bus business of any operating companies thereafter acquired by National City Lines. He stated that the remaining 15 percent was reserved for emergency purchases or for disposition as agreed upon by General Motors and Mack.

Mr. Dixon stated that at the time these contracts were entered into, the operating companies of National City Lines were securing buses from several suppliers. He stated that these suppliers were naturally foreclosed from furnishing any further equipment to these companies after these contracts became effective. Representatives of competing suppliers, the witness related, indicated during the trial of the criminal case that they could not sell their buses to the operating companies controlled by National City Lines, Inc., because of its agreement with General Motors.

In substance, Mr. Dixon testified that General Motors acquired substantially all of the bus business of the operating companies of National City Lines by making "so-called stock investments" in National City Lines or its subsidiary companies. He stated that the supliers who made these so-called investments themselves apparently recognized that they were buying the stock only as part of a larger deal which assured them the business of the operating companies (VI, 2606). Mr. Dixon also claimed that National City Lines made its purchases of buses from General Motors with little reference to current price quotation. He implied that the requirements contracts obligated National to purchase buses from General Motors, regardless of the prices charged by other bus manufacturers.

Mr. Dixon testified that after the affirmance of the conviction in the criminal case, some of the defendants, including General Motors, disposed of their investments in National City Lines, Inc., and its operating companies in an apparent effort to make the issues in the civil case moot (VI, 2606-07). Some of the requirements contracts were also abandoned or canceled, and others expired through the lapse of time. Mr. Dixon revealed that, despite the conviction of the criminal case, some of the other defendants persisted in retaining their requirements contracts, and that such contracts were not terminated until the entry of the final order of the district court in 1955.

The Subcommittee is vitally interested in the effectiveness of antitrust decrees in restoring competition. Mr. Dixon ventured the opinion that 5 years hence, if the Department of Justice reviews the situa tion, it will probably find that the National City Lines companies, if they are still operating, will be using General Motors equipment almost entirely. Mr. Dixon expressed the view that the lapse of a long period of time generally works in the defendant's favor in an antitrust case, and that this was particularly true in the National City Lines case. As the witness said:

The conspiracy charged had been in effect for at least 10 years prior to the time the indictment and civil cases were filed.

The result is that for a period of 18 years in this case the market involved here has been foreclosed from substantially all competition, and in the meantime, the companies have been making the profits on the products that they bave sold in this market, without any fear that they were going to lose that business from compeitive suppliers.

Now, as a practical matter, the court decree may require certain things, but if you have been doing business with someone for 18 years the chances are that you are going to be a little reluctant to change to someone else unless you are forced to do so (VI, 2620).

This criticism corroborates the views of other critics of antitrust enforcement, who hold that buying habits and other commercial practices, once entered into illegally, are often difficult if not impossible to terminate. While court decrees can enjoin or cancel illegal contracts, it is extremely difficult to disrupt the buying habits of companies which find it expensive and burdensome to change to other suppliers. General Motors, in rebuttal of the testimony of Mr. Dixon, subinitted its own statement of the facts based upon the court records relating to General Motors and the National City Lines cases. This statement charged that Mr. Dixon's testimony gave an inaccurate and incomplete picture of the facts in the record:

so incomplete and inaccurate that actually no mention was made that the final outcome of the several years' litigation in this case was the denial of the relief requested by the Government and dismissal of the civil action against General Motors *** (VIII, 3919).

General Motors took strong exception to what it described as the implication left at the hearing that it was by virtue of contracts with National City Lines that General Motors had achieved its present high percentage in the bus market. General Motors claimed that the record showed that its total sales to National City Lines companies during the years 1949 through the first 10 months of 1954 constituted only 4 percent of its total sales of buses. It concluded that there must be other reasons for its success, since 96 percent of its total business came from other sources.

This raises an important issue respecting General Motors' role in the bus industry. If the General Motors Corp. made important inroads into the bus market through restrictive agreements in this case, requirements contracts-this is a fact which law-enforcement officers must carefully appraise. Any final conclusion as to possible Sherman Act violation by General Motors in this area must take into account the use of such contracts as a device to preempt the market, and their importance in achieving this result. In its statement filed with the Subcommittee, General Motors does not state what percentage of its sales of transit buses were represented by its sales to National City Lines companies for the period in question. If Mr. Dixon imputed significant gains to the General Motors Corp. because of the illegal contracts, the market he was speaking of was obviously the sale of transit or urban buses. There is reason to believe that in this market General Motors' National City Lines business was considerably in excess of 4 percent.

