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ROBERT M. HURT, Antitrust and Competition * - Ralph Raico, New Individualist Review [1961]

Edition used:

New Individualist Review, editor-in-chief Ralph Raico, introduction by Milton Friedman (Indianapolis: Liberty Fund, 1981).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Antitrust and Competition*

ROBERT M. HURT*

If [the businessmen] like freedom and don’t want outright control, then they’ve got to stand up and be good citizens. They’ve got to quit their informal conforming and doing business the easy way. They’re going to have to, we might say, expose themselves to the rigors of competition.”

. . . . . . . .

“We must hold open opportunities for a man with an idea so that, with a little capital, he can go into business and have a fair chance, by his ingenuity, to grow and become big himself. This is very difficult if you subscribe to what is called “hard” competition. Competition of this kind is war in a jungle, where only the big man can survive.”1

Paul Rand Dixon, Chrm. of the Federal Trade Commission

GOVERNMENT AND PUBLIC alike are now exhibiting a case of schizophrenia in their attitude toward competition, complete with separate vocabularies. On the one hand, a group of business executives are given jail sentences for fixing prices in violation of the Sherman Antitrust Act and are paraded before the public as enemies of society. They are charged with obstructing the market and thereby injuring the public. Even in those circles in which Adam Smith and his kin have been consigned to the innermost hell, his arguments against cartelization are accepted: independent pricing by each competitor in an effort to maximize his profit will result in lower prices and greater output than collusive pricing. Although collusion might bring greater security and greater profits to the participants, it is allegedly the philosophy of the antitrust laws that these are offset by disadvantages to the public. In the lexicon of our commentators, the goal is “competition” and the departure is marked by “conspiracy,” “doing business the easy way,” “oligopoly,” and “directed prices.”

On the other hand, in a continually expanding area, both federal and state governments embark on a calculated policy of encouraging the same results the price fixing prosecution was designed to prevent. In this area, the very type of competition which is likely to bring lower prices is prohibited. Here the vocabulary is given an Orwellian twist in its mimicry of the language used to describe a competitive market. The goal is “orderly competition” and “fair trade,” the departure the “war of the jungle” and “unfair competition.” The price cutter, in the words of President Roosevelt, is a “chiseler”; the competitor hurt by lower prices is deprived of his “fair chance” and “right to compete.” It can be seriously argued that certain types of business conduct described as “unfair competition,” especially in the area of fraud, can be proscribed with no adverse effect on price competition. This article deals with the sphere of government intervention which is clearly protectionist in character and acts to thwart the market at least as decisively as the conduct of the imprisoned executives.

The government’s most grandiose attack on competition was the National Industrial Recovery Act of 1933, enforcing industry drafted codes, of which 85% contained provisions for fixing minimum prices. The President of the United States Chamber of Commerce stated the underlying philosophy of the Act:

“The time has come when we should ease up on these laws and under proper government supervision, allow manufacturers and people in trade to agree among themselves on these basic conditions of a fair price for the commodity, a fair wage, and a fair dividend.”2

After a period of horror, in which even an investigating committee appointed by Roosevelt denounced the whole undertaking as a “regimented organization for exploitation,” the Supreme Court put the monster to death amidst sighs of relief even of some of its original supporters. This experiment with “corporativism” of the continental variety probably had the redeeming effect of leaving an understandable antipathy for such comprehensive legislation.3

The ghost of the NRA philosophy, however, lingers in a surprisingly large part of our economic life. Allocations of quotas to oil producers by state governments are enforced by the federal government. The producers argue that the purpose of the arrangement is conservation of dwindling reserves rather than higher profits, while they lobby for depletion allowances to allegedly encourage exploration and exploitation of oil fields. Over half the states have retail price maintenance laws (euphemistically dubbed “fair trade” laws) preventing price competition among retailers in a wide range of brand name products. These are exempt from the antitrust laws under the Miller-Tydings Act. While regulatory agencies are usually associated with the setting of maximum rates, there is an increased willingness on the part of the Interstate Commerce Commission and the Civil Aeronautics Board to set minimum rates to “protect competition.” An increase in the minimum wage is openly advocated as a means of protecting Northern industry from the lower prices of low wage Southern industry. The avowed goal of our farm program is to keep prices high enough to enable all those wishing to remain farmers to achieve, as Kennedy promised during the election campaign, a return on investment equivalent to that obtained in business. And, of course, protective tariffs and other trade restrictions have from time immemorial sacrificed lower prices, greater output, and increased efficiency of specialization resulting from the free movement of goods for the greater security and profits of the protected industry.

