Giant, do you see any problem at this time in their operations in this area?

Mr. KAUPER. Well, I think in most markets that I am aware of, there is not the degree of concentration in the retail market which would lead one to believe that the prices at the retail level are being unduly enhanced.

Indeed, as you may know, one of the complaints made against A. & P. is precisely the opposite, that when A. & P. went to its so-called WEO pricing, that it engaged in predatory pricing. That is a matter which, as I recall, the Federal Trade Commission has looked at. But, that is quite an opposite complaint from the other, and in a situation where as I recall A. & P.'s market share was declining rather rapidly. So, I do not think one can characterize the retail market as such as peculiarly concentrated. And certainly we have seen no instances of price fixing among retail grocers.

You have to keep in mind that a retail grocery sells a great many products. It is very difficult to fix prices on all of those products, and if you did not fix the price on all of the products you sold, after all, and one of our experiences in price fixing is that among other things that there does not tend to be a great deal of honor among thieves They tend to cheat.

So, if you are going to be effective you have to be able really to fix the price on virtually everything you sell, because, you see, they can get around and sell something else.

Mr. FLOWERS. But in the Thursday afternoon paper they have the double page foldout on each one of the food chains and the identical items cost 19 cents, 29 cents or 89 cents or whatever. These are either extremely competitive or somebody in that marketing department has made a telephone call across town and said well, now, what are you going to charge for today, and let's get together on it.

Mr. KAUPER. We have no evidence that I am aware of that the latter is occurring. I think you have put your finger on a problem which is that everybody is selling basically the same product at virtually the identical price, which may indicate a very high degree of competition; namely, you cannot really sell it at a higher price if you wanted to.

Mr. FLOWERS. Thank you, sir. No further questions, Mr. Chairman. Chairman RODINO. Mr. McClory.

Mr. McCLORY. Thank you, Mr. Chairman.

We are concerned here, of course, with the possible relationship of high food prices and the antitrust laws. But, it comes to my mind that perhaps the high food prices are not as high as other costs in the economy.

In other words, do you have any information that food prices have risen higher than wages or the cost of other consumer goods? Mr. KAUPER. I do not think I could give you a simple answer to that. That is the sort of very generalized economic analysis that I suppose the Council of Economic Advisers can answer better than I. Mr. MCCLORY. Well, has it not come to your attention that food prices have risen higher, for instance, since 1965 than other prices, to the point where you are compelled to see whether or not there is some scheme or device that has been developed by producers, manufacturers, or retailers?

Mr. KAUPER. Well, I guess my impression, and I could not point you to a specific report that would lead me to this conclusion, is that food prices in general have tended to rise somewhat higher, at a somewhat more rapid rate than other prices.

Now, that may be a very false comparison from an economic point of view, because each food product is in a sense its own market, and what you would really have to do would be to compare that with other submarkets.

I think in general my impression is that in 1972 that food prices did in fact go up if you take them as a single entity, did, in fact, rise somewhat higher than other prices.

Mr. McCLORY. You are talking about last year, last month, or what? If you are talking about the last 10 or 15 or 20 years, I think your impression is wrong.

Mr. KAUPER. No. I said in 1972 and into this year.

I did not mean to say over a long period of time. Indeed, it may be to the contrary over a long period of time.

Mr. McCLORY. Now, there is a case before the Federal Trade Commission with regard to dry cereals. I think you made some reference to it. Do you have an opinion as to how the dry cereal manufacturers might be affected by the antitrust laws, or do you have any recommendations to this committee with respect to what is alleged to be a shared monopoly which has developed, not necessarily by design, but is there nonetheless?

Is there anything that you feel the committee should do about that, or the Congress should do about it?

Mr. KAUPER. I think, Congressman, the Federal Trade Commission has a major proceeding at the moment involving the dry cereal manufacturers.

I am frankly a little reluctant to comment on that because I find that things that I say about particular industries tend to get quoted and relied upon in other places, and I do not think it would be appropriate for me to be in a position of attempting to give my views as to what the Federal Trade Commission now has in hearing procedure. Mr. McCLORY. Is the Justice Department actively involved in that proceeding?

