Don't Get Caught

"I didn't expect to get caught. I went to great lengths to conceal my activities so I wouldn't get caught." So, last week, explained a witness before the Senate Antitrust and Monopoly subcommittee as it opened hearings into the shenanigans that led to the conviction of 29 electrical-equipment companies on charges of illegal price fixing. Judging by the speaker-General Electric's L. B. Gezon, former marketing manager of the low-voltage department--and nine other lower-echelon executives, the real fear was not of wrongdoing but of being caught.

Tennessee's Democratic Senator Estes Kefauver, the subcommittee's chairman and a man of good political instincts, was out after bigger game than those already convicted. Last week's witnesses presumably included some men who had already given secret evidence about price fixing to the Government under promise of immunity from prosecution. "We want to know," said Kefauver, "if the conspiracies went higher up in the corporate hierarchy than the individuals indicted by the grand jury." To find out just how much top executives knew, Kefauver at week's end decided to subpoena the higher-ups themselves, perhaps including G.E. Board Chairman Ralph Cordiner.

Walking a Tightrope. To some of the witnesses, it was brutally plain that if they wanted to get ahead in the company they had better go along with the clandestine price fixing; others figured that, even in the face of proclaimed company antitrust regulations, they were obliged to break them just to hold their jobs. Said Paul Hartig, former general manager of G.E.'s insulator department: "It was a way of life. It was part of the job." G.E.'s George R. Fink, former sales manager of the medium-voltage department, who was ordered by his superior to meet with the competitors, went over his boss's head to complain and was told "it was necessary I talk to competitors about prices. I was against doing anything illegal and I still am. If I didn't do it, I felt I would be removed and somebody else given my job." Fink did it. Another G.E. man who complained was transferred to a lesser job.

"I knew the risks involved," said G.E.'s Gezon. "It had been clearly spelled out that for any employee who did participate in such competitive meetings, there was no defense. The company would be compelled to discharge or demote him, and also face Government action. That was pointed out by every superior I ever had." Many of the conspirators have in fact been dismissed or demoted--Gezon was demoted--since the Government began its investigation, and G.E. has fired all 16 of its convicted executives.

Illegal Meetings. Westinghouse's Alva A. Johnson, manager of the assembled switchgear and devices department, said that he knew the meetings were illegal, but "had no reason to look into it" when he found himself "caught in the middle" between his superior (who got a 30-day suspended sentence) and his immediate subordinate, who carried out price-fixing orders. Part of the indoctrination for his new job as sales manager for Westinghouse's medium-turbine department, said Donald Ray Jenkins, was to get acquainted with executives from other companies at secret price-setting sessions in hotels. Asked Kefauver: "What sort of turn would the discussion take? 'I have not had a contract for sometime, so let me get this one?'" Replied Jenkins: "You sound like you have been there, Senator."

When the secret price-fixing meetings finally did cease, it was not because anyone thought they were wrong, but only because they were not paying off. One reason was the rise of foreign competition: foreign firms began winning contracts with lower bids. Furthermore, though agreement might be made about who should submit the lowest bid, it became standard practice for the other firms to try to get the contract anyway by convincing the buyer that their product and services were worth their higher bids. Often, they succeeded. Said Jenkins: "This is a dog-eat-dog business, and everybody wanted it."

"I Was Naive." Republican Minority Leader Everett Dirksen, a subcommittee member, did not seem to be very troubled. "So here were typical American businessmen sitting down," said Dirksen. "Everybody was after the business, and the question was, who was going to get it?" But some of the executives had plainly learned a lesson. Nebraska's Republican Senator Roman L. Hruska tried to suggest to G.E. Marketing Specialist John Peters that even in the future it might be all right to have at least a little social contact with competitors. But Peters, who said he took part in price fixing because "I probably was naive," answered: "If I see a competitor on one side of the street, I will walk on the other side."

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