Price Fixing (Contd.)

Before the Senate subcommittee investigating the great electrical price-fixing conspiracy, the boss of the nation's second biggest electrical company last week was both contrite and positive. Mark W. Cresap Jr.. president of Westinghouse Electric Corp., denied any personal knowledge of the conspiracy, but accepted his "share of the responsibility" and promised to make "law abidance, ethical business conduct and integrity the way of life at Westinghouse." Cresap's reaction to the whole "sorry" episode: "I hope the long-run results will be constructive and wholesome for the entire industry." Coals & Cricket. By the time Cresap appeared, the subcommittee was already digging into the possibility that there had been price fixing not only in heavy equipment, the only field covered in the Government's original conspiracy charges, but in electric motors as well. The new dis closures came from William F. Oswalt, who headed General Electric's motor and generator department until he was forced to resign in March. Oswalt testified that on two occasions he discussed prices with competitors at meetings designed "primarily to establish motor reratings," added that at other times he had discussed prices over the telephone with competitors, including Westinghouse. Oswalt admitted that he did not take subordinates with him to the meetings, in order to avoid subjecting them to "any risk involved."

Armed with this information, Kefauver asked Cresap, who was hired by Westinghouse in 1951 after serving the company as a management consultant, if he had ever investigated his own motor division. He had not--nor had he thoroughly investigated the four Westinghouse departments involved in the heavy-equipment conspiracy, or even spoken with his convicted executives about their part in it. When both Kefauver and Michigan's Senator Philip Hart questioned how Westinghouse could effectively plan to prevent recurrences if it had not made a detailed investigation of the past, Cresap insisted: "I am not making a thorough investigation. I have not devoted my efforts to raking over the coals of the past. My efforts have been devoted to making sure the ship is in shape today." Said Senator Hart: "I have the greatest difficulty getting it through my noodle why management seems to feel that it isn't cricket to rake over the coals."

The Free Forces. In the coals that Kefauvers committee was raking over were the identical prices quoted by G.E. and Westinghouse for a huge generator neither had ever built. To Cresap, this was "merely the free working of economic forces in the market"; both he and his competitors had to meet one another's prices. Such list prices were only used as a base point, said Cresap, and could change in sealed bids. To refute this, Senator Kefauver cited the case of sealed identical bids submitted by G.E. and Westinghouse on a generator ordered by the Tennessee Valley Authority. When TVA decided that it did not want construction supervision, and asked the two companies to reduce their bids accordingly, both subtracted exactly $177,900.

How could they do that, asked Kefauver, without talking it over? Replied Cresap: "I expect there is a very rational answer to that question." But what that answer might be, he confessed he did not know.

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