General Motors claimed that Mr. Dixon's statement gave none of the background for the capital investment and contracts, and that such background would show that General Motors had no purpose to prevent or restrict competitors from the opportunity to secure National City Lines business. General Motors explained its capital investment in National City and the related contracts in the following way: Yellow Truck & Coach Manufacturing Co., referred to as Yellow, was a manufacturer of buses from 1923 until 1943, and during this period General Motors owned slightly more than 50 percent of its stock. The management of Yellow in 1932 set up a holding company with capital of $300,000 for purpose of financing the conversion from streetcars to buses in certain small cities. Yellow felt that if it built a small bus, a market would be created in smaller communities where a bus could be

operated more economically than a streetcar. Investments were made in three cities where it was claimed Yellow sucessfully motorized the city and, having demonstrated the feasibility of using small buses, turned the management over to other interests and liquidated its investment. Roy Fitzgerald of National City Lines and his associates were then conducting similar activities in other small communities and were buying their buses from Yellow. According to General Motors' statement, Fitzgerald made his first venture into converting city streetcar systems to bus operation upon the suggestion of a representative of Yellow. General Motors claimed that Fitzgerald converted several small cities from streetcars to buses, purchased his buses from Yellow on time, reduced fares and made money. National City Lines, it claimed, was organized to engage in a similar type of activity. General Motors claimed that when Fitzgerald could not obtain financing from investment bankers, he solicited capital from Yellow and other suppliers. The first investment made by General Motors (Yellow) in the City Lines companies was in Pacific (a subsidiary) in 1938. General Motors further stated that at the time this investment in Pacific was made, nothing was said about Yellow's supplying buses to Pacific. The matter of a requirements contract for buses was first mentioned in 1940, General Motors claims, 2 years after it made its investment and only in order to assure Pacific of an assured supply of buses during wartime conditions (VIII, 3921). Mr. Dixon had also stated that, according to the record, it was National City Lines who sought the capital investment from the defendantsuppliers.

Although this requirements contract was not made until 2 years after Yellow's investment in Pacific, no such delay occurred with reference to Yellow's investment in National in 1939. In connection with this investment, the board of directors of Yellow Truck & Coach approved the investment in National, and, at the same meeting, approved the requirements contract described by Mr. Dixon. General Motors asserts that Fitzgerald sought capital assistance for National City Lines in 1939, but does not deny that the requirements contract with National was part of the package involving the capital investment. General Motors alleged that an investment of $500,000 was. made by Yellow, and that the requirements contract was entered into at the suggestion of Fitzgerald.

Yellow did not ask for nor want a requirements contract; prior to that time the Fitzgeralds and National, after its organization, had been purchasing practically all their bus requirements from Yellow (VIII, 3922).

Significantly, General Motors gives no reason why Fitzgerald suggested the requirements contract at the time of the original 1939 investment in National City Lines. More important, General Motors makes no explanation why it decided to enter into a requirements contract. Since it claims it was already obtaining the business, there would appear to be no need for the contract. And since General Motors was advancing the money at City Lines' request, it was under no obligation to make such a contract.

Mack received a contract from National for 4212 percent of the new bus business of after-acquired properties. According to General Motors, Mack had assured National it would and could build buses competitive with Yellow's, but it never did and as a result failed to

sell its allotted percentage of new equipment. Mack Corp. denied that its failure to obtain its 4212 percent was due to its inability to build the new buses as promised.

General Motors rejected the inference drawn by Mr. Dixon that its success with National was due to the requirements contract, and, by way of reply, stated that it sold to National and its subsidiaries the following percentages of their purchases of new buses for the years prior to the requirements contract:

During the 10-year period of the existence of the requirements contract, 1939 to 1949, General Motors stated its percentage of National City Lines' business was 75.49 percent. Following the termination of the contract, General Motors sold National and its subsidiaries the following percentage of their requirements:

1950 1951

(VIII, 3923)

Percent

100. 0

95.7

The figures for 1950 and 1951 can be construed as supporting Mr. Dixon's assertion that even after illegal contracts have been terminated it is very difficult to eradicate their results.

