Plan to Sell GM Division to Germans Dropped : Courts: An antitrust lawsuit was filed by the Justice Department to block German acquisition of Allison Transmission

By DONALD W. NAUSS

Nov. 19, 1993 12 AM PT

TIMES STAFF WRITER

DETROIT — General Motors Corp. on Thursday abandoned the sale of its automatic transmission division to a German competitor because the federal government said it would create a near monopoly.

The decision came two days after the U.S. Justice Department filed an antitrust lawsuit to block the $525-million acquisition of GM’s Allison Transmission Division by ZF Friedrichshafen.

The government alleged that the merger would increase prices and lower services for customers. It also said the deal would reduce the technological innovation that results from market competition.

In a joint statement, GM and ZF said that while they disagree with that view, it was not in the firms’ best interests to extend the prolonged battle.

“In our opinion, the government took a very narrow view of competition in the market and one that does not reflect commercial reality,” said the statement from William Hoglund, GM executive vice president, and Klaus Bleyer, ZF chief executive.

The antitrust suit, filed in U.S. District Court in Wilmington, Del., was the first brought by the Justice Department since Anne K. Bingaman was named head of the antitrust division in June. She said the case exemplified a new focus on protection of competition in technology.

GM began seeking a buyer for Indianapolis-based Allison 18 months ago and announced the sale in August. The transaction fit with the auto maker’s restructuring strategy, which calls for shedding non-core businesses.

But there were concerns that the deal reduced U.S. competition for medium- and heavy-duty automatic transmissions used in trucks and buses. The firms have only one bus competitor and together control the market for heavy trucks.

The government also said the merger would reduce design and production innovation worldwide for commercial and military trucks. The companies control 89% of the transmission design business, the suit said.