section 2(a) shall be conclusively presumed where, for

5 years or more, one company has accounted for 50 percent or more

of annual sales in the market, or four or fewer companies have accounted for 80 percent of sales.

Now, in my understanding of the English language, when something

is conclusively presumed and you make a size determination thereof,

that pretty much attaches a label which makes bigness into the

category of badness. Now, maybe you understand differently, but

could you enlighten me on this?

Mr. TURNER. Would it help, sir, if I said in effect our proposal

made some bigness badness?

Senator HRUSKA. But it is conclusively presumed.

Mr. TURNER. But then there are exceptions provided, you see.

The market power is conclusively, presumed but we then provide that

it shall not be deemed unreasonable if certain showings can be made.

Senator HRUSKA. But you shift the burden of proof to the defendants

'

do you not?

Mr. TURNER. That is right.

Senator HRUSKA. That is a pretty hard burden sometimes to

sustain, to say you are guilty unless you prove yourself not guilty.

That is a pretty heavy burden, is it not?

Mr. TURNER. Yes, it is—let me say two things about that.

First, that here, as in other legal issues, you often locate the burden

of proof on the party that has the evidence most readily at its disposal.
NOMINATION OF DONALD F. TURNER 13

Senator HRUSKA. With the powers of discovery that are available

to the majestic and very, very powerful U.S. Government? Is there anything you cannot learn from these companies if you wanted to as Assistant Attorney General?

Mr. TURNER. I will find out. I will find out what the answer

to that question really is, I guess. I have not had the opportunity to discuss it with the personnel in the Antitrust Division, but there is

some indication that their answer to that would be no.

Senator HRUSKA. Three years ago we passed a very helpful statute,

_a discovery procedure, which is a very fine procedure, and we were

told it would do everything necessary to get all the information the

Department wanted without filing criminal charges or a lawsuit, which is fine, and that is why we approved it in the Congress. So I

.do not know that there was not anything you could not learn, but

maybe you will find out.

Mr. TURNER. SO, with regard to these particular issues, I think

we felt that companies would be much more—could more readily

provide evidence on economies, evidence on patents, evidence of

peculiar efficiencies that they themselves had than the Government.

But this is an arguable issue. This was one of the main arguable

issues that we faced and I would be the last to say that we were

clearly right.

Again, let me point out that this was a legislative proposal which

•went beyond what we thought existed in the antitrust law at the time.

Senator HRUSKA. Have you made a survey to determine how

many companies fall in that 50-or-more-percent classification?

Mr. TURNER. I have not; no.

Senator HRUSKA. Had one been made in the writing of the book or

in preparation of it?

Mr. TURNER. There was a rather crude statistical study made in

'chapter 2 of the book which I frankly myself had very little or nothing

to do with. It was basically an economic study.

Senator HRUSKA. Would it pertain to the automobile field, for

'example?

Mr. TURNER. Three companies hold well over 80 percent; that is

'correct.

Senator HRUSKA. What about steel, do you remember?

Mr. TURNER. I think not.

Senator HRUSKA. What would be the corrective procedure here?

If 50 percent or more, or if 80 percent with four was shown, and there

is a conclusive presumption, then what happens under the bill?

Mr. TURNER. Our recommendation was that to the extent it was

feasible and to the extent that it would not destroy efficiencies, that

additional firms be created by dissolution.

Senator HRUSKA. They would spin off the big companies there?

Mr. TURNER. That's right; they would have to be viable. If you

could not create viable competitors, that would impose a limitation.

Senator HRUSKA. On page 27 of your book you get into the business of type 1 oligopoly—the first 8 firms have at least 50 percent of

total market sales and the first 20 ...lave at least 75 percent of total

market sales.

What recommendations, if any, would you have to limit the power

of type 1 or type 2 oligopoly?
14 NOMINATION OF DONALD F. TURNER

Mr. TURNER. Those figures fall below the presumptive figures

that we created in our proposed statute and the Government in cases

of that kind would have had to establish market power by more

direct evidence.

Senator HRUSKA. What views have you on prenaerger notification,

Professor Turner? What comments would you have in mind? As

you know, there have been attempts to ripen that into legislation

here in Congress, and Congress has steadfastly refused to enact such

a bill.

Mr. TURNER. I haven't considered it in detail. I would be favorably disposed to it. It certainly would be helpful to the enforcement

agencies. I am not entirely clear what the objectims are.

