AUTOS : U.S. Sues GM Over Unit’s Sale to German Rival

DETROIT — Signaling a new vigilance over competition in technology, the Justice Department filed an antitrust lawsuit Tuesday to block the sale of General Motors Corp.’s automatic transmission division to a German rival.

The suit, filed in U.S. District Court in Wilmington, Del., charges that the proposed merger of GM’s Allison Transmission Division with ZF Friedrichshafen would reduce competition, raise prices and lessen technological innovation.

The case marks the first antitrust suit brought since Anne K. Bingaman became head of the Justice Department’s antitrust division in June. She has filed objections to six other mergers that were subsequently withdrawn or restructured.

GM announced plans to sell the division to ZF in August, 1992. The company said it wanted to focus on its core auto business as it restructured.

Objections to the deal quickly surfaced. There were concerns about reduced competition in the market for medium- and heavy-duty transmissions used in garbage trucks and transit buses in the United States. The combined company would control 78% of the bus market and have a monopoly on parts for garbage trucks.

Because Allison has some defense contracts, worries also arose about the transfer of technology to a foreign concern.

The Justice Department said the merger would result in higher prices and poorer service for customers. In addition, the suit alleges that the sale would curtail technological innovation that resulted from competition between the rivals.

“This case is an example that merger enforcement in the 1990s will increasingly focus on the protection of competition in technology,” Bingaman said. GM officials declined to comment, and ZF officials could not be reached.