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proposed joint venture with Toyota will assist GM in main
taining this position and thwart competitive efforts by
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
February 27, 1984
Comment of Ford Motor Company with Respect to
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.
And it is not
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
United States v American Cyanamid co., 719 F.2d 558 at 567 (2d Cir. 1983).
See PTC documents p. 000019 (Muris Memorandum).
devote its resources to the large car market which it
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
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
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.
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
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'
GM expects its version of the car,
Ward's Auto world, November, 1983, p. 30.
See 48 Fed. Reg. p. 57256; PTC documents p. 000280.
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
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
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/
See also, PTC documents
48 Fed. Reg. 57257.
The anticompetitive effects of the joint venture are
Based on the FTC's figures.
See PTC documents p.
PTC documents pp. 000198, 200. (Bureau of