Mr. KAUPER. No, we are not. That is a Federal Trade Commission proceeding, and I would think from both their point of view and ours that they would be the appropriate ones to respond to your question about that.

Mr. McCLORY. You made reference to the poultry industry, and I am concerned as my colleague Mr. Flowers is about a producer who would deliberately and freely destroy, as I understand it, 60,000 baby chicks to avoid incurring a supposed loss.

You made reference to the poultry industry, and the livestock industry, and to the milk industry as being involved in these cooperatives that are exempted under the Capper-Volstead Act. Are there any other industries that have come to your attention where a large percentage of the production is controlled by

Mr. KAUPER. Cooperatives?

Mr. McCLORY. No, no. Controlled by a few large corporations or enterprises?

Mr. KAUPER. No; I do not think I could point to any particular submarket of agricultural products where you have really very large control by corporate enterprises.

There are some markets where there are cooperatives which have quite a high percentage of production, but I would not put that in the same category as what I think you are talking about, which is a large corporation, for example, which may not even be involved generally in the agricultural business.

Mr. McCLORY. Well, there has been concern recently with the cost of lettuce. I have heard that a very high percentage of the lettuce production is controlled by a few corporations.

Do you know anything about that?

Mr. KAUPER. Well, I can't give you an exact market share, but, if you are taking the total market for lettuce, I think you would find that the percentage is not what we would regard as anything like a concentrated market in the hands of a corporation.

Now, I do not know what the role of cooperatives in the lettuce industry as such is. But I am not aware of the fact that there is a major co-op which controls the bulk of our lettuce production.

Mr. McCLORY. You make quite a point of not having sufficient information upon which to proceed under the existing laws. Are you now volunteering that you really do not have sources of information sufficient to proceed?

Mr. KAUPER. Well, let me comment on that. Keep in mind, we should keep in mind that part of that statement which talked about this sort of data was in the section evaluating such things as the role of cooperatives; that is, in arriving at various policy judgments. Obviously in terms of whether antitrust violations exist, we have the normal tools which are available to us.

I think there is, however, also something of a misapprehension as to what authority we have in obtaining information. Unlike the Federal Trade Commission, we do not have authority to seek production of material to provide and put together economic reports, analyses of that sort.

We are basically a law enforcement agency, and apart from what we can obtain through public or quasi-public sources, we have two primary means of obtaining information.

One is through the issuance of civil investigative demands, where there must be some probability of violation before we can issue the demand, or through the use of a grand jury.

Those are our two methods of compelling testimony and production of documents or data, and we are, therefore, to a considerable degree in formulating general policy, confined to facts made available by those who do gather such data.

Mr. McCLORY. Are you requesting from the Appropriations Committee additional funds for the establishment of an active investigative agency which would go beyond just perusing the existing public literature in an effort to uncover in the area of food production and processing and so on various elements that may be contributing to the high cost of food and which are possibly violative of existing antitrust laws?

Mr. KAUPER. Well, what we are trying to do at the moment, Mr. Chairman, in fact it is in the process at the moment. is to bolster

primarily our economic unit which is in part where the sort of thing you are talking about would be done. We have a number of new economists coming in, and there is some restructuring of that operation going on. Food prices will be part of what they are worrying about, clearly.

Now, I am not going to say that that is going to be the only thing they are going to be concerned about. There are a great many problems in the economy. Food is one of them, but we cannot ignore all of the others at the same time.

Nor do I want to leave you with the impression that in trying to decide enforcement policy we simply peruse public sources. I have indicated we have two mandatory ways of getting material. Obviously we can try to obtain material from a wide variety of other governmental agencies.

We have complainants which provide us with materials voluntarily. There are other ways of doing it, but in terms of the broad economic study, we do not have the authority to go out and compel people to give us annual reports, for example.

But I think in general, in terms of prosecution of cases, we are able to get the information we need.

