Justice Department Drops Antitrust Probe of Auto Makers Involved in California Emissions Deal -- Update

By Brent Kendall and Timothy Puko

WASHINGTON -- The Justice Department has closed its antitrust investigation of four auto makers that had reached a tailpipe emissions deal last summer with the state of California, according to people familiar with the matter.

After examining the matter for several months, the department concluded that the auto makers -- Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG -- didn't engage in conduct that violated U.S. antitrust law, the people said.

At issue was a July agreement between the auto makers and the California Air Resources Board on fuel efficiency standards, a state-based framework that is at odds with the Trump administration's regulatory approach.

Justice Department officials questioned whether the companies agreed among themselves on the outlines of the deal with California regulators, and the auto makers received formal civil subpoenas in the fall.

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.

The New York Times first reported the Justice Department's closing of the probe.

The Justice Department had started investigating the companies amid larger conflicts between the Trump administration and California, often on environmental grounds. In September, the administration moved to take away California's ability to set its own vehicle emissions standards, and then informed state leaders that their air-pollution plans might be incomplete or unworkable, putting billions of dollars in federal aid for the state at risk.

The friction over the future of the auto industry has been the biggest conflict. Since its earliest days, the Trump administration has been attempting to roll back rules California had set in collaboration with the Obama administration to reduce tailpipe emissions. Leaders in the Republican administration want to curb Democratic-dominated California's influence over rules governing the industry.

The four companies announced a deal in July to support rules set by the California Air Resources Board, betting it was the best way to ensure one set of nationwide emissions standards. Justice Department officials said at the time they believed the agreement could effectively restrict competition by potentially limiting the types of cars and trucks the auto companies offer to consumers, according to people familiar with the department's thinking.

That investigation had effectively frozen any progress on negotiations to further detail or expand the pact. No other companies have announced interest in joining since the start of the investigation. Several companies that hadn't announced interest intervened on behalf of the Trump administration in October in a lawsuit over its proposed rollback of new tailpipe-emissions rules.

Write to Brent Kendall at brent.kendall@wsj.com and Timothy Puko at tim.puko@wsj.com

(END) Dow Jones Newswires

February 07, 2020 17:51 ET (22:51 GMT)

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