Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Michigan Governor signs bill clarifying existing law banning direct auto sales, (Oct 22, 2014)
Organizations Mentioned:Tesla Motors, Inc.
By Linda O’Brien, J.D., LL.M.
Michigan Governor Rick Snyder announced yesterday that he has signed legislation that clarifies an existing law banning direct automobile sales in Michigan. House Bill No. 5606 amends the Michigan motor vehicle dealer law to prohibit manufacturers from dictating fees franchised dealers can charge customers. The legislation (Public Act 354 of 2014) also allows individual auto dealers to make the business decision whether to charge the transaction fee.
House Bill No. 5606 addresses the list of prohibited conduct by manufacturers. Among the prohibited acts of the pre-existing 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.
According to the Governor’s office, the language in House Bill No. 5606 states plainly that a manufacturer can sell new vehicles to consumers only through its own network of franchised dealers. The new legislation deletes the word “its” from a sentence in existing law.
The change would merely allow manufacturers who do not have their own franchised dealers to sell through another manufacturer’s network of franchised dealers. They will be required, just as they are under current law, to sell through a franchised dealer, and not directly to consumers.
Snyder noted that there has been a misunderstanding about the legislation, which has been called an “Anti-Tesla” measure, allegedly aimed at prohibiting the electric car manufacturer from making direct sales to customers.
“This bill does not, as some have claimed, prevent auto manufacturers from selling automobiles directly to consumers at retail in Michigan—because this is already prohibited under Michigan law,” Snyder said in a letter to lawmakers that accompanies the signed bill.
Companies: Tesla Motors, Inc.
News: FranchisingDistribution MichiganNews