ment upon the claims made by General Motors for a "genuine" clutch disc in its advertising. Mr. Murphy stated: Well, I would say that our part would meet that definition. It is the one that is made to fit right, function better, last longer. In other words, it is the same, has the same precision even though it is sold through our Borg-Warner Service Parts Co., an independent wholesale jobber. It is the same part functionally. It certainly serves the same purpose, meets those same tests as the one sold to Chevrolet for original equipment or for their parts (VII, 3015). Not only did Mr. Murphy testify that Borg-Warner's replacement clutch disc was as good in every respect as Chevrolet's, but he also pointed out that specifications for the Chevrolet clutch disc were originally developed by Borg-Warner engineers and subsequently adopted by Chevrolet (VII, 3016). Furthermore, he stated that although Borg-Warner's clutch disc was designed slightly differently, the tools used in its production were equal to the tools used to produce the Chevrolet clutch disc. Mr. Murphy concluded that if a BorgWarner replacement clutch disc were put alongside a replacement clutch disc made by Borg-Warner specifically for Chevrolet Motor Division, that they would both be equally genuine (VII, 3017-18). The Federal Trade Commission, which had been studying General Motors' "genuine parts" advertising for some time, following the completion of the Subcommittee's hearings on this subject, issued a complaint against General Motors on December 8, 1955, charging them with false advertising, in violation of section 5 of the Federal Trade Commission Act. 11. PROPOSED FURTHER STUDY It is intended that the staff of the Subcommittee will continue its study of General Motors in an effort to shed further light on the complex issues raised by the problem of bigness under the antitrust laws. This has been a preliminary staff report in which many major areas of the corporation's activities were omitted entirely; for example, consumer appliances and overseas operations. Time has not permitted adequate treatment of other topics which were touched upon, such as profitability of the corporation and its separate divisions, intracompany sales, purchasing policies, particularly of automotive parts and accessories bought for original equipment and for the replacement market, the relationship of efficiency to size, research and development, and problems of the full line. This staff report has been prepared during a period in which there has been considerable uncertainty as to the future of the automobile industry. Simultaneously with continuing reports of research progress and product improvement in motor transportation there have been discouraging showings by individual producers. Mergers have not improved the competitive situation. În parts production there has been continuing integration. The study of the automotive parts industry will be a major task of the Subcommittee staff. SEPARATE STATEMENT OF STAFF MEMBERS In addition to what appears in the staff report, we desire to call particular attention to the following points which we regard as of vital importance: 1. Phantom freight: There is evidence that in a single year General Motors realized a profit of $152 million, representing the difference between the actual freight costs on automobiles shipped by General Motors and the actual freight charges paid to General Motors by its dealers. 2. Rebates or preferential prices: There is considerable evidence of discriminatory prices obtained by General Motors for a great many years on windshield and window glass as compared with prices offered to independents by Libby-Owens-Ford Glass Co. With respect to the exercise of General Motors' purchasing power generally, the extent to which it is able to force suppliers to sell to it at prices which allow little or no margin of profit deserves special attention. 3. Reliance on consent decrees: There is doubt whether adequate relief has been afforded in important antitrust cases through reliance upon consent decrees rather than court adjudication. In addition, redress is thereby made more difficult for those who have actually been injured through violations of such decrees. Specifically, attention may well be directed to the disposition of the case involving General Motors in which a general conspiracy to monopolize the braking systems industry was charged (U. S. v. Bendix Aviation Corp.). 4. Coercion of dealers to purchase parts and accessories from General Motors sources only: The long struggle of dealers to force abandonment of coercive and oppressive practices by which they were compelled to purchase parts and accessories exclusively from General Motors culminated in the issuance of a cease and desist order against General Motors by the Federal Trade Commission more than 14 years ago. Yet, because of innumerable complaints of violations, this order is still under investigation in order to determine the extent to which General Motors is complying therewith. 5. Control of components: The economic power of General Motors is further illustrated by its control of certain essential components, such, for example, as automobile transmissions, by which it is enabled to raise or lower profits at will. 6. Relations with Greyhound Lines: The agreements between General Motors and Greyhound Lines deserve careful examination with a view to determining the existence and precise nature of any preferential or other arrangements by which competitors may have been adversely affected. о [Signed] JOSEPH A. SEELEY. INVESTIGATION CONCERNING THE CHARGES OF MONOPOLISTIC INFLUENCES IN THE POWER INDUSTRY 75904 Printed for the use of the Committee on the Judiciary UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON: 1956 SUBCOMMITTEE ON ANTITRUST AND MONOPOLY ESTES KEFAUVER, Tennessee WILLIAM LANGER, North Dakota DONALD P. MCHUGH, Chief Counsel and Staff Director 1 The late Hon. HARLEY M. KILGORE, while chairman of the committee and the subcommittee, died on February 28, 1956. |