Mr. MARSHALL. I noticed in looking through the justification, that the FBI, for example, carries about the same figure right along. Mr. BROWN. It is a constant item with them.

Mr. MARSHALL. Do they have a more stable method of determining supplies?

Mr. BROWN. That is right. It is more constant in their operations than it is in the appropriation you are speaking of.

Mr. MARSHALL. When you carry a figure like $710,000, which is about doubled, and then you adjust it backwards, what effect does that have on the budget? Does it mean you have money you do not use and then you return it at the end of the year?

Mr. BROWN. It has no effect on these appropriations.

Mr. ANDRETTA. It means that it is just a liquidation of your commitments at the end of the fiscal year.

In other words, delays in submitting bills or delivery under contracts.

Mr. MARSHALL. It is money which is actually obligated but the goods were not delivered?

Mr. ANDRETTA. Yes. It is just a question of what goes out of the till. Actually, when the expenditures go out of the Treasury. Mr. BUTTS. It is really the aggregate of unpaid bills as of the close of June 30.

Mr. MARSHALL. Thank you.

Mr. ROONEY. Thank you, gentlemen.

THURSDAY, MARCH 2, 1961.

SALARIES AND EXPENSES, ANTITRUST DIVISION

WITNESSES

S. A. ANDRETTA, ADMINISTRATIVE ASSISTANT ATTORNEY GENERAL

LEE LOEVINGER, ASSISTANT ATTORNEY GENERAL-DESIGNATE W. W. KIRKPATRICK, FIRST ASSISTANT

P. J. BASSFORD, ADMINISTRATIVE OFFICER

Mr. ROONEY. The committee will please come to order.

We shall this morning concern ourselves with the requested appropriation entitled "Salaries and expenses, Antitrust Division," which appears at page 94 of the committee print.

The details with regard thereto are to be found under tab 20 of the justifications book.

JUSTIFICATION OF THE ESTIMATE

We shall at this point insert in the record pages 20-1 through 20-57, which means the entire set of justifications with the exception of the green sheets.

(The pages follow :)

The Assistant Attorney General in charge of the Antitrust Division is responsible for enforcement of the Federal antitrust laws. This includes the investigation of possible violations, the conduct of necessary grand jury proceedings, the preparation and trial of civil and criminal cases, the prosecution of appeals, and the negotiation and enforcement of final judgments. The Division also is charged with the enforcement of numerous so-called "kindred laws." This requires the supervision and direction of litigation arising under a number of regulatory acts, participation in hearings before several administrative boards, such as the Interstate Commerce Commission and the prosecution of appeals from the orders of such boards. In addition, the Division is charged

with the responsibility of studying, reporting, and advising on the anticompetitive aspects of Government and industry activities connected with the Nation's defense program, the Interstate Oil Compact, the Small Business Administration and the Disposal of Government-owned rubber-producing facilities and surplus property.

The sum of $5,500,000 is requested to enable the Antitrust Division to continue its stepped-up program of enforcement of the laws under its cognizance during the fiscal year 1962. This will exceed by $426,000 the amount available for the current fiscal year including the amount required to meet the costs of the Federal Employees Pay Raise Act of 1960. Of the increased amount, $381,300 is for 36 positions and related costs required to continue and further enlarge the stepped-up program of investigation and prosecution of major cases. The balance of $44,700 will be needed to meet the net cost of statutory changes. of these items are as follows:

Details

$58, 300 2,700 -16, 300

44, 700

237, 400 15, 400 2,300 25,000 10, 800 40,000 35,000

Fiscal year 1960 witnessed greater activity in the field of antitrust enforcement than any previous 12-month period in the history of the Department. Eighty-six cases were filed during the year (59 civil and 27 criminal). This exceeds the number filed in any year since 1942. Case terminations totaled 45 (23 civil and 22 criminal). All of the 23 civil terminations represented Government victories; 17 criminal cases were won and 5 lost. At the end of the fiscal year there were 141 cases pending (101 civil and 40 criminal).

At the end of

Two hundred and fifty-three major antitrust investigations were begun during the year and 179 completed; 42 investigations resulted in 85 civil and criminal cases, 5 were consolidated and 132 were terminated otherwise. the year the Division had 481 such investigations pending. Fines imposed in antitrust cases amounted to $1,087,750. sum of the fines imposed during any year since 1943.

This exceeds the

The Division is continuing its program of administrative surveillance of merger activities throughout the country. During fiscal year 1960, 1,250 mergers were examined and 146 fully investigated.

Between the date of approval of Public Law 86-463, May 13, 1960, and the end of the fiscal year, 22 reports were prepared with regard to the competitive factors involved in proposed bank mergers.

We have also emphasized our program of cooperation with State attorneys general in the coordinated enforcement of antitrust policy. To this end a conference with State attorneys general was held in the Department in April 1960. The conference was attended by representatives of 40 States. The prevailing theme was the complementary role of Federal and State law enforcement authorities in the antitrust area.

ATTORNEY PERSONNEL

Excluding personnel assigned to the Congressional Reports Section and those whose time is devoted to enforcement of the so-called kindred laws or to other duties, the Division has 267 authorized legal positions for attorneys assigned almost exclusively to the enforcement of the antitrust laws. The disestablishment of the Transportation Section, together with an increase authorized by the Congress last year, has made it possible to assign more attorneys to antitrust enforcement. This number is not, however, enough to enable us to continue to expand our stepped-up program of enforcement. Therefore, we are asking for authority and funds for the recruitment of 21 additional attorneys, and necessary supporting personnel.