While a complete list of clearly protectionist legislation, of which the above is a small sampling,4 would be grim reading for persons of almost any political persuasion, I find the most distressing developments in that supposed citadel of free competition, the antitrust laws. The remainder of this article deals with these developments. In 1911, Justice White enumerated the evils which the Sherman Act was enacted to combat:

“The power which the monopoly gave to one who enjoyed it, to fix the price and thereby injure the public; the power which it engendered of enabling a limitation on production, and the danger of deterioration in quality of the monopolized article.”5

Protection of the consumers from these evils—higher prices, lower output, and deterioration of quality—was accepted by the courts as the criterion of Sherman Act enforcement.6 This standard roughly corresponds to the criteria developed by classical economists to demonstrate the superiority of competitive enterprise, although it is by necessity a cruder standard. It has frequently been argued that some, or even all, of the methods adopted by the antitrust laws have not or could not achieve these goals. But no student of the antitrust laws would deny that their enforcers have in the past at least sought to protect the public rather than to secure the position and profits of high cost competitors. The appearance of success has been sufficient to persuade the Common Market nations, long the ideological home of government aided cartels and the anti-competitive mentality, to include antitrust provisions strikingly like our own in the Rome Treaty.

Recently, however, the antitrust laws have been used to achieve those very results which they are allegedly designed to prevent—to thwart developments which will lead to lower prices and the other advantages which flow from competition. This trend is not irreversible, especially in view of the fact that many of the important cases are still to be reviewed by the higher courts. Three of the most important developments are: (1) the proposed consent decrees in the electrical equipment price fixing cases, (2) recent applications of the Celler-Kefauver Anti-Merger Act, (3) the attack on price discrimination and the large buyer under the Robinson-Patman and Sherman Acts. Since this is a brief survey article, I cannot avoid some over-simplification; but the following discussion I believe captures the drift of the cases.

AFTER THE SEVEN executives were safely tucked away behind bars for conspiring to keep the price of electrical equipment “above the market price,” the Justice Department proposed decrees which included a rule prohibiting the selling of equipment at an “unreasonably low price,” to prevent competition which might drive smaller firms out of business.7 Having prohibited agreements to thwart “competition,” the Justice Department seems to desire that the big companies avoid actual competition. These companies would be left with the job of determining what is a “reasonable” price, with possible contempt proceedings, complete with jail sentences, threatening if they fail to calculate what the government and the courts consider an “unreasonably low price.” Several customers of the convicted equipment suppliers, who are the very parties that the antitrust laws supposedly protect, have attempted to intervene in the case to protest this deprival “of the benefits of free price competition in the purchase of electrical equipment.”

A ruling that big concerns should set their prices so as not to injure competitors would not only deprive customers of the benefits of lower prices; it would also place these larger companies in a preposterous situation. Should the price selected as consonant with safeguarding their small competitors be considered too high, the pubic is said to be the victim of “directed prices,” and the authorities are exhorted to break up the “oligopoly.” If the price is so low as to hurt some competitors, they are guilty of “monopolistic practices” and likewise subject to public outcry and prosecution. This would give a custodial role to large firms incompatible with any notion of a free market. The only completely safe course would be to obtain a clearance from the Justice Department before making a price change. The dilemma of the large firm is summed up by Leland Hazard, an antitrust lawyer:

“Antitrust doctrine forbids certain forms of hard competition. For example, GM would hesitate to price its cars as low as its efficiency might permit, for fear of driving Chrysler, American Motors, even Ford to the wall. As critics put it, businessmen must compete, but no one must win the competition. It is this aspect of antitrust which creates two standards, one for big business, another for small business. No matter how vicious the competition of the little fellow, the big fellow must not compete too hard.”8

IN 1950 AS a result of fears that the merger movement was rapidly increasing monopoly power in American industry, the Celler-Kefauver amendment to the Clayton Antitrust Act was passed to prohibit mergers whose effect “may be to substantially lessen competition or tend to create a monopoly.” While less of an immediate effect on competition was required when compared to the Sherman Act standard, the Congressional reports clearly indicate (1) that the goal was to protect competition rather than less efficient competitors and (2) that a “reasonable probability” rather than a mere possibility of injury to competition must be shown.9 However, certain recent cases indicate that this act may be forged into one of the most sweeping anti-competitive devices in the hands of the Government.10

