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FTC complaint

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Well done, ppl. Even though I live in Illinois where direct Tesla sales and service is not being impeded, you inspired me to send the following message to The FTC's Bureau of Competition whose e-mail address is [email protected] :

[FONT=&]
Dear FTC:[/FONT]


[FONT=&]My brother cannot buy a Tesla Model S electric car in North Carolina. My cousin cannot buy one in Virginia. Others cannot buy one in Texas.[/FONT]

[FONT=&]If someone in one of those states does pay to have a new Model S shipped to them from another state, their state is perfectly willing to register the car and accept payment of sales tax. Therefore there are no safety issues.[/FONT]

[FONT=&]The problem is state laws mandating that cars be sold and serviced by franchised dealerships. The requirement that consumers endure the added expense of middlemen was originally intended to keep manufacturers from stepping on the toes of their own franchised dealers. Polls indicate that consumers overwhelmingly would prefer Tesla’s methods of direct sales and service. Yet state legislators influenced by the campaign funding from the dealership lobbies actively work against the wishes of their own constituents.[/FONT]

[FONT=&]Tesla Motors has never had any franchised dealers. In most states they have stores for demonstrating their cars, but they are sold through orders taken online. [/FONT]

[FONT=&]Dealerships make most of their money through service. The Tesla service division has been mandated to add no profit to the company. Electric cars rarely have problems, but in the event one does a Tesla Ranger brings a Model S loaner to the owner and drives the owner’s car back to a Tesla service center. Would a dealer be willing to do this? And at no profit? [/FONT]

[FONT=&]Consumers desires are being ignored while state legislatures ignore the US Constitution’s requirement that interstate commerce be unimpeded. I would hope that the FTC will perform its proper duty to American citizens by insuring that free interstate commerce overrides antiquated state laws requiring cars be sold and serviced through franchised dealerships.[/FONT]

[FONT=&]Regards,[/FONT]
[FONT=&]Curt Renz[/FONT]

Curt, I stole your copy and posted it to the recent Reddit article relating to this issue. Hope you don't mind.
 
Right. And that's different from what was said here:
As Elon said in the shareholder's meeting, it will be the customer that drive the solution to this one as Democracy is clearly broken.

The difference is perhaps subtle but significant. Politics involves sentient creatures. Those creatures can do good or ill with it. Elon was saying people are doing ill with democracy, not that democracy -- the idea -- is broken.

Also, technically we don't have a pure democracy in the U.S. anyway but we're bending off topic somewhat.
 
What I don't know is whether the FTC has any ability to overrule state laws.

The Interstate Commerce Clause (Article I, Section 8, Clause 3) gives congress absolute power to regulate commerce between states. They absolutely have the right to overrule state laws. It's probably the most powerful clause in all of the constitution .

I came across a few more Acts that Tesla might be able to use.... the 'Sherman Antitrust Act' http://en.wikipedia.org/wiki/Sherman_Antitrust_Act and the 'Clayton Antitrust Act'. http://en.wikipedia.org/wiki/Clayton_Antitrust_Act (both of which stem from the Interstate Commerce Clause, and were predecessors to the formation of the FTC).

For the Sherman Antitrust Act, I think it could be argued that NC's law pushed by the auto dealers to prevent Tesla sales via the internet is in violation of Section 1 (and perhaps section 2?? I'm no lawyer):
A Section 1 violation has three elements:
1. An agreement
2. which unreasonably restrains competition
3. and which affects interstate commerce.

A Section 2 violation has two elements:
1. the possession of monopoly power in the relevant market and
2. the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.

I think it can be proved that NC/national auto associations (I don't know their technical name) are acting like a monopoly and taking actions to crush threats (Tesla) to them, e.g. (obviously already have in Mass., Texas, Virginia, and NC) and these IMO quality as anti-trust violations of these laws.