Mr. MCCLORY. Mr. Chairman, I think it would be most helpful to the committee, since this is directly involved in our present oversight hearings, for you to elaborate in some detail, if you can, on this expanded agency in the Department that is being developed.

Chairman RODINO. I think that is a good suggestion, and pursuant to that I would like to direct Mr. Kauper's attention to the fact, and I would like to know whether or not he is aware of it, that the June issue of the News, U.S. Department of Agriculture, which is issued by the Economic Research Section of the USDA, pointed out in a rather meaningful and significant manner that the imposition on June 13 of the price ceilings on all retail and wholesale prices means that retail food prices for 1973 will probably average about 12 percent above last year and that the first 4 months of 1973 were characterized by the most drastic rise in food prices in more than 20 years, and that the average food price increase increased an average of over 2 percent per month.

I would assume that the Department is aware of this, and this is information, since it is public information, which comes to the attention of the Department?

Mr. KAUPER. Oh, yes, and it is on that kind of basis that I indicated a moment ago that my information was that food prices were rising at a higher rate. Sure, that kind of information is available to us all the time, Mr. Chairman.

Chairman RODINO. When you talk now about expanding the Department to bring in economists to be able to be helpful here, is this what is contemplated at this time in view of the fact that this is an area of concern where economists might be helpful as well?

Mr. KAUPER. Well, I think

Chairman RODINO. In making value judgments for the Department? Mr. KAUPER. Let me, if I might, indicate that we have had an economic section for some time. My concern has been to upgrade its operation, to have it more involved in questions of planning, allocation of our resources, and what we should be doing as a matter of policy.

That is what this is designed to do. I do not want to leave the impression that it is peculiarly aimed at the food prices as such, because it is not.

Obviously, questions of the best use of our resources involve a number of industries and a number of policy judgments, so that it is aimed at doing that.

Now, we, of course, obtain general economic sorts of publications put out by the Department of Agriculture as well as in many other departments, State agencies and so on. But, that does not answer the question to us as to whether and to what extent we should devote antitrust resources, and that is in part what we are hoping to do. Mr. McCLORY. Mr. Chairman, I have just one more question if I and I do not want a long answer.

may,

If you can answer this just "Yes" or "No," it would satisfy me. I just want to know whether in your opinion the proposed reorganization plans of the executive branch of Government, as proposed by the President, would contribute to a more efficient operation of the Department of Justice in this area in which we are inquiring?

Mr. KAUPER. I suppose to a degree; yes.

Mr. McCLORY. Thank you.

Chairman RODINO. Mr. Kauper, I wonder if you can give me an answer to this that might at least cause me to, in my mind, conclude that you form an opinion when you get some of this information.

Framing the question in this way, with a 1-year rise of 16 percent in retail food prices, would that mean the presence of price competition or suggest undue market power? Is there anything in such a situation that would cause you to make a conclusion one way or the other?

Mr. KAUPER. On that data alone?

Chairman RODINO. Right.

Mr. KAUPER. I would say there is not.

Chairman RODINO. Would it engage your attention to look into the matter to try to determine whether or not?

Mr. KAUPER. Oh, yes. I think it would do that. But I think it does not in and of itself afford a basis for concluding that there are antitrust problems in those industries, which among other things presumably would, if you are talking of a rapid rise, would have all of a sudden come into being.

Chairman RODINO. Well, does this kind of situation trigger information gathering or investigation?

Mr. KAUPER. Well, I think yes. I think any situation where prices are behaving in a somewhat extraordinary way, or where there are shortages, it is the sort of thing that we are going to look at. But, I think that, as I understand your question, as to whether or not that figure alone indicated the presence of this kind of practice, I think the answer to that is no.

Chairman RODINO. Mr. Seiberling.

Mr. SEIBERLING. Well, thank you, Mr. Chairman.

Just following on the chairman's question, if that happened in the tire industry, what conclusions would you tentatively draw? Mr. KAUPER. You mean if the price suddenly rose 16 percent? Mr. SEIBERLING. Yes.

Mr. KAUPER. Well, I suppose with a handful of manufacturers it might suggest some sort of anticompetitive practice.