The Reynolds Metal Co., a producer of aluminum foil, was recently ordered by the Federal Trade Commission to divest itself of a recent acquisition, Arrow Brands, Inc., which converted aluminum foil into decorative foil for the florist trade. Although Arrow was a customer of Reynolds before and after the acquisition, the main complaint of the Commission was that after the merger Arrow had priced so low that competitors were badly hurt. When Reynolds responded that they had not initiated the price cut but had lowered their prices to meet foreign competition, the Commission bluntly stated the new philosophy:

“Whether or not Arrow was actually the first to reduce prices was not too important. The significance in the situation is that Arrow could lower its prices and maintain them at low levels for an extended period which it could not have done before the merger. . . . In any event, we do not need to be particularly concerned with the justification Arrow may have had for reducing its prices below the cost of production. It is enough that the reductions show the exercise of a market power which Arrow achieved as a direct result of the acquisition.”11

We leave to conjecture whether the Commission would recommend a protective tariff to fill the vacuum created by removing those firms which could meet foreign competition. Arrow’s sin was what would, at one time, have been considered a virtue, its ability to compete more effectively. Though the Commission mentions pricing “below the cost of production,” it hedges on whether Arrow did actually price below cost. Earlier the opinion admitted that “even if Arrow had not been selling below cost, it was selling at prices so near cost and so low that it virtually ran some of its competitors out of business.”12 In other words, even if after a merger the merged concern still makes a slight profit, should the lower prices “virtually run some of its competitors out of business,” the merger injures “competition.” This reasoning would apply whether the increased “power” results from greater efficiency or from greater financial “power.”

A recent decision by a hearing examiner, sent back for further findings of fact by the Commission, involves what is referred to as a conglomerate merger—a merger of two firms which neither are competitors nor do business with each other. Proctor & Gamble’s acquisition of Clorox, a producer of liquid bleach, was found by the examiner to violate the Act.13 Clorox’s misdeed lay in being able to embark on a promotional campaign which allegedly succeeded at the expense of Clorox’s competitors due to Proctor & Gamble’s superior advertising and promotional experience and greater financial strength. Further, Proctor & Gamble, due to the large quantity of its advertising, received discounts unavailable to Clorox’s competitors. This decision, if accepted by the Commission, would make explicit a completely new philosophy of antitrust. In previous cases, mergers were challenged because (1) by combining competitors they increased concentration in the market, (horizontal merger), or (2) by combining a buyer of a product with its seller, they “foreclose” competing sellers or buyers from a market (vertical merger). In the case of the conglomerate merger, the only grounds for objection must either be the increased financial ability to compete more effectively through advertising, price competition, or introduction of new techniques, or the economies of scale of management, mass advertising, etc. The former Chairman of the Commission has indicated that the Clorox case might lead the way to protection of small firms from the adverse effects of such mergers:

“The acquisition by a large and powerful diversified company of a small company in a discrete industry historically shared by a number of small companies competing on equal terms followed by drastic competitive injury to the smaller competitors might be a demonstration of anti-competitive effect sufficient to satisfy the statutory requisites even if the acquisition was truly conglomerate.”14

This philosophy, if accepted, could be used to freeze the structure of many American industries. When firms in a given industry are of a given size or structure, they would be kept that way if they could not generate the capital to introduce new cost saving techniques or the promotion necessary to expand the market. (This is especially likely at present, since a large percentage of equity capital is provided by large firms.) This can be compared to prohibiting a rich heir from buying a corner drugstore because by hard competition—advertising, new techniques—he could deprive competitors of a large part of their business, i.e., of a “fair opportunity to compete.”

