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Briefly Section 7 of the Clayton Act, as amended, prohibits the acquisition of stock or other capital assets in certain lines of commerce where to do so would "substantially lessen competition, or tend to create Section 5 of the Federal Trade Commission Act prohibits

a monopoly."

"unfair methods of competition...and unfair or deceptive acts or practices." The provisions of the consent order issued by the FTC, and agreed to by and between GM and Toyota, would limit the joint venture to a twelve year period ending no later that December 31, 1997. It would permit the exchange of certain information necessary to produce the Sprinter-derived

vehicles.

The consent order would prohibit certain communications of information concerning current or future prices of automobiles and components by either automaker; current or future sales and production forcasts; and current or future marketing plans for products.

The Decmeber 28, 1983 publication of a notice of the proposed consent agreement and proposed complaint in the Federal Register was an action taken by the Commission in accordance with its regulation dealing with consent agreements, 16 C.F.R. Section 2.34, which requires that the Commission publish the agreement and receive and consider public comments or views concerning the order filed by interested persons. Under that regulation, the Commission may withdraw its acceptance of the agreement and take other actions, or serve its complaint and decision in disposition of the proceeding.

Thus, at present the consent agreement is open for public comment. Final action on the matter could result in a withdrawal of the consent

order and possible initiation of proceedings based upon antitrust violations, or the matter could be concluded by the final adoption of the

consent order.

There were dissents from two Commissioners to the proposed consent order. Commissioner Pertschuk concluded that "...it is a fundamentally misguided decision to sanction this type of cooperative arrangement between the dominant manufacturer and the leading importer. To justify such risks to competition we should require a substantial showing of true procompetitive benefits. These are not present. The cosmetic limitations placed on this joint venture by the consent agreement represent an antitrust 2/ policy based on crossing fingers and looking the other way.'

Commissioner Bailey also dissented, concluding "...if this joint venture between the world's first and third largest automobile companies does not violate the antitrust laws, what does the Commission think will?”

It is on the basis of this pending FTC proceeding, that questions arise regarding the possible legal effect now, during the comment process on the consent order, of congressional hearings relating to the matter.

THE PROPOSED CONGRESSIONAL HEARING

There have already been extensive written communications between Members of Congress and various officials at the Federal Trade Commission regarding possible congressional hearings concerning the G.M.-Toyota joint venture, the pending proceeding concerning the joint venture at the FTC, and other related

matters.

2/ Id., at 57, 254.

On June 14, 1983, in response to an April 29, 1983 request from FTC Chairman Miller, the General Counsel of the FTC prepared a memorandum outlining legal issues and various precedents related to possible

congressional hearings on the proposed G.M.-Toyota joint venture agreement.

The memorandum made this conclusion and recommendation:

Without a sense of the specific questions or
comments that might be presented in any future
hearings, we cannot offer very precise guidance
on how the Commission might respond to Congressional
concerns. We would recommend, however, that before
any hearings are conducted, efforts be made to apprise
committee staff of the potential problems suggested
by the case law on prejudgment and Congressional
influence and to work with them to aviod questions
and comments that might jeopardize future law enforce-
ment activity.4/

On December 21, 1983, the day before the Commission provisionally accepted the proposed consent agreement and before publication on December 28, 1983 of the Federal Register notice for public comment, Chairman James J. Florio of the House Subcommittee on Commerce, Transportation and Tourism sent a letter to FTC Chairman Miller expressing concern about the proposed G.M.-Toyota joint venture. pending decision on the legal merits of this transaction is emphatically one for the Commission alone to make," the letter raised issues of prejudgment by Commission staff:

Acknowledging that "[t]he

It has been suggusted that there may have been prejudgment of the issues by some FTC staff and a failure by the FTC to accord the public, including

3/ See, Memorandum entitled "Possible Congressional Hearings on QM/ Toyota," dated June 14, 1983 to FTC Chairman Mill from FTC General Counsel.

4/ Id., at 1.

3/

competitors of the parties to the proposed venture,

a full and fair opportunity to present their views.5/

The letter also raised issues concerning the effect of the joint venture on domestic employment and concluded as follows:

All of these threatened consequences simply
heighten the importance of the Commission using
the utmost caution in reaching its decision. It
may become necessary for the Subcommittee to address
in hearings the procedural questions raised above
and for Congress to deal in legislation with the
potential consequences of the proposed venture.
I ask that you advise me of the measures you are
taking to ensure fairness in this proceeding.
appreciate your cooperation in this matter.6/

I

On December 23, 1983 following tentative approval by the FTC of the joint venture agreement, Chairman Florio sent another letter to FTC Chairman Miller requesting copies of virtually all documents prepared by FTC employees and consultants with the exception of communications between commissioners and their immediate staffs relating to the G.M. -Toyota venture. This request apparently has served as a basis for the FTC to make available may of the documents in its possession relating to the proceeding to the

Subcommittee.

On January 23, 1984, Chairman Florio issued a memorandum to Members of the Subcommittee on Commerce, Transportation and Tourism announcing a February 8, 1984 Subcommittee hearing on "Federal policy and the automobile

5/ Letter dated December 21, 1983 from Honorable James J. Florio to

FTC Chairman Miller. Attachment # |

6/ Id.

industry in light of the recent FTC decision on the proposed GM/Toyota joint

7/

venture. That memorandum described the background and status of the FTC pro

ceeding making these observations:

When Congressional hearings are held in proximity
administrative action, due regard should be paid to

the appropriate roles of agencies and Congress. In the
past, such situations have occasionally given
rise to assertions that the independence of
agency decision making has been compromised by
unwarranted Congressional pressure. Particular
sensitivity might arise in certain kinds of
interrogation of agency decision makers when a
Congressional hearing is held during the pendence
of a quasi-judicial proceeding.

The decision currently pending at the FTC is a
decision whether, after public comment, to accept
the consent agreement as the final resolution
of this matter. Commission rules provide that
during the comment period "the Commission will
receive and consider any comments or views concerning
the order that may be filed by any interested person."
16 C.F.R. Sec. 2.34 (1983).

Nevertheless, even in the present circumstances,
Members of the Subcommittee will want to be sensitive
to the appropriate relationship between the Commission
and the Congress. Accordingly, you and your staff may
wish to review the legal precedents on this subject,
some of which are cited and summarized in the a tached
law review article, "Judicial Limitation of Congressional
Influence on Administrative Agencies." [73 Northwestern
University Law Review 931 (1979)]8/

On January 24, 1984, Chairman Florio sent a letter to FTC Chairman
Miller inviting him to testify at a hearing of the Subcommittee on
February 8, 1984, a date prior to the scheduled close of the comment
period, February 27, 1984:

The subject of this hearing will be the Federal Trade Commission and federal policy towards the automobile industry in light of the recent Commission decision on the proposed GM/ Toyota joint venture. Topics examined will include, among others, the following:

7/ See, Memorandum entitled "Hearing on the Future of the U.S. Automobile Industry in Light of the Recent FTC Decision on the Proposed GM/Toyota Joint Venture," dated January 23, 1984 to Members of the Subcommittee on

Commerce, Transportation and Tourism from Chairman Florio. Hachment #2

8/ Id.

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