to a "full phase" investigation. Shortly thereafter, GM and Toyota advised the staff that the proposed joint venture would be structured in a manner making it reportable under the premerger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act. (15 U.S.C.§ 18a et seq.) Premerger notification filings were completed by GM and Toyota on April 4, 1983, and on May 4, 1983, requests for additional information were issued to GM and Toyota under the applicable premerger notification statutory procedures. Over the course of the following months, both GM and Toyota submitted tens of thousands of pages of documents to the Commission staff in response to these requests, including the companies' most sensitive information about their costs, profits, product plans, and business strategies. This information related not only to the Fremont joint venture, but also to the entire automobile business of each company. At the same time, similar requests for information were sent to every other manufacturer of automobiles in North America, including Ford, Chrysler, American Motors, Volkswagen, Honda, and Nissan. All of these companies voluntarily cooperated with the investigation, although it was necessary to issue a subpoena in one instance to obtain complete cooperation. These companies, like the parties to the joint venture, also submitted thousands of pages of documents in response to these requests, including highly sensitive information about their costs, profits, product plans, and business strategies. Altogether, the Commission's attorneys and economists conducting the investigation screened and analyzed about 50 boxes of documents submitted to the Commission. - in During the course of the staff's work, 26 formal investigational hearings were held, in addition to numerous informal interviews with automobile company executives. These hearings and interviews were held across the United States Detroit, Boston, Los Angeles, Washington, and Marysville, Ohio. In addition, Commission investigators went to Japan for more than a week of hearings in Toyko and Toyota City. Formal hearing transcripts were taken of five executives from GM (one of these on two different occasions), nine from Toyota and its United States affiliate, four from Ford, two from Chrysler, one from Honda of America, and four from Nissan of America. In addition to these formal submissions and appearances, the parties and the other companies were in constant contact with the Commission throughout the investigation. Chrysler and Ford submitted additional affidavits, statements, and documents, either on their own or at the request of the staff. Ford, Chrysler, and AMC all submitted formal legal papers concerning the joint venture, and Ford and Chrysler also submitted extensive economic analyses. Moreover, the companies' contacts were not solely with the investigative staff. Chrysler presented its position to the Director of the Bureau of Competition as early as November, 1982, and to individual Commissioners in July, 1982. Ford visited with individual Commissioners as early as February, 1983, and returned, with Chrysler and AMC, to restate its position as the Commission moved toward its decision in December, 1983. On most days during the weeks just prior to the Commission's action of December 22, 1983, representatives of one or more of the automobile companies visited one or more Commissioners or staff. Throughout the period from March, 1983, to December, 1983, the only contact between the Commission and the investigating staff was a series of occasional briefing sessions on the progress of the investigation. Status reports were made on March 1, 1983, May 31, 1983, October 18, 1983, and December 16, 1983. At these sessions, the Commission reiterated the guidance mentioned above and provided support for the staff's investigational efforts; in particular, the Commission endorsed the staff's insistence on obtaining access to complete responses to the requests for additional information from the parties, despite company qualms about revealing their most sensitive cost and profit data. Although the Commission staff began drafting preliminary, background analyses during the Summer of 1983, the staff could not begin to formulate its recommendation until after all investigational hearings were completed in September, 1983. And the staff could not complete its recommendation until complete responses to its information requests were made available, which did not occur until nearly the end of November, 1983. A delay of approximately two months in obtaining the information requested under the Hart-Scott-Rodino procedures resulted from Toyota's initial refusal to produce certain corporate documents. These documents contained cost and profit data by model line, and came to light during the staff's investigational hearings with Toyota corporate officials in early September. The Commission was briefed on the status of this apparent impasse on October 18, 1983, and supported the staff's position that the documents were required before it could complete its antitrust review. That same day, on request, the Commission advised the House Judiciary Committee of the document submission delays. After lengthy negotiations between the staff and Toyota's counsel, Toyota agreed to make available to the staff all of the withheld materials needed to complete the staff analysis. That information became available on November 21, 1983. Draft papers were circulated for review and comment in the Bureaus of Competition and Economics, and between the respective Bureaus. Tentative recommendations were discussed and debated, as was the concept of a consent agreement and order along the lines of the one tentatively accepted by the Commission on December 22, 1983. The possibility of a consent decree was discussed among the