Senator HRUSKA. It is my recollection that there is comment in

the book on it.

Mr. TURNER. Yes I think we recommended that.

Senator HRUSKA. `With respect to the above two alternatives—

page 46, the paragraph numbered 3, the policy might be carried out

either under a statute in which market power is defined in general

terms, requiring a fairly expensive economic inquiry for determination of each case, or, under a statute in which market power is more

arbitrarily defined, which would facilitate the disposition of cases and

more clearly identify the targets, but could possibly to firms that, in

fact, lacked market power.

You recall that passage, do you not?

Mr. TURNER. Yes.

Senator HRUSKA. In view of that would you have any comment?

Mr. TURNER. No, sir.

Senator HRUSKA. Does it contain any different interpretation of

views than those discussed in your Harvard Law articlel

Mr. TURNER. Which one—the last one?

Senator HRUSKA. The last one.

Mr. TURNER. I don't believe SO. It was on a quite different

subject.

Senator HRUSKA. On another subject, not that it makes it either

good or bad, but there is a recommendation in the book that the.

treble damages provisions in the antitrust laws should be amended

so that they would apply to only per se violation of the antitrust law.

What is your view and recommendation on that?

Mr. TURNER. I would have to think about that one again. We

proposed two limitations of that kind. One is that criminal sanctions.

be limited to well-defined defenses. That we felt very strongly about

and I still feel quite strongly about.

The second was that treble damages be limited to per se offenses.

This is a somewhat more debatable issue.

As I say, I probably would want to think that one over again before

I give a final opinion on that. As of the moment, I will assume that

I was right when I first wrote this, but I would want to reconsider.

Senator HRUSKA. That is fair. Thank you very much.

Now, in your article, you do also discuss advertising which bears,

of course, on the competitive picture. You state that the vast bulk

of advertising with which we may be concerned in this regard has

hardly been touched. Would you care to comment on the extent to

which you feel the advertising industry might be affected by antitrust

laws in the foreseeable future?
NOMINATION OF DONALD F. TURNER 15

Mr. TURNER. That is a terribly difficult question, Senator.

Senator HRUSKA. Would you give us your thoughts why you believe that field has been neglected a good deal? What led you to say

that or how important is it, or in what way?

Mr. TURNER. Well, let me put it in that context. I think that

sentence—what is the page on that?

Senator HRUSKA. 1335.

Mr. TURNER. The issue that I was discussing there was the question

whether or not promotional economies or advertising economies

should be deemed a reason for invalidating a conglomerate or any

other merger, and I was casting considerable doubt on that proposition,

and one of the reasons I gave, and I think that is what that sentence

referred to, was that the bulk of advertising does not—is perfectly

lawful—does not fall within the catetory of false and misleading advertising as defined by the Trade Commission in the courts, and since

this was so, it seemed to me that it was at best not clear that enforcement agencies should use promotional economies as an affirmative

reason for invalidating a merger.

Senator HRUSKA. The particular passage that I had in mind reads:

that generally the only legislative action taken against salesmanship has to be to

curb advertising and labeling that is false and misleading. What is false and

misleading as defined by the Federal Trade Commission and the courts is undoubtedly an expanding category, but the vast bulk of advertising with which

we may be concerned here has hardly been touched. It seems particularly difficult

therefore to defend the proposition that promotional economies should be treated

more harshly than other economies in any case where the real product differentiation is involved.

That is the passage to which you referred?

Mr. TURNER. That is correct.

Senator HRUSKA. And it is in that context that you discussed that

subject?

Mr. TURNER. That is right. I am really not competent to comment on the issues as to how much further inroads, if any, should be

made on advertising. I am not prepared on that.

Senator HRUSKA. Now, we have witnessed in recent years a terrific

competition among various Government enforcement agencies in this

field of antitrust and it has been somewhat disquieting to some segments of business and also to the particular industry involved. The

banking industry is one example. Congress had thought we had

passed a law saying that in this business of mergers, the jurisdiction

would stay within the agencies that had always exercised exclusively

the jurisdiction in that field. The Supreme Court decided that was

not the way it was. That in their wisdom they thought that Congress

did not do it that way, notwithstanding the assurances from the majority leader of the Senate who now occupies the White House. But

that was the fact. There is legislation pending to expressly say once

more, with the hope that the highest judicial body in the Nation will

believe it at this time that the jurisdiction should stay in the banking

agencies rather than in the Department of Justice.

