PRICES: Phase II Sale Season

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U.S. consumers are about to be treated to a Phase II sale. Because some big corporations have exceeded the Price Commission's guidelines on profits, they are in the process of rolling back prices and may even be forced to make some cash refunds to their customers. Last week a number of firms either were ordered to cut some prices or voluntarily announced reductions. The companies ranged in size from Ford Motor Co., which lowered the price tag on 31 car models by $16 to $50, and F.W. Woolworth Co., which was ordered to reinstate last summer's prices at its lunch counters, down to a little-known Texas garbage-disposal concern.

Easy Profits. Eventually, said Commission Chairman C. Jackson Grayson, the rollbacks and refunds will save consumers "hundreds of millions of dollars." It developed that he had fallen victim to the Nixon Administration's seeming compulsion to overstatement: he later confessed to TIME Correspondent Lawrence Malkin that the vaunted millions included more than price reductions. Besides these, said Grayson, savings to consumers might come in the form of future price increases that companies either will be scared out of requesting or that the commission will not grant. At week's end, the commission rescinded car price increases of about 4% that it had previously granted, pending a restudy.

The commission is enforcing a rule aimed at preventing easy profits. In effect, it forbids companies that have been granted price increases to raise their margin of profit—that is, profit as a percentage of sales—above that of a pre-freeze base period. Like most other Phase II guidelines, the profit margin rule is enforced most rigidly against companies with annual sales of $50 million or more. Their officials are currently supplying the commission with report cards on the first full-business quarter after Phase II became effective last Nov. 14. Either through miscalculation or otherwise, quite a few have reported profit margins that were not permissible.

Grayson plans to compel big-product firms—manufacturers of automobiles or steel, for example—literally to refund any overcharges discovered in their records by paying back individual customers. Only one company so far has been dealt that fate on the basis of its profit margin: Houston's Browning Ferris Industries was ordered to pay back $40,000 to its customers within 90 days, as well as to reduce future prices by a total of $120,000. But Ford's decision to lower prices on its high-volume models, including its LTD, Maverick and Mustang, may well have been taken in an effort to avoid the enormous paperwork that would be required to make a refund to all first-quarter Ford buyers.

Though the company refused to make public its figures for U.S. operations only—the ones that will be used by the Price Commission—Ford's worldwide after-tax profit margin of 5.3% was its highest since 1968. Worldwide earnings for the first quarter of 1972 leaped 49%, to $252 million, over those in the same period last year.*