Mr. GOSSETT. He is talking about my statement. Mr. YNTEMA. In the hypothetical part of your statement to Mr. Gossett you referred to my testimony and did not characterize it correctly. Mr. MALETZ. You said the odds are, did you not? Mr. YNTEMA. I said this: that you can't determine the effectiveness of competition by counting noses. Mr. MALETZ. That you can't determine the effectiveness of competition by injecting into Mr. YNTEMA. By counting noses. Mr. MALETZ. An additional competitive factor. Mr. YNTEMA. By counting noses. The question is the effectiveness of competition. You can't determine the effectiveness by counting noses. Mr. MALETZ. Mr. Gossett on page 8 you say: Recent antitrust history is replete with instances in which earlier consent decrees have not prevented Government suits or threats of litigation based upon subsequent developments in an industry. Do you know of any instance where divestiture has been ordered after the Government brought a suit seeking divestiture and settled the case by a consent decree not requiring divestiture? Mr. GOSSETT. No, I don't, but all I want to point out is that the Government is free to bring a suit for divestiture for good grounds, and that the consent decree will not operate as an umbrella. Now I know that, for instance, in the Aluminum case, which I participated in the trial at New York, we had a very strong consent decree, and 15 years later in came the Government and brought another suit, and the consent decree was pleaded as a defense, and it was not accepted as a defense, and the Aluminum Co. was held to violate the antitrust laws and penalties were imposed upon them. And I think it would happen again if the Government had a good case. You see, you are talking here about a 1938 conspiracy, and the Government can start all over if it has a case and a decree won't help them-won't help the defendants in the earlier cases-won't protect them. Mr. MALETZ. At page 13 of your statement, you say that If our motor vehicle competitors are suffering any disadvantage by not having finance and insurance affiliates, they have the right to enter the business whenever they feel the need to do so. You also say: There has been no showing that they could not do so successfully if their dealers and customers were not receiving adequate service and competitive rates. Is it not a fact that it is extremely difficult for motor vehicle manufacturers to penetrate the market? Mr. GOSSETT. I don't think American Motors has had much trouble. Mr. MALETZ. As a matter of fact, did not your associate, Dr. Yntema, specifically testify, and I quote from his testimony: The business of financing and insuring the sales of automobiles is an integral part of the merchandising of automobiles but it requires specialized experience and skills that we in Ford Motor Co. did not possess. We knew that it would take years to recruit and develop a high-grade complement of personnel. We knew it would be years before we would be able to get sufficient volume to obtain the full economies of large-scale operation. We knew that we would have many difficulties, high launching costs, and low profits during the initial years. These we would have preferred to avoid. Ford is the second largest automobile manufacturer in the country, is it not? Mr. GossETT. Yes. Mr. MALETZ. If it is difficult for Ford effectively to penetrate the automobile financing business, may it not be well-nigh impossible for its smaller competitors? Mr. GOSSETT. There are some considerations there that I would like to point out and then I think Mr. Yntema might like to supplement what I have to say. In the first place, we found, as we told you, that the influence of GMAC and FMCC is to get the rates down in all the areas where they operate, not only for the benefit of the GM and Ford dealers but also for the benefit of the other dealers, and that is what Mr. Misch testified. Second, even though we did not have the skills and the knowledge to organize a finance company, we did it and we are running. We are in operation, and although we are not making a lot of money, we are going to make a reasonable return some day. American Motors already has a finance company that it uses in the home appliance business. All it would need to do would be to extend that to the automobile business, borrow a little more money. They have got the skills and the knowledge. And there is always, you see, the threat that if these rates aren't reasonable, the factories will come into the business. But this bill would eliminate all that. The unaffiliated finance companies would say, "We don't need to worry about the factories. They can't come into the business. They have a legal disability to come into this business." Now, what worse influence could there be on the competitive situation in the finance business than that? The CHAIRMAN. Mr. Gossett, you used the term "anti-antitrust and you said that this bill would be anti-antitrust. Judge Loevinger, head of the Antitrust Division, has testified in favor of this bill. Would you say he, as head of the Antitrust Division is anti-antitrust? Mr. GOSSETT. Mr. Chairman, Judge Loevinger is an experienced lawyer of great intellectual capacity. He is a dedicated public servant, and I think we are fortunate to have him there. But I don't have to agree with him, and I think he is taking the short view here. I think that he is overconcerned with this alleged concentration of General Motors, and he is willing to give up the traditions of the antitrust laws in this country simply to put the big pants on General Motors, and I think that in doing that he is doing the country a great disservice. The CHAIRMAN. Would you say in a word that he is anti-antitrust ? Mr. GOSSETT. No, I would not. I think that he has exercised his best judgment here. I just don't agree with it. I don't think it is the long view. I think it is the short view, and I think if this short view prevailed here, we would all regret it, including Judge Loevinger who is a great fellow. 73326 0-61-pt. 2--25 The CHAIRMAN. That will terminate the testimony of Mr. Gossett, and we want to thank you both; that is you, Dr. Yntema, and Mr. Gossett, for your patience. It has been a bit trying, but in an endeavor to get out all the facts sometimes we may get a little intemperate. I am sure that there is no intention on either side to be hurtful to anyone, and I think you will agree with that. Mr. GOSSETT. We certainly will, sir. We are very grateful for your patience. The CHAIRMAN. Thank you very much, and we appreciate your coming here and giving us this valuable assistance. Mr. GOSSETT. You did make one mistake, Mr. Chairman. You said we are trying to delay this legislation. We are not trying to delay it, we are trying to beat it. The CHAIRMAN. It is a good fight. You have the right to correct the testimony, and if you wish to submit any additional data and statements, you are free to do so. Mr. GOSSETT. Thank you very much. Mr. YNTEMA. Thank you, Mr. Chairman. (The prepared statement of Mr. Gossett is as follows:) FOR RELEASE AFTER 10:00 A.M., E.D.T., WEDNESDAY, JUNE 28, 1961 STATEMENT BY WILLIAM T. GOSSETT VICE PRESIDENT AND GENERAL COUNSEL before the Antitrust Subcommittee of the Committee on the Judiciary United States House of Representatives Representative Emanuel Celler, of New York Washington, D. C., Wednesday, June 28, 1961 STATEMENT BY WILLIAM T. GOSSETT My name is William T. Gossett. I am Vice President and General Counsel of Ford Motor Company. My statement is devoted to some fundamental legal questions presented by H.R. 71. If the bill were enacted, it would be a violation per se of the antitrust laws for a motor vehicle manufacturer to finance or insure the sale of its products; and as to manufacturers now in such businesses the bill presumably would make mandatory the drastic remedy of divestiture, regardless of the circumstances. manufacturers of motor vehicles; it would not affect others. The prohibition would be absolute; it would apply regardless of the size of the manufacturer or the need for its services in financing and insuring its sales. The legislation would apply only to the The effect of the legislation would be to grant to the unaffiliated finance and insurance companies a specially legislated sanctuary, free from competition by the manufacturers. Not only would the legislation be discriminatory; it would destroy arbitrarily a right of the motor vehicle manufacturer as fundamental as its right to manufacture carburetors, spark plugs or any other product component. Manifestly, such drastic action should not be taken except in the most extreme circumstances and then only after a hearing with full opportunity for presentation of all relevant factual material, with the right of cross examination and the right to judicial review. The Bill is Anti-antitrust Legislation The bill contains no findings to justify its summary interdictions; and the only stated purpose of the bill is "To supplement the antitrust laws of the United States against restraint of trade or commerce by preventing manufacturers of motor vehicles from financing and insuring the sales of their products." |