The Commission’s endeavors have probably been surpassed by the recently replaced Robert Bicks of the Justice Department, who, you may recall, carried the torch of free competition in the price fixing case. An action has been brought against Von’s Grocery Co. to disband its merger with Shopping Bag Food Stores. Together they comprise 8% of the grocery market in the Los Angeles area. At the time of the complaint there were twenty leading supermarket chains in the area; and experience indicates that competition, in the sense of lower prices, would be at least as great in such a market as in a market of small retailers, especially since entry is notably easy in the grocery business. But the complaint indicates that this is not what is meant by competition:

“Independent retailers of groceries and related products may be deprived of a fair opportunity to compete with the combined resources of Von and Shopping Bag.”15

Mr. Bicks is more explicit as to what is undoubtedly the goal of the prosecution:

“This complaint reflects our continuing concern over the effects on small independent grocers resulting from combinations of large supermarket chains”16

It is not claimed that the merger will deprive the other twenty chains of the “opportunity to compete,” as it undoubtedly would not. It cannot be seriously argued that price competition among the chains would be appreciably lessened, that there is a “reasonable probability” that prices are likely to be higher as a result of a merger. The objection is that the achievement of efficiencles from combined resources would deprive less efficient forms of business of a “fair opportunity to compete.” Again, it is not the consumer but the competitor who is being protected.

Mr. Bick’s magnum opus, however, is the Brown Shoe case,17 now pending before the Supreme Court, in which Justice Weber ordered the merger of the Brown Shoe Company and the G. R. Kinney Company ended. The shoe industry is notably competitive; and, according to the Court’s own figures, after the merger the combined firms had only 5.5% of the manufacturing market and 5.7% of the retail market.18 Since these figures are singularly unimpressive even in present antitrust cases, Justice Weber made some almost ludicrous assertions, belied by his own figures, that there was a sufficient trend toward concentration to warrant fear for the future of competition. But the crux of the argument is that dangerous efficiencies are driving small and less efficient retailers to the wall:

“Company owned and company controlled retail stores have definite advantages in buying and credit; they have further advantages in advertising, insurance, inventory control and assists, and price control. These advantages result in lower prices or in higher quality for the same price, and the independent retailer can no longer compete in the low and medium price fields and has been driven to concentrate his business in the higher prices, higher quality type of shoes—and the higher the price, the smaller the market. He has been placed in this position, not by choice, but by necessity.”19

“It is the Court’s conciusion that the merger would establish a manufacturer-retailer relation which would deprive all but the top firms in the industry of a fair opportunity to compete.”20

Justice Weber has made explicit what other protectionists are often loathe to admit. Economies which permit lower prices are a danger, not a benefit, when they hurt less efficient producers. This is what is meant by “fair opportunity to compete.”

These cases cannot be dismissed as isolated instances, since they represent the attitudes of the agencies charged with enforcing the antitrust laws. Lee Loevinger, now heading the Justice Department’s Antitrust Division, has indicated that we can expect increased activity in the merger area, and this policy is even more ominous when coupled with the “backward sweep” doctrine developed by the Supreme Court. In the DuPont-General Motors case, DuPont was ordered to give up stock of General Motors it acquired over thirty-five years ago, though there was no claim that the acquisition was “anti-competitive” at the time. If this doctrine is literally applied, when coupled with the “competitive opportunity” doctrine developed in the above cases, the government could function as a regulatory bureau over any firm which has had a merger since 1950 and attack it when things seem to get rough for competition due to the success of the merged operation.21

ALLEGEDLY TO prevent “monopolistic” price discrimination, the antitrust laws have been turned against one of the strongest vehicles for bringing lower prices to consumers—the large buyers, especially the chain stores. Large retailers have unquestionably reduced prices by passing on a great part of the benefits of large-scale economies in lower prices and improved services, by operating at a low unit profit (although the total profits may be high), and by procuring lower prices from suppliers. Due to the ease of entry into retailing and the intense competition between these large buyers, this is generally a most unlikely area for monopoly extractions from consumers. Supporters of competition in this field even have the dubious aid of Ambassador Galbraith, who has emphasized the benefits of large scale retailing to the public.22

But when prices are lowered, someone is likely to be hurt, in this case the small and high cost retailers as well as many suppliers of merchandise. Aided by one of the most vigorous lobbies in the nation, they have partially succeeded in thwarting low price competition through “fair trade” and compulsory mark-up laws. In addition, they have succeeded to a large measure in preventing price concessions from suppliers, even when justified by cost savings to the supplier due to large purchases and service performed, through the Robinson-Patman Act and, even, the Sherman Act.

