gestions are accompanied by threats of nonrenewal of the dealer's selling agreement, according to Mr. Morris (VI, 2864).

General Motors characterized Mr. Morris's statement as "one of the more insidious charges" and categorically denied that it coerces its dealers either directly or indirectly to purchase replacement parts from it (VII, 3874). Mr. Morris read into the record a letter dated November 15, 1955, addressed to him, from one of the members of the association, concerning the practices of car manufacturers designed to force their dealers not to deal with independent automotive jobbers. The letter reads, in part, as follows:

Big business, and General Motors in particular, has constantly hammered at the very existence of automotive jobbers. Through the years it has become increasingly difficult for us to do business with the car dealer, a natural and traditional customer of ours. Through threats, often veiled and implied but effective just the same, the car dealer has been and is being forced to buy his merchandise other than vehicles through the car manufacturer. In the vast majority of cases, the car dealer would rather buy from his automotive jobber, whom he knows and respects and from whom he gets service and availability that he cannot get from the manufacturer. Hundreds of instances are known where the car dealer buys merchandise from his automotive jobber and literally hides it away from the car manufacturers representative, who will put on the pressure if he finds the dealer doing business with the jobbers. The big business car manufacturer has intensified his policing efforts along this line in recent years

**

(VI, 2866).

In testimony before the Subcommittee, Mr. Curtice and Mr. Hufstader, reiterated that it is not General Motors' policy to coerce its dealers to purchase replacement parts and accessories from it. The testimony of General Motors and its dealers on this point is conflicting. Nevertheless independent wholesalers express fear of ultimate extinction because of General Motors' market policies and practices. Certainly the franchise dealership represents a protected market for General Motors' sales. The unequal position of the car dealer under a franchise which renders him particularly susceptible to any kind of factory coercion, pressure, or threat enables General Motors and its parts and accessories distributors to obtain access to a market from which independent jobbers are partially precluded.

General Motors, through its various divisions, produces accessories for use on General Motors cars. As noted above, the Federal Trade Commission cease and desist order expressly prohibits General Motors from requiring its dealers to purchase or deal in accessories sold and distributed by General Motors or anyone designated by it. To the extent that accessories for General Motors cars are to be purchased at the option of the consumer, the market for the sale of such products should be open to any producer. The Subcommittee endeavored to learn whether General Motors has engaged in any practices intended to or having the effect of excluding producers from access to this accessory market.

The Subcommittee's attention was directed to heaters, usually considered optional accessory equipment. In 1954, 1,417,453 new Chevrolet cars were reported registered in the United States. In 1955, 1,830,037 new Chevrolet cars were produced. Evidently, the sale of heaters for Chevrolet cars represents a substantial market in which small producers can compete. There appeared to be no reason why General Motors should have any preemptive rights in this market. If Chevrolet owners are to have the full advantages flowing from com

petition, it is necessary that all roadblocks to competition be eliminated, and that the field be open to all.

E. L. Schofield, president of E. L. Schofield, Inc. of Rockford, Ill., charged in his testimony before this Subcommittee that General Motors was requiring its dealers to order 1955 Chevrolet cars with factoryinstalled heaters, a practice he considered a violation of the Federal Trade Commission's 1941 cease and desist order.

E. L. Schofield, Inc. manufactures and sells automotive heaters for passenger cars and trucks. One of the company's lines is a "custom" heater for Chevrolet passenger cars (VI, 2883). A custom heater is one designed specifically for installation in a particular vehicle without any prime mechanical work. Mr. Schofield testified that Schofield, Inc. began selling custom Chevrolet heaters in 1954, and that encouraging sales acceptance among Chevrolet dealers prompted his company to develop a heater for the 1955 model Chevrolet car (VI, 2885). In 1954, the total sales were between 5,000 and 6,000 units. Schofield's projected sales plans for 1955 was a minimum sale of 20,000 units, with anticipated sales of upward of 50,000 units (VI, 2885). To the best of Mr. Schofield's knowledge, there are only two other small manufacturers producing a custom heater for Chevrolet cars (VI, 2905). Mr. Schofield related that engineers of Harrison Radiator division, which makes heaters for General Motors automobiles had developed a heater-defrost system for the Chevrolet wraparound windshield which almost precluded installation of this heater-defrost unit in the 1955 model by the dealer. Schofield engineers, he stated, specially designed a heater-defrost unit quick and easy to install, to fit this model (VI, 2892).

Almost immediately after the announcement of the new Schofield heater designed for the 1955 Chevrolet, Mr. Schofield noted, his company

began to receive orders for substantial quantities from established Chevrolet dealer accounts. Shortly after the first of the year, however, sales diminished drastically.

Upon investigation, it was found that General Motors zone and district managers in certain major metropolitan areas were refusing to approve orders for 1955 Chevrolet cars without factory-installed heaters (VI, 2884).

