Too Big and Failing: The Missed Chance to Break Up GM

As General Motors works its way through the early stages of its bankruptcy and forced restructuring, it is worth remembering that government antitrust enforcers once had an opportunity to break up GM. They chose not to pursue it, which missed a chance to create a stronger competitor. That decision holds valuable lessons for antitrust policy going forward.

A little more than 40 years ago, reported that antitrust lawyers in the U.S. Justice Dept. had been engaged in a long-running investigation of General Motors. The investigation, begun in the Eisenhower Administration, continued into the Kennedy Administration, when the head of the antitrust division set up a "General Motors Task Force." By 1964 serious thought was being given to a suit that would break up GM. The fruits of this investigation eventually led to a 104-page draft complaint—"neatly typed," the noted—charging GM with violating U.S. antitrust laws.