Damaging Suit

In the three years since they were convicted of price-fixing, 29 electrical-equipment manufacturers have quietly agreed to pay some $200 million to set tle damage claims in more than 1,000 customer suits. Though the price seems high, it was cheap enough for keeping the cases out of the headlines and out of the courts, where settlements might well have proved costlier. Last week the first damage case did reach a court, and the outcome shocked the electric companies.

A federal jury in the U.S. District Court at Philadelphia hit Westinghouse, General Electric, Allis-Chalmers and three other manufacturers with quite a bill. To Philadelphia Electric and two other complaining utilities, it awarded damages of $9.6 million; then Judge Joseph S. Lord III trebled the award to $28.9 million, as the Clayton Act requires. Most important, the jury found that the utilities were entitled to dam ages for having been overcharged as far back as 1946, even though the original electrical-conspiracy cases covered only the 1956-60 period. The ruling stemmed from a clause in the law that suspends the statute of limitations (four years in antitrust cases) if plaintiffs can prove both that price-fixing had been practiced long before the indictment and had been "fraudulently concealed." Lawyers for the electrical-equipment companies offered an eyebrow-raising defense. They did not deny the price-fixing conspiracy but denied that it had been "fraudulently concealed." They contended, in effect, that customers knew about the fix but that high officers of the electrical-equipment companies did not. The jury found this hard to accept.

Though the decision will not affect the damage cases that have already been settled, it may well prompt other customers to take their claims to court. Between 800 and 1,000 cases are still outstanding. Most are small, but at least two substantial claims will be brought by the Midwest's American Electric Power and Michigan's Consumers Power. The Philadelphia decision will be appealed by General Electric and Westinghouse, and probably by the other defendants. But the appeals alone could tie them up in costly litigation for years.

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