We who come from a country where heavy industry and autos are regarded as important to our well-being view this kind of inquiry as being potentially very helpful.

This inquiry is a matter of great significance and goes into a matter of equally great significance not only to the two auto companies involved, but the industry as a whole, and also to the workers who will be affected by those agreements, including those who are not to be benefited, and by the American consumer generally. Of particular relevance to the subcommittee's inquiry will be the testimony of a member of the Federal Trade Commission. The Commission, as the record will indicate, spent some 10 months last year examining the proposed agreement between General Motors and Toyota.

In December, the Commission made a preliminary determination to accept a consent agreement that was placed on the public record for comment.

This is a 60-day proceeding which will end later this month. I understand that the Commission will make its final decision in early March.

Prior to the hearing this morning, there has been considerable discussion with the FTC with regard to the FTC and what has commonly been referred to as the Pillsbury line of cases.

I believe the record must indicate some of the circumstances and the legal facts and principles relative to that decision at this point, so that we can understand how the matter shoid proceed this morning.

It is important that the record of this hearing reflect that the Pillsbury line of cases does certain things and does not stand for other things. These cases in no way limit or qualify the constitutional authority of Congress to conduct investigations or compel the appearances of witnesses or the production of documents or other functions necessary to the conduct of effective congressional oversight.

These cases do not provide grounds upon which an agency's decisionmakers may refuse to comply with a congressional request for their appearance at hearings, nor do they suggest that hearings, per se, will lead to situations where a later judicial challenge may result in the reversal of an agency's actions.

Having said this, however, it must be observed that the committee has a very special responsibility to proceed with extraordinary care this morning to procure the information that is necessary, to see to it that it is done in a fashion which does not intrude into the decisionmaking process of the agency and at the same time to see to it that the needs of the Congress are properly and fully met.

The law, as defined by the Pillsbury line of cases, holds simply that agency actions can be deemed invalid if it turns on improper outside pressure. This committee has long stood for the principle that the agency decision should be sacrosanct, should be made by the Commission in the course of its proper responsibilities, acting under the law, in a fair and proper fashion, and that this should be done free from outside pressure, including pressure from this room, from the Oval Office, and from others who might desire to arrange the outcome of a particular decision before this or any other regulatory agency.

In very rare and extreme cases, such outside pressure could be, as I have indicated, in the form of influence from Congress or from some other executive agency. Such parties as might be involved in the matter may be deprived of their right to appearance of agency impartiality, or they might even be denied the right to real impartiality by the agency.

Specifically in the Pillsbury case, Pillsbury Company v. FTC, 345 Federal 2nd 952, Fifth Circuit, 1966, the court invalidated the agency's actions and referred to-and I quote, "questions and comments by members of the committee in which they forcefully express their opinions" as to the action the agency should take.

Furthermore, the Court held that it was impermissible to subject a Commissioner to a searching examination as to how and why he reached a particular decision. This is a growing body of law which is added to periodically, and indeed, I might observe that on occasions I have added to the law in other matters.

I would be particularly concerned if members of the Commission were to volunteer information which might jeopardize the decisionmaking of the Commission, and would caution them, as well as my colleagues, that their behavior must be very circumspect in view of judicial review and in view of the rights of all of the parties, including the citizenry at large, to expeditiously correct decisions by the agency.

The possibility that congressional action here could so taint the matter as to render the action of the agency invalid is, I believe, generally slight, particularly in view of the attitude that I observe in the chairman of this subcommittee and in the subcommittee itself, as well as the expertise which this committee and this subcommittee and its sister subcommittees on this committee happen to have.

But the possibility that such action could occur concerns me greatly. I am, however, confident, as I have indicated, that Chairman Florio and members of the subcommittee are mindful of these considerations and will observe them in the conduct of the hearings this morning.

Clearly, nobody on this committee, particularly its chairman, wants a repetition of the Pillsbury-type case affecting the actions of this particular body. I would like to assure members of the Federal Trade Commission who are here today that this member is very mindful of the proper role of the Congress in this inquiry, and of the proper bounds of examination.