To the extent that there is that competition for jurisdiction, there

is added a tremendously greater quantity of confusion and uncertainty

in a field in which those things already abound. Have you any

general comments in that area on that subject?

Mr. TURNER. I do not believe so, Senator. I have not considered

that issue very carefully and I have not had any opportunity to talk
16 NOMINATION OF DONALD F. TURNER

it over with any of the people in the Department of Justice. I do not

believe, although I may be wrong, the Department has submitted any

recommendations on this. I do not really feel prepared to comment

on it.

Senator HRUSKA. There was an amendment to the Robertson bill

made late yesterday, but I will not bother you with it at this time.

Sometime I would like to get your views on it when we get close to

legislation in that field.

There is one interesting conclusion you make in your article; you do

not believe that the Congress has given the courts and the FTC a

mandate to campaign against superconcentration in the absence of

any harm to competition. I imagine that is an invitation to Congress

to speak in legislative form, is it not?

Mr. TURNER. It was not an invitation. It was just a statement of

what I felt to be a fact.

Senator HRUSKA. The what?

Mr. TURNER. It was not an invitation, sir; it was just a comment On

what I thought the current situation is. I was not making a recommendation one way or the other on that issue.

Senator HRUSKA. Mr. Chairman, I have just one other item here

and that has to do with the background of our candidate. In Nebraska we are very proud of him. He is a graduate of Benson High

School of Omaha, Nebr., where he was a member of the debating

squad and we do believe that he has really attained tremendous

stature in his chosen field of law.

I would very much like to have included in the record at this point

an article from the Omaha World-Herald of April 28, 1965, and,

although it deals with other matters, the headline is "Benson Graduate Appointed Antitrust Division Chief." Good old Benson has

come into its own once more.

Among many of its achievements this is one of the most brilliant

and I would like to have that included in the record because it does

recite other facets of Mr. Turner's career and I for one want to wish

him well in his duties that he is assuming. We expect to be seeing you

from time to time within our Judiciary Committee and Antitrust

Subcommittee whenever we have legislation that does affect your

particular field.

Mr. TURNER. Thank you very much.

Senator HART. The Omaha World-Herald article will be printed.

Senator HRUSKA. Thank you, Mr. Chairman.

(The article referred to follows:)

[From the Omaha World-Herald, April 28, 1965]

BENSON GRADUATE APPOINTED ANTITRUST DIVISION CHIEF

As a Benson High School senior in May 1937, Donald F. Turner and President

Franklin Roosevelt spoke from the same platform in Washington, D.C.

Now, 28 years later, President Lyndon Johnson has appointed the former

Omahan Assistant Attorney General in charge of the Antitrust Division.

President Johnson chose Tuesday's nationally televised news conference to

announce the appointment.

Mr. Turner, a former U.S. Supreme Court law clerk, is a visiting professor at

Stanford University.

Honors came early to Mr. Turner, a minister's son.
NOMINATION OF DONALD F. TURNER 17

He was one of five boys named in the finals of the 1936 Nebraska Young Citizens' contest sponsored by the American Legion and the World-Herald.

He and Richard Abernathy, Jr., now vice president of N. P. Dodge Co., teamed

to win the Nebraska debate title in 1937.

Mr. Turner was chosen that same year to speak with President Roosevelt at

the opening session of the National Red Cross conference. He won the trip in a

Junior Red Cross oratory contest against four competitors.

Mr. Turner earned his undergraduate degree at Northwestern University and

a postgraduate degree in economics at Harvard University.

After serving 4 years in the Navy during World War II, Mr. Turner taught

economics at Yale University, attending Yale Law School at the same time.

Editor of the Yale Law Review, Mr. Turner was graduated from law school

at the top of his class.

After serving as a clerk to the U.S. Supreme Court, the former Omahan joined

the faculty at Harvard as a professor of law.

Senator HART. It does make comment with respect to matters not

included in the biography which I think the readers of this record will

find interesting.

Just by way of an added footnote and comment on two of the

matters raised by the distinguished Senator, and your responses, on

this business of efficiency. You make a point of agreeing with Senator

Hruska that the effect on consumers is a darn good rule of thumb to

apply in any of these economic controversies that develop. I am

sure that you would agree that when we consider efficiency in terms

of evaluating a proposed merger, we should be conscious that efficiency

in theory is of no value to the consumer unless there is sufficient

competition remaining to persuade the passage of that theoretical

efficiency on to the consumer.

