Mr. DINGELL. Who told you this?

Mr. MANDELL. This fellow was out, absolutely amazing, the repre

sentative of Neutrogena.

Mr. DINGELL. What was his name?

Mr. MANDELL. Mr. Gross, Walter Gross.

Mr. DINGELL. When did he do this?

Mr. MANDELL. On his visit. He asked me to accede to the wishes of the company to order 60 dozen, and I could certainly get along selling the retailers 60 dozen, because 60 dozen was the most that any wholesaler was purchasing at that time, and I should be satisfied with as much as the other guys were buying and everybody was maintaining the resale price, and I should do the same thing and be a nice fellow. At that time, I told him that I had no intention of doing the same thing, that every one of our customers was just as good as the next customer if he was going to pay his bills. I told him we would be delighted to sell 60 dozen, but we had all intentions of suing him for everything that we could normally sell and they were not going to sell us if we ever got around to it, and all these other manufacturers started cutting us off because we were, obviously, a small wholesaler and cannot go around suing the world. We could only do a normal job on distribution, and we were not being allowed to.

Mr. POTVIN. Mr. Gross told you it was their policy and they were going to continue to maintain their policy of selling Neutrogena soap at their price, $1 a bar?

Mr. MANDELL. Yes, I think that would even hold in a teaching institution where you have people studying postgraduate work, pharmacists and other people going into the industry, where this thing is taught in the course of medical marketing, that a manufacturer can and does in fact maintain his retail price to the consumer by selected distribution wholesalers.

Mr. PorvIN. During the years you have been discussing, were you dealing with the Du Pont firm?

Mr. MANDELL. No, the Du Pont firm is-I think I am correct—a new entity in the drug industry. They have never been essentially in the pharmaceutical industry before. They have been researching for some years a product called Symmetrel, which is a product for use as an antiagent, an antiflu agent, an oral, which means you take it by mouth, an oral antiflu agent, and antiflu tablet-I believe tablet or capsule, or they might even have a liquid form.

Mr. PorvIN. This was their initial entry into the drug field?
Mr. MANDELL. Yes.

Mr. PorvIN. You received promotional material for Symmetrel? Mr. MANDELL. We did. I received a letter from Mr. George French, who is national sales manager, I believe-I do not know his exact title, but in essence, he is the sales manager nationwide for the Du Pont Pharmaceutical Division.

We received a letter from him with promotional material for our salespeople and were, in effect, asked to go out and promote this product, because it was going to be a big seller.

So we sent an order to Mr. French and a short while later we received the order back telling us that they would not fill it.

Mr. PorvIN. And this letter was from Mr. French?

Mr. MANDELL. Yes; they would not fill our order.

Mr. POTVIN. Was any reason given?

Mr. MANDELL. No, sir.

Mr. POTVIN. Was there any further correspondence?

Mr. MANDELL. Yes. I wrote to him and told him that since we had received the promotional material, I did not see any reason they would not now fill our order, and since it was a new company, their marketing policies could not possibly have been established yet and their requirements for wholesalers for any particular trading area, and we were most anxious to supply this product to our customers on their demand. Mr. POTVIN. Could we obtain this correspondence from you? Mr. MANDELL. Yes, sir.1

Mr. POTVIN. Are you familiar with Mr. French's background in the industry, sir?

Mr. MANDELL. I know Mr. French worked in very high management in Bristol Laboratories sometime before he came to Du Pont. Mr. POTVIN. That was the same Bristol Laboratories that cut you off sometime prior to this point in the narrative?

Mr. MANDELL. Yes, sir; and I can only assume the letter received from Mr. French was a form letter and came out in a mailing list of people who were in a particular trade organization to us.

Perhaps they had decided to go and sell all wholesalers in a particular trade organization which we happened to be a member of. Mr. POTVIN. Mr. Mandell, at the present time, are you privileged to sell the over-the-counter, or as they say in your trade, the OTC products manufactured by the Squibb Co.?

Mr. MANDELL. Yes, sir.

Mr. POTVIN. Do you handle their pharmaceuticals?

Mr. MANDELL. We would like to, but we have not been given that opportunity.

Mr. POTVIN. Have you attempted to obtain their pharmaceuticals? Mr. MANDELL. Oh, yes. A Squibb salesman who handles the OTC, or over-the-counter products came to us a short number of weeks ago and told us that Squibb would make available to us at that timevery strangely enough, they had just gone off fair trade, so there was no price control at the consumer level of these products, and at that time, they decided to make this line available to us, as well as, I imagine, to several other wholesalers.

