Jail for More Price Fixers?

"Go to jail" is a common command in the ever-popular game Monopoly. But in the real world, businessmen who break antitrust laws are hardly ever put behind bars; only 38 violators of the Sherman Anti-Trust Act have been sentenced to jail in that law's 84-year history. Now that situation could be changing. As part of its struggle against the nation's roaring inflation, the Ford Administration has announced plans for a sweeping new assault against anticompetitive practices, including price-fixing conspiracies and agreements between companies not to sell in each other's prime market areas.

The President, in his economic message last month, recommended a maximum fine of $1 million, v. the present $50,000, against corporations that violate the antitrust laws. Last week Attorney General William Saxbe added that the Department of Justice will more frequently bring criminal charges against businessmen it catches participating in price-fixing conspiracies. When Congress returns after the elections, the department will press it to classify antitrust violations as felonies rather than misdemeanors and increase the maximum prison sentence for such violations to five years, from one year at present. (Even that sentence is almost never imposed; the longest jail terms meted out to executives convicted in the notorious 1961 electrical-equipment price-fixing case, for example, were for 30 days.) "Executives are not in the throes of an irresistible impulse when they fix prices," Saxbe argues. "They violate the law deliberately."

Sugar Probe. The Justice Department also has begun digging on its own for evidence of collusion in suspiciously large price rises, rather than waiting for complaints as it usually does. Last week Saxbe disclosed that trustbusters are looking for evidence that price fixing is inflating the cost of such foods as beef, milk, bread and especially sugar, which in the past year has rocketed from 140 per Ib. wholesale to a record 460. The Council on Wage and Price Stability also will hold hearings to determine whether sugar refiners are making undue profits. Justice teams are further sifting through data about oil-company price hikes and casting a suspicious eye at price rises in such industries as steel, copper, lead and drugs, which are dominated by a relatively few giant corporations. Legal as well as illegal price fixing has become a target. Last week Saxbe called on Congress to scrap the federal legislation that enables states to enforce "fair trade" laws, which prohibit retailers from selling many products at prices below those set by the manufacturer--a move that should have been made long ago.

How much can the new campaign really diminish inflation? That, of course, depends upon how vigorously it is pursued and how much price fixing the Government can actually uncover. Trustbusting crusades are always vulnerable to political pressures, a point underscored when the Nixon White House prodded the Justice Department to permit ITT to keep Hartford Fire Insurance Co. despite the Administration's initial, loudly voiced opposition to conglomerate mergers. ITT did agree in 1971 to sell off some lesser firms, but it has still not disposed of its 52% interest in Avis, Inc.; last week the Justice Department moved to appoint a trustee to force divestiture of the car-rental firm.

Some non-Government experts believe that a single-minded attack on price fixing now could yield at least a limited slowdown of inflation. Yale Economist Merton J. Peck, a member of the Council of Economic Advisers under President Johnson, sees little chance that political pressure will deter prosecution of such cases: the most fervent conservatives consider price fixing a sin against the free market. Murray L. Weidenbaum, the newest member of TIME'S Board of Economists, is convinced that successful attacks on price-fixing conspiracies would slow the pace of price increases "not only among companies that are on the receiving end of antitrust prosecution, but also among companies that know they deserve to be."

But how prevalent is price fixing? Assistant Attorney General Thomas E. Kauper, the nation's chief trustbuster, argues that "historically, price fixing has been endemic when the economy comes off [wage-price] controls, because the public expects increases anyway." But most experts believe that in order to make a really sizable dent in inflation by use of the antitrust weapon, the Government would have to weaken giant companies that have the market power to make price increases stick even in times of recession--and without resorting to conspiracy. Under present law, that would be a tortuous and time-consuming task even if the Administration were persuaded politically and philosophically that it should be undertaken.

Democratic Senator Philip A. Hart of Michigan, chairman of the Antitrust and Monopoly Subcommittee, has introduced a bill that would make the job easier. Under Hart's measure, if four firms or fewer account for 50% of the sales in an industry, or if there has been no substantial price competition between two or more firms during a three-year period, those firms could be taken to court and adjudged monopolies. They would then be automatically subject to court-ordered reorganizations aimed at increasing competition. That could mean forcing the companies to give up contracts, sell off assets or give away patent rights.

Hart's bill is probably too radical to pass Congress in its present form; it smacks of the "bigness is badness" philosophy, which Americans have never really accepted. No justification exists for price fixing, however; whether or not the Administration's antitrust campaign substantially reduces inflation, it is worth pursuing.

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