The Robinson-Patman Act is a mire of legal draftsmanship and defies a short description. But, while clouded in the usual language of “competition” and ostensibly designed to prevent price discrimination, the Act seems to have but one unifying principle: “to enforce discrimination against the lower cost buyer or the lower cost method of distribution.”23 The Act, together with its administration, has been noted for its disregard for any economic analysis of the price discrimination problem. Certain types of price discrimination which economists would class as most likely to be “monopolistic” and lead to higher prices are ignored by the Act, since no competitors are immediately injured, while discrimination which injures someone’s business is almost consistently condemned, though such discrimination may in some cases be highly conducive to competition and lower prices.24

Several of the provisions, taken almost directly from NRA codes, make discrimination against buyers in some cases compulsory. A firm which performs its own brokerage cannot receive a discount for the amount the seller thus saves, and the seller cannot give discounts for other services performed by a buyer (such as advertising) or make services available to a buyer unless an offer is made to smaller customers on “proportionally equal terms,” which is in many cases impossible.

The Act’s main provision effectively prevents price discounts given to buyers which prove particularly annoying to competitors of these buyers. It prohibits discounts which “injure competition” with any competing buyer. It has generally been sufficient to show that complaining competitors have suffered losses because of the differential to prove injury to this “competition.” This is true when large buyers, by cutting into the profits of wholesale sellers, have been able to pass part of these savings on to the consumer, substituting vigorous competition among large retailers for the previous small firm, high price retail structure. Though some courts have used language to the contrary, the courts have generally substituted an “injury to competitors” for an “injury to competition” test.25

A price discount is exempt from the Act if it is equal to cost savings to the seller resulting from the size of the purchase or the method of delivery. However this has been so difficult to prove to the satisfaction of the Commission and the courts that the Act has effectively barred most discounts justified by cost savings. Discounts made in good faith to meet, but not undercut, the price of competitors, are also exempt. But the Commission recently held that this allows only “defensive” and not “aggressive” discounts, i.e., discounts cannot be made to meet the price of a competitor in order to win customers away from him.26 As the dissenting Commissioner pointed out, this rule may effectively isolate suppliers in many markets from any price competition. The Commission has further held that a firm may not give a discount to meet the price of a competitor if consumer acceptance of its brand gives it an advantage.

In 1946 the biggest guns of antitrust were focused on a noted object of protectionist ire, the A&P, in a Sherman Act prosecution which is an epic in antitrust literature.27 Even the judge convicting A&P proclaimed that “to buy, sell, and distribute to a substantial portion of 130 million people one and three-quarters billion dollars worth of food annually at a profit of 1¼ cents on each dollar is an achievement one may well be proud of.” While selling less than 7% of the groceries in the nation, it had admittedly been a pioneer in introducing new techniques resulting in both lower prices and improved services to consumers. In the process, however, many had been hurt and were screaming loudly. There is legitimate disagreement as to just what the facts were and whether some action was warranted, but the government arguments and court decisions were landmarks in both economic confusion and protectionist sentiment. Only a few high points can be mentioned here.28

A&P was assailed for its policy of reducing prices so that volume of sales would eventually increase to a point where greater economies of scale would be realized and higher profits would be made. This practice would seem to lie at the very basis of competition, but to the government the notion of cutting prices to increase sales and realize economies seemed somehow un-American: “An honest retailer would attempt to price his merchandise in the traditional American way, that is, cost, plus expenses, plus a profit.”29 A&P’s threat to manufacture its own products if its suppliers, often large ones, would not reduce their prices, was attacked as unfairly “coercive.” A&P had performed its own brokerage, but it was forbidden by the Commission to receive discounts for the amount saved. It demanded allowances for its advertising and other services rendered its sellers, but these were attacked as giving A&P an “unfair advantage” without regard for the actual savings to suppliers in accepting these services. Though the action was brought under the Sherman Act with its market effect standard, the discounts received by A&P through hard bargaining were condemned without any attempt at showing that these policies were likely to injure rather than benefit buyers of groceries.

EVEN IF ONE agrees with the author that the antitrust laws have been perverted in recent years in certain areas, this, of course, does not demonstrate that they should be discarded. There is considerable honest dispute among economists as to what extent mergers resulting in increased concentration, price fixing and various other restrictive practices are likely to lead to higher prices and decreased output. Economists such as Stigler, J. M. Clark, and Machlup, to name a few, have advocated strong enforcement of the laws. Others, including Hayek, Mises, and Schumpeter, have been skeptical about the value of such action, especially as to the desirability of breaking up concentration. Machlup and others have suggested more may be accomplished by elimination or modification of patent law, tariffs, and other government policies which encourage concentration. But it is to be hoped that in the future the controversy over antitrust questions returns to this area and that the present anti-competitive tangent can be abandoned.

