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or the financial consequences to them of the things that they, themselves, request.

For example, when they ask for products in even ounces, they overlook that this would require different sizes for each item, different packaging lines, inventories of different package sizes, and inventories of different shipping container sizes. All of these create additional costs, which must inevitably go into consumer prices.

5. Finally, when we start with the oft-repeated premise that most manufacturers are honest and most packages are honest, we need only deal with a comparatively few fringe companies or products. These can be dealt with under existing law.

The remedy proposed is too drastic for the illness. It is like amputating an arm to remove a pimple on a finger. The fact that the administrative agencies don't win every case they now prosecute is no indication that a new law is needed which gives them more power and the courts less power. It is rather an indication that the agencies are not always right and should not be made prosecutor, judge, and jury. To summarize, it is our considered opinion that the proposed bill is far too drastic, it is unnecessary, in that its mandatory requirements can be met by enforcement of existing laws, its authorized administrative rulings are unreasonable and unwarranted in extent, it stifles the initiative which has made our economy the greatest the world has ever seen and the alleged benefits to the consumers, the supposed beneficiaries of the legislation, may be nonexistent and may even be outweighted by disadvantages and higher costs resulting in higher consumer prices.

And, Senator Lausche, in view of some of the discussion here today, may I add just a few words on the relationship of the Food and Drug Act and the Federal Commission Act to the present proposed act.

The proposed act authorizes regulations divided into two groups, one a mandatory group and second a discretionary group. The mandatory group is essentially what the Food and Drug law says today. I don't think we need anything new on that subject.

Again I repeat, just because once in a while the Food and Drug Administration or the Federal Trade Commission loses a case doesn't mean that we need new laws. It means that either the courts are sometimes right and the Agency is wrong, or if we say the courts are always wrong and the Agency always right, we are casting discredit on our judicial system. It is a good thing to have the courts come into the picture, when a manufacturer "bonafidely" thinks he is right and the Agency thinks he is wrong and sometimes the courts have held the Agency to be wrong. But they don't have to enact a lot of new laws because of that. When you come to the discretionary powers, these go far beyond what the Food and Drug laws cover today, and this is the crux of the objection by all of the manufacturers whom I have heard testify.

It is no answer to me at least in my opinion to hear statements made by committee members or by anybody else saying—

But the agencies would never do a thing like that. You are worrying about something that may never happen.

This is no answer. If they are not going to do it, in my opinion, they should not have the power to do it. The many, many cases that are

coming up in court, not on a question of whether an agency has some powers which it is not using, the cases come up on the question of whether an agency is exceeding the powers that it has. Powers have a tendency not to remain unused. If they are not going to use these powers, they should not have the powers. If they are going to use these powers, God help us.

Thank you, sir.

Senator LAUSCHE. Thank you very much. (Prepared text follows:)

TESTIMONY OF MELVILLE EHRLICH, COUNSEL ON BEHALF OF POTATO CHIP INSTITUTE INTERNATIONAL

My name is Melville Ehrlich and my address is 919 Eighteenth Street NW., Washington, D.C. I am appearing as counsel for the Potato Chip Institute International.

The Potato Chip Institute International, 940 Hanna Building, Cleveland, Ohio, is a nonprofit trade association of manufacturers of potato chips.

The Institute and its members, in common with numerous other industries, are strongly opposed to S. 985 for many reasons.

We understand it to be the position of the supporters of the bill that its major objective is to prevent deception of consumers by requiring plain, legible, and honest labeling. We do not quarrel with this objective. But we believe that this bill is neither necessary nor proper to accomplish such an objective. We are in complete agreement with many other industries and with the testimony of other witnesses to the effect that these objectives can readily be achieved by enforcement of present laws, particularly the Food, Drug, and Cosmetic Act and the Federal Trade Commission Act.

We do not wish to burden the record by repeating testimony on this point. However, we do wish to point out that in passing the Federal Trade Commission Act the Congress deliberately omitted any attempt to precisely define unfair competition or deception. The Congress enacted its prohibitions in general, rather than specific terms, in order to cope with new situations as they arise. We are in agreement with the Congress that this is a sounder approach than any attempt to particularize, commodity by commodity.

In order to accomplish its alleged main objective, the bill authorizes administrative action which, in our view, goes much further than is necessary or warranted. We refer specifically to such administrative action as standardization of weights and sizes, definition of servings, submission of samples of product or containers used or to be used and similar details.

We are aware that provision is made for notice to be given or even for administrative hearings to be held for enactment or amendment of such commodity regulations. We are also aware, however, of the force of administrative rulings even when tested in the courts. We are particularly concerned with the criteria for enacting regulations, which are stated as being necessary.

