Smelly Business: Car Makers and Air Pollution

Back in 1969, the Nixon administration settled a civil antitrust suit against the Big Three automakers that charged them with conspiring since 1953 to “eliminate all competition among themselves in the research, development, manufacture, and installation of motor vehicle air pollution control equipment.” (The Johnson administration originally brought the civil suit in 1968, after having decided against criminal charges.)

The settlement’s consent decree included a promise by the Big Three — GM, Ford Motor Co., and Chrysler — and their trade association not to engage in the collusive behavior or take the joint-policy positions described in the lawsuit. The companies got away without making any admissions of guilt, paying any fines, or having to put any extra effort into their pollution-control research and development.

All this happened at a time when people in southern California were choking on recurrent smog, largely caused by the photochemical mixtures of motor vehicle emissions. Physicians advised some 10,000 people a year to move out of the Los Angeles basin because of the serious danger to their health.

In 1981, under President Reagan, federal antitrust authorities did not pursue renewal of the consent decree, thus freeing the automakers to present a unified position on what can and cannot be done to control vehicular emissions. No one in government paid much attention to whether the auto companies were reverting to their old bad habits.

Then in August 1993 the naive Clinton administration entered into an agreement with the Big Three that committed $1 billion in taxpayer money to help the very profitable auto companies make their motor vehicles more fuel efficient — the so-called Clean Car Initiative. This joint venture with the government allowed the auto companies more leeway to do nothing. It gave them a buffer against long-overdue regulatory updates on fuel efficiency standards and any further antitrust action. And it gave them the argument that because they’re in a partnership with Uncle Sam there is no need for regulation and antitrust prosecution.

Predictably, the last six years have produced virtually no changes in this taxpayer-subsidized boondoggle, and by now the automakers surely believe the heat is off. So weak are the federal pollution standards that full-size pickup trucks and sport-utility vehicles are permitted to emit two and a half times the smog gases as cars. Next year, when tighter standards become law, they will be allowed to emit five times as much as cars.

Now Ford Motor has announced that, starting this fall, its full-size pickups will meet the current pollution rules for cars. It expects these same truck models to meet the stronger laws for cars next year. This news was reported in the New York Times May 18, 1999, by Times reporter Keith Bradsher. But then Bradsher wrote a very disturbing paragraph that the Antitrust Division in the Justice Department should follow up on. He wrote:

“Some auto executives say that until the last couple years, there was a gentleman’s agreement, at least among the Detroit automakers, not to compete on environmental issues. Ford has broken that informal understanding since early last year by repeatedly and very publicly going beyond what Federal regulations require, to the annoyance of executives at rival companies.”

If this is what has indeed been going on, then the lawyers who pushed for a criminal case back in 1968 and lost the argument to those who filed a civil case, will have been vindicated. Corporate executives treat criminal cases with far more gravity than civil lawsuits, which tend to end with not much more than a slap on the wrist.

Once again, the violation of “product fixing” comes to the forefront with its mockery of the competitive enterprise system. Maybe those annoyed auto executives need to get a call from the Justice Department.

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