Monday, Jun. 12, 1950
Slightly Clearer
When the Supreme Court outlawed the cement industry's basing point system* two years ago, many businessmen in other industries felt that they too were breaking the law, although they weren't sure just what the law was. The Federal Trade Commission did not clear up matters any when it told U.S. business that basing-point prices were entirely legal so long as they did not result in identical pricing that smacked of "collusion." To be on the safe side, the entire steel industry voluntarily junked its basing point system, sold steel F.O.B. the mill and waited for Congress to clear up the confusion.
Last week, after nearly a year of wrangling, Congress made an attempt at clarification. The Senate passed a compromise version of a bill introduced last summer by Wyoming's Democratic Senator Joseph C. O'Mahoney (TIME, June 13), and sent it to the President. If Harry Truman signed it, the bill would, in effect, reverse the Supreme Court's cement decision. It would permit freight absorption, provided that prices 1) are independently arrived at and 2) do not eliminate competition. More important, the bill would take business off the defensive. Where the burden of proof now lies on business to show its innocence of any collusion, the new bill would require the Government to prove beyond doubt that an actual conspiracy to fix prices existed. Thus, even if rising prices should result from actions taken individually by companies, the Government would still have to show conclusive evidence that this was done by prior agreement; "good faith" would be a complete defense.
* Under which freight charges were absorbed in order to meet competitive prices at distant points, and "phantom freight" was tacked on for nearer customers.
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