FAIR PACKAGING AND LABELING

WEDNESDAY, MAY 5, 1965

U.S. SENATE, COMMITTEE ON COMMERCE, Washington, D.C.

The committee met at 9 a.m., in room 5110, New Senate Office Building, Hon. Maurine B. Neuberger, presiding.

Senator NEUBERGER. The committee will come to order.

Our first witness is Mr. Cheney, executive director and general manager of Glass Container Manufacturers Institute.

STATEMENT OF RICHARD L. CHENEY, EXECUTIVE DIRECTOR AND GENERAL MANAGER; ACCOMPANIED BY JAMES A. SPRUNK, COUNSEL, GLASS CONTAINER MANUFACTURERS INSTITUTE, INC., NEW YORK, N.Y.

Mr. CHENEY. Madam Chairman, I would like to introduce our legal counsel, Mr. James A. Sprunk, of Toledo, Ohio, and request that he sit here with me.

Senator NEUBERGER. That will be fine.

Mr. CHENEY. The material filed includes my lengthy report of March 1963. My present report is condensed to save the time at this hearing. I should like to read this. You have copies of the report. Senator NEUBERGER. Thank you.

Mr. CHENEY. Before commenting on the bill, I should like to express our appreciation to the chairman and to the committee for granting us this opportunity to present the views of the Glass Container Manufacturers Institute relative to S. 985.

Slightly over 2 years ago I had the privilege of presenting to the Antitrust Subcommittee of the Senate Judiciary Committee our institute's views on the substantially identical bill-S. 387-introduced by Senator Hart in the 88th Congress.

Since the time of the committee is limited, I will, so far as possible, avoid repeating my prior testimony before the Antitrust Subcommittee.

I do feel, however, that what I said then has equal application to the present bill. Therefore, I have appended to this statement a copy of my statement of March 22, 1963-printed at pages 424 to 433, part 1, hearings before the Subcommittee of Antitrust and Monopoly of the Committee on the Judiciary, U.S. Senate, 88th Congress, 1st session, pursuant to Senate Resolution 56 on S. 387, hereinafter referred to as 1963 hearings-and respectfully request that it be printed as a part of this statement in the transcript of these hearings.

My previous statement outlined the nature of our institute and whom we represent.

It is our considered opinion that S. 985, if enacted, and particularly sections 3(c) (1) and (2) thereof, would greatly increase the costs of package manufacturers, packers, and bottlers, and thereby increase the cost of packaged goods to consumers.

In addition, it would deprive consumers of the right, they presently enjoy, of being able to purchase packaged products, in such quantities and in such sizes and shapes of packages as their purchasing patterns have shown they desire. It would also deny consumers many future benefits which otherwise certainly will accrue to them from innovation in packaging.

Beyond this, the effect of these sections on our members-the glass container manufacturers-would be particularly injurious and would, we believe, place them at a severe disadvantage in their competition with manufacturers of other forms of packages and packaging materials.

We are in entire accord with the sponsors of the bill-that consumers are entitled to protection against deception and to accurate, easy-toread, easy-to-find statements of quantity on the packaged goods they purchase.

No responsible person or organization could entertain any other view or have any quarrel with those objectives of the bill.

A considerable record has been compiled, however, consisting of testimony of businessmen, lawyers, and legislators, having intimate knowledge and experience in these matters, that existing laws, if vigorously enforced, are wholly adequate to protect consumers fully in these regards.

I do not mean to imply that there have been no abuses; obviously the Government has, and must continue to play, a major role in consumer protection. But the mere fact that some abuses may still occur does not demonstrate a need for additional legislation.

I have no doubt that if S. 985 is enacted, there will be a few dishonest people who will violate its proscriptions just as they violate the laws now on the books.

We do not believe that violation of existing laws, by a relatively few dishonest businessmen, affords any justification for imposing upon all businessmen a system of pervasive governmental control which would threaten to cripple the free market system, which has given us the highest standard of living the world has ever known.

We would suggest, instead, that the agencies charged with enforcing existing packaging laws be provided with the additional funds and personnel which they have repeatedly requested, so that they can do a more effective job of enforcing the sound laws which now exist.

While I have noted that Government has a very proper role in consumer protection, even so, no Government worker or bureau or commission, no matter how well intentioned, could possible do the job of controlling business as does the individual American housewife under our free enterprise system. She votes for or against a product— and its package with her purchases, and the message comes through to the businessman loud and clear.

The incentive represented by her patronage or the withholding of it has brought out the best in creative and imaginative research, innovation, and improvement, combined with cost and price reduction.

Competition for her patronage has held consumer prices down to a real bargain level. While our per capita income in the United States has risen 81.5 percent from the 1947-49 base period, food prices have risen only 25.6 percent (cost of living index, U.S. Department of Labor).

Supermarket net profits average between nine-tenths of 1 percent and 1 percent on dollar sales. When you give the boy a quarter to carry your $10 bag of groceries to the car, he makes 15 cents more than the supermarket operator who makes only 10 cents on the purchase.

These figures conflict sharply with the picture some paint of the supermarket as a place where thousands of deceptive packages lie in wait to trap the unwary housewife. The fact is that the supermarket and its silent salesmen the packages-are giving the American housewife very good and ever-increasing value for her money.

As I have indicated, the specific provisions of the bill which we regard as most objectionable are sections 3(c) (1) and (2). They would authorize the establishment of regulations controlling the weights or quantities in which packaged products could be sold and also the sizes, shapes, and dimensional proportions of packages.

We oppose these provisions, first, because they are wholly unnecessary to protect against deception; second, because of our conviction. that they are not administratively feasible; third, because they would penalize rather than benefit consumers; and, fourth, because they would work unnecessary hardship on package users and package manufacturers.

