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TO AMEND THE ANTITRUST LAWS

FRIDAY, JULY 28, 1939

UNITED STATES SENATE,
SUBCOMMITTEE OF THE COMMITTEE ON THE JUDICIARY,

Washington, D.C. The subcommittee met, pursuant to call, in room 318, Senate Office Building, at 10:30 a. m., Senator Edward R. Burke (chairman) presiding.

Present: Senators Burke (chairman), Danaher, and Miller.
Also present: Senator Joseph C. O'Mahoney, of Wyoming.
Senator BURKE. The committee will come to order.

The purpose of the meeting this morning is to give the committee and the Members of Congress and others who may be interested to read these proceedings the opportunity to have the author of the bill, S. 2719, explain the provisions of the bill and what it is hoped may be accomplished by the enactment of such a measure.

ľ would like for the record to show that it is the well-established custom of the Committee on the Judiciary of the United States Senate that when a bill is introduced and referred to this committee, if the introducer of the bill is a member of the committee, the chairman appoints that person as the chairman of the subcommittee to consider the measure. "I understand that in this case, although Senator O'Mahoney is a member of the Judiciary Committee, it was at his particular request that Chairman Ashurst of the committee appointed someone else. Senator O'Mahoney took the position that this is a matter of great importance. He felt that someone who had no connection with the drawing of the bill or interest in it other than as a general matter, wholly disinterested, should be chairman of the subcommittee; hence it became my lot to preside over this hearing. It it with very great pleasure that we will now hear from Senator O'Mahoney in reference to S. 2719.

Senator O'MAHONEY. Thank you very much, Senator Burke.

May I suggest that the record begin with the text of the bill, S. 2719?

Senator BURKE. It will be so ordered. (The bill referred to is as follows :)

[S. 2719, 76th Cong, 1st sess.) A BILL To provide additional civil remedies against violations of the antitrust laws, and

for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 8 of the Act entitled "An Act to protect trade and commerce against unlawful restraints and monopolies”, approved July 2, 1890, is amended to read as follows:

“Sec. 8. The word 'person', as used herein, means an individual, a corporation, a partnership, an association, a joint-stock company, a business trust, or any organized group of persons, whether incorporated or not; or any receiver, trustee, or liquidating agent of any of the foregoing in his capacity as such.”

SEC. 2. Such Act is amended by adding the following new section: “SEC. 9. This Act may be cited as the 'Sherman Antitrust Act.”

1

SEC. 3. Section 1 of the Act entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,” approved October 15, 1914, is amended by striking out the third paragraph thereof and inserting in lieu of such third paragraph the following:

“The word 'person', as used herein, means an individual or company.

“The word 'company', as used herein, means a corporation, a partnership, an association, a joint-stock company, a business trust, or any organized group of persons, whether incorporated or not; or any receiver, trustee or liquidating agent of any of the foregoing in his capacity as such.

“The word 'director' means a director of a corporation or any individual who occupies a similar status or performs similar functions in respect of any company.

“The word 'officer' means an officer of a corporation or any individual who occupies a similar status or performs similar functions in respect of any company.

“The term 'antitrust provisions of the Tariff Act of 1913' means sections seventy-three to seventy-seven, inclusive, of an Act entitled 'An Act to reduce taxation, to provide revenue for the Government, and for other purposes,' approved August twenty-seventh, eighteen hundred and ninety-four, as amended by the Act entitled 'An Act to amend sections seventy-three and seventy-six of the Act of August twenty-seventh, eighteen hundred and ninety-four, entitled “An Act to reduce taxation, to provide revenue for the Government, and for other purposes," ' approved February twelfth, nineteen hundred and thirteen.”

Sec. 4. Section 14 of such Act is amended to read as follows:

"SEC. 14. (a) Any violation of any provision of the antitrust laws by any company shall be a violation of such provision by each officer or director of such company who shall have done, or authorized, ordered, or caused to be done, any act constituting in whole or in part such violation. In any proceeding against any officer or director of any company in respect of any such violation by such company, such officer or director, if he shall have had knowledge of any act constituting in whole or in part such violation, shall be presumed to have authorized, ordered, or caused such act; and if evidence shall be introduced in behalf of such officer or director adequate to rebut such presumption, the fact of such knowledge shall, nevertheless, be submitted to the jury, or, in any action tried by the court without a jury, shall be taken into account by the court, as evidence of such authorization, ordering, or causation.

“(b) Any officer or director chargeable under subsection (a) of this section with a violation of any penal provision of the antitrust laws shall be guilty of a misdemeanor, and upon conviction therefor he shall be punished by a fine of not exceeding $5,000 or by imprisonment for not exceeding one year, or by both, in the discretion of the court.

"(c) Any officer or director chargeable under subsection (a) of this section with a violation of any provision of the Sherman Antitrust Act, the antitrust provisions of the Tariff Act of 1913 or section 3 or section 7 of this Act by any company shall forfeit to the United States a sum equal to twice the total com. pensation, direct and indirect, whether in the form of salary, commission, bonus, share of profits or otherwise, received by or due to such officer or director from such company or on account of services to or in behalf of such company, in respect of each month during which any such violation or any part thereof shall have occurred : Provided, That if the sum computed as aforesaid should amount to less than $5,000, such forfeiture may nevertheless be fixed by the court in an amount not exceeding $5,000: Provided further, That in respect of any compensation received by or due to such officer or director which is not computed on a monthly basis, the portion of such compensation attributable to each such month shall be one-twelfth of such compensation as computed on an annual basis. Such forfeiture shall be payable into the Treasury of the United States and shall be recoverable in a civil action by the United States.