The present trend, however, might be destined to predominate in the years ahead, since it may well represent an attitude closer to the hearts of Americans than lip service paid to “free enterprise.” (This is well illustrated by many “right wing” businessmen when their profits are threatened by competition.) The author suggests that the most likely statist trend in this country would not be toward “socialism,” the present bogey of the right wing, but rather toward an indigenous hybrid of feudalism and economic fascism. In the extreme form of this type of social organization, each businessman would be guaranteed his margin of profit, just as each worker would be guaranteed his wage and each farmer his income, sheltered against the forces which have made for a progressive, consumer oriented economy, with its painful adjustments for the marginal producer. The last few centuries have been viewed as dramatically displaying a movement away from such a society with its frozen relations toward a society characterized by mobility, freedom, and progress. This movement received Sir Henry Maine’s famous characterization as the movement from “status” to “contract.” Present popular attitudes as well as government policies may well indicate a reaction—from contract back to status.

While such a trend is to be noted not only in a wide area of governmental policy but also in private business and in labor relations, it can be seen in its purest form in the discussion of farm policy. Here the espousal of “just price” and the right of a farmer and his son (ad infinitum) to a “fair” return on their plot of land regardless of the greater efficiency of larger units and the conditions of demand, remarkably parallels the medieval attitude toward competition. We are asked to determine an intrinsic value of the farmer’s performance separate from the market value of his production, and guarantee him a corresponding income.30

To those who accept this philosophy I can only suggest that they shed their hypocritical wrath directed at private price fixers. The philosophical arguments in support of such a position can certainly claim intellectual respectability. And I cannot deny the possibility that a government supervised static society, or one tending more in that direction, might, by more successfully satisfying urges for security and tranquility, provide greater “contentment” of a sort to the bulk of its members.

But to those who consider this sort of contentment repulsive and who prefer the values, material and otherwise, which are maximized in a free society, I urge that our present policies be carefully re-examined. It is a corollary to this position, although to some an uncomfortable one, that if the forces of competition are to have their desired effect, they will alter the structure of industries. And twenty similar sized firms in a market may be much more competitive than the two hundred previously existing in the market, notwithstanding the torturous demise of the firms not suited to remain. Once the distinction between preserving competition and protecting competitors is made clear, we can return to a fruitful debate on the policies most suited to maintain competition.

With our last issue (November 1961) the single copy price of NEW INDIVIDUALIST REVIEW was raised from 25c to 35c. Our subscription rate, however, has remained the same. This increase was made necessary by our expanding from 32 to 40 pages.

With this issue, NEW INDIVIDUALIST REVIEW will become a quarterly; an issue of at least 40 pages will be published every three months. (We hope to be able to further increase the number of pages as soon as possible.)

Readers who enter their subscriptions prior to February 28, 1962 will receive five issues. Those who subscribe after that date will receive four issues a year at the original rate of $2.00 a year for non-students and $1.00 a year for students.

[* ] Since this article was written the Justice Department has indicated that it will drop its demand for a rule against “unreasonably low prices” in the decree against GE. It is likely to do likewise with the other defendants.

[* ] Robert M. Hurt received a B.A. from Wabash College and an L.L.B. from the Yale Law School. He is presently a Volker Fellow studying under Prof. F.A. Hayek on the Committee on Social Thought of the University of Chicago. He has recently joined the editorial board of New Individualist Review as an Associate Editor.

[1 ]U. S. News and World Report, July 17, 1961, p. 65.

[2 ] Henry I. Harriman, quoted in Wilcox, Public Policies Toward Business. (Irwin, 1960), p. 351.

[3 ] The alleged purpose of the price control was to aid economic recovery. However, the expected result was born out by the Brookings Institute study which concluded that the Act, “on the whole, retarded recovery.” Lyon, et. al., The National Recovery Administration, (Washington, D. C., Brookings Inst., 1935), p. 873.

[4 ] A complete list would include items not usually associated with price fixing, such as licensing of professional services.

[5 ] Standard Oil of New Jersey v. United States, 221 US 1, 52, (1911).