Only the over-the-counter products, not the pharmaceuticals. They split the company into two divisions, Squibb Pharmaceutical and Squibb Over-the-Counter Division. They were going to make the over-the-counter division available to us, which we were delighted to receive, because it was another line for us to supply our accounts. When I discussed it with several retailers that we were going to receive the over-the-counter products, they were quite excited and told me I should apply for the pharmaceuticals, because this supply situation for Squibb, and particularly-by the way, I never contacted Squibb about getting the pharmaceutical line.

But at this time, I was advised to contact Squibb by several retailers. who told me that the other wholesalers were running a lot of "outs" on Squibb merchandise, and it was difficult to obtain promptly and for a decent price, so we were quite excited about the possibility of our getting Squibb to supply to them.

1 The information had not been received at the time of this printing.

So, I, in fact, wrote a letter to Mr. Beckwith, who is now president of Squibb Pharmaceutical, asking him if they would give us the right to purchase Squibb pharmaceutical products.

I received a call about a week after writing the letter to the district

manager.

Mr. PorvIN. What is the name of the person who called you?

Mr. MANDELL. A Mr. Murray Rosenthal, who is the district sales manager for the Bronx, and from what I understand, he had just been brought into the Bronx just a matter of days or weeks ago. The fellow who was in the Bronx before is gone.

At any rate, he, in a conversation, asked me several preliminary questions as to what type of operation we have, and I told him of the critical situation of the Bronx, told him of the outs that the wholesalers were running, and we were most anxious to provide service and distribution for his line. He said he would look into the matter.

He called me back, I would say 3 or 4 minutes after that, and told me Mr. Jack Shervinak, who is the regional manager of Squibb, would like some information as to volume we do with about 10 of our leading pharmaceutical manufacturers. This information purportedly being extracted from us to show Mr. Shervinak exactly what kind of a job we were able to do on any specific pharmaceutical line.

So I went over several pharmaceutical manufactures with Mr. Rosenthal. We agreed upon the 10 that he wanted me to provide for Mr. Shervinak, and I told the information that I was going to provide for him; we must agree it would be kept strictly between himself and Mr. Shervinak and go no further in the company nor to any other manufacturer or wholesaler, because I thought this was marketing information which we valued and I did not want other people to know about.

He agreed to that, and I so stipulated in the letter I sent to him.

I told him the volume we did in 1966-I think there were 10 manufacturers of his choosing.

About a week or 10 days after that, I got a call from Mr. Rosenthal, who was very excited. He said we were going to get an opening order from Squibb Pharmaceutical. He in fact brought the salesman by. I was not at the place of business the morning he called me. He spoke to my assistant and my assistant conveyed this information to me, that Mr. Rosenthal was there with the salesman and had indicated he was going to write an opening order, and we were going to get the Squibb Pharmaceutical line, which I was very excited about.

He told me Mr. Rosenthal would stop by in the afternoon, so from where I was, I returned back to meet Mr. Rosenthal, who came in very shortly thereafter with the salesman.

We took a very short tour of the warehouse and he indicated at that time that chances were excellent that we would be receiving the Squibb Pharmaceutical merchandise.

Mr. Shervinak would like to have lunch with me. He suggestedI think we both agreed that it would be the following Monday that would be a good day to have lunch, which, in fact, we did.

Mr. Shervinak and Mr. Rosenthal came by-I am getting just a bit ahead of myself. Excuse me for a moment.

This was a Thursday when Mr. Rosenthal and this salesman came in-the fellow's name was Gus, I think, a nice fellow. He came in—

no, he did not come in the following morning. He called me on the phone the following morning or it might have been in the afternoon. It was Friday. He was very excited. He said Mr. Shervinak wants to have lunch with you next week, we are going to write the opening order.

I told him that was wonderful news, I was delighted to hear it. We agreed to write the opening order over lunch, which, in fact, occurred the following Monday.

They came by and took me to a very posh club in Manhattan. They did not seem to want to eat in any restaurants in the Bronx. We had some nice ones up by Yankee Stadium, but he did not seem to want to talk in our warehouse or eat in any of our restaurants. He had a restaurant of his own we went to.

We had, down in the car and at the restaurant, a discussion of, oh, close to 3 hours, of various and sundry things, in which he informed me that he was going to write the opening order, it would amount to somewhere around $10,000 or so, which we had no objection to. The terms of payment were discussed and our requirements were discussed, which are well known, the requirements that Squibb would expect of us, the distribution aspect of it.

