Auto Makers Set to Meet With Justice Department on Antitrust Probe

Date : 09/27/2019 @ 4:28PM
Source : Dow Jones News
Stock : Bayerische Motoren Werke AG (BMW)
Quote : 50.49  1.93 (3.97%) @ 2:17PM
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Auto Makers Set to Meet With Justice Department on Antitrust Probe

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By Brent Kendall 

WASHINGTON -- Car makers facing a federal antitrust probe for their auto emissions deal with California will begin meeting with the Justice Department next week, according to people familiar with the matter, as the department is facing questions about its decision to investigate an issue with high political stakes.

The meetings will mark the first substantive discussions between the two sides since the Justice Department sent an inquiry letter a month ago seeking information about a greenhouse gas emissions agreement that Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG reached with the California Air Resources Board.

The four auto makers agreed in the California pact to cut their emissions by 3.7% annually from model years 2022 to 2026. The targets, announced in July, are lower than those mandated by Obama-era rules, but stronger than those sought by the Trump administration, which wants to unwind the Obama regime as well as strip California's ability to set its own emissions standards.

The Justice Department's Aug. 28 letter to the auto makers, first reported by the Journal earlier this month, questioned whether the companies reached the deal privately among themselves, which "may violate federal antitrust laws," and asked them to provide more information.

There has been relatively little communication between the department and the companies in the weeks since, a period in which news of the investigation has created a stir on Capitol Hill and among some staffers at the Justice Department.

California and the Trump administration are locked in a political and legal showdown over emissions policies, prompting critics to question the Justice Department's motivations.

When U.S. Assistant Attorney General Makan Delrahim appeared for a Senate antitrust subcommittee oversight hearing last week, Democrats said the department's actions looked like a politically targeted move against companies that are working with a state opposed to President Trump's approach to emissions.

"It looks an awful lot like scores are being settled here," Sen. Sheldon Whitehouse (D., R.I.) said.

"I'm not doing this for political reasons," Mr. Delrahim, head of the department's antitrust division, told the senator, saying the probe at this point was a fact-finding effort.

"We have not concluded there is a violation," he said of the auto makers. "All I have done so far is ask them to come in and explain to us."

Earlier that same day, Mr. Delrahim held a scheduled internal "town hall" event at the antitrust division and received questions from employees about why the department was pursuing the investigation, people familiar with the matter said.

Mr. Delrahim in his Senate appearance compared the investigation to other recent instances where the department read about potentially collusive behavior and chose to investigate, including in a matter involving college-admissions counselors.

He said there was nothing wrong with auto makers each announcing emissions targets on their own, or getting together to petition the government for regulations or legislation. But it could be a problem if the companies effectively reached a private agreement among themselves for emissions targets, he said.

Spokesmen for Honda and BMW declined to comment. Ford, Volkswagen and the Justice Department didn't respond to requests for comment.

Court precedent gives companies protection to jointly lobby the government, though with some limitations. Past cases say that if companies reach an anticompetitive private agreement among themselves and then ask the government to bless it, that conduct wouldn't be immune from antitrust liability.

, chair of the California Air Resources Board, has said the state worked individually with the auto makers and that all parties were mindful of operating consistent with antitrust laws.

--

Mary Nichols

Write to Brent Kendall at brent.kendall@wsj.com

 

(END) Dow Jones Newswires

September 27, 2019 11:13 ET (15:13 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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