Several of the witnesses representing other bus companies testified that they had been successfully selling buses to transit companies which were later taken over as part of the National City Lines system. According to these witnesses, after National City Lines acquired the companies they were no longer able to do any substantial volume of business with them. The witnesses stated that they did continue to get some replacement business but the bulk of this business went to General Motors (VI, 2645).

General Motors also challenged Mr. Dixon's assertion that the statement by a bus manufacturer concerning the exclusionary effect of these requirements contracts was typical. General Motors claimed that at the trial only one witness from a competitive bus manufacturer testified that he tried unsuccessfully to solicit bus business from City Lines. General Motors pointed out that on cross-examination it was shown. that the reason City Lines did not purchase buses from the witness' company was because of the faulty performance of buses previously furnished. General Motors concluded that it seemed rather obvious the City Lines president was using the

so-called General Motors tie-up as a means of getting rid of a salesman whose product he did not want (VIII, 3924). Thus, it can be said there was no proof that General Motors relationship with National City Lines companies prevented competitive manufacturers from selling their product.

However, the contracts offered in evidence, as the basis of the Government's case, were clearly restrictive on their face (VIII, 3924). General Motors concluded:

The court record, therefore, demonstrates National was and is buying General Motors buses because of their merits, as are all other purchasers, and not because of some insinuated improper relationship as suggested by the former Government attorney (VIII, 3925).

The evidence submitted by General Motors does raise a question concerning the relative significance of the requirements contracts in obtaining National's bus business for General Motors. However, its reference to "some insinuated improper relationship" and its disclaimer of all wrongdoing ignore the finding by the jury in the criminal case that General Motors, along with other defendants, had in fact entered into a criminal conspiracy to monopolize the business in question. The Court of Appeals affirmed that verdict.

General Motors stated that the court expressly ruled that the making of the requirements contract was legal and that no objection was made by the Government to this ruling, referring to the memorandum decision by the district court in 1955 in which the court characterized the practices involved in the case as not matters of outright lawlessness or brazen price-fixing, and stated that, since requirements contracts are not illegal per se, it is not necessarily unlawful for a supplier to help a customer financially, whether by extending liberal credit or investing capital.

General Motors thus regarded the final outcome of the several years of litigation in this case as the denial of the relief requested by the Government and dismissal of the civil action against it. Such a characterization leaves the impression the corporation was completely exonerated from all wrongdoing in these cases and that the Government in fact did not prevail. However, the corporation was in fact indicted and convicted in the criminal case for violating the Sherman Act. The Government's suit for civil relief against General Motors was dismissed by the court as unnecessary only because the corporation had abandoned the restrictive contracts and had divested itself of its stock interests in National City. In fact, in the very suit which was dismissed, the court had previously declared that the issue concerning the illegality of the conduct, of which the requirements contract formed the basis, had already been decided by the court in the criminal case and could not be relitigated. The inferences drawn by General Motors from the remarks of the trial court, and the further assertion by General Motors that the court declared the contract to be legal are scarcely consistent with the ruling of the district court in the civil case on the Government's motion for summary judgment. In declaring that the issue of liability in the case had already been decided against the defendants and was binding upon this court, the district court on December 17, 1953, declared (118 F. Supp. 465, 468): In affirming the conviction, the Court of Appeals painstakingly reviewed the evidence. The findings which were held to be necessary to support the verdict on appeal are:

1. That, within the period charged in the indictment, the defendant entered into contracts among themselves for the exclusive sale and purchase of the supplies required by the transportation companies involved;

2. That these contracts were intentionally executed by the defendant acting in concert;

3. That these acts were performed with the intent required by the Sherman Act; and

4. Constituted a conspiracy to restrain trade in violation of that act (United States v. National City Lines, Inc., 7 cir. 1951, 186 F. 2d, 562 at pp. 570-572). These matters shall be deemed established. No proof of these facts shall be required of the plaintiff at the trial, and no evidence denying them shall be admitted, except that any evidence bearing upon the proper scope of any decree which might be entered may be received. [Italics supplied.]