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Detroit Auto Dealers Association, Inc., et al.; Proposed Consent Agreement With Analysis to Aid Public Comment

American Government Special Collections Reference Desk

American Government Topics:  Detroit Auto Dealers Association

Detroit Auto Dealers Association, Inc., et al.; Proposed Consent Agreement With Analysis to Aid Public Comment

Donald S. Clark
Federal Trade Commission
May 9, 1994


[Federal Register Volume 59, Number 88 (Monday, May 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 94-11107]


[[Page Unknown]]

[Federal Register: May 9, 1994]


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FEDERAL TRADE COMMISSION
[Dkt. 9189]

 

Detroit Auto Dealers Association, Inc., et al.; Proposed Consent 
Agreement With Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
prohibit, among other things, the association of motor vehicle dealers 
and a former officer, James Daniel Hayes, from entering into, 
continuing or carrying out any agreement to establish, fix or maintain 
any hours of operation of any dealer in the Detroit area. In addition, 
the consent agreement would require the respondent association to amend 
its bylaws to comply with the provisions of the order, and to place 
advertisements, in the city's two daily newspapers, stating that 
certain area dealers are required by the Commission order to maintain 
extended hours (at least 62 hours a week) for a one-year period.

DATES: Comments must be received on or before July 8, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
Ernest Negata, FTC/H-394, Washington, DC 20580. (202) 326-2714.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 3.25(f) of 
the Commission's Rules of Practice (16 CFR 3.25(f)), notice is hereby 
given that the following consent agreement containing a consent order 
to cease and desist, having been filed with the accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of sixty (60) days. Public comment is invited. Such 
comments or views will be considered by the Commission and will be 
available for inspection and copying at its principal office in 
accordance with Sec. 4.9(b)(6)(ii) of the Commission's Rules of 
Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order To Cease and Desist

    In the Matter of: Detroit Auto Dealers Association, Inc., a 
corporation, et al.

    The agreement herein, by and between Detroit Auto Dealers 
Association, Inc. (``DADA'') and James Daniel Hayes, individually, 
hereafter sometimes referred to as respondents, and their attorneys, 
and counsel for the Federal Trade Commission, is entered into in 
accordance with the Commission's rule governing consent order 
procedures. In accordance therewith the parties hereby agree that:
    1. Respondent DADA is an incorporated trade association for motor 
vehicle dealers with its principal place of business located at 1800 W. 
Big Beaver Rd., Troy, MI 48084.
    2. Respondent James Daniel Hayes was, at relevant times, an officer 
of DADA, and as such formulated, directed and controlled the acts and 
practices of DADA. James Daniel Hayes' mailing address is 2845 
Palmerston Rd., Troy, MI 48084.
    3. Respondents have been served with a copy of the complaint issued 
by the Federal Trade Commission charging them and others with violation 
of section 5 of the Federal Trade Commission Act, and have filed 
answers to said complaint denying said charges.
    4. Respondents admit all the jurisdictional facts relating to Count 
I set forth in the Commission's complaint in this proceeding.
    5. Respondents waive the following with respect to Count I of the 
complaint:

    (a) Any further procedural steps;
    (b) The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    (c) All rights to seek judicial review or otherwise to challenge 
or contest the validity of the Order entered pursuant to this 
agreement; and
    (d) Any claim under the Equal Access to Justice Act.