"*** to establish or preserve fair competition between or among competing products by enabling consumers to make rational comparison with respect to price and other factors, or to prevent the deception of consumers as to such products, * *

What, for example, must be the extent of the deception? How many consumers and what degree of intelligence must be deceived? Other important factors are not included in these criteria, such as burdens on manufacturers, deprivation of innovations, inconvenience to the public, and additional costs which will inevitably be passed on to the consumers even when the great majority of consumers are not being deceived.

Despite any alleged administrative safeguards, we strongly oppose the necessity of desirability of administrative action permitted by this bill, on five major grounds:

1. Standardization of weights or sizes or both can have an extremely limiting effect on manufacturers who strive to give the consuming public what it wants. Consumers have varying preferences and needs. These preferences vary between consumers and between areas. We believe that an administrative official in Washington should not have the authority to say what weights

or sizes should be sold nationally or even regionally. Administrative judgment or preference in the marketplace, on which a product stands or falls. Also, consumer preference and needs change from time to time and frequently, at his own risk, a producer of commodities tries out new sizes to test consumer preferences. He may succeed or fail, but he should not be prevented from following or testing his own judgment in the marketplace. Nor should he

be required to first obtain an administrative permit after notice and hearing. 2. This committee is undoubtedly already familiar with the fact that there are certain prices at which commodities move freely and others at which they move slowly. There are certain "magic" prices such as 5 cents, 10 cents, 29 cents, or 39 cents. Suppose a commodity was standardized some 10 years ago at a size which generally sold at 29 cents. With the changed value of the dollar and with rising costs of materials and labor, it becomes quite obvious that a point is reached when the same weight cannot continue to be sold at the same price. Something must give, either weight or price. If the weight were standardized, the price would have to be changed from a magic to an uncommon price. The alternative would be an administrative proceeding to change the standardized weight, which, even if successful, might well be too late to cope with the problem.

Consider, for example, what has happened in the potato-chip industry in the past year. Potatoes of the 1963 crop sold to potato chippers in the range of $1.25 to $1.50 per hundredweight. Sizes and prices were established by manufacturers. Due to a short crop by reason of climatic conditions, potatoes of the 1964 crop suddenly spurted to $3.50 and even $4 per hundredweight. What is the manufacturer to do? Normally, he must decrease the weight of his package in order to compensate for the increased cost of potatoes, with the new weight printed on the package. Further, with the major portion of the product sold in transparent packages, the housewife can see just what she is getting for her money in addition to the statement of the weight on the package. But suppose the sizes and weights had been established or standardized under the provisions of a bill such as we are now considering. A manufacturer or all the manufacturers could petition for an adjustment of the established standard.

They might even get a favorable administrative reception. They might even get a hearing, after notice. They might even be successful and get a new size established as a standard.

But by that time the season would be over and a new crop of potatoes would come in, with costs which could be the same, or higher, or lower. The cycle could start all over again.

The same situation could arise with respect to numerous commodities. For example, take the case of a candy bar which traditionally sells at 5 cents.

Suppose the price of the major ingredient changes sharply to the extent that either the size must be decreased or the price increased. If the size of the bar has been standardized, the only alternative available in a reasonable time is a price increase. But suppose the increase needed is only half a cent. This creates a real problem.

It is difficult to increase the price by a half cent, but a small adjustment of weight could solve the problem. Any adjustment of price would undoubtedly penalize the consumer beyond what was necessary, in addition to the problems of changing the traditional 5-cent price.

Incidentally, on the subject of candy bars and standardization, it is interesting to speculate, in view of the numerous candy bars of different sizes and ingredients, whether one uniform size might be established for all regardless of ingredients or whether individual sizes might be standardized for each individual combination of ingredients, or, in substance, each brand.

It might be argued that an administrative agency would not go to such extremes. But this bill gives them the power to do so.

If they would not do so, they should not be given the power.

Experience demonstrates that agencies generally tend to use their full powers. Indeed, even court tests are common to determine whether an agency is exceeding its powers, not leaving its powers unused.

3. Any administrative action to standardize factors such as size, weight, measure or servings would necessarily have to be taken on an individual commodity basis. In the food field alone, supermarkets carry thousands of items. Despite all pious protestations to the contrary, it is only reasonable to anticipate and we are convinced that either an army of additional personnel

would be required to investigate, hold hearings, and make decisions, commodity by commodity, or that the delays involved would be so serious as to severely stifle growth or change.

Our dynamic industries could become static.

This applies to initial determinations to be made, commodity by commodity, and even more so to changes or amendments which later become necessary or desirable after a commodity is standardized in weight or size.