It has been urged that regulating weights or quantities will make it easier for the housewife to compare competing products on a centsper-ounce basis: that when products are packed in fractional ounces this makes price comparison a more difficult mathematical problem.

We think it extremely unlikely that even ounces would materially aid the consumer in making price-per-ounce comparisons, in the light of prevailing pricing practices at the retail level; nor would it greatly benefit her if it did, for such comparisons, leave out consideration of differences in quality and a multitude of other factors which enter into her concepts of value.

One of the stated purposes of section 3 (c) is to preserve fair competition between competing products by enabling consumers to make rational price comparisons. However, if rational decisions are to be made on the basis simply of price comparisons, the goods must be comparable.

Competition occurs between dissimilar products having similar uses, such as apples and oranges, carrots and peas, beef and poultry, et

cetera.

The value judgments involved in making a decision to buy peaches. versus pineapples, apple butter versus strawberry jam, and the like, would not be enhanced by regulations controlling the weights and measures in which such products are packaged.

The buying decision must remain essentially a matter of taste, preference, variety in the family menu, and other considerations not measurable through price comparison.

The ultimate object of the bill is to benefit consumers, primarily in an economic way. Its great evil, however, is that it would actually cost consumers millions and millions of dollars annually.

The Grocery Manufacturers of America, a trade association, has estimated that added packaging costs could well run into the $100 million range.

The main reason for such added costs would be the expense of converting plants and equipment to comply with packaging regulations established for various categories of products.

As an illustration, a great portion of the pack of fruits and vegetables harvested in California is packaged in containers of standard size. The same size container is routinely used for a large variety of fruits and vegetables.

These have different densities and, in accordance with their nature, call for relatively different proportions of fluid in the packs. The net weight or measure will vary depending upon the particular vegetable or fruit being packed.

Since the cubic content of a standard glass container is the same regardless of the fruit or vegetable packed therein, the differing densities of the individual vegetables and fruit result in considerable variation in the net contents from vegetable to vegetable and fruit to fruit, though the net weight or measure would be substantially the same for fruits or vegetables of the same species.

If an administrator believes that it would enable consumers to make rational comparison with respect to price and other factors, bearing in mind the intent of the draftsman of the bill to facilitate the so-called price per pound or price per ounce determination by the consumer, he might propose regulations requiring each vegetable or each fruit to be packed in even ounces or major fractions thereof.

In view of the different densities of the various fruits and vegetables, this would make it necessary for a different size container to be used for each fruit or vegetable.

This, in turn, would require each packer not only to maintain an inventory of a large range of sizes of glass and other containers, but also to make costly changes in his filling and packing lines and inventory procedures to accommodate the large range of container sizes needed, all of which would result in substantial increases in production, labor, and other costs.

In addition, the economies of long production runs achieved by the producers of the container would be lost, resulting in higher costs and prices for the smaller quantities of the larger range of containers needed. All such increased costs would necessarily have to be reflected in higher prices to consumers.

The bill also disregards the convenience to different classes of consumers in having products available in a wide range of sizes and quantities. The convenience of the consumer is a relative term, whose actual meaning must be determined in relation to the size of the family unit, its buying habits, availability of storage, and the like. The weight or measure which a single person might find a convenience would be quite different from the weight or measure which a large family would find a matter of convenience.

The standardization of weights and measures which this bill would authorize would frustrate the purpose of the bill by redounding to the disadvantage of consumers rather than to their benefit.

There is nothing in the bill that would require the regulatory agencies to even consider the matter of convenience for the various classes of consumers through a range of package sizes and shapes.

Equally important to consumer convenience are such factors as container utility and apearance. The countles sizes, shapes, and styles of packages found on supermarket shelves are there precisely because of the different and constantly changing needs and desires which consumers have expressed in their daily purchases of packaged products. Forced standardization of container sizes and shapes would substantially lessen, if not entirely eliminate, this important facet of competition in packaging.

Freedom to innovate in package design is particularly important to new and small businesses, which often need a distinctive package to help gain acceptance for new products in competition with older established lines.

Constant development and promotion of new products and new packages is vital to economic prosperity and basic to a rising standard of living. The American consumer, with more money than ever before to purchase such values as convenience and luxury, has grown not only to expect but to demand something new on the supermarket shelf.

Extensive package regulation, such as this bill would authorize, plus the redtape and expense that would be inevitable, would put a damper on packaging innovations and consequently on new product develop

ment.

In the typing of our statement one word was left out in the next sentence, the word "particular." I will read it as it should be. Businesses, particularly small or new ones, would be slow to invest money in a package that might be killed in Washington.

Of particular importance to our institute and its members is the effect which this bill would have on the ability of their product to compete with other types of packaging materials. Strong competition exists between various types of packages and packaging materials, such as glass, metal, plastic, and paper, including such wrapping materials as cellophane and polyethylene.

The effect of this competition has been to lead to technological advances in each sector of packaging materials and to a reduction in packaging costs to the consumer.

Given the different nature of the materials used in these classes of containers, the economics of marketing and distribution, including transportation costs, result in containers of somewhat different capacities for the same product depending on the type of packaging materials used.

Yet this bill would permit the agency to adopt uniform weights and measures for a product regardless of the nature of the different types of containers in which packaged or the effect of the proposed regulation on competition between the several types of packaging materials. Principal among the packages competitive with glass containers are metal cans. Not only are cans lighter, but in most cases they are cheaper than glass containers. The principal offsetting advantage which glass possesses is that it can be molded into an infinite variety of shapes and sizes. This, combined with great production flexibility is what enables our members to compete effectively with can manufacturers.

Government controls limiting the freedom of our members to develop new shapes and designs in order to satisfy consumer desires for