    6. This agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
agreement is accepted by the Commission it will be placed on the public 
record for a period of sixty (60) days and information in respect 
thereto publicly released. The Commission thereafter may either 
withdraw its acceptance of this agreement and so notify the respondents 
in which event it will take such action as it may consider appropriate, 
or issue and serve its decision, in disposition of Count I of the 
complaint issued by the Commission in this proceeding.
    7. This agreement is for settlement purposes only and relates 
solely to Count I of the Commission's complaint in this proceeding; 
this agreement does not constitute an admission by the respondents that 
the law has been violated as alleged in Count I of the complaint issued 
by the Commission.
    8. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Sec. 3.25(f) of the 
Commission's Rules, the Commission may without further notice to the 
respondents (1) issue its decision containing the following Order to 
cease and desist in disposition of Count I of the complaint issued by 
the Commission in this proceeding, and (2) make information public in 
respect thereto. When so entered, the Order to cease and desist shall 
have the same force and effect and may be altered, modified or set 
aside in the same manner and within the same time provided by statute 
for other orders. The Order shall become final upon service. Delivery 
by the U.S. Postal Service of the decision containing the agreed-to 
Order to respondents' addresses as stated in this agreement shall 
constitute service. Respondents waive any right they might have to any 
other manner of service. The complaint may be used in construing the 
terms of the Order, and no agreement, understanding, representation, or 
interpretation not contained in the Order or in the agreement may be 
used to vary or to contradict the terms of the Order.
    9. Respondents have read the complaint and the Order contemplated 
hereby. They understand that once the Order has been issued, they may 
be required to file one or more compliance reports showing they have 
fully complied with the Order. Respondents further understand that they 
may be liable for civil penalties in the amount provided by law for 
each violation of the Order after it becomes final.
    It is ordered, that for the purposes of this order, the following 
definitions shall apply:
    1. Person means any natural person, corporation, partnership, 
association, joint venture, trust, or other organization or entity, but 
not governmental entities.
    2. Dealer means any person who receives on consignment or purchases 
motor vehicles for sale or lease to the public, and any director, 
officer, employee, representative or agent of any such person.
    3. Dealer association means any trade, civic, service, or social 
association whose membership is composed primarily of dealers.
    4. Detroit area means the Detroit, Michigan metropolitan area, 
comprising Macomb County, Wayne County and Oakland County in the State 
of Michigan.
    5. Hours of operation means the times during which a dealer is open 
for business to sell or lease motor vehicles.
    6. Weekday hours means the hours of 9 a.m. to 6 p.m. Monday through 
Friday.
    7. Non-weekday hours means hours other than 9 a.m. to 6 p.m. Monday 
through Friday.
    8. Respondent means any dealership, individual, or association 
respondent.

I

    It is further ordered, that DADA and James Daniel Hayes shall cease 
and desist from, directly or indirectly or through any corporate or 
other device, entering into, continuing, or carrying out any agreement, 
contract, combination, or conspiracy, in or affecting commerce (as 
``commerce'' is defined in the Federal Trade Commission Act), with any 
other respondent or other dealer or dealer association in the Detroit 
area to establish, fix, maintain, adopt, or adhere to any hours of 
operation.

II

    It is further ordered, that DADA and James Daniel Hayes shall cease 
and desist from, directly or indirectly or through any corporate or 
other device, performing any of the following acts or practices or 
encouraging, inducing, or requiring any person to perform any of the 
following acts or practices, or entering into, continuing, or carrying 
out any agreement, contract, combination, or conspiracy with any other 
person in the Detroit area to do or perform any of the following acts 
or practices:
    A. Exchanging information or communicating with any other 
respondent or other dealer or dealer association in the Detroit area 
concerning hours of operation, except to the extent necessary (i) to 
comply with any order of the Federal Trade Commission, (ii) after two 
(2) years from the date this order becomes final, to incorporate 
individual dealers' hours of operation in lawful joint advertisements, 
and (iii) in connection with special sales events or promotions 
sponsored or coordinated by DADA, including but not limited to the 
North American International Auto Show; or
    B. Requesting, recommending, coercing, influencing, inducing, 
encouraging, or persuading, or attempting to request, recommend, 
coerce, influence, induce, encourage, or persuade, any other respondent 
or other dealer or dealer association in the Detroit area to maintain, 
adopt or adhere to any hours of operation.