Mr. Schofield testified that as a result of General Motors' practices, his sales organization was dissipated, employees had to be laid off, and the efforts of the company had to be diverted to other products and markets (VI, 2884). By March 1955 sales had dropped to zero, with the company receiving requests for cancellation of orders, actual cancellations, and refusals of shipments (VI, 2894).

Mr. Schofield also related how he contacted Mr. Brandt of the Aetna Motor Products Co. of Boston, Mass., to discuss a new switch for the 1956 Schofield heater for Chevrolet cars. Mr. Brandt advised him that he could not supply the switches, as the purchasing department of General Motors' Harrison Radiator division had informed him "that if we supply switches to any other heater manufacturer, they would cancel their business with us" (VI, 2890).

General Motors told the Subcommittee that it caused this charge to be investigated, and that Mr. Brandt denied Mr. Schofield's statement (VIII, 3881).

The Subcommittee undertook to investigate these charges of Mr. Schofield. The Subcommittee heard testimony of W. W. Brown,

Chicago sales representative of E. L. Schofield, Inc. Under oath, Mr. Brown submitted 17 examples of his inability to sell Schofield heaters in the Chicago area because of the alleged inability of dealers and others to obtain Chevrolet cars without factory-installed heaters. Mr. Brown testified that these examples were not exhaustive, and that they could be duplicated many times over (VI, 2909).

Mr. Brown testified that he had contacted several firms in the presence of a Subcommittee staff attorney. One of the dealers contacted had 13 Schofield heaters in stock. He told Mr. Brown that he had ordered 13 cars without heaters but found he could get only 5 without heaters and would have to take the rest with factory-installed heaters (VI, 2915). Mr. Brown further testified that he and the staff attorney contacted a fleet operator who said he would prefer to buy Chevrolet cars without heaters, but was unable to do so (VI, 2918). The Subcommittee's staff attorney gave sworn testimony confirming Mr. Brown's evidence (VI, 2918). The Subcommittee's staff attorney further testified that one of the dealers contacted "indicated that he was interested in buying a large number of Schofield heaters, that he had on many occasions put in orders for cars without heaters, and was unable to get them" (VI, 2919).

The record shows that on March 24, 1955, William J. Marshall, Jr., counsel for Schofield, Inc., submitted to General Motors an abstract of reports furnished by Schofield salesmen to the effect that they could not sell the Schofield heater because General Motors Chevrolet dealers could not obtain 1955 cars without factory-installed heaters. He did not then disclose the names and locations of the dealers because they had been given in confidence (VI, 2895). General Motors informed Mr. Marshall that it "would be very much interested in knowing the names of the dealers and the General Motors personnel involved in the reports" because such practices were contrary to General Motors policy and contrary to the Federal Trade Commission cease and desist order of 1941 (VIII, 3876).

On May 20, 1955, General Motors received a letter from Mr. Marshall giving the names of five Chicago firms who had advised him and a Schofield representative that they had been unable to obtain 1955 Chevrolet cars without heaters, and of one Chevrolet district manager and several zone managers who had refused to accept orders for Chevrolet cars without heaters (VIII, 3879). On June 23, 1955, General Motors answered this letter denying the charge (VIII, 3880).

In its appearance before the Subcommittee, General Motors submitted a rebuttal challenging the Schofield complaint, stating:

An example in point of the irresponsible character of some of the testimony regarding the alleged coercion of dealers is the testimony of Mr. E. L. Schofield who claims that Chevrolet dealers, whose names he cannot reveal, have informed his salesmen and sales representatives that Chevrolet motor division refused to accept orders for Chevrolet passenger cars without factory installed heaters (VIII, 3874). [Italics supplied.]

General Motors also said:

*** that Mr. W. W. Brown, a salesman for E. L. Schofield, Inc., was sworn as a witness and gave testimony under oath that a number of Chevrolet dealers in the Chicago area had told him they could not order Chevrolet passenger cars without factory-installed heaters. However, none of these dealers were named (VIII, 3881). [Italics supplied.]

As noted above, several dealers were named in the letter from Mr. Marshall, received and answered by General Motors.

General Motors further testified that, having been supplied the names of the dealers and General Motors officials involved, "we immediately caused an investigation to be made and each of the dealers named and each of the zone managers flatly denied the charge” (VIII, 3878).

In view of the conflict in testimony and the fact that General Motors considered this matter of major importance, the Subcommittee felt it was incumbent upon its staff to make an immediate investigation, especially as one of its staff attorneys had testified under oath, confirming Mr. Brown's sworn testimony.

Because of the fear of reprisals by General Motors none of the dealers involved were willing to testify before the Subcommittee. William J. Marshall, Jr., as a member of the bar, felt obligated to come and give testimony.

