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proposed joint venture with Toyota will assist GM in main

taining this position and thwart competitive efforts by

other manufacturers.

Conclusion

GM has long been the dominant factor in the

American automobile business, an industry in which there are

only five domestic manufacturers.

If deconcentration is

ever to be achieved in this market, it will come about only

if GM is prevented from entering agreements with other

manufacturers that have the effect of weakening smaller

competitors and preventing them from establishing a market position from which they can challenge GM. It is these companies alone that offer the prospect of significant new

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February 27, 1984

FTC/S
office of the Secretary
Washington, D.C. 20580

Comment of Ford Motor Company with Respect to
General Motors Corp. and Toyota Motor Corp.
Proposed consent Agreement
(File No. 821-0159)

I.

OVERVIEW

The proper role of the Federal Trade Commission

(FTC) is to enforce the law.

It is not 'to apply

'contemporary economic theory' to the extent it may be

distinct from (legal) precedent, and to fail to apply the standard framework of analysis.

.1/

And it is not

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to target certain competitors for favored treatment to

facilitate their domination of the market.

Yet the FTC

majority has discarded the law and ignored competitive

reality in an inexplicable solicitude for General Motors.

If "GM faces a dilemma' in the small car market, 2/

it is one of its own making.

If GM has no modern,

competitive small cars of its own, it is because it

consciously chose not to develop them, preferring to

1/

United States v American Cyanamid co., 719 F.2d 558 at 567 (2d Cir. 1983).

2/

See PTC documents p. 000019 (Muris Memorandum).

devote its resources to the large car market which it

already monopolizes.

If it cannot import all the Japanese

cars it wants, it is because of the continuation of import restraints which it successfully assisted in urging in the

first place.

It is not incumbent upon the FTC to cure

these self-inflicted wounds in order to assure GM's

maintenance and expansion of its dominant market position.

The proposed joint venture benefits no one but GM

and Toyota. It benefits GM by providing it with a small car to sell, while blunting serious competition from Toyota, without the investment necessary to compete independently. It benefits Toyota by limiting competition

from GM and by providing a politically expedient means to

avoid producing cars in the United States on its own.

The American public does not benefit, but is

injured.

The joint venture transfers much of GM's small

car sourcing to Japan, keeps Toyota from coming to the

U.S., and results in the dominant competitor from each

country selling the same basic high volume small car

instead of competing independently.

The joint venture injures Ford and other com

petitors, who have invested billions in the United States

to compete independently in the small car market, by

facilitating GM's expansion of its monopoly position.

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the time the joint venture has ended, GM's Chairman predicts that GM will sell over 60 percent of the cars in

the u.s. 'mostly because I don't see anybody that is going to invest the money to produce the larger-size cars that we're doing. :3 That result, if it materializes, will

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The essence of the joint venture is that GM and

Toyota, each of which can compete on its own, have agreed

instead that GM will market high volumes of Toyota's basic

car model for the next twelve years; two or three normal model cycles.17

As models change, Toyota will assist GM

in maintaining the similarity between the two companies'

versions.5)

GM expects its version of the car,

3/

Ward's Auto world, November, 1983, p. 30.

4/

See 48 Fed. Reg. p. 57256; PTC documents p. 000280.
Historically, the corolla has been Toyota's
principal model. GM will sell 250,000 joint venture
corollas per year more than any 1983 model
Chevrolet or import model. In addition, GM can
potentially obtain unlimited additional Corollas
from Toyota assembly plants in Japan. See 48 Ped.
Reg. at 57249.

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essentially the existing Toyota Corolla, to replace sales of its current Chevette and 'g' cars./

The joint venture's adverse effect on competition will be substantial.?!

First, the parties have immense

market power. The relevant market delineated by the FTC

the sale of 'small cars' (subcompact, compact and

intermediate) in the United States and Canada

is

already highly concentrated.

General Motors so dominates

this market that its 40 percent share exceeds those of the number 2, 3 and 4 companies combined. 8/ Toyota, with an

8 percent share, is the largest importer and fourth

largest seller.

The FTC staff found that GM's prices

'virtually dictate' those of other u.s. companies and that

'just as clearly,' Toyota's prices determine those of Japanese importers.9/

6/

See also, PTC documents

48 Fed. Reg. 57257.
p. 000269.

7/

The anticompetitive effects of the joint venture are
discussed at length in earlier submissions by Pord
to the PTC, which we are including as attachments to
this comment. See, e.g. Attachment A (Preliminary
Analysis by Professor Joseph Brodley, March 3, 1983)
pp. 1-12; Attachment B (Pord's Supplemental Legal
Analysis, September 19, 1983) pp. 1-25; Attachment D
(Ford's Responses to Questions by Commissioner
Calvani, December 19, 1983) pp. 1-5, 7-9.

8/

Based on the FTC's figures.
000998.

See PTC documents p.

9/

PTC documents pp. 000198, 200. (Bureau of
Competition Memorandum)

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