Another tidbit from here: http://www.atg.wa.gov/antitrustguide.aspx#.UbBmKHaUH-U

the United States Supreme Court has interpreted the Sherman Act as applying only to unreasonable restraints of trade. Penalties for violating the Sherman Act include can be either civil or criminal in nature. Only the United States Department of Justice has the authority to criminally prosecute individuals for violating the Sherman Act. Additionally, some states have criminal authority under their own state antitrust laws....The United States Department of Justice Antitrust Division (“DOJ”) and the Federal Trade Commission (“FTC”) share responsibility for investigating and litigating cases under the Sherman Act...State attorneys general also have authority to enforce federal and state antitrust laws. Typically, states investigating a matter arising under the federal antitrust laws will jointly investigate with either the DOJ or the FTC, or may conduct a separate investigation...The antitrust laws are also enforced by private parties. Under both federal and state antitrust law, any person who is “injured in his business or property” by a violation of antitrust laws is entitled to bring an action in court.

I would think lawyers could have a field day with NC's ban on 'buying cars via internet'.
 
Tesla owners take matters into own hands

Owners are promoting Tesla's electric cars in front of North Carolina dealerships.


In recent weeks, NC dealers have been celebrating after having successfully lobbied to prevent direct sales of electric cars from Californian Tesla Motors. It seems, however, that this is not the end of their worries with Tesla. On Saturday, local owners of Tesla's Model S luxury sedan shows up outside many of the larger dealerships, showcasing their cars to bypassers including the visitors to the dealerships. The owners came well prepared, having stocked up on Tesla Motors brochures.

"I just think that this car is the future of driving, and I can't stand the thought that fellow North Carolinians would not have access to it", says Joe Schmoe, who brought his Model S from California last year. This sentiment is echoed by other Tesla owners interviewed by this paper.

The dealers do not share the enthusiasm. "This is another attempt by Tesla Motors to deprive customers of the protections mandated by North Carolina dealership laws", says Eenie M.M. Moe, head of the North Carolina Dealership Association.

Tesla Motors spokeswoman J. Lopez denies that Tesla has orchestrated the campaign. "We are touched by the enthusiasm of the North Carolina Model S owners", she says in an email. "However, this is a private initiative that we were not aware of before today."

Meanwhile, customers looking to purchase a car on Saturday were impressed by what they saw, even though many would not consider the $69,000 starting price. There was certainly more enthusiasm in front of the dealerships than inside on this particular Saturday.
 
Sure wish I was in NC or Texas for this one. I do not think there is any more potent sales representation for MS than a current MS owner (I've even stolen customers out of the Dania Beach service center while they were waiting to talk to a rep to go for my test ride).

The idea of telling people their state will not let them buy one is pure genius. Nothing gets people going like telling them they can not do something.
 
Tesla owners take matters into own hands

Owners are promoting Tesla's electric cars in front of North Carolina dealerships.


In recent weeks, NC dealers have been celebrating after having successfully lobbied to prevent direct sales of electric cars from Californian Tesla Motors. It seems, however, that this is not the end of their worries with Tesla. On Saturday, local owners of Tesla's Model S luxury sedan shows up outside many of the larger dealerships, showcasing their cars to bypassers including the visitors to the dealerships. The owners came well prepared, having stocked up on Tesla Motors brochures.

"I just think that this car is the future of driving, and I can't stand the thought that fellow North Carolinians would not have access to it", says Joe Schmoe, who brought his Model S from California last year. This sentiment is echoed by other Tesla owners interviewed by this paper.

The dealers do not share the enthusiasm. "This is another attempt by Tesla Motors to deprive customers of the protections mandated by North Carolina dealership laws", says Eenie M.M. Moe, head of the North Carolina Dealership Association.

Tesla Motors spokeswoman J. Lopez denies that Tesla has orchestrated the campaign. "We are touched by the enthusiasm of the North Carolina Model S owners", she says in an email. "However, this is a private initiative that we were not aware of before today."

Meanwhile, customers looking to purchase a car on Saturday were impressed by what they saw, even though many would not consider the $69,000 starting price. There was certainly more enthusiasm in front of the dealerships than inside on this particular Saturday.

Which article is this from? Do you have a link?
 