He also told me at that time there might come a time, or might be some time when we might be engaging in an "unfriendly act" and at that time, he would reserve the right to come to me as one man to another, because he told me he was very frank, all cards above the table and all that, he would come and tell me we were engaging in an unfriendly act and he would expect me at that time to stop engag ing in an unfriendly act.

I told him if I was engaging in any unfriendly act at the time that was hurting him in any way and I could possibly stop it, I certainly would. I do not like to hurt anyone.

He also pointed out to me how people who buy from Squibb and who work for Squibb eat good in the restaurant there and live good, and if I were to do a good distribution job for Squibb, other pharmaceutical manufacturers would probably look with favor upon us. Mr. POTVIN. In other words, he intimated that you might, thereby, become a member of the club and obtain other prime lines?

Mr. MANDELL. Yes, sir; which would delight us no end, because this is what we have been trying to do and what my father has been trying to do for half a century; it has been my ambition.

We got to the point where the opening order was going to be sent in and just as we got up to leave, Mr. Shervinak asked me if we were a member of Biddle. I said we were, in fact, a member of Biddle. He said, "Well, you know, we do not want you selling any of our merchandise to Biddle."

So I sat down again.

I said, "You're asking me to do something which a lot of other people have asked me to do in the past, and I just ain't about to. I am not going to enter into any conspiracy to restrain trade or price-fix or anything of the sort. Members of Biddle are customers of ours. I am not going to tell you that we are going to sell Squibb merchandise to Biddle; I do not know if we can. But, certainly, if we get orders for it and we are asked to quote a price on it, I am not going to refuse to quote a price; I am not going to refuse to sell it."

He said, "Well, if you do that, we are not going to sell to you." I said, "Well-" In the discussion, he had told me that they were not going to tell us whom to sell to, they were not going to tell us what price to charge. When we discussed the unfriendly acts, he said at that time, there might be an unfriendly act.

I said, "You just told me a while ago you were not going to tell us whom to sell to, you are not going to tell us what price to charge. Now you are telling us not to sell to Biddle. How do you account for that?" He said, "Well, that is an unfriendly act."

Mr. POTVIN. Was there any discussion of the L. H. Moore firm?

Mr. MANDELL. Yes, I naturally asked him how about somebody like L. H. Moore. "Are you prohibiting us from selling to somebody like L. H. Moore?"

He said, "Yes."

I said, "Are you prohibiting us from selling to any wholesalers?" He said, "Yes, it is an unfriendly act."

I said, "Are you prohibiting us from selling to any wholesaler anywhere?"

He said, "Yes, we expect you to sell to retailers."

Mr. POTVIN. What was the net result of this?

Mr. MANDELL. That result was that I told him I could in no way, shape, or form agree not to sell to Biddle, and if he thought those were the only terms and conditions, he could sell us the line under, he had better not send the order in because I could not give him a guarantee that we would not sell Biddle, we would love to be a distributor of Squibb, very anxious to have the line, but as far as what terms and conditions, I could not agree to it.

Mr. POTVIN. Did you feel that just as Squibb had a right to choose its customers, you also should have an unreserved right to choose your customers so long as they were licensed?

Mr. MANDELL. Yes, I feel any businessman has the right to choose his customers, as long as that right is not abused and used for purposes to restrain trade or price-fix and control distributions, which I think is being done in the drug industry today.

Mr. DINGELL. In these discussions which you have just been referring to, was any question raised with regard to the price at which you sold Squibb products?

Mr. MANDELL. Oh, yes, Mr. Chairman. We did have a discussion. There was a 3-hour discussion. But Biddle was not mentioned until, as I say, at the last moment.

There was a discussion as to price. Mr. Shervinak told me he did not want their line, Squibb, used as a football. In other words, we were not going about bandying his line as a leader to get other business, go about destroying the existing price structure on Squibb merchandise. Mr. POTVIN. In standard trade terminology.

Mr. MANDELL. That was an unfriendly act.

Mr. POTVIN. He was telling you not to sell at less than a usual wholesale markup and particularly not to do so in sales to discount stores that might use a Squibb product as a "football" or "loss leader”?

Mr. MANDELL. Yes, sir.

Mr. DINGELL. Is that what he was telling you?

Mr. MANDELL. Yes, sir.

Mr. DINGELL. Did he tell you that in so many words, or is that what you understood him?

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