[6 ] The courts have developed certain rules of thumb, declaring certain types of conduct illegal in all cases. (These are referred to as illegal per se). Into this category fall price fixing, market allocation, and joint boycotts. However, this was not considered a departure from the market standard, as the courts felt that these acts could have no other purpose than to injure the buying public. The market standard has been recently reaffirmed as the goal of antitrust enforcement in the important Report of the Attorney General’s National Committee to Study the Antitrust Laws, (1955), p. 320.

[7 ]U. S. News and World Report, Dec. 4, 1961, p. 60.

[8 ]Atlantic Monthly, Nov. 1961, p. 57.

[9 ] Cf. Milton Handler, “A Decade of Administration of the Celler-Kefauver Act,” 61 Columbia Law Review, 629, April, 1961.

[10 ] A more complete account of the anti-competitive enforcement of this act is given by Robert Bork in 39 Texas Law Review, 711, June, 1961.

[11 ] Reynolds Metal Co., 1960 Trade Reg. Rep. ¶28,533, p. 37,256.

[12 ]Ibid., p. 37,255.

[13 ] Proctor & Gamble, (FTC Dkt 6901), remanded for further findings, CCH Trade Regulation Reports ¶15,245 (June 15, 1961). The Commission found that the Examiner’s facts were not sufficient to support his conclusions. For instance the Nielson rating showed that Clorox was expanding its sales faster before the merger. However, the language of the opinion seems to indicate that the Commission supported the theory of the Examiner as to the “anti-competitive” effects of a conglomerate merger.

[14 ] Earl W. Kintner, quoted in Adelman, “The Anti-Merger Act,” 51 American Economic Review, part 2, 1961. p. 243.

[15 ] United States v. Von’s Grocery Co., CCH Trade Regulation Reports, 45,060, p. 66,427.

[16 ]Ibid.

[17 ] United States v. Brown Shoe Co., 179 F. Supp. 721 (ED Mo., 1959).

[18 ] Justice Weber has to juggle statistics even to get the 5.7%. He takes Brown-Kinney’s total retail sales as compared with the total sales of the 22,000 retail outlets classified by the Census Department as shoe stores. 70,000 stores sell shoes, but the Census Department included only those which do over 50% of their business in shoes, excluding department stores. However, shoes sold by Brown-Kinney in department stores are included in its total.

[19 ] Brown Shoe Co., op. cit., p. 738.

[20 ]Ibid., p. 741.

[21 ] This danger is developed at length by Bork, op. cit., passim.

[22 ] J. K. Gailbraith, American Capitalism, (1956), pp. 119-120.

[23 ] Adelman, “The Consistency of the Robinson-Patman Act,” Stanford Law Review, Dec., 1953, p. 4.

[24 ] Cf. Ferrall, “Quantity Discounts and Competition,” 3 Journal of Law and Economics 146, Oct., 1960.

[25 ] The Supreme Court indicated that it identified injury to competitors with injury to competition in FTC v. Morton Salt Co., 334 US 37. (1948): “[The Commission] heard testimony from many witnesses in various parts of the country to show that they had suffered actual financial losses on account of respondent’s discriminatory prices. Experts were offered to prove the tendency of injury from such prices. The evidence covers about two thousand pages, largely devoted to this single issue—injury to competition.”

[26 ] Sunshine Biscuits, Inc., CCH Trade Regulation Reporter, ¶15,469 (Sept. 25, 1961).

[27 ] United States v. A&P, 67 F. Supp. 626, affirmed 173 F2d 79, (1949); and A&P v. FTC, 106 F2d 667. Representative Patman of Robinson-Patman fame unsuccessfully introduced a bill subjecting chain stores to a federal tax which would have imposed a $470,000,000 annual levy on A&P, creating a net loss of $390,000,000. Discriminatory taxes were placed on chains in 29 states, Wilcox, op. cit., p. 372.

[28 ] For a detailed analysis, see Adelman, “The A&P Case” 63 Quarterly Journal of Economics 238. (1949). For the opposing opinion, see Dirlam and Kahn, Fair Competition: The Law and Economics, (Ithaca, 1954), pp. 233-241.

[29 ] From the Main Brief of the Government, quoted in Adelman, “The A&P Case,” p. 241.

[30 ] “This nation owes to its farmers—not a fair income or a guaranteed income—but it owes to them conditions under which they have an opportunity to earn that kind of an income to which their industry and ability entitles them. This is the only answer that is consistent with our American ideals.” Orville Freeman, World, Jan. 3, 1962, p. 17. If the reader can comprehend this distinction, please enlighten the author.