Electrical Price Fixing (Contd.)

Under the Clayton Act of 1914, anybody who can prove that his business has been injured by another company's antitrust violations is entitled to damages amounting to three times the loss suffered. Along with the humiliation of being convicted of criminal price fixing ten months ago, the 29 companies involved in the great electrical-equipment conspiracy looked forward apprehensively to a flood of treble-damage claims. Last week their worst apprehensions came true as more than 60 public and private utility companies combined to file nearly 40 suits complaining that they had been overcharged on electrical equipment.

In all, the electrical companies now face more than 180 treble-damage suits, representing the combined complaints of 100 electrical-equipment purchasers. Since the federal statute of limitations in the price-fixing case is due to run out in February, scores of additional suits are sure to be filed within the next few weeks. Moreover, both Westinghouse and General Electric have offered to waive the statute of limitations in certain cases, so still more suits will presumably be trickling in for months to come. Should everything go against the electrical manufacturers, they could conceivably find themselves saddled with upwards of a billion dollars in damages and costs.

Always Prepared. Many of the electrical companies began to anticipate the damage suits during the original antitrust trial by pleading "no contest" to the price-fixing charge--a move that kept details of the alleged conspiracy off the court record. Now, without benefit of those details, the suing utilities face the task of proving that over the years the prices of electrical equipment would have been lower had there been no conspiracy. Says one antitrust lawyer: "You have to compare what you paid with what you would have paid under conditions that didn't exist." To do this, some of the utilities are cooperating in setting up a hypothetical "statistical model" of the electrical manufacturing business based on conditions before the conspiracy. Then, by adjusting this model to allow for general economic trends during the conspiracy years, they hope to show the courts what prices should have been.

In rebuttal, the manufacturers seem certain to argue that they gave their customers "fair value" regardless of price fixing. Some manufacturers, despite their earlier pleas, may now insist that they were not part of any conspiracy. All of them can be counted on to fight hard in the first cases to come to trial, since these will set the pattern for awards in subsequent suits.

Still Friends. Through it all, the manufacturers face the ticklish task of continuing business as usual with their suing customers. To do this (and to free its other executives from long hours in court), General Electric last week set up a special department to handle claims. Both G.E. and Westinghouse have indicated that they would welcome reasonable out-of-court settlements.

So far, all suing utilities have demanded a jury trial. If each suit went to trial, the federal courts would be trying little else for years. But legal experts agree that, once the first suits set a pattern, cheaper and quicker out-of-court settlements are likely to become the rule. Nonetheless, many a youngster just starting law school may well earn his first few years' salary as a member of the bar working on the electrical-equipment suits.

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