Mr. TURNER. Yes, sir; that efficiency is a good thing; it is not a

bad thing. But this does not necessarily mean in any case where

some increase in efficiency could be shown that this would protect a

merger which in other respects might cause a significant decline in

competition. For one thing, mergers are not the only way to achieve

efficiencies. You can also do it by internal growth.

Senator HART. The second point was again on this matter of predatory pricing. Senator Hruska properly and correctly summarized

the presentation made by Professor Adelman. I would hope that you

would also be aware of what Professor Dirlam had to say with respect

to Professor Adelman's approach.

I think it is not out of order to suggest that you might sometime

visit with a very able member of the committee staff, Mr. Flurry

who I had in mind to comment on that A. & P. case. Mr. Flurry

lived with that case for a number of years and examined over 100,000

documents, many of which bore on the predatory pricing. You

might find such a visit would show you that he has some pretty

strong views.

Mr. TURNER. None of us is infallible, Senator. I am sure Professor

Adelman would agree that he was not.

Senator HRUSKA. Would the chairman yield on that point?

Would you say our laws on predatory pricinc,are quite adequate

and if there is any evidence of such practices that prosecution would

not be too difficult so far as statutory provisions concerned for that

purpose?

Mr. TURNER. I think it is quite adequate.

Senator HART. The problem is to recognize it before it becomes a

fait accompli.
18 NOMINATION OF DONALD F. TURNER

Senator HirusicA. There we get into the business again of the

capability to predatory pricings. It is just like the ownership of an

ax or the ownership of a shotgun. Normally, you chop down wood

with an ax and you normally shoot game with a shotgun, but there

is the capability of the owner of both those items to put them to

illegal use and does not know how to get at this use of anticipating

predatory pricing in advance. That would be kind of hard to interpret.

Senator HART. Senator Hruska and I go around this circle periodically.

Mr. TURNER. I think I better stay on the outside.

Senator HART. I do not know whether the moral of this hearing is

that you should or should not write books and law-review articles.

But clearly, the action of those of us present is favorable and notwithstanding the sections and paragraphs that we may pull out of

your text of the article and proceed to worry over.

Senator HRUSKA. I think books should be written and so should

law articles be written, Mr. Chairman. If they were written as

purposefully as these two in this instant case, we would all be better

off. I do hope the witness did not think that I endeavored to pull

any of these concepts out of context from the book because I did

strive not to do that. But by referring to specific passages I wanted

to focus on the very concept which was symbolized by those passages.

But I think it is helpful to get these things from the people who spend

almost a lifetime in studying and teaching and also practicing the

law that is involved in the Antitrust Division.

Senator HART. Unless the Senator from Nebraska thought that

I was suggesting that he might pull something out of it, the chairman

had in mind some of the comments that he made.

Because readers of this record, which is really more expansive and

goes into more substance than normally occurs in these hearings on

nominations, I would like to have printed in the record a table that

deals on the discussion that we had over the proposed draft of the

antitrust laws bearing on 50 percent or more and 80 percent or more of

the market in individual industries. It is table A, on page 89 of part 1

of the economic concentration record of the committee, which will

point up specifics of some of the additional consequences of the

effect of such a draft of the law on the books. The chairman is

entering it not because he feels the law should or should not be enacted, but for the reader this will give a substantial advantage of what

would be reached.

(The document referred to follows:)
NOMINATION OF DONALD F. TURNER 19

TABLE A.—Major industries 1 with the 4 largest companies accounting for more

than 50 percent and the 8 largest for 75 percent or more of the value of shipments,

