The Price-Fixing Verdict

Since John F. Kennedy in 1962 forced the nation's steelmen to pull back a $6-a-ton price boost, federal grand juries have voted seven indictments accusing the steel companies of conspiring to fix prices. In the most important of these cases, the Justice Department last week won a big, if qualified, victory.

Eight major steel companies withdrew their original pleas of innocence and pleaded nolo contendere (no contest) to criminal charges that they had rigged some prices of the commonest grade of steel, carbon steel sheets, which go into autos, washing machines, kitchen cabinets, refrigerators, office furniture and many other consumer goods. Judge Edward Weinfeld of Manhattan's U.S. district court fined them $50,000 each, the maximum allowed under the Sherman Antitrust Act.

Clandestine Meetings. The $400,000 total of fines, highest ever in the industry's history, was levied against its six largest companies--U.S. Steel, Bethlehem, Republic, Armco, National and Jones & Laughlin--as well as Wheeling Steel and National's Great Lakes Steel subsidiary. The judge also allowed no contest pleas by the only two individuals indicted: James P. Barton, 62, U.S. Steel's assistant general manager of administrative service, and William J. Stephens, 58, hard-selling president of Jones & Laughlin. Stephens, who worked for rival Bethlehem as an assistant vice president at the time covered by the indictment, is the highest U.S. executive ever singled out by such charges. At their sentencing, set for Sept. 21, the two men could be fined $50,000 each and sent to prison for up to one year.

The indictment charged that the defendants arranged during a series of clandestine meetings in hotel rooms between 1955 and 1961 to subtly rig the thousands of "extra" charges that steel companies make for tailoring sheets to specific size, shape, weight, quality and chemical or metallurgical content. Such extras account for 16% of the $2 billion-a-year carbon-sheet business done by the eight firms.

When the indictment was handed down last year, steelmen were openly resentful, and Bethlehem went so far as to accuse the U.S. trustbusters of digging up "ancient history" to "harass" the industry. By last week tempers had cooled, and steelmen seemed relieved. Wheeling, National and Jones & Laughlin all called their no-contest pleas "appropriate" under the circumstances. Bethlehem said it was "satisfied" that the disposition of the case "is in the best interests of the company and its stockholders."

Avoiding Damages. By pleading no contest, the companies avoided the embarrassing and costly ordeal of a public trial, and they did not admit any guilt. More important, the plea greatly diminished the chance that injured customers could successfully sue for treble damages. Reason: not only could the steel companies deny the charges in such suits, but the customers would have to prove both the conspiracy and their own injuries without access to the Government's evidence. Clearly, for steelmen who would like to forget about the whole affair, this was the best way to be rid of it.

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