Harrison's Reports (1958)

116 HARRISON'S REl QRTS July 19, 1958 to our knowledge has the Attorney General initiated court action on such a complaint. In every case within our knowledge the Attorney General, through the Antitrust Division, has declared that the complaint involved no violation of the applicable injunction. "The reasons advanced by the Department in letters to complainants for its refusal to take action will be noted herein after. The basic fallacy is that the Department so often stresses the asserted 'right' of the film companies to do what they are doing as though each challenged act stood alone and had no connection with a pattern of con' duct. This sort of analysis customarily is offered in defense of persons charged with conspiracy but it comes as a shock from the chief law officer of the Government. This is especially true in the present circumstances because the Supreme Court in this very case stated the proper rule: 'For equity has the power to uproot all parts of an illegal scheme — the valid as well as the invalid — in order to rid the trade or commerce of all taint of the conspiracy.' "The Attorney General's reliance on abstract theories of 'right' outside the framework of the conspiracy denounced by the decisions seems to imply that the Courts have conferred a good conduct medal on the film companies, or, at least, have given them absolution for their sins. This attitude ignores the fact that the Supreme Court twice referred to the defendants' 'marked proclivity for unlawful conduct.' It also fails to take account of the fact that the Courts made painstaking provisions to insure the defendants' future good conduct. "The major vice of such reasoning is that it arrives at results directly contrary to the decrees. That is the point we wish to emphasize throughout this booklet. The Attorney General's refusal to act on the complaints made to him and his condonation of the policies and practices of the defendant companies, must be judged in the light of the clearly worded injunctions set forth herein. They are as comprehensible to layment as to lawyers." In a strong indictment of the Department of Justice, the Allied document, employing illustrations and legal and logical arguments, cites examples of how the Department has nullified and is nullifying the different injuctions handed down by the Courts. On the matter of discrimination, the pamphlet points out that there is nothing in the opinions handed down in the Government's antitrust suit to indicate that the Court intended to abolish or disturb the orderly flow of motion pictures that had prevailed for many years, making them available to first, second and third-run theatres in regular sequence with clearances or waiting periods between runs. "On the contrary," declares the booklet, "the rulings are wholly consistent with a purpose to perpetuate that system with only such reforms as were necessary to eliminate abuses and monopolistic practices that had been adopted by the film companies in their efforts to unduly favor their own theatre circuits at the expense of independents." Allied cites examples to prove that the present sales methods of the film companies are just as discriminatory toward the small independents as they were prior to the Court rulings, which are being nullified by the Attorney General who 'clings to an outworn definition of clearance and shrugs off any suggestion that undue waiting time involves all the evils of unreasonable clearance and hence should be curbed." "What the Attorney General's position really amounts to," adds the pamphlet," is this: That the discrimination practiced against the independent theatres involves only the exercise by the film companies of an asserted right to license only as they see fit and to deliver prints of licensed pictures to licensed theatres only when it suits their convenience. He has not lent a hand to secure a modernized definition of clearance." Allied charges also that there is evidence that the largecity subsequent-runs and the theatres in the smaller cities and towns are discriminated against in the pricing of films in that the terms allowed the large first-run city theatres frequently are lower than those quoted the smaller houses. The Antitrust Division, states the booklet, "has decided flatly that no violation of the injuction is involved," and in recent letters to complainants the Division has stated that the injunction "is not a compulsory selling provision." Commenting on this, the pamphlet states: "Carried to its logical conclusion, that non sequitur would clear the way for the film companies to discriminate against the independents with impunity, selling only to favored theatres and freezing out all others. That would be a strange result to flow from an antitrust proceeding initiated and prosecuted by former Attorneys General in a bona fide effort to save the business from monopoly and the independent exhibitors from extinction." In a further comment on discrimination in licensing theatres located in the same community, the pamphlet, after citing methods employed in marketing "The Ten Commandments" and "Peyton Place." had this to say: "The scope of the film companies' monopolization of the exhibition of pictures has greatly increased under the decrees as interpreted by the Department of Justice. Their former plan for accomplishing this purpose by the ownership and operation of theatres could not be complete because the total investment in theatres exceeded even their mammoth reources. Now under the decrees they are controlling the operating policies of all theatres playing their boxoffice attractions. The exhibitors are deprived of virtually all rights that are customarily enjoyed by the owner of a business. They are becoming mere agents of the film companies deriving their pay from a percentage of the gross receipts." A strong case is made out in the pamphlet to show how the Courts' provision for protecting subsequent-run theaters against unreasonable clearances "has been set at naught." The Allied argument charges that the film companies, with the approval of the Department of Justice, are adhering to an artificial distinction between "clearance" and "availability," thus rendering "meaningless the careful provisions made by the Courts for preventing restraints of trade resulting from unreasonable clearances and for protecting independent exhibitors from the blighting effects thtereof." The distributors, states the booklet, contend that clearance merely confers a right on the prior theatre and confers no right on the theatres that follow it as to when they may actually play a picture. They contend also that the delivery of a print rests in their uncontrolled discretion, and that the time of the print delivery is the theatre's availability. Clearance, they claim, has no bearing on availability. The adoption by the Department of Justice of this arbitrary distinction, states the pamphlet, has "stifled" the remedy the exhibitors thought the Courts had given to them. The pamphlet makes out a powerful case also against the fixing of admission prices, charging that this illegal practice is being continued with the official approval of the Attorney General, despite the Court order. This section of the booklet cites the various subterfuges employed by the distributors to fix admission prices, and it labels the Attorney General's defense of these activities as "superficial and unconvincing." The Attorney General, adds the pamphlet, in the performance of his duty to enforce the antitrust laws, "should make an investigation to ascertain the effects of these selling devices on the public and on the theatres." Other informative chapters in the booklet concern charges that the "Department of Justice has acquiesced in and actively promoted efforts to rebuild theatre monopolies condemned by the Courts," and that the Department "has shown a strange hostility toward independent exhibitors who are the victims of the motion picture trust." Calling upon the Attorney General to act now to save the independent theatres, to prevent business failures, unemployment and damage to community property, and urging him to seek judicial construction of the decrees and not permit them to be destroyed by "executive interpretations," the booklet had this to say: "The Department of Justice without invoking the reserved powers of the Court has construed the decrees in all known instances against the interests of the independent exhibitors and in favor of the film companies. It has given the green light to policies and practices which have doomed many theatres and threaten the existence of many more. The depressing effects of such closings upon the communities they serve has already been noted. The reader will appreciate that in times like these business failures with resulting unemployment should be prevented and not promoted by governmental policies. "Contrary to the caption the decrees we are considering are not consent decrees but litigated decrees as to most of the provisions cited in this pamphlet. No one can question the good faith of the judges who sat at the hearing on settlement of the decrees. It is fair to assume that if they were alive they would be shocked that their orders have been so ineffective; that policies and practices are being (Continued on inside page)