Evening star., 1961-02-12
BY MIRIAM GUTENBERG
Star staff Writer

ny MIRIAM GUTENBERG
9 Star Staff Writer
The Governments case against
the electrical industry will be long
remembered not only because it
was the biggest in ANTITRUST his
tory but also because 1t unveiled
Q picture Of captains of industry
conspiring with all the trappings
Of Class B movie.
The contrast continued through
sentencing. A Federal Judge in
Philadelphia took the unusual
step Of falling seven Of the con-
spiratOrS-all senior officials with
sterling regulations in their COM
nlunities.
There was, indeed, nothing usual
about the antitrust cases that
reached their climax last week in
Philadelphia. In the usual anti
trust case, the Government claims
Q group Of companies are con-
spring to fix prices or destroy
competition, the companies deny
it and the battle is waged in court.
But in Philadelphia, the giants
Of the heavy electrical industry
got Q tongue-lashing from the
Judge and took their punishment.
The only battle their attorneys
waged was for leniency. Their
clients had either pleaded guilty
or did not contest the Govern
ment's charges.
homogeneous Position
In fact, the president of one of
the two largest companies in
volved General Electric had
publicly announced the guilt of
some Of his employees and his in
tention Of disciplining them while
the investigation was still going
on and before the first indict-
ments were handed down last
year.
The other giant-Westinghouse
Electric Corp.-made a statement
Immediately after the first indict-
ments calling the accusations
shock to management" and the
actions charged to Westinghouse
employees completely contrary TO
long established policies which
govern the conduct of the COM
pany's business"
Neither company fought back.
Both publicly drew some comfort
from the prosecution statement
that the Government had not
charged members of the board Of
either company with knowledge
OF the conspiracy nor had it
claimed that any Of these Off
cials personally authorized the
acts charged in the indictments.
But Judge ]. Cullen Ganey took
q different view of the prosecu-
ton statement. Before he started
sentencing the 20 different COM
panies and IS individual defend
ants, he laid the real blame" on
the doorstep of the corporations
and those who guide and direct
their policy"
Responsibility Cited
While the Justice Department,
he said. acknowledged that it
didn't have enough evidence to
get conviction beyond q reason
able doubt Of those in the highest
echelons Of the companies. "in q
broader sense they bear q grave
responsibility for the present sit
uation, for one would be most
naive indeed to believe that these
violations Of the law, SO long
persisted in, affecting so large a
segment Of the industry and
finally, involving so many mil
lions upon millions Of dollars,
were facts unknown to those re-
sponsible for the conduct of the
corporation.
In effect, he was asking what
has puzzled a lot Of other people:
How could subordinates conspire
on the grand scale to fix prices
and slice up the business without
the big bosses knowing about it?
Basically, the conspiracies were
aimed at removing all the COM
petitive flavor Of q business with
annual sales Of SITS billion. With
out competition, prices could be
pegged at any level and some
prices could go up and did. But
some Of the conspirators didn't
stop there. They took the COM
petition out Of bidding for Gov
ernment jobs by deciding in ad-
vance which company was to get
which contract.
One Of the conspiracies described
In the indictments had endured
since 1851. In other indictments
the earliest offenses cited were
In 1858 or later. but the Govern
ment made no secret Of Its belief
that the plotting to fix prices had
originated much earlier.
How Il Worked
Generally, on Federal, State
and local government Jobs, the
lowest bidder gets the contract.
The bids are submitted sealed.
They're supposed to be a big secret
until the bids are opened. They
were no secret to these competi-
tors. How did they work it?
They had a variety of share
the-wealth schemes. What these
schemes were dealing with were
the big jobs, the custom made ma
chinery built according to Govern
ment specifications. Company en-
gineers for a particular type Of
machinery had to make elaborate
cost computations on the basis
Of parts and labor involved. Then
they would turn their estimates
over to the sales or pricing man
ager to figure out how much the
company should charge.
There should have been q wide
variation between companies. One
might have a larger labor supply
than another, or a more efficient
operation to keep overall costs
down. One might be willing to
take a loss on a contract because