I suspect it is a mocked-up article, of what could be (not what is). Look at the names of the people in the article
.
Yeah, it is a mock up but such a thing should happen ... broder, take #2.
~5 Model S' straight from a carwash should park on a public parking as close as possible to a major dealer, open all the doors and throw a party offering a testdrives for random people.
Each should have a few pics, a short table with specs and a link to TM site, all nonoffical TM stuff, nothing to link with TM or accuse them for orchestrating or supporting the event.
This should happen more than once at different locations. Call it a Tesla Field Day :)
 
This is my May 25 reply in the Tesla Motors forum, with suspicions confirmed by Elon Musk during the stockholders' meeting:

Those of you who follow motorsports have heard of Rick Hendrick. His company, Hendrick Automotive Group, has 87 total dealerships, 37 dealerships in North Carolina and 50 in other states, including TX, VA, FL, CA, TN, and SC among others. Makes they sell include: Acura, BMW, Buick, Cadillac, Chevrolet, Chrysler, Dodge, Fiat, Honda, Kia, Land Rover, Lexus, Mercedes Benz, Mini Cooper, Porsche, Scion and Toyota. I'm sure Mr. Hendrick does everything he can to protect his own interests, but I'm not as confident he's truly looking out for his fellow North Carolineans (NASCAR fans excepted).

Notice a trend? NC, TX, VA...
 
The Interstate Commerce Clause (Article I, Section 8, Clause 3) gives congress absolute power to regulate commerce between states. They absolutely have the right to overrule state laws. It's probably the most powerful clause in all of the constitution.
Yes, I am aware. But I don't think the anti-trust laws would work against dealers in that the dealers themselves are not monopolies. I think what you need here is a new law. So, Congress can and should pass a law to accomplish this. I don't believe that you will be successful under current law. I guess you could claim that the dealers are colluding against Tesla (which is clearly the common sense interpretation of what they are doing). But the Supreme Court considers lobbying protected speech. So, I think you need new law.
 
Here's the response I received from the FTC:
_____________________________________

The “state action doctrine” is grounded in principles of federalism and state sovereignty. As determined by the Supreme Court, the state action doctrine protects from liability under the Sherman Act (1) actions that a State itself may take, and (2) certain conduct of private entities that (a) is undertaken pursuant to a “clearly articulated and affirmatively expressed” state policy to displace competition with regulation, and (b) is “actively supervised” by the State itself.

The following report concerns the state action doctrine:

http://www.ftc.gov/opa/2003/09/stateaction.shtm

FTC staff members do advocate in certain circumstances when invited to submit comments. Such advocacies are listed on our web site at:

http://www.ftc.gov/opp/advocacy_subject.shtm

Alan Friedman
 
Here's the response I received from the FTC:
_____________________________________

The “state action doctrine” is grounded in principles of federalism and state sovereignty. As determined by the Supreme Court, the state action doctrine protects from liability under the Sherman Act (1) actions that a State itself may take, and (2) certain conduct of private entities that (a) is undertaken pursuant to a “clearly articulated and affirmatively expressed” state policy to displace competition with regulation, and (b) is “actively supervised” by the State itself.

The following report concerns the state action doctrine:

http://www.ftc.gov/opa/2003/09/stateaction.shtm

FTC staff members do advocate in certain circumstances when invited to submit comments. Such advocacies are listed on our web site at:

http://www.ftc.gov/opp/advocacy_subject.shtm

Alan Friedman

Why does that mean? They could intervene in the NC situation only if invited to comment, otherwise they wouldn't get involved?
 
By having this reported in the national news as a flashpoint issue in a few states, consumers are made aware of Tesla Motors’ direct sales and service method without the need for advertising. It may induce people to purchase a Model S. Meanwhile it should help develop grassroots support for overturning state dealership mandates and voting out politicians more concerned about campaign contributions from lobbyists than the desires of their constituents.

Eventually the federal government and courts should see things Tesla’s way. The interstate commerce clause of the US Constitution would set things right. In the meantime, Elon is getting loads of free publicity for the Model S and the movement to overturn antiquated state laws. He's playing this game splendidly.
 
Here's the FTC comment on NC (back in '99):

V990008 - North Carolina Legislature

Conclusion

In summary, S.B. 420 and S.B. 419 could have adverse competitive effects on the motor vehicle market by restricting the ability of manufacturers to structure their businesses as they deem necessary to meet the competitive demands of the marketplace. We believe that both bills are likely to harm consumers to a greater degree than is the case with the current statute.