I feel certain that this committee does not intend to exceed those bounds and I am certain that its chairman does not. Should any member of the Commission who is here today experience any nervousness about those bounds or that they are being approached, I would certainly welcome that being called to the attention of the subcommittee, and I am satisfied that the subcommitee would respond very carefully and very correctly.

I am sure that the matter then can be and will be dealt with responsibly. It is not in the interests of anyone, as I have indicated, that this proceeding should be tainted by transgressions of the Pillsbury doctrine. As our distinguished chairman has noted today, the hearing is not intended to influence the Commission in this

matter.

The hearing is to inform the subcommittee, and I stress that it is not to inform the Commission. The proceeding today is for the records of this commitee and not for the records of the Commission.

I would ask unanimous consent, Mr. Chairman, to insert in the record at this point my earlier correspondence with the Commission relative to the matters before the committee today.

[Testimony resumes on p. 27.]

[The correspondence referred to follows:]

Thank you for your letter of January 24, 1984, requesting our testimony at a hearing your Subcommittee has scheduled for February 8, 1984. Thank you also for your letter of January 27, 1984, clarifying our separate responsibilities with respect to this important matter.

We welcome the invitation to discuss the topics your letter of January 24, 1984, identifies as areas of interest. Indeed, given the considerable misinformation concerning the manner in which the Commission and its staff have thus far discharged their duties regarding the proposed joint venture between General Motors Corporation and Toyota Motor Corporation, we are eager for an opportunity to set the record straight. The fact is, this investigation thus far has been carried out with exemplary care and in accordance with established law and procedure.

As you know, on December 23, 1983, the Commission made a preliminary determination to accept a consent agreement that was placed on the public record for comment. Our staff has worked diligently in response to your various requests and has made available copies of all documents relating to our investigation of this matter. In addition, the major reports reviewed by the Commission before making its decision have been placed on the public record to the extent permitted by law, as interpreted by the Commission's Office of the General Counsel, although the dissenting statements of Commissioners Bailey and Pertschuk urged a less restrictive reading of the law (and, consequently, placing a less expurgated version of these materials on the public record.) Currently, the Commission is receiving comment and will meet to render its final decision as soon as possible after its review is complete.

We

As eager as we are to appear before your Subcommittee, we respectfully note that the scheduled date of February 8, 1984, will occur prior to our final decision. In our view, there are obvious potential practical and legal hazards to our appearance at such a hearing before our final decision is rendered. understand your view that the hearing could be conducted without impinging on the independence of the agency. Moreover, we are extremely grateful for your sensitivity about this matter. Absent some compelling reason, however, we respectfully submit the wiser course would be to postpone the hearing date until after we've made our final decision. This may entail a delay of perhaps no more than a month. Moreover, we believe a postponement would not adversely affect your stated objectives but would in fact enhance their attainment because then we would be free to participate more fully. Failing such a postponement, we respectfully request you to invite the Commission's staff, which is thoroughly familiar with every aspect of the procedures employed in this matter, as a substitute for our formal appearance at the hearing.

We believe that a postponement of the hearing date (or substitution of staff) is required for two reasons. First, it would avoid the awkward situation in which we might seem unresponsive to questions posed by Members of the Subcommittee when to respond fully might be interpreted as prejudgment on our part. Second, and far more important, a postponement (or substitution of staff) is required in order to avoid even the appearance of unwarranted influence on our final decision and potential criticism, however unjustified, that our final decision was influenced by participation in your hearing.

We of course agree with the comment you expressed in your letter of December 21, 1983, and repeated in your letter of January 27, 1984, namely that "[t]he pending decision on the legal merits of this transaction is emphatically one for the Commission alone to make." However, regardless of the final decision, it is critically important that no one have any cause to claim or even suspect that it may have been improperly influenced. As you have recognized, and the courts have repeatedly held, we must avoid even an appearance that the independence of an agency decision has been compromised by unwarranted Congressional pressure. A hearing prior to the final decision at which we appeared to address the areas described in your letter of January 24, 1984, could easily be interpreted, however unfairly, as such an intrusion -- particularly since your Subcommittee has oversight and authorization responsibilities for the Commission, and you appear to have expressed views as to what the Commission should do in the pending matter.

The problems presented by our direct participation in the scheduled hearing are similar to those discussed in the leading judicial decisions involving unwarranted Congressional