Openers Against Bigness

Before the Congressional Joint Economic Committee last week, the Justice Department's top trustbuster. Assistant Attorney General Victor R. Hansen. was testifying on "undue concentration" in U.S. industry. Asked Wyoming's Democratic Senator Joseph O'Mahoney: "There's no doubt that you feel we do have undue concentration in autos and steel?" Answered Hansen: ''That's correct, sir." Well, asked O'Mahoney. did he have plans to do something about it? Said Hansen: "Yes. sir, but I feel it would be premature for me to discuss them."

Next day, Hansen's plans came out. The Justice Department embarked on what may become the biggest antitrust action in history: a gigantic campaign to investigate the U.S. auto and steel industries, with the possibility of both civil and criminal court suits to whittle the power of two of the nation's biggest corporations. Prime targets: General Motors. No. 1 U.S. industrial company, and U.S. Steel, No. 4.

Two Grand Juries. To G.M. officials went a subpoena ordering them to produce company records dating back to 1929. Within weeks a federal grand jury will be impaneled in Manhattan to study the records and whatever other evidence a team of ten Justice Department lawyers has dug up, will then decide whether to indict G.M. under the Clayton Act. In spring a second grand jury will be in action--this time in San Francisco--listening to the same kind of evidence about the steel industry. Though no subpoenas have yet been served. Justice lawyers want to study "numerous complaints" of price fixing by major steel producers. There the most likely candidates are U.S. Steel, Bethlehem and Kaiser Steel, already named in a suit brought by Independent Iron Works. Inc.. a large West Coast fabricator, which charges discriminatory price fixing.

The Government's action came as an almost complete surprise, at least to G.M.'s Chairman Frederic Donner. who first heard of the "investigation" in the newspapers, later said that G.M. had indeed received the subpoenas, lapsed into official silence. Privately, automen were baffled by the whole thing. Normally, when an antitrust case is in the works, Government investigators work closely with company lawyers, and the company has a good idea just what the Government is after and why. In this case there was no advance warning, no statement beyond the fact that the Government wants G.M.'s records--all of which led automen to wonder if it might not be a gigantic fishing expedition, hurried along by the recent uproar about G.M. in Senator Estes Kefauver's Antitrust and Monopoly Subcommittee (TIME. Feb. 10, 1958). Hansen himself gave point to this view in saying that "we've been studying the auto industry for years. Now we are engaged in a search for evidence to verify some of our findings. We are not crusading against bigness, but only building a program of antitrust action" in response to a growing number of complaints that big companies wield more and more monopoly power. Last year alone, he said, the Justice Department received 1,400 complaints v. a mere 300 five years ago. And as Hansen says, "more complaints mean more cases." The program for 1959 is greater emphasis on mergers and bigness, and an especially hard look at those areas that affect the cost of living.

The Justice Department's concern in the auto industry is the "persistent" decline in the number of U.S. auto companies, the growing importance of General Motors (see chart), and the almost identical list prices among the Big Three--prices that the trustbusters allege are set by G.M.

Target for Today. Hansen wants the courts to determine not only whether G.M. has abused its power but whether the very size of G.M., abuse or not, results in a suppression of competition. If it does, then he would like to force it to spin off one-third of its holdings. Adds Hansen: "But don't get the idea that we are out to strangle G.M., because we're not."

G.M. 'has been a target of trustbusters ever since 1938, when the Big Three were indicted for restraint of trade through their finance companies. Ford and Chrysler gave in, but G.M. fought and eventually won. Since then, G.M. executives have been star performers almost yearly before congressional investigating committees--and have always come out whole. In 1955 Senator O'Mahoney's Antitrust and Monopoly Subcommittee charged G.M. with a 76% "monopoly" of the diesel locomotive market; the investigation lasted four weeks, and the only real trouble was a complaint by G.M. dealers about the company's one-year contracts. G.M. immediately offered to extend the contracts to five years, and that was that. Later the Justice Department brought suit against G.M.'s bus business, charging an 80% monopoly. After almost three years, the suit is still pending in Detroit. On G.M.'s record, this latest attack is bound to lead to a long, rugged fight.

This file is automatically generated by a robot program, so reader's discretion is required.