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Washington, DC. The subcommittee met, pursuant to call, at 9:30 a.m. in room 2123 Rayburn House Office Building, Hon. James J. Florio (chairman) presiding.

Mr. FLORIO. I call the committee to order.

This is a hearing within the jurisdiction of this committee to deal with a number of matters, probably the most significant of which is the future of the automobile industry in light of recent tentative approval of the Federal Trade Commission of the proposed joint venture between General Motors and Toyota.

Our hearing today is the latest in a series of hearings this subcommittee has been conducting over the last number of months concerning the automobile industry, an important aspect of the subcommittee's jurisdiction and of our continuing interest. Our hearing also reflects the subcommittee's jurisdiction and responsibility for the operation of the Federal Trade Commission.

There is no more important subject on our country's economic agenda than the future of our great manufacturing industries. We are not here today, however, as an advocate of a particular approach to that future. Rather, the subcommittee is here to learn and to inform itself.

Last week, Business Week reported that merger specialists say we are in the midst of a merger wave that is far from having crested, with further consolidation predicted in oil, steel, banks, and automobiles. Time magazine reported last week that 1983 saw a new year high in merger activity.

The automobile industry has been battered by high interest rates, currency imbalance, plant closings, and sagging productivity, until some observers suggest it may soon be impossible to manufacture cars in the United States for the important small car domestic market.

We are not convinced of that.

Almost simultaneously with the FTC tentative approval of the GM/Toyota joint venture, there have been press reports of other domestic auto companies either seeking to establish joint ventures with foreign manufacturers or to initiate new production for the American market by domestic producers in foreign countries.


if it denies a litigant its due process right to impartiality in the de cisionmaking process.

The second principle holds that agency action will be struck down where it results either in whole or in part from congressional pressure. Although the judicial opinions distinguish these two situations, one fundamental principle appears to be applied in all the


Any sort of interference in an ongoing administrative proceeding from members of the legislative branch of Government can so infect or influence the proceeding that a court will nullify the decision reached in the tainted process and order the agency to make any appropriate action to ensure reasoned, independent decisionmaking.

In fact, that Pillsbury case goes back to 1966, but it set aside, I believe, a 1950 or 1951 decision of the Federal Trade Commission after Senator Kefauver had inquired of certain members of the Commission as to their reasons in a certain case similar to the case that we are looking at today.

The subsequent case law supports the prudence in the Commission's decision not to appear before us at this time. It should be stated for the record that Chairman Miller, who has submitted a statement for the record, has indicated that he would welcome any opportunity to appear before this subcommittee to discuss this issue fully after final FTC action has taken place. I would point out that on February 27, in just a few days, the close of the public comment period occurs, and at that point the Federal Trade Commission would be happy to appear and discuss this issue at length.

As documented in the correspondence between this committee and the FTC, their concern is the avoidance of even the appearance of unwarranted congressional influence on their final decision in the context of this hearing.

The CRS' memorandum also includes a discussion at pages 52 to 54 of the lines of questions and statements which could pose a potential problem if pursued by any of the members with the Commission witnesses at this hearing today.

This analysis underscores the need to exercise considerable caution during the Commission's appearance today, so as to avoid any possible impropriety. And I would like to ask permission to circulate copies of this memorandum to all members attending the hearing.

Your efforts, Mr. Chairman, to protect the integrity of the Commission's ongoing proceedings in this matter are most important as well as necessary.

Thank you, Mr. Chairman.

Mr. FLORIO. Thank you very much. We are pleased to have with us in attendance the chairman of the full Energy and Commerce Committee. I at this point recognize him for the purpose of an opening statement.

Mr. DINGELL. Mr. Chairman, I thank you for the courtesy. Mr. Chairman, I commend you and the members of the Subcommittee on Commerce, Transportation, and Tourism for undertaking an inquiry on the future of the auto industry as it may be affected by the General Motors/Toyota joint venture.

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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 sho: !d 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.

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