Corporations: The Great Conspiracy

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Identical Bids. The Government said that the conspiracy had been going on for nearly 25 years. The companies involved might have got away with it even longer had not TVA—which bought from the companies such equipment as the $16.1 million, 500,000-kw. turbogenerator for its Widows Creek steam plant in Alabama—become aroused over a succession of almost identical bids. It tipped off the Justice Department, which began digging into the conspiracy in 1959 under the direction of Republican Trustbuster Robert Bicks (who recently entered private law practice). Often the Government has a hard time gathering evidence in antitrust cases, but this time it got a break. In October 1959, four Ohio businessmen were sentenced to jail for antitrust violations, the first in history to go to jail after pleading nolo contendere in an antitrust case. (One of them committed suicide on the way to jail.) This news sent a chill through the electrical-equipment executives under investigation, and some agreed to testify about their colleagues under the security of immunity. With the evidence gathered from them (most are still with their companies), the Government sewed up its case.

The threads wove a fantastic pattern. Top electrical-equipment executives, gathering together at conventions or in hotels, homes and resorts, worked out common prices, split up markets as if they were personal property, and devised ingenious systems for rigging bids on contracts, such as the "phase of the moon" system in which each firm knew when to bid low or high, taking its turn in rotation at the low bid. With most of the industry represented, the conspiracy directly or indirectly affected almost every dam built, every power generator installed and every electrical distribution system set up in the U.S., even reached into the new and vital field of atomic energy.

Many of the executives complained that they had to go along with the conspiracy if they hoped to keep their jobs or have a chance for promotion. Some, even after indictment, openly defended what they had done. F. F. Loock, president and general sales manager of Milwaukee's Allen-Bradley Co., who was slapped with a $7,500 fine and whose company was fined $40,000, maintained that "no one attending the gatherings was so stupid he didn't know they were in violation of the law." Then he added, in a surprising non sequitur: "But it is the only way a business can be run. It is free enterprise."

Handcuffs & Guards. G.E. has already demoted, shifted or cut the pay of 48 employees involved in the antitrust violations, including 16 who were indicted. Several of the G.E. men indicted who drew fat salaries ranging from $60,000 to $125,000 have had their salaries cut as much as $50,000. But G.E. made no move at all to discipline its most important figure in the trial: Vice President Ginn, head of G.E.'s important turbine-generator department at a salary of $125,000 a year. G.E.'s lame reason: Ginn's illegal activities in the transformer field were outside the company's own three-year statute of limitations for antitrust violations. Westinghouse demoted none of its executives, noted that its employees' punishment "already is harsh," and announced that "no further penalties would serve any useful purpose."

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