Economics goverment - Essay Example

While the partnership entailed several economic benefits such as enhanced efficiencies, it became problematic because of the perceived coordination of pricing and other behavior that were feared to lead to anticompetitive practices. Joint ventures are investigated by the Department of Justice and the Federal Trade Commission (FTC) based on the provisions of the Hart-Scott-Rodino pre merger notification act of 1976. The said investigation was a requirement before the venture was finally consummated.

There was not court proceeding, without any formal depositions or accounts by both parties of their positions before the court, as well as public disclosure of documents. The investigations merely involved the examination of a huge number of documents. After this type intensive antitrust investigation, FTC finally provided the stamp of approval and the joint venture proceeded, although with some modifications. The first legal issue in the GM-Toyota joint venture pertains to its impact on the market.

Particularly, there is the perceived likelihood of cooperative behavior wherein the parties - both dominant players in the auto industry - would cooperate that can disadvantage the position of the consumers (Kwoka, p.50). For example, the level of partnership provides an opportunity for both companies to fix pricing. Ultimately - in this respect - the investigators were concerned that the venture would adversely impact the competition in the market or moderate competitive behavior if a complete consolidation of operations between these two companies was realized.

The second and final issue in the investigation concerns the appropriate treatment of Japanese production. Under the so-called “voluntary restraint agreement or VRA, Japanese car import is subject to a quota: 1.68 million car export to the United States within the period of two years (p. 51). The legal implication of the joint venture is numerous. First, there is the debate whether the