Auto Makers Set to Meet With Justice Department on Antitrust Probe

Source: By Brent Kendall, Wall Street Journal • Posted: Monday, September 30, 2019

Four car companies being investigated over agreement with California on tailpipe emissions

Traffic at the San Francisco-Oakland Bay Bridge toll plaza. Four auto makers agreed in a deal with California to stronger emissions targets than sought by the Trump administration. Photo: Justin Sullivan/Getty Images

WASHINGTON—Car makers facing a federal antitrust probe for their auto emissions deal with California will meet with the Justice Department next week, according to people familiar with the matter, as the department itself faces questions about its decision to press an issue with political overtones.

The meetings would mark the first substantive discussions between the two sides since the Justice Department sent an inquiry lettera month ago seeking information about an agreement on greenhouse-gas emissions that Ford MotorCo. , Honda MotorCo. , BMWAG and VolkswagenAG reached recently with the California Air Resources Board.

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

The Justice Department’s Aug. 28 letter to the auto makers, first reported by The Wall Street Journal, questioned whether the companies agreed privately among themselves on the outlines of the California deal—an act that “may violate federal antitrust laws”—and asked them to provide more information.

The Justice Department questions whether the auto makers reached an emissions deal privately among themselves, which ‘may violate federal antitrust laws.’ Photo: Andrew Harrer/Bloomberg News

There has been relatively little communication between the department and the auto makers in the weeks since, as news of the investigation created a stir on Capitol Hill and among some staffers at the Justice Department. California and the Trump administration have been 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,” said Mr. Delrahim, who heads the department’s antitrust division, telling senators that the probe was currently 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 “town hall” event for the antitrust division at which he received questions from employees about why the department was pursuing the investigation, people familiar with the matter said.

Makan Delrahim, head of the Justice Department’s antitrust division, said the probe isn’t politically-motivated. Photo: Alex Edelman/Bloomberg News

Mr. Delrahim in his Senate appearance compared the case to other recent instances where the department read about potentially collusive behavior and chose to investigate, including 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 on regulations or legislation. But it could be a problem, he said, if the companies effectively reached a joint agreement on emissions targets in private.

Spokesmen for Honda and BMW declined to comment. Ford and Volkswagen didn’t respond to requests for comment.

“In examining potentially anticompetitive conduct, the Department of Justice routinely asks questions of the parties and considers any and all arguments and defenses that they may raise,” a department spokesman said.

Companies enjoy legal protections when they jointly lobby the government, though with some limitations. Court precedent indicates that if companies reach an agreement among themselves and then submit it for government approval, their private action could still be subject to antitrust review.

Mary Nichols, chairwoman of the California Air Resources Board, has said the state worked individually with the auto makers and that all parties were mindful of not violating antitrust laws.

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