Pub. 56 2015-2016 Issue 1

38 from abuse by manufacturers and to guarantee that consumers would have a local representative of the manufacturer to whom to [sic] they could turn for servicing and warranty issues. However, new car companies like Tesla and Elio Motors are attempting to create new models of national distribution and auto servicing of their cars that do not require locally franchised dealers. . . The FTC staff has pointed out repeatedly in letters and commentary to state legislatures and government officials that these laws are anomalous within the larger economy and potentially counter- productive. Most manufacturers can, and should be allowed to determine the best method of distribution for their products based on consumer preferences and other business considerations. Thesenew distribution models also offer potential efficiencies that could be passed on in the form of better pricing or quality of service. Government intervention in the market should only be used to accomplish specific policy objectives–none of which are apparent in the auto distribution restrictions at issue here. 46 Finally, Commissioner Ohlhausen is thankful that the FTC’s advocacy efforts are paying dividends citing New Jersey’s passage of legislation that allows Tesla to operate a number of direct sales outlets. The FTC staff submitted written comments to a Michigan state senator, a Missouri state representative as well as to a New Jersey assemblyman. The comments from the FTC’s Office of Policy Planning, Bureau of Competition and Bureau of Econom- ics argue for repeal of any ban on direct sales by a motor vehicle manufacturer as they are a special protection that harms competi- tion and consumers. Getting the FTC to recognize that the franchised dealership system is a necessary link with the manufacturer or distributor and a consumer is a constant challenge. The essential role that the franchised dealer performs for the consumer, the factory, and the economy is an on-going educational process. The history of the automobile industry shows that investing in a dealership is unlikely to happen without the state franchise laws. This truism is more apparent every day as the cost of land, buildings, inventory, consumer demands, labor, and governmental requirements increase. The public policy considerations supporting the state franchise laws are valid and prudent and take into account the needs and interests of all parties. Conclusion The Federal Trade Commission is active in a dealer’s day-to-day business activities. From advertising, sales, and the franchise, the FTC is entrenched in the automobile dealership. The compliance challenge is ever-increasing in time and cost and yet the franchised automobile dealer continues to accept the challenge and is a welcome addition in any community. Each franchised dealer wears big shoes–giant-sized shoes. Those shoes are not easily or readily filled. The resilience, dedica- tion, generosity, and ever-optimistic nature that each franchised dealer exhibits each day is a part of why the franchised dealer is so vital.  1 Federal Trade Commission Act, ch. 311, § 1, 38 Stat. 717 (1914). 2 www.ftc.gov 3 16 C.F.R. Part 455. 4 Public Law 106-102 (1999) (15 U.S.C. §§ 6801 - 6809). 5 12 C.F.R. § 226. 6 12 C.F.R. § 213. 7 15 U.S.C. § 1601, et seq. 8 15 U.S.C. § 1667, et. seq. 9 FTC Act, 15 U.S.C. §§ 41-58. 10 15U.S.C. § 45 11 Id. § 45(1). 12 FTC Consumer Compliance Handbook, FTC Act at 1 (6/08). 13 15U.S.C. § 55. 14 In the Matter of Jim Burke Automotive, Inc., Docket No. C-4523 (May 4, 2015). 15 In the Matter of TT of Longwood, Inc., Docket No. C-4531 (July 2, 2015). 16 In the Matter of TC Dealership, L.P., File No. 152 309–Consent Agreement (80 FedReg 38689 (July 7, 2015)). 17 United States of America v. Billion Auto, et al., Case No. 5:14-cv-04118-MWBU (N. District Iowa) (FTC File C-4356). 18 Id. 19 In the Matter of New World Auto Imports, Inc., Docket No. C-4437 (Feb. 20, 2014); Id. File No. 152 309. 20 Id. Docket No. C-4531. 21 Id. 22 Id. Docket No. C-4437. 23 In the Matter of City Nissan, Inc., Docket No. C-4524 (May 4, 2015). 24 “FTC Policy Statement on Deception,”to the Honorable John D. Dingell, Chairman Committee on Energy and Commerce (October 14, 1983). 25 16 C.F.R. Part 455. 26 79 FedReg 70804 (Nov. 28, 2014); extension of comment period 80 FedReg 4519 (January 28, 2015). TADA submitted timely written comments to the proposal on March 16, 2015. 27 Federal Trade Commission v. Abernathy Motor Company, et al., (Eastern District, Arkansas) No. 3:14-cv- 63 BRW (FTC File 132 3173). 28 A “new motor vehicle” in Texas is defined as a motor vehicle that has not been the subject of a retail sale, regardless of the mileage of the vehicle; therefore, a demonstrator is a “new”motor vehicle but for the purpose of the Buyers Guide, it is considered “used”as it has more than the limited use necessary in moving or road testing it prior to delivery to a consumer. TEX. OCC. CODE § 2301.002(24) (Vernon Supp. 2014). 29 76 FedReg 14014 (March 15, 2011). 30 Public Law 111-203, 124 Stat. 1376 (July 21, 2010) (to be codified in scattered titles and sections of the U.S. Code). 31 5 U.S.C. § 553. 32 Dodd-Frank Act § 1029(f)(1). 33 Public Law 106-102, 113 Stat. 1338 (1999) (codified 15 U.S.C. § 6801, et seq.). 34 12 U.S.C. § 5519, § 1029. 35 A motor vehicle dealer is not required to allow a consumer to opt-out of the dealer’s sharing involv- ing third-party service providers, joint marketing arrangements, maintenance and servicing of accounts, securitization, law enforcement and compliance, reporting to consumer reporting agencies, and certain other activities. 15 U.S.C. §§ 6802(b)(2), 6802(e); 16 C.F.R. §§ 313.13, 313.14, 313.15. 36 Fair Credit Reporting Act § 624 and 16 C.F.R. § 680 (the Affiliate Marketing Rule). 37 15 U.S.C. § 1681s-3. 38 Id. § 313.6(a)(8). 39 15 U.S.C. §§ 6801-6809. 40 P. L. 93-637 (codified as 15 U.S.C. § 2301, et seq.) 41 16 C.F.R. Part 702. 42 See FTC, .COM Disclosures: How to Make Effective Disclosures in Digital Advertising (2013), available at http://www/ftc.gov/os/2013/03/130312dotcomdisclosures.pdf, fn 7. 43 In the Matter of BMW of North America, LLC, FTC File No. 132 3150 (80 FedReg 16011 (March 26, 2015)). 44 Id. 45 N. C. State Bd. Of Dental Exam’rs v. FTC, 135 S.Ct. 1101 (2015). 46 Ms. Ohlhausen cites to Marina Lao, et al, Direct-to-consumer Auto Sales: It’s Not Just About Tesla, FTC Blog, May 11, 2015 11:00 AM, https://www.ftc.gov/news-events/blogs/competition-matters/2015/direct-to- consumer-auto-sales-its-not-just-about-tesla (describing the agency’s advocacy efforts across several states)  FTC — CONTINUED FROM PAGE 36