Antitrust Case Study Research Paper Example | Topics and Well Written Essays - 1750 words

Antitrust Case Study - Research Paper Example The agreement was signed on 17th February 1983 by the chairmen of Toyota and GM, and triggered one of the biggest and most controversial antitrust investigations in recent history. The vital question was whether it was plausible that the joint venture would actually lead to an increase in domestic small cars that were manufactured more efficiently, with good insights that GM and other firms could use in their plants, or whether it could lead to the regulation of pricing and other conduct between GM and Toyota and merely supplant less-anticompetitive options that GM could have employed in order to realize its objectives. The examination of these question shed light on a number of issues: the changes in behavior that could crop up from the joint venture, the scale of the efficiencies resulting from the venture, economic impacts of the joint venture, and the options available to GM. Some new tools were developed in order to evaluate and examine the joint venture, but they did not result in an agreement with regard to its consequences. Key words Antitrust, GM, Toyota, joint venture, small cars Analysis Most proposed joint ventures, acquisitions, and mergers above a particular size require that, under the stipulations of the Hart-Scott-Rodino premerger notification act of 1976, the Department of Justice and the FTC (Federal transition Commission) be notified. This process provides both agencies with time to investigate a proposed arrangement before it is consummated. In this case, the FTC was mandated to carry out the investigation. In April 1983, Toyota and GM filed initial information and responded to calls for additional information during the summer (White, 1991). The investigation was referred to as one of the most intensive and extensive antitrust examinations ever conducted. The final judgment was delivered by five FTC commissioners, and was founded on different memoranda from a consulting economist, the Bureau of Competition (the legal personnel), and the Bu reau of Economics. The two bureaus recommended that the joint venture be approved, but the consultant’s report recommended that it should be contested. In December 1983, and based on these analyses, the FTC commissioners voted 3-2 provisionally to allow the joint venture to be effected, subject to a few minor revisions. Final approval was confirmed by the same margin (3-2) in April of 1984. The fact that there were no court proceedings means that Toyota and GM did not formally account for their positions. In addition to this, there was no direct merging of the issues between the critics and proponents of the joint venture, and not even a public disclosure of evidential paperwork (Cole & Andrea, 1987). The only thing that existed was a set of documents amounting to 1364 pages that the FTC released in January of 1984. Cooperative Behavior and Market Definition This is the first issue in the analysis of the joint venture, and involves the possibility of cooperative behavior in t he appropriate market. This called for a determination of the geographic market and appropriate product and then an evaluation of the likelihood that the companies in that market might cooperate in a way that would hurt market efficiency and consumers. Clearly, if the