Mr. Marshall testified under oath from notes taken at the time he talked to the five Chicago firms (identified in his letter to General Motors) who advised him and Mr. Brown, the Schofield representative, that they had been unable to obtain 1955 Chevrolet cars without heaters. Mr. Marshall testified that Mr. Myer of Ideal Rent-A-Car Co., a Chicago car-leasing concern, had told Mr. Brown and himself that he was sorry that he could not buy any Schofield heaters at that time, but that since he had not been able to buy Chevrolet automobiles without heaters, there was no sense in his buying heaters (VIII, 3894). Mr. Marshall gave testimony that he and Mr. Brown had also visited Nelson Chevrolet, Inc., where they spoke to Frank Schmiel, assistant sales manager and purchaser of all automobiles for Nelson Chevrolet. Mr. Schmiel had previously ordered 109 Schofield heaters; nine had been delivered and 100 were still to be delivered. Mr. Marshall

testified:

Schmiel said that it was possible they would have to cancel that order for the 100, because they couldn't use the 9, they could not get cars without heaters. (VIII, 3895).

Messrs. Marshall and Brown also visited Lewis Auto Sales, Inc., a Chevrolet dealer, and spoke to Mr. Al Levine. Mr. Marshall testified that Mr. Levine stated he had purchased 25 Schofield heaters, but was a little anxious about them at the time as he had 24 left. Mr. Levine also said "he had not been able to get any cars through without heaters, and that he had ordered some," Mr. Marshall stated (VIII, 3896). At the Ray O'Connell Motor Co., Chicago Chevrolet dealer, Mr. Marshall testified that Mr. O'Connell stated he still had some Schofield heaters left, and that orders for Chevrolets without heaters had been turned back. Mr. O'Connell further said: "Well, no other dealer in this area is getting cars without heaters. As soon as they do start coming through, I will be the one who knows," Mr. Marshall testified (VIII, 3901). When he and Mr. Brown visited B. & L. Motors, a Chicago auto-leasing firm, Mr. Marshall testified, he was told that Chevrolets without heaters could not be obtained (VIII, 3902). The day prior to his appearance before the Subcommittee, Mr. Marshall and the Subcommittee's staff attorney endeavored to call upon the five Chicago firms which had informed Mr. Marshall that they had been unable to obtain 1955 Chevrolet cars without heaters

and whose names he had submitted to General Motors. Mr. Marshall testified that Mr. Schmiel of Nelson Chevrolet, Inc., confirmed his previous statement that he had ordered cars without heaters but had not been able to get them. Mr. Schmiel further stated that a Chicago office of the Chevrolet Division of General Motors had called and said they would not write the factory orders unless these orders included heaters (VIII, 3903). The Subcommittee's staff attorney, testifying under oath, confirmed Mr. Marshall's testimony and added that Mr. Schmiel stated he had contacted Mr. Harry O'Boyle, a North Side Chicago General Motors sales representative, who told Mr. Schmiel "that Chevrolet considered the heater to be an integral part of the car, and that if I wanted cars I was going to have to order heaters, or I was not going to get any cars" (VIII, 3910).

Mr. Marshall gave testimony that he and the Subcommitte's staff attorney called on Ray O'Connell Motor Co. and that Mr. O'Connell would neither confirm nor deny that he had told Mr. Marshall he could not get cars without heaters. Mr. Marshall and the Subcommittee's staff attorney did not visit Lewis Auto Sales, Inc., because they had been informed that Mr. Al Levine had left Lewis Auto Sales and had acquired his own dealership (VIII, 3908).

No definite conclusions can be drawn at this time concerning the charge that General Motors had coerced or improperly induced its dealers to purchase Chevrolet cars with factory installed heaters. However, it is clear that an independent manufacturer of heaters had been virtually foreclosed from access to this market. This incident illustrates the great difficulties confronting an independent manufacturer attempting to sell in a market which General Motors, in one form or another, controls.

In 1948 there were about 12,000 independent wholesalers of automotive equipment. These wholesalers handled parts produced by independent parts manufacturers as well as parts manufactured by automobile assemblers. They sell to car dealers, garages, filling stations, and accessory stores. General Motors relation to this industry is complex; it is a producer, user, and a wholesaler of automotive parts. It purchases and resells parts and accessories to its dealers and distributors through its car divisions, through AC Spark Plug Division, and through United Motors Service Division, whose sole function is the distribution of parts and accessories produced mainly by the various General Motors divisions. Both United Motors and AC Špark Plug appoint warehouse distributors to wholesale the various General Motors lines.

On January 1, 1954, General Motors changed its parts distribution methods so that dealers could expand their wholesaling operations to include not only parts manufactured or wholesaled by the automobile divisions, but also the parts produced by the General Motors parts divisions and previously handled only by the parts jobbers operating under United Motors Service and AC Spark Plug Divisions. Wholesalers' lines were also expanded to include those parts previously handled by dealers. Dealers were offered discounts as an incentive to wholesale parts. In this manner General Motors created potentially 18,000 parts wholesalers to compete with the independent wholesalers already in existence. The dealers, who become wholesalers under this plan, had previously been potential customers of the existing wholesalers in the field. By the end of 1954, according to a statement sub