Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Michigan “anti-Tesla” bill would not add new direct sales ban, supporters say, (Oct 20, 2014)
Organizations Mentioned:Tesla | Tesla Motors, Inc.
By John W. Arden, J.D., LL.M.
Tesla Motors Inc.’s criticism of proposed Michigan legislation for prohibiting motor vehicle manufacturers from selling directly to retail customers is off base, according to the bill’s sponsors and supporters, since the Michigan motor vehicle dealer law already bans such sales.
House Bill No. 5606—which has cleared the legislature and awaits action by Governor Rick Snyder—addresses the list of prohibited conduct by manufacturers. Among the prohibited acts of the current law (MCL 445.1574) is Sec. 14(1)(i), stating that a manufacturer shall not:
(i) Sell any new motor vehicle directly to a retail customer other than through its franchised dealers, unless the retail customer is a nonprofit organization or a federal, state, or local government or agency. This subdivision does not prohibit a manufacturer from providing information to a consumer for the purpose of marketing or facilitating the sale of new motor vehicles or from establishing a program to sell or offer to sell new motor vehicles through the manufacturer's new motor vehicle dealers.
The only change to this subsection in the proposed legislation is the deletion of “its” preceding “franchised dealers” in the first sentence. According to Terry Burns, Executive Vice President of the Auto Dealers of Michigan, “there’s no regulatory change at all in the amendments.” State Rep. Aric Nesbitt (R-Lawton), sponsor of the bill, says that the measure “doesn’t have anything to do with Tesla,” which has not contacted him.
The controversy apparently began when James Chen, Tesla’s Vice President of Regulatory Affairs and Associate General Counsel, told the Wall Street Journal that the bill was unfair to its business model (“Tesla Fights Michigan Legislation on Direct-Selling, Servicing”).
After easily passing both houses of the Michigan legislature, House Bill No. 5606 was presented on October 7 to the Governor for signature. Further information about the legislation appears here on the Michigan Legislature’s website.
Companies: Tesla Motors, Inc.
News: FranchisingDistribution MichiganNews