"(d) Upon a proper showing in a civil action brought by the United States

"(1) any officer or director chargeable under subsection (a) of this section with a violation of any provision of the Sherman Antitrust Act, the antitrust provisions of the Tariff Act of 1913 or section 3 or section 7 of this Act by any company shall be enjoined (A) from rendering any service directly or indirectly to or in behalf of such company, permanently or for a specified period not less than ninety days in the discretion of the court; (B) from receiving any compensation, direct or indirect, whether in the form of salary, commission, bonus, share of profits or otherwise, from such company or on account of services to or in behalf of such company, during or in respect of such period; and (C) from engaging in business, whether on his own account or as an officer or director of any other company, or otherwise, in competition with such company, during such period; and

"(2) such company shall likewise be enjoined (A) from receiving any service, direct or indirect, whether voluntary and uncompensated or otherwise, from such officer or director, during such period; and (B) from paying any compensation directly or indirectly, whether in the form of salary, commission, bonus, share of profits or otherwise, to or in behalf

of such officer or director during or in respect of such period.” SEC. 5. Such Act is amended by inserting the following new sections after section 14 thereof :

"SEC. 14A. Any company which violates any provision of the Sherman Antitrust Act, the antitrust provisions of the Tariff Act of 1913 or section 3 or section 7 of this Act shall forfeit to the United States a sum equal to twice the total of net income received by or accruing to such company (A) during each month within which any such violation or any part thereof shall have occurred, (B), in respect of any operations of such company during each such month, and (C) otherwise attributable to each such month: Prorided, That if the sum computed as aforesaid should amount to less than $25,000, such forfeiture may nevertheless be fixed by the court in an amount not exceeding $25,000 Such forfeiture shall be payable into the Treasury of the United States and shall be recoverable in a civil action by the United States. For the purposes of this section, net income shall be computed in accordance with the method of accounting regularly employed in keeping the books of such company, if such method is in accordance with recognized principles of accounting and clearly reflects the income. If no method of accounting has been employed in keeping the books of such company, or if the method employed does not accord with recognized principles of accounting or does not clearly reflect the income, the computation shall be made by a method which does conform to recognized principles of accounting and which does clearly reflect the income. In any such action tried by jury, the court may require the jury to return a special verdict upon the question of liability. If in any such case, the jury in such special verdict shall find the plaintiff entitled to a forfeiture, or if, in any such action tried by the court without a jury, upon the conclusion of the taking of eridence upon the question of liability, the court shall be of opinion that the plaintiff is entitled to a forfeiture, the court, for assistance in the computation of such forfeiture, may require such company to retain at its own expense an independent public accountant satisfactory to the court, and may utilize tie assistance of the Federal Trade Commission or an officer thereof as a master in accordance with the procedure set forth in section 7 of the Federal Trade (''mmission Act."

"SEC. 143. Any two or more of the proceedings hereinafter enumerated, if instituted against the same parties, or if relating in whole or in part to the same act or acts, may be consolidated :

“(A) A proceeding in the name of the United States to prevent and restrain a violation of any provision of the antitrust laws;

“(B) An action under subsection (C) of section 14 of this Act;
"(C) An action under subsection (d) of section 14 of this Act; and

“(D) An action under section 14A of this Act : Provided, That upon any such consolidation which involves an action under said subsection (c) of section 14 or an action under said section 14A, the right of trial by jury shall be preserved.”

SEC. 6. Such Act shall be amended by adding the following new section : "Sec. 27. This Act may be cited as the 'Clayton Act.'"

Senator O’MAHONEY. I would also like to have incorporated in the record at this point the report received from the Department of Justice.

Senator BURKE. Immediately following the text of S. 2719, there will appear in the record this memorandum submitted by the Department of Justice.

(The memorandum referred to is as follows:)

DEPARTMENT OF JUSTICE,

Washington, D. C., July 27, 1939. Memorandum for Senator O'Mahoney.

This memorandum supplements the memorandum I sent you this morning in regard to the number of complaints, investigations, and suits in the Antitrust Division.

Reliable comparative figures on the number of complaints, investigations and suits are available only for the last 8 fiscal years. We have information on the number of suits instituted during each year since 1890, but the Division records on complaints and investigations have not been compiled on a comparative basis prior to the year ending June 30, 1932. Comparisons for the last 8 years, however, reveal the following:

11, 451

Complaints received in antitrust division Fiscal year: 1932.

356 1933

449 1934.

11,020 1935. 1936

730 1937

581 1938.

923 1939

1, 375 1 Complaints received during the fiscal years 1934 and 1935 include more than 1,000 complaints relating to the N. R. A.

Investigation for antitrust division by Federal Bureau of Investigation Fiscal year: 1932

139 1933.

103 1934.

127 1935.

69 1936.

67 1937.

90 1938.

59 1939_

90

Fiscal year:

Antitrust suits Pending: 1932

19 1933

18 1934

19 1935.

21 1936_

27 1937

21 1938

28 1939.

32 Instituted: 1932_

3 1933

7 1934.

11 1935.

10 1936_ 1937

10 1938_ 1939.

13 Terminated :

1932-
1933
1934
1935
1936-
1937-
1938.

1939 Information is available on the number of antitrust suits instituted and terminated each year since 1890, and I am attaching hereto a list of the suits insti

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