Senate Democrats Grill DOJ Official Over Automaker Investigation
DOJ Probe of Automakers Looks Like Intimidation, Klobuchar Says
(Bloomberg) -- Democratic senators grilled a senior Justice Department official about an antitrust probe of automakers over efficiency standards, with one saying the inquiry looked like an effort by the Trump administration to intimidate the companies.
Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG agreed in July to voluntarily meet compromise emissions targets offered by California regulators, defying an administration proposal to freeze national standards at 2020 levels. Both would be less stringent than requirements put in place during the Obama administration.
“‘The automakers’ reported conduct seems to be little more than an effort by regulated companies to petition a state regulator for more favorable rules, something that happens all the time,” Senator Amy Klobuchar of Minnesota, the top Democrat on the Senate’s antitrust subcommittee and a presidential candidate, said Tuesday during a hearing on antitrust matters.
She said the inquiry “appears to have less to do with protecting competition than with intimidating parties that don’t fall into line with the Trump administration’s plan to relax emissions standards.”
The July agreement under which the companies pledged to reduce tailpipe greenhouse gas emissions in their vehicles through model year 2026, came in defiance of a Trump administration proposal to slash emissions requirements for cars and revoke California’s authority to regulate tailpipe greenhouse gas emissions. That is a plan automakers fear would lead to uncertainty and litigation over the standards between regulators in Sacramento and Washington.
When the four automakers announced the emissions pact, they said it would “provide our companies much-needed regulatory certainty by allowing us to meet both federal and state requirements with a single national fleet, avoiding a patchwork of regulations while continuing to ensure meaningful greenhouse gas emissions reductions.”
The Justice Department notified the four carmakers about their antitrust concerns linked to the deal in late August before news about the inquiry broke on Sept. 6. That same day, Environmental Protection Agency and Transportation Department lawyers warned California officials that the voluntary emissions pact might violate federal law.
Makan Delrahim, assistant attorney general of the Justice Department’s antitrust division, told lawmakers on Tuesday that there had been no coordination on the issue among the White House, Justice Department or the federal agencies involved in the Trump administration’s emissions rollback proposal.
Delrahim said press reports that the automakers had worked together on the emissions agreement attracted the Justice Department’s attention because of concerns about possibly improper coordination between the companies.
Companies “cannot cooperate amongst themselves, and I could name at least four or five other investigations which are similar, as far as collusive activity after which we have inquired,” he said.
Asked by Connecticut Senator Richard Blumenthal about the basis for the probe, Delrahim acknowledged that companies are free to discuss a policy position and petition government agencies, but said it is a violation “when there’s collusive activity.”
In a testy exchange, Sheldon Whitehouse, a Rhode Island Democrat and former prosecutor, asked whether Delrahim had any evidence that the carmakers had made any agreements related to vehicle pricing, to which Delrahim said he did not.
Given the broader conflict over the Trump administration’s plan to ease emissions standards and the reluctance of automakers to support it, “it looks an awful lot like scores are being settled here, and God forbid that the Department of Justice should ever become the tool for political scores to be settled,” Whitehouse said.
Delrahim replied, “I agree with you on that senator, and that’s not what’s going on here.”
--With assistance from Ben Brody.
To contact the reporter on this story: Ryan Beene in Washington at rbeene@bloomberg.net
To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, John Harney
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