Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—GaSCt: Car-Selling Dealer Could Not Sue for Encroachment Under Georgia Motor Vehicle Franchise Act Based on Service-Only Location, (Oct 16, 2012)

By William Zale, J.D.

Honda dealer WMW lacked standing to sue under the anti-encroachment provision of the Georgia Motor Vehicle Franchise Practices Act based on American Honda’s opening of a new dealership less than eight miles from a WMW’s Alpharetta service-only location, but more than eight miles from WMW’s Roswell sales and service location, the Supreme Court of Georgia has ruled (WMW, Inc. v. American Honda Motor Co., Inc., October 15, 2012, Nahmias, D.). The new dealership location did not fall within WMW’s “relevant market area” under the Act, the court held.

The Act authorizes an existing dealership to file suit to prevent its franchisor from establishing a new or relocated dealership within the existing dealership’s “relevant market area,” under OCGA § 10-1-664 (b). The Act, OCGA § 10-1-622 (13.1), defines “relevant market area” as “the area located within an eight-mile radius of an existing dealership,” the court observed.

Dealership, Relevant Market Area

The Act defines “dealer” in two different ways. See § 10-1-622 (1). First, a dealer is

any person engaged in the business of selling, offering to sell, soliciting, or advertising the sale of new motor vehicles and who is licensed or otherwise authorized to utilize trademarks or service marks associated with one or more makes of motor vehicles in connection with such sales.

(Emphasis added by court.) Alternatively, a dealer is

any person who engages exclusively in the repair of motor vehicles, except motor homes, if such repairs are performed pursuant to the terms of a franchise or other agreement with a franchisor or such repairs are performed as part of a manufacturer’s or franchisor’s warranty.

(Emphasis added by court.)

As a “car-selling” dealer, WMW’s “relevant market area” is read most naturally to mean the eight-mile radius around the location or locations where it performs the only activity that qualifies it as a “dealer” and “dealership” under the Act, that is, where it sells new vehicles pursuant to its franchise agreement with Honda, the court determined. It would be awkward to read the term “relevant market area,” as applied to a car-selling dealer, to mean anything else. The “market” at issue is car sales, not repairs. Thus, a car-selling dealer’s “relevant market area” does not extend to other locations where the dealership performs repairs (or engages in other corporate activities), because those activities are not what make a car-selling dealer a dealership under the Act, the court held.

The case is No. S11G1828.

H. Lamar Mixson (Bondurant, Mixson & Elmore, LLP) for WMW, Inc. Richard K. Hines V (Nelson Mullins Riley & Scarborough, LLP) for American Honda Motor Co., Inc.

Cases: FranchisingDistribution GeorgiaNews