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March 03, 2000 01:00 AM

Tire price-fixing probe? What a waste of time ...

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    The end has come with a whimper for an unnecessary, even silly, price-fixing investigation of the tire industry by the U.S. Justice Department.

    On Feb. 18 the department told major U.S. tire makers it has closed a five-year probe of their pricing practices. No complaint will be filed.

    And that´s about all the Justice Department said. The federal agency officially doesn´t comment on such investigations, even to admit it is conducting one. And chances are it doesn´t apologize when it wastes taxpayers´ dollars and impugns the reputations of tire companies.

    The Justice Department saw smoke. Anyone in the industry could have told them there was no fire.

    Probably, the coincidence of announced price increases in the tire industry caught the department´s attention. When one tire maker says it is raising prices, invariably others fall in line.

    But are the tire companies working in concert? If so, they are the most bungling conspirators since the Watergate burglars. Tire prices always have been deflated—announced price hikes almost never stick. For that matter, prices of many non-tire rubber goods and, certainly, supplies to the manufacturers rise and fall in tandem. That´s how this business operates.

    This investigation could have been wrapped up in a day. The Justice Department merely had to look at the producer price index, published by another government entity, the Department of Labor. The PPI clearly shows the weakness in tire prices. In the last year, for example, wholesale prices are down 0.6 percent for tires.

    Even the most inept price fixer would try to make prices higher, not lower.

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