III

    It is further ordered, that respondent DADA shall:
    A. Beginning thirty (30) days after this order becomes final, and 
for a period of not less than four (4) weeks thereafter, place and 
cause to be disseminated each week at least four (4) advertisements, 
including one in the Thursday editions of the Detroit News and the 
Detroit Free Press, one in the Saturday edition of the combined Detroit 
News and Free Press, and one in any other edition of the Detroit News, 
the Detroit Free Press, or the combined Detroit News and Free Press. 
Each advertisement shall: (1) List all dealership respondents which 
within ten (10) days prior to the placement of the advertisement are 
subject to a final Commission order to maintain minimum weekly hours of 
operation, (2) list all non-respondent dealerships in the Detroit area 
that are owned or operated by an individual respondent who within ten 
(10) days prior to the placement of the advertisement is subject to a 
final Commission order to maintain minimum weekly hours of operation, 
and (3) disclose that all such orders have a minimum hours requirement 
of 62 hours per week, or 58 hours per week where applicable. For the 
purpose of complying with Part III.A.(2), above, DADA shall use its 
best efforts to identify all non-respondent dealerships in the Detroit 
area that are owned or operated by an individual respondent. The 
advertisements shall be devoted exclusively to the content set forth in 
paragraph B. hereto. The advertisements shall be clear and prominent 
containing a banner headline in 24 point or larger bold type so that it 
can be readily noticed, with the principal portion of the text in 12 
point or larger type, and the list of respondent and non-respondent 
dealerships in 9 point or larger type. The advertisement shall be a 
minimum of one-eighth (\1/8\) of a page and shall be placed in the same 
location at which advertisements for the sale of new automobiles 
ordinarily appear; and
    B. The advertisements referred to in paragraph A. of this section 
shall state as follows:

Auto Dealers Open For Extended Hours

    Prior to [date of Order] most Detroit area automobile dealers 
have not been open for business on Saturday or on Tuesday, 
Wednesday, or Friday evening. As a result of a consent order of the 
Federal Trade Commission, the following Detroit area automobile 
dealers must offer expanded shopping hours of a minimum of 62 hours 
per week for one year and are free to choose their own hours 
thereafter.

[list dealerships]*
---------------------------------------------------------------------------

    *Dealers noted with an asterisk must offer a minimum of 62 
shopping hours per week during Daylight Savings Time and a minimum 
of 58 hours at other times.
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IV

    It is further ordered, that DADA shall, for a period of five (5) 
years from the date this order becomes final, cause to be made minutes 
of all business meetings of its membership, its board of directors, and 
its committees. Such minutes shall: (i) Identify all persons attending 
such meeting, (ii) include a certification, signed by the presiding 
officer and the secretary under penalty of perjury, that states whether 
hours of operation were discussed at the meeting, and (iii) summarize 
what was discussed at the meeting. If hours of operation were discussed 
at any business meeting subject to this order, then the minutes of such 
meeting shall identify the participants in the discussion of hours of 
operation and state in detail the substance of the discussion(s). DADA 
shall retain such minutes (including, but not limited to, the required 
certifications) for a period of five (5) years from the date the 
minutes were created. Such minutes shall be provided to the Commission 
upon request.

V

    It is further ordered, that DADA shall:
    A. Within sixty (60) days from the date this order becomes final, 
amend its bylaws, rules and regulations to eliminate any provision 
inconsistent with any provisions of this order;
    B. Within sixty (60) days from the date this order becomes final, 
amend its bylaws, rules and regulations to incorporate:
    (1) A provision that prohibits its members from discussing at any 
formal or informal membership, board of directors, or committee meeting 
the hours of operation of any dealer, except to the extent necessary to 
comply with any order of the Federal Trade Commission; and
    (2) A provision that requires expulsion from membership of any 
member who violates such prohibition;
    (C) Within ten (10) days after the amendment of any bylaws, rules 
or regulations pursuant to this order, furnish a copy of such amended 
bylaws, rules or regulations to all members, and within ten (10) days 
of any new member joining DADA, furnish to such new member a copy of 
the bylaws, rules and regulations of DADA; and
    D. Within sixty (60) days after receiving