ENFORCEMENT PROGRAM

Last year we indicated in our justification that we intended to place special emphasis on the use of section 7 of the Clayton Act, as a flexible and effective instrument of enforcement.

In the period covered by fiscal years 1955 to and including 1958, we examined an average of about 850 mergers a year and an average of 43 a year were investigated. During 1959, 950 mergers were examined and 109 were fully investigated. Six merger proceedings were filed. During the year just completed, we examined 1,250 mergers, investigated 146 and filed 13 merger cases. The numbers of mergers and acquisitions seems to be increasing each year. As these increase, our workload increases.

Effective antimerger enforcement does create a heavy drain on the resources of the Division. The costs of preparing for trial and trial are heavy, and a relatively large legal staff is required for each major undertaking. Shortage of personnel hampers prompt consideration of proposed mergers and acquisitions. In many cases, the acquired assets may be assimilated or dissipated before relief can be obtained.

In this connection, prompt action by the Division prior to merger or acquisition not only substantially increases prospects of obtaining relief but usually saves time and the heavy expense of litigation. For example, in August 1959 we obtained information indicating a proposed merger of two New Haven, Conn., banks. Prompt inquiry revealed that the combined banks would have 68.2 percent of the total assets, 68.5 percent of the time and demand deposits, 67.5 percent of the loans and discounts, and 73.7 percent of the total capital accounts of all commercial banks in New Haven. In October 1959 we advised the counsel for the banks that, in our opinion, the proposed merger would violate sections 1 and 2 of the Sherman Act. Two days later we were advised that the proposed merger had been abandoned in view of the advice received from the Antitrust Division.

Similarly, early in January 1960 a Canadian corporation, Aluminium, Ltd., and Apex Smelting Corp., an Illinois corporation, entered into an agreement and plan of reorganization under which the former would acquire the assets of the latter. Aluminum is a producer of primary aluminum and Apex is a producer of secondary aluminum, both of which products are interchangeable for many

end uses of aluminum. Investigation led us to the conclusion that the proposed acquisition would constitute a violation of section 7 of the Clayton Act in that it would entail the merger of two important suppliers in the domestic market and would probably initiate a chain of similar acquisitions. In June the parties were informed of our conclusions and advised that if the proposed acquisition took place we would not agree to withhold filing suit. The day following the parties advised us that the proposed acquisition was being abandoned.

With regard to antimerger litigation, three cases were closed during the 1960 fiscal year and important opinions or decisions were handed down in three others. Those closed involved the Standard Oil Co. (Ohio), the Hertz Corp., and Anheuser-Busch, Inc.

The complaint in the Standard Oil Company case sought to prevent the acquisition by Standard Oil of Ohio of Leonard Refineries, the largest independent petroleum company in Michigan. The suit was dismissed after the companies abandoned the proposed acquisition.

Suit against the Hertz Corp. was terminated by the entry of a consent judgment under which Hertz was required to divest itself of substantial automobile rental properties in the State of Florida and large truck-renting and leasing companies in the New York City area.

A consent judgment also successfully terminated the Government's action against Anheuser-Busch, Inc., and three other defendants. The final judgment entered requires Anheuser-Busch to divest itself of the Miami brewery acquired from the other defendants, and imposes certain other obligations and restrictions on the defendants.

Although not finally terminated, important decisions and opinions sustaining the positions taken by the Government were handed down in three merger cases against the Brown Shoe Co., Firstamerica Corp., and the Maryland & Virginia Milk Producers Association.

Twenty-five merger cases were pending on June 30 1960, and it is expected that 15 will be tried during the 1961 fiscal year. The trial of one of these (Continental Can, Hazel Atlas) commenced prior to the end of June but was recessed for the summer.

In addition to the emphasis being placed upon the merger investigations and proceedings, we plan to continue to endeavor to expedite the handling of all enforcement actions to the maximum extent compatible with orderly legal procedures by enlargement of the litigating staff. Although no reduction in caseload is anticipated, the enlargement of the staff will reduce the average workload per attorney. It will also serve to reduce the number of investigations and merger reviews assigned to each attorney. This will, in turn, enable members of the legal staffs to expedite other work to which they are assigned.

As of the close of the 1960 fiscal year, 86 field attorneys assigned to the 6 offices outside of Washington had primary responsibility for the preparation and trial of 91 cases, 96 investigations (including grand jury investigations) and 180 preliminary reviews. Many other complaints, merger examinations, and investigations are being held in abeyance because of insufficient staff.

The recently enacted amendment to the Federal Deposit Insurance Act (Public Law 86-463, 86th Cong., approved May 13, 1960), under which the Attorney General is required to report to the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, relative to the competitive factors involved in proposed bank mergers, has already resulted in a substantial increase in the Division's workload.

In addition to the cases of national importance, there continue to exist many regional violations involving price fixing, territory and customer allocations, and boycotts. These have, of course, an adverse effect on the community and on small business in particular. In attempting to afford the most widespread relief, and because of our personnel shortage, it is always necessary to make a selection among such situations. Since the emphasis being placed on merger investigations and trials often requires more personnel than local price fixing, and similar complaints, greater selectivity will have to be exercised in this area unless additional personnel is authorized.

Our efforts to improve the detection of violations, frame effective legal and economic remedies, evaluate the effectiveness of enforcement in the important sectors of our economy, and expedite pending litigation, will require additional personnel if they are to be conducted on a scale large enough to be really effective.