1958

Industry

code

Industry

Percent of value of shipments accounted for by—

4 largest

companies

change,

1947-58,

percentage

points

4 largest

companies

8 largest

companies

3723 Aircraft propellers 97 99 —1

3334 Primary aluminum 2 96 100 —4

3741 Locomotives and parts 95 99 +4

3211 Flat glass 92 99 8+2

3651 Electric lamps (bulbs) 92 97 0

3664 Telephone and telegraph equipment 92 97 5+2

2841 Soap and clycerin 90 94 +11

2862 Softwood distillation 89 96 +3

2073 Chewing gum 88 95 +18

3272 Gypsum products 88 96 +3

3612 Carbon and graphite products 87 92 0

3511 Steam engines and turbines 87 97 —1

3692 Primary batteries 84 95 +8

2043 Cereal breakfast foods 83 95 +4

2274 Hard-surfaced floor coverings 83 (9 +3

3411 Tin cans and other tinware 80 89 +2

2111 Cigarettes 79 99+ —11

2811 Sulfuric acid 79 93 3 _3

2896 Compressed and liquefied gases 79 88 —4

3572 Typewriters 79 99 0

2825 Synthetic fibers 78 96 0

3353 Aluminum rolling and drawing 78 85 —16

2826 Explosives 77 89 —3

3571 Computing and related machines_ 77 85 +8

3663 Phonograph records 76 83 —3

2045 Flour mixes 75 86 +34

2216 Finishing wool textiles 75 85 (5)

3717 Motor vehicles and parts 75 81 +19

3011 Tires and inner tubes 74 88 —3

2094 Corn wet milling 73 92 —4

2141 Tobacco stemming and redrying 73 90 —15

2895 Carbon black 73 98 —5

3313 Electrometallurgical products 73 91 —15.

2072 Chocolate and cocoa products 71 84 +2

3581 Domestic laundry equipment 71 90 +31

3615 Transformers 71 84 —2

3584 Vacuum cleaners 70 89 +(,,)

2852 Inorganic color pigments ,...,., . 69 . 83 3+2

3521 Tractors I°. Vt,e , 90 +2

2223 Threadmills ',..2 • 68 1e 79 +2

3021 Rubber footwear 65 82 —le

3275 Mineral wool 65 79 +8

2812 Alkalies and chlorine 64 89 —e

2833 Medicinal chemicals, including botanicals 64 77 3 ...-

3229

3691

Pressed and blown glass, not elsewhere classified_ i

Storage batteries A ..,,,,

64

64

.

'

79

81

+12

+2

3641 Engine electrical equipment I_ _g• 63 79 —4

2093 Margarine il 62 86 —2

3497 Metal foil . 62

.

76 , —12

2824 Synthetic rubber 60 .,• 86 3 +7

3721 Aircraft ,,,,., 59 ? / 83 (9

3292 Asbestos products I t;$4W,• . 76 3 —1

3221 Glass containers 4,,,,15,&' 75 —5

3742 Railroad and street cars 58 81 +2

2131 Chewing and smoking tobacco 57 82 —4

3593 Ball and roller bearings 57 77 —5

3722 Aircraft engines_ 56 77 —16

2121 Cigars 54 75 +12

3261 Vitreous plumbing fixtures 54 75 —4

3586 Measuring and dispensing pumps 52 85 +a

1 Industries with a value of shipments in 1958 of more than $100,000,000.

2 percentage withheld by Bureau of the Census to avoid disclosing figure for individual companies. This

figure was calculated from data in Standard & Poor's "Industry Surveys."

3 1954-58.

Percentage withheld to avoid disclosing figure for individual companies.

6 Not available.

Source: Concentration Ratios in Manufacturing Industry, 1958, table 2-A.
20 NOMINATION OF DONALD F. TURNER

Senator HRUSKA. Mr. Chairman, I am indulging in the observation that the first time, on a national basis, that we had one company

producing or accounting for more than 50 percent of the products in

a given field as indicating monopoly, and was very bad and should

be dealt with and strictly and sternly, came during the candidacy of

one William Jennings Bryan, another distinguished Nebraskan, back

in 1908. Those were the early days of antitrust and Bryan's statement of quantitative basis has gone far and I imagine it is this reason

that bigness is not badness, per se. Maybe that will be shattered one

of these days but there is that historic footnote to which I would like

to refer.

Senator HART. Did he go to Benson?

Senator HRUSKA. No, he did not go to Benson. He was educated

in Illinois. I would also ask, Mr. Chairman, to convey the regrets of

the Senator from Illinois, Mr. Dirksen. He is busily engaged in the

Finance Committee reducing people's taxes and he thought that was

so important that he asked me to say that he felt he ought to be there.

And it is to his State that we will give credit to the education of William

Jennings Bryan.

Senator HART. I am sure he would want the record correct in that

regard.

Thank you very much.

(Whereupon, at 11:18 a.m., the subcommittee adjourned.)

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