FTC opinion: Who decides how consumers should shop?

[Norbert]

While I fully support Tesla's direct-sales model, this appears to be a "state's rights issue." We're going to have to fight this state by state. This blog post is certainly well-reasoned, but the FTC's opinions can't override state laws.

Well, it is not a legal comment in the first place. But it is something than can be quoted in any debate on the matter, including a legal one. The dealer associations will now have a much harder time selling the franchised dealer model as the only way it should be.

 

[rolosrevenge]

While I fully support Tesla's direct-sales model, this appears to be a "state's rights issue." We're going to have to fight this state by state. This blog post is certainly well-reasoned, but the FTC's opinions can't override state laws.

If it's in response to interstate commerce the feds can regulate it. If one state is banning the sale of something from another state ...

 

[RobStark]

While I fully support Tesla's direct-sales model, this appears to be a "state's rights issue." We're going to have to fight this state by state. This blog post is certainly well-reasoned, but the FTC's opinions can't override state laws.

The only state that can legitimately claim "State's Rights" is California.

Otherwise it is an interstate commerce issue.

While the FTC can't overrule individual state laws the United States Supreme Court can.

And the US Congress can enact laws that supersede state laws or give the FTC the authority to do so.

 

[slipdrive]

I think a large area of concern for the dealers is the "horizontal restraints" they have weaseled themselves into, that is, colluding among themselves with or without the help of state franchise laws to eliminate competition and new entrants. The FTC Act and other federal law can come in to rectify those activities. I think we can assume Tesla has very, very smart lawyers that have all this wired. They may be letting the dealers lean into it a bit more, and create the factual basis for FTC or other action...

 

[CalDreamin]

The U.S. Department of Justice weighed in on this issue during 2009. DOJ estimated substantial cost savings to consumers with direct sales of cars, bypassing the independent dealer model.
http://www.justice.gov/atr/public/eag/246374.htm

 

[slipdrive]

Great reference CalDreamin. Thanks. The author is in the Antitrust Division of DOJ of course... This is great reading.

 

[JohnQ]

If it's in response to interstate commerce the feds can regulate it. If one state is banning the sale of something from another state ...

NJ is certainly not banning the sale, only regulating the sale. Similar to regulating the sale of alcohol. And it's a lot more nuanced ... though I know you know that. A cannabis grower in CO doesn't really have much standing when complaining that he can't legally sell in NJ.

 

[Krugerrand]

This blog post is certainly well-reasoned, but the FTC's opinions can't override state laws.

That doesn't matter. You get to shore one stroke at a time, and this blog post represents many strokes to shore. It's yet another tick in the 'win' column for Tesla and ultimately for the consumer. Every little bit of pressure placed has value, adding to the total pressure that will finally break the dealership business model and everything and everyone that currently holds it upright.

 

[slipdrive]

NJ is certainly not banning the sale, only regulating the sale. Similar to regulating the sale of alcohol. And it's a lot more nuanced ... though I know you know that. A cannabis grower in CO doesn't really have much standing when complaining that he can't legally sell in NJ.

When embedded sellers collaborate to restrain or eliminate competition, or regulations which do the same, the FTC gets interested. That was their point about internet sales of wine, etc. States have removed protectionist laws and regulations in these area to benefit the consumer. Yes, it may still be State legislatures cleaning this up, but people will be more and more aware, and the dealers boats (yachts) are springing leaks ...

 

[ElSupreme]

A cannabis grower in CO doesn't really have much standing when complaining that he can't legally sell in NJ.

But that would mostly be due to the fact that cannabis is illegal at the federal level. So they would frown upon the interstate commerce of cannabis, as well as NJ.

 

[scaesare]

NJ is certainly not banning the sale, only regulating the sale.

What are the specific "regulations", and the supposed protections they provide?

 

[JohnQ]

What are the specific "regulations", and the supposed protections they provide?

Not necessarily the issue. Some states don't permit the sale of certain things on Sunday (including automobiles). Is that protecting me as a consumer? Of course not. This is something governed by states or even municipalities. In theory, it's an interstate commerce issue and could be addressed by the FTC. But I don't think it rises to the necessary level to be addressed.

I'm not supportive of the NJ restrictions, I think they're outdated and protectionist. The question is whether they reasonably run afoul of the commerce clause (I say reasonably because most anything can be considered interstate commerce depending on the make up of the court).

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But that would mostly be due to the fact that cannabis is illegal at the federal level. So they would frown upon the interstate commerce of cannabis, as well as NJ.

That was just a tongue in cheek example, of course. When drinking ages varied by state, was that an interstate commerce issue? What if one state banned the sale of tobacco (or large fountain sodas).

Interestingly, the right of the federal government to restrict the growth and sale of cannabis for personal consumption within the same state was confirmed by the Supreme Court based on the commerce clause. Anything can be couched in economic terms that affect commerce across the country. It's a question of the political will to address the issue and the courts' current philosophies.

 

[dsm363]

NJ is certainly not banning the sale, only regulating the sale. Similar to regulating the sale of alcohol. And it's a lot more nuanced ... though I know you know that. A cannabis grower in CO doesn't really have much standing when complaining that he can't legally sell in NJ.

But cars are not considered an illegal product by the federal government.
Just saw you already addressed this.

Can the FTC bring this up on their own to the Supreme Court?

 

[Chickenlittle]

But cars are not considered an illegal product by the federal government.
Just saw you already addressed this.

Can the FTC bring this up on their own to the Supreme Court?

not only that but the states have the right to license physicians to assure quality and public safety. however this argument is not real since all states will register teslas and they go through state inspections so one cannot argue that limiting tesla sales is for public safety

 

[tdelta1000]

What is happening to TM is what I consider "the stifling of Capitalism". The principles of our capitalist system allows anyone with a dream to start a business and grow that business but in TM's the growth is being hindered.

Outside forces are maneuvering to slow or even kill this business because it has the ability to supersede long standing concepts we have held onto for years. The FTC, should use its power to keep the principles of capitalism alive for TM and any other company that may be afflicted with "the stifling of Capitalism."

 

[brianman]

What is happening to TM is what I consider "the stifling of Capitalism". The principles of our capitalist system allows anyone with a dream to start a business and grow that business but in TM's the growth is being hindered.

Outside forces are maneuvering to slow or even kill this business because it has the ability to supersede long standing concepts we have held onto for years. The FTC, should use its power to keep the principles of capitalism alive for TM and any other company that may be afflicted with "the stifling of Capitalism."

(Quoted for context, not direct response)
I find it somewhat interesting that some of the strongest proponents of incentives and other government action to "guide" the free market are some of the same people that are upset when companies like Tesla are held back by the market not being "quite so free".

Government intervention is an imprecise but powerful instrument. The simplest approach is perhaps to sweep away the intervention entirely -- incentives, credits, and the results of dealership monetary/political pressures.

 

[scaesare]

Originally Posted by scaesare
What are the specific "regulations", and the supposed protections they provide?

Not necessarily the issue.

But the NADA has said it IS at issue.

 

[Zythryn]

Not necessarily the issue. Some states don't permit the sale of certain things on Sunday (including automobiles). Is that protecting me as a consumer? Of course not. This is something governed by states or even municipalities. In theory, it's an interstate commerce issue and could be addressed by the FTC. But I don't think it rises to the necessary level to be addressed.
...

However, we don't have limits on sales that apply differently to sales from a direct seller vs a franchise.
I think this is a great time for Tesla to push hard as we have a great example of how the dealer model does not provide protection to the consumer with the GM 10 year too late recall.