Evening star., 1948-11-07
Douglas
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tices have been outlawed, business
men have urged that Congress
amend the laws to make them per-
missible.
william Simon, general counsel of
the Trade Policies Committee, in
an address before trade association
executives Wednesday, said that the
commissions orders in the steel
cases expressly require fob. mill
pricing" The steel cases have not
been ruled on by the Supreme
Court but the Pittsburgh-plus order
was afirmed by agreement Of the
steel companies last month.
DR.. Corwin D. Edwards, director
OF the Bureau of Industrial Eco
nomics of the FTc, answers that
this Interpretation is not justified.
He cites the cement decision as
holding that delivered prices (that
is, prices covering the factory price
plus the freight CHARGE are not
barred. The court said:
Another Point
Most Of the objections to the
order appear to rest in the premise
that its terms will bar an individual
cement producer from selling ce-
ment at delivered prices such that
its net return from one customer
will be less than from another,
even If the particular sale be made
in good faith to meet the lower
price of a competitor. The COM
mission disclaims that the order be
possibly so understood. Nor do we
so understand it."
There is another point. 1t is the
fear of business that the FTC will
hold that knowing parallel action"
is an unfair method of competition.
According to this reasoning, If one
Pittsburg steel company absorbs the
freight in selling steel to the Middle
West it would be legal. but the prac-
tice would become illegal if others
would do so knowing Of the action
by the first.
DR.. Edwards answer to this is
that where there is collusion, yes.
But he adds: There is no instance
In which the commission has
charged that a single company using
q basing point system without re-
gard to what its competitor is doing,
is in violation Of the Federal Trade
Commission Act"
The Robinson -Patman Act makes
illegal price determinations that
may injure competition. Take the
case of a manufacturer who sells his
product at the same price to sew
eral customers at different distances
from his plant. The differences In
freight costs result in varying net
returns. In view of the cement de-
cision, would not the FTC hold that
this is price discrimination.
Won't Permit Conspiracies
DR.. Edwards has this answer: III
these price differences create no
injuries to competition there can
be. no violation Of the Robinson
Patman Act, no matter how bizarre
the price structure may seem when
compared WITH the freight struc-
ture."
Senator Capehart says that what
ever pricing policy will best pro-
mote competition at all levels should
be permitted. But he emphasizes
that price-fixing conspirac!es should
continue to be illegal.
The Capehart committee has re-
ceived some interesting stories from
businessmen about the effect of
fob. pricing on the industrial sys-
tenn. Committee staff members cite
this complaint received from the
New York Airbrake Co. OF Water
town. N. T.:
The company was established so
years ago and manufactures air.
brakes which 1t sells principally to
Western railroads. Its biggest COM
petttor Is In Pittsburgh. The New
York company says it cannot COM
pete If it has to pay the full freight
on the stee! 1t purchases and charge
the ful. freight on the airbrakes
1t ships 10 the West.
Plight of Employees
The company employs 1000 per-
sons. more than 80 per cent OF
whom own their own homes. It is
the principal source of employment
in the community. But it feels
that to comply with the law 1t will
have TO move out Of its $4,000, ,0o(
plant in Watertown and build a new
plant in Pittsburgh, which it esti-
mates will cost s1O,o0o,00O.
The plight Of the town in such
an event is illustrated by the fac,
it has held up construction of new
high school for which 100000 ir
bonds was voted last year.
The steel industry grew up in
Pittsburgh because of the avail
ability of coal and ore. The area
now, has q steel capacity Of 11,0O0,-
900 ingot tens, while the consump-
ton in the area Is approximately
hall, that.