In the food field alone, new items and sizes are being introduced every day and subjected to the final test in the marketplace, the test of consumer acceptance. If we reach the point of standardization which this bill permits, before a manufacturer could introduce a new size or weight, or possibly even a package shape, he would first have to get a standard changed, after public notice, which is a disclosure of his plans to his competitors. He would have to get the approval of an administrator, who might not agree that consumers want such a new size, or weight or shape. The administrator must first decide whether he will even let it be offered before he knows whether or not consumers want it.

We have no faith in an administrator or administrative group, making these decisions for consumers who should be free to accept or reject a product. Similarly, a producer should be permitted to offer to consumers what his judgment and studies convince him they want and will buy.

4. The advantages of this bill to consumers are highly doubtful and may well be outbalanced by disadvantages. You cannot legislate intelligence. Consumers, a highly intelligent group as a whole, do not need the alleged protection of this bill. They already have the protection of other laws. Nor have we seen any ground swell of desire for this bill on the part of consumers. We are convinced that the great majority of consumers are satisfied and take no position on this bill. In our opinion, this committee will hear only from a highly vocal small minority.

Further, we are convinced that the vocal minority of consumers supporting this bill have little knowledge of the problems involved or of the consequences of their own proposals. This has been demonstrated by consumer testimony in support of a similar earlier bill, the so-called truth in packaging bill (S. 387, 99th Cong., 1st sess.).

In theory, at least, the vocal minority of consumers want such legislation because they are price conscious, they want the opportunity to compare prices and they want this opportunity because they feel they can then shop more economically. Let us examine, briefly, the consequences of some of their own suggestions.

Take soaps or soap powders, for example. Consumer witnesses have suggested that such items should be packaged in standardized weights such as a halfpound or a pound. They want to do away with any odd number of ounces or fractional ounces. They want an even number of pounds or ounces to make direct price comparisons. Any cent they might save in this manner could result in a higher cost and therefore higher price in excess of any saving to be made by such comparisons. These witnesses fail to grasp the problem involved.

The same manufacturer may pack many different items, even in the same line, such as soapflakes for hand laundering, detergent powders for dishwashing, and powders for automatic dishwashers or clothes washers. These items vary in density and weight. The manufacturer now tries to use one size of package for as many items as possible, with the weight stated on the package.

If all weights were required to be the same, the manufacturer would be obliged to do one of two things either start with a package large enough to contain the standardized weight of his lightest, bulkiest item and pack all items in that package, running the risk of prosecution for slack-filled, deceptive packages for the denser items, or have containers of numerous sizes, with a different size to be used for each item in his line, according to its weight.

This would mean carrying warehouse stocks of each size of package instead of one size, different sizes of shipping containers to hold a given number of packages, and possibly different packaging machinery and lines for the different sizes. Who would pay for this if not the consumer?

The same situation holds true in numerous industries. Take canned foods as another example. The so-called No. 21⁄2 can is widely used in the canning industry, both for fruits and vegetables. Obviously, since apples do not weigh the same as string beans, and peas do not weigh the same as peaches, the weight in the can always varies according to what is packaged in it although the can

size remains the same. The label shows what is in the can and shows its weight.

According to consumer proposals of even ounces, each commodity would require a different size can, inventories of numerous sizes of cans and shipping cartons, separate closing and labeling lines and a host of other costs which would result from handling numerous sizes. Again the consumer pays.

It is better and more economical manufacturing practice and cheaper to the consumer to use one size, one inventory, one closure line, one shipping carton and put the net weight on the label according to the specific commodity in the container.

5. Finally, when we start with the often-repeated premise that most manufacturers are honest and most packages are honest, we have the necessity only of dealing with a comparatively few fringe companies or products. These companies can be effectively dealt with by enforcement of present laws as to statement of weight on the label and laws prohibiting slack-filled or deceptive packages.

In any event, companies putting out a deceptive package cannot long survive in the marketplace. The majority of consumers are intelligent shoppers and will not be deceived and continue to purchase the deceptive items. A business cannot survive without repeat sales.

The proposed cure is too drastic for the alleged illness. It is like amputating an arm to remove a pimple on a finger. The bill proposes to put industry in a straitjacket generally to get at a few fringe operators instead of vigorous use of existing powers in the few cases where remedial action is required.

To conclude, it is our considered opinion that the proposed legislation is far too drastic; it is unnecessary in that its mandatory requirements can be met by better enforcement of existing laws; its authorized administrative rulings are unreasonable and unwarranted in extent; it stifles the initiative which has made our economy the greatest the world has ever seen; and the alleged benefits to the consumer, the supposed beneficiaries of the program, may be nonexistent and may be outweighed by disadvantages and by higher costs.

Senator LAUSCHE. That will conclude the hearings today. We will recess until 9 o'clock tomorrow morning.

(Whereupon, at 12:10 p.m., the committee was recessed, to reconvene at 9 a.m., Tuesday, May 4, 1965.)

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