The Carter administration yesterday won its first brush with a company over the five-month-old price standard as Scott Paper Co. agreed to roll back a series of proposed price hikes that officials said would have violated the guidelines.
Scott acted voluntarily after the Council on Wage and Price Stability, which oversees the guidelines program, denied the Philadelphia-based firm's bid for a hardship exemption from the regular price standard. Scott had claimed it was suffering "uncontrollable cost increase."
The action marked the first time the council asked a company to roll back either current or projected price increases since the guidelines program began. The wage-price program is voluntarly, although the White House may deny violators access to government contracts.
Barry P. Bosworth, the council's director, issued a statement saying his agency "wishes to commend Scott for its support of the president's anti-inflation program." Neither the council nor Scott, however, would give any details of how much the price roll-backs involved.
The action by the company came a month after the council, seeking to bolster the flagging anti-inflation program, announced a significant tightening of its price guidelines in an effort to close an escape hatch that officials feared was leading to abuses
Under orignal guidelines issued last October, a firm either could hold its 1979 price boosts to half a percentage point below its average increase for 1976-77, or else-as an alternative-merely agree to keep its profit margins steady.
However, official found that so many firms were shifting to the profit-margin rule to escape the more restrictive limits of the regular guideline that the system was virtually inviting abuse. So the council limited the transfer it would allow.
Although Scott's application for an exemption was filed before the council tightened its standards, a spokesman said the new rules provided "a frameword" for its denial of the company's request. The council's initial decision was announced last week.
Scott had contended that its labor, energy and raw materilas costs this year would be so high that it could not reasonably follow the regular half-point deceleration standard and still show a profit.
However, the wage-price council, denying the Scott application, said the firm had "made no showing" that its operating costs were rising disproportionately and questioned whether its profits would erode under the half-point rule, as the company had said.