Bureau of Competition staff as early as September, 1983; however, it was broached to the parties for the first time in early December, 1983. During the week of November 28, 1983, the staff of both bureaus provided the Commission with penultimate drafts of memoranda analyzing the joint venture. These memoranda prompted inquiries from all of the Commissioners' offices, and throughout December, 1983, the investigating staff discussed with Commissioners and their staffs the Bureaus' analyses and recommendations. During December, 1983, the staff was also attending meetings between individual Commissioners and representatives of each of the American automobile companies (including GM), plus Toyota. The staff formally transmitted its complete and final recommendation memoranda to the Commission on December 16, 1983. At that time, at the direction of the Bureau of Competition Director, staff was already involved in negotiations with GM and Toyota over the terms of a possible consent order. Basic agreement was reached between the staff and the parties on December 20, 1983. The final details of the proposed order were completed on December 21, 1983, the day before the Commission's action. - It is clear from this history of the procedures the Commission used in investigating the proposed GM/Toyota joint venture that Chrysler's assertions that it lacked adequate information to comment on the proposed joint venture and that the FTC's procedures were somehow conducted in "back rooms" in secrecy are without merit. First, it was clear from our staff's meetings with Chrysler throughout 1983 that the company in fact had a clear understanding of the joint venture's contours. Thus, Chrysler's analysis and comments to the Commission and its staff were not handicapped. As the Subcommittee will recall, Chrysler filed a petition with the Commission on January 10, 1984, requesting public disclosure of "the GM, Toyota and staff documents and analyses on which [the Commission] acted" in provisionally accepting the consent agreement. As you may also know, the Commission voted yesterday to deny that petition, with Commissioners Pertschuk and Bailey dissenting. to this testimony. A copy of the Commission's order is attached We note at this time, however, that in separate litigation GM chose to disclose the entire Memorandum of Understanding between it and Toyota. The Commission has now placed the complete Memorandum on the public comment record. As we noted previously, the Commission had already placed upon the public record redacted versions of the staff memoranda and consultants' reports to the Commission, from which confidential information was deleted as required by applicable federal law and Commission rules. Thus, Chrysler has had access to as much information concerning the proposed joint venture as the law and sound law enforcement policy permit. As you may know, one week ago, Chrysler Chairman Iacocca testified before the House Banking Subcommittee on Economic Stabilization that the FTC approved the proposed joint venture "after a secret proceeding from which all interested parties and the news media were barred." It is technically correct that the actual meeting at which the Commission voted was non-public. This procedure was in accord with standard Commission practice, and is expressly authorized by the Government In The Sunshine Act. (5 U.S.C. $552b.) We should stress, however, that the meeting had to be non-public because of a need for us to discuss and weigh confidential information statutorily protected against disclosure. As the attached list of meetings reveals, officials of Chrysler (and of all other major auto manufacturers) had frequent and extensive access to the Commissioners and FTC staff throughout our investigation. From November, 1982, through December, 1983, Chrysler representatives met with FTC staff on no fewer than eight separate occasions. And Chrysler officials participated in rounds of meetings with individual Commissioners on at least two different occasions, once in July, 1983 and again in December, 1983. This record demonstrates that Chrysler and other domestic auto manufacturers had ample opportunity to - make their case(s) to the Commission. The procedures employed in this investigation, as in all Commission investigations, provided the direct parties, and all interested third parties, repeated opportunities to present their 1 One reason GM had for maintaining the confidentiality of those portions of the Memorandum dealing with competitively sensitive pricing formulas may have been obviated when Commissioner Pertschuk made public a part of this information inadvertently - apparently when he released a statement to the press prior to the Commission's meeting of December 22, 1983. 2 Prepared Remarks by Lee A. Iacocca, Chairman of the Board, views and comments, information, data, and other evidence to the investigative staff, Bureau Directors, and individual Commissioners. Indeed, the investigative record is replete with evidence to the effect that not only were such opportunities provided and accepted, but were initiated by the investigative staff. In fact, the staff sought and secured a most thorough and complete record, and never once compromised the Commission's statutory rights to obtain all relevant information and data necessary to complete its independent analysis and review of the joint venture. Both the thoroughness of the investigative record and the in-depth analysis of all issues presented by the staff, reflected in its recommendation memoranda to the Commission, demonstrate both the adequacy and fairness of the procedures employed by the Commission in reaching its decision. In summary, we are proud of the record of the Commission in this proceeding and remain confident it will withstand the most thorough scrutiny. |