This argument also reads Act and Section 7 of the Clayton Act. Even if there had been such "life or death" power over dealers in 1948, when the Ford case was decided, which we dispute, the power clearly does not exist today. The 1952 decrees contain numerous, detailed provisions designed to insure that the competition of GMAC and of any Ford and Chrysler finance subsidiaries would be scrupulously fair and free of any effort by the manufacturers to influence their dealers. Moreover, The Automobile Dealer Franchise Act of 1956 is designed to prevent any manufacturer from discriminating against, coercing or intimidating dealers. Mr. Arnold does not charge any specific acts of coercion within the past 23 years by GM or GMAC, nor does he assert that there has been any coercive conduct on the part of Ford or Ford Motor Credit Company. And the testimony of Mr. Paul C. Jones, the principal witness for American Finance Conference, is that there is no coercion by any of those companies. Accordingly, the sole purpose of H.R. 71, as Mr. Arnold views it, is to render the antitrust laws applicable to, and bring about the dissolution of, the affiliation between GM and GMAC (Tr. 1066). And the basis of the application would be the sheer effect of the relationship, not coercive action. The du Pont Case Mr. Arnold relies upon the du Pont case for several propositions. We concur in his statement that under the du Pont decision the legality of an acquisition under Section 7 of the Clayton Act is to be determined as of the time of suit rather than the time of acquisition. But the du Pont case is not a precedent for declaring that in organizing GMAC, General Motors acted in contravention of Section 7 of the Clayton Act, or by inference, that Ford violated Section 7 in organizing its credit company. In the first place, Mr. Arnold blandly assumes that Section 7 of the Clayton Act would apply to the organization of a new subsidiary, in contrast to acquisition of stock in an existing company, as in the du Pont case. No court has so interpreted Section 7. In response to a question of counsel for this Subcommittee, Judge Loevinger, Assistant Attorney General in charge of the Antitrust Division, testified as follows (Tr. 249): "GMAC was set up as a subsidiary of General "Again, I am not prepared to express an But lack of judicial precedent or administrative interpretation by the Justice Department apparently was no deterrent to Mr. Arnold's unqualified conclusion that acquisition of stock by formation of a wholly-owned subsidiary is encompassed by Section 7. In addition, the du Pont case and the GM-GMAC situation are clearly distinguishable on their merits. The du Pont case involved purchases of stock in General Motors, a customer, by du Pont, an important supplier of automotive fabrics and finishes. In the du Pont case the Supreme Court held that du Pont's ownership of General Motors stock had the vice of foreclosing competing automotive fabric and finish suppliers (competitors of du Pont) from an important segment of the market for automotive fabrics and finishes (products manufactured by du Pont). The GM-GMAC (and Ford-FMCC) situation is quite different. It involves the organization of a financing subsidiary to assist in the conduct of a business closely related to that of the parent motor vehicle manufacturer. It has not been argued that General Motors' ownership of GMAC stock has the effect of foreclosing General Motors' competitors from the automobile market, as long as other motor vehicle manufacturers are free to engage in the related business of financing sales of their products. Clearly, Mr. Arnold's conclusion that the present owner ship of GMAC by GM violates Section 1 of the Sherman Act and Section 7 of the Clayton Act is unsupported in law. But even if he were correct on these points, the Government would not be barred from attacking the GM-GMAC relationship in a proper case. Res Adjudicata Mr. Arnold argues that by entering into the 1952 consent decree with GM under a complaint that specifically charged a violation of Section 1 of the Sherman Act and Section 7 of the Clayton Act, the Government is barred by the doctrine of res adjudicata from relitigating either charge. Consequently, according to Mr. Arnold, General Motors has a special privilege to continue violating the antitrust laws, which can only be corrected by legislation ( Tr. 1069). Ford and Chrysler, he is forced to admit, have no such res adjudicata immunity with respect to Section 7 of the Clayton Act because the suits filed against them contained no such charge. "But as a matter of morals and justice Ford and Chrysler do have such an immunity", he says, since "it would be outrageous for the Antitrust Division, having granted GM immunity by its own consent decree, to prosecute Ford and Chrysler for acquiring finance companies in order to overcome the competitive disadvantage created by the decree." (Tr. 1069) It is not true that the Government has surrendered the opportunity to attack the GM-GMAC affiliation. It is significant that neither during the 1959 Senate hearings nor in the current hearings before this Subcommittee has Mr. Arnold pointed to any precedent whatever in support of his conclusion. The fact is that there is ample procedural precedent for a properly based Government suit at this time against General Motors for divestiture of GMAC, and the 1952 consent decree would not be an effective bar. The Alcoa case is an apt illustration of an antitrust suit brought by the Government for divestiture after an earlier suit had been settled by consent decree. The first Government case against Alcoa was terminated in 1912 by a consent decree entered in the District Court for the Western District of Pennsylvania. The decree, by its terms, was entered upon the assumption that Alcoa had "a substantial monopoly of the production and sale of aluminum in the U.S." Nevertheless, the decree did not require divestiture of Alcoa properties. It adjudged as null and void certain agreements between Alcoa and foreign producers, declared illegal certain restrictive provisions in a number of domestic contracts and enjoined Alcoa perpetually from committing a series of prescribed acts. In 1937, the Government brought a second suit against Alcoa, this time in the Southern District of New York, under Sections 1 and 2 of the Sherman Act, alleging monopoly and conspiracies to restrain and monopolize trade. Alcoa challenged, but lost on appeal, the jurisdiction of the New York Court on the ground that the District Court for the Western District of Pennsylvania retained exclusive jurisdiction by reason of its earlier consent decree.* Thereafter, the suit was tried in the Southern District of New York. Despite the 1912 consent decree and certain interim Federal Trade Commission proceedings against Alcoa involving some issues that were identical with those presented in the New York case, the Court allowed the case to proceed to judgment, pointing out that the pleadings in the New York case extended over "a period long following the period that was covered by the Commission." United States v. Aluminum Company of America, 19 F. Supp. 374 (W.D. Pa. 1937), rev'd. 20 F. Supp. 608 (Expediting Court, W.D. Pa. 1937), reversal upheld on appeal, 302 U.S. 230 (1937). |