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FTC: Direct Consumer Auto Sales: It's not just about Tesla

Discussion in 'News' started by dauger, May 11, 2015.

  1. dauger

    dauger Member

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  2. igotzzoom

    igotzzoom Member

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    Disappointing that a stronger case wasn't made for how the dealer franchise monopoly is contrary to the interstate commerce clause.
     
  3. MSEV

    MSEV Member

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    The FTC report was very interesting to me; thanks for posting.
     
  4. Robert.Boston

    Robert.Boston Model S VIN P01536

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    The FTC lives within the FTC Act. My (limited) assessment is this: the auto dealers are not engaging in any act proscribed by the FTC Act, and the FTC has no jurisdiction to bring an action against a state itself. (15 USC §45(a)(2) "The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except
    [list of exceptions] from using unfair methods of competition in or affecting commerce and unfair or deceptive actsor practices in or affecting commerce.") Note that "states" is not on that list.

    To the extent that there is federal action on this issue, I think it will have to come from the DOJ under the Sherman Antitrust Act. This will be tough because the SCOTUS has already issued an order about new car dealers. I'm going to quote an analysis of this ruling by the South Carolina AG's office:
    So, bottom line, I think the FTC and DOJ are reduced to trying to persuade state legislatures that these dealer restrictions are bad policy.
     
  5. brucet999

    brucet999 Active Member

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    I must have missed something here. This decision seems to have dealt with laws regulating manufacturers in establishment of a new franchised dealership in the territory of an existing franchised dealer. I don't see anything that would apply to state laws preventing a manufacturer which has no franchised dealers from establishing company-owned stores. That would appear to me to clearly violate the interstate commerce clause.
     
  6. JohnQ

    JohnQ Active Member

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    #6 JohnQ, May 12, 2015
    Last edited: May 12, 2015
    As Robert.Boston mentioned, the Sherman Act does not prohibit restraints on commerce imposed by a state acting as sovereign. So, states can regulate all sorts of things such as how liquor is sold, prescriptions, electricity, even raisins. Although I don't believe it's been tested, this would likely fall under that category.

    Incidentally, there are enormous complexities in determining whether an action is authorized by the state, whether the action goes against a stated goal of competition in a particular marketplace, etc. But, in general terms, the explicit regulation of a marketplace by the state for a specific benefit is difficult to challenge.
     

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