decree entered pursuant to paragraph 8 hereof or to vacate or modify any provision thereof on the ground that the commission or omission of any of the agreements, acts or practices herein prohibited or required, under the economic or competitive conditions existing at the time of such application, does not constitute an unreasonable restraint of trade or commerce among the states in automobiles within the meaning of the Sherman Anti-Trust Law as amended to the date of such application, regardless of whether or not such economic or competitive conditions are new or unforeseen. Jurisdiction of this cause is retained for the purpose of granting or denying such applications as justice may require and the October, 1938, Term of this court is hereby extended indefinitely for such purpose and the right of the respondents to make such applications and to obtain such relief is expressly granted. The provisions of this paragraph are in addition to, and not in limitation of, the provisions of any other paragraph of this decree. 19. This decree shall have no effect with respect to respondents' acts and operations without the continental United States or to their acts and operations within the continental United States relating, exclusively, to acts and operations without the continental United States. 20. This decree shall go into effect one hundred and twenty days after the date of entry hereof, except as to the provisions of paragraphs 8, 11, and 12 hereof, which said paragraphs shall take effect as therein provided. Mr. GOSSETT. I would like to offer also a communication of November 9, 1959, directed to Robert S. Olson, president of the credit company, and to credit company personnel, regarding these consent decrees. (The document referred to follows:) Attached is a copy of Legal Information Bulletin No. 144, dated November 9, 1959, which is being issued by me as Vice President and General Counsel of Ford Motor Company. Restrictions on Ford Motor Company in its relationships with its automobile dealers and with finance companies are summarized in this Bulletin. These restrictions are set forth in full in the appended copy of the antitrust consent decree entered in United States v. Ford Motor Company, Universal Credit Corporation, et al. Since the Credit Company is a "finance company", as that term is defined in the consent decree, Ford Motor Company is obligated to comply with these restrictions in dealing with it. This obligation is one that the management of Ford Motor Company regards most seriously, and it will do everything it possibly can to assure strict compliance. There is strong basis in the federal statutes and court decisions for concluding that the Credit Company and its personnel in certain circumstances may be bound by the terms of the consent decree. The federal statute on the scope of injunctions provides: "Every order granting an injunction and every restraining order. . is binding . . . upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise." (U.S. Code, Title 28, Rule 65(d); italics added). The purpose of this statutory provision was stated concisely by Mr. Justice Jackson: "This is derived from the common law doctrine that a decree of injunction not only binds the parties defendant but also those identified with them in interest, in 'privity' with them, represented by them or subject to their control. In essence it is that defendants may not nullify a decree by carrying out prohibited acts through aiders and abettors, although they were not parties to the original proceeding." (Regal Knitwear Co. v. National Labor Relations Board, 324 U.S. 9, 14; italics added). Accordingly, it is essential that all key personnel in your central office and in the branch offices, and all personnel having contact with personnel of Ford Motor Company and its dealers, become thoroughly familiar with the decree and refrain from any action that could be construed as making them "aiders and abettors" in the nullification of the decree. In addition to the provisions that apply to the relationships between Ford Motor Company, its automobile dealers, and the Credit Company as a "finance company" (see summary in attached Bulletin), there are special provisions in the decree applying to Universal C.I.T. Credit Corporation and its affiliates ("Respondent Finance Company"). I believe that it would be advisable and in the best interests of the Credit Company to conduct itself in a manner consistent with the following restrictions applicable to U.C.I.T.: a. The "Respondent Finance Company" may not represent to any Ford Motor Company automobile dealer (1) that Ford Motor Company requires him to patronize "Respondent Finance Company", or (2) that his failure to do so will result in his cancellation, or the loss of any advantage, service or facility furnished by Ford Motor Company, or (3) that "Respondent Finance Company" can obtain from Ford Motor Company any facility, service or privilege that is not available to any other finance company. b. The "Respondent Finance Company" may not enter into certain agreements with Ford Motor Company automobile dealers that "tie-in" wholesale and retail financing. Although this provision does not prohibit all "tie-ins" of the wholesale and retail financing arrangements of Ford Motor Company automobile dealers, I believe that it would be advisable and in the best interests of the Credit Company to regard this provision as if it were all inclusive. To put the matter another way, this provision should be regarded as though it prohibited the Credit Company from entering into any contract, arrangement or understanding with a Ford Motor Company automobile dealer in connection with wholesale financing of auto mobiles (other than special arrangements permissible regarding capital or long-term loans, as indicated in the attached Bulletin) that requires the dealer to deal with the Credit Company in respect of retail financing of automobiles. (In this connection, it is of interest that the GM-GMAC antitrust consent decree specifically provides that GMAC "shall not enter into any contract, agreement or understanding with any dealer in connection with wholesale financing which requires the dealer to deal with GMAC in respect of retail financing of automobiles.") This is not to say that the Credit Company may not, as a matter of policy, refuse to provide wholesale financing to dealers who persistently transact their retail financing with other sources. The restraint, as applied in our case, merely prohibits the Credit Company from requiring the dealer to use the Credit Company for retail financing as a condition to providing wholesale financing. It is important that the foregoing information be brought to the attention of all key personnel in your central office and in the branch offices, and all personnel having contact with personnel of Ford Motor Company and its dealers. This should be accomplished, I suggest, by distributing copies of this memorandum and the attachments. Attachments WILLIAM T. Gossett |