Question

You will review the actual case of Ford Motor Co. v. United States, 405 U.S. 562, 92 S.Ct. 1142, 31 L.Ed.2d 492 (1972) on Google

In 1950, the United States government passed the Celler-Kefauver Antimerger Act. This reformed and strengthened the Clayton Antitrust Act of 1914, which had amended the Sherman Antitrust Act of 1890. In the 1960s, the Ford Motor Company, along with the Chrysler Corporation and General Motors Corporation, owned approximately 90% of U.S. automobiles. Champion, GMC, and Autolite mostly owned the spark-plug market.   The Ford Motor Company bought Autolite. In turn Champion’s share of the market dropped considerably. The United States filed a suit against the Ford Motor Company in a federal district court, claiming that the Autolite acquisition violated Section 7. The court ordered the Ford Motor Company to divest itself of Autolite. The Ford Motor Company appealed.

After reading the case, you will respond with answers to the following questions using your critical thinking and moral reasoning skills:

• How could Ford, as an outsider, have affected competition among spark plug manufacturers?
• If Ford had chosen to manufacture its own spark plugs, rather than to acquire Autolite, would there have been a different effect on competition in the spark plug market?
• Would Ford’s decision to manufacture spark plugs itself have been illegal? Discuss.

Answer 1

1. Before Ford acquired Autolite, it had “a moderating influence” on spark plug manufacturers. “An interested firm on the outside has a twofold significance. It may someday go in and set the stage for noticeable deconcentration. While it merely stays near the edge, it is a deterrent to current competitors. This was Ford uniquely, as both a prime candidate to manufacture and the major customer of the dominant member of the oligopoly.”

2.The effect on competition in the spark plug market would have been much different if Ford had decided to manufacture its own plugs rather than to acquire Autolite. There was “the chance that Autolite would have been doomed to oblivion by defendant’s grass-roots entry .  .  . . Had Ford taken the inter­nal-expansion route, there would have been no illegality; not, however, because the result necessarily would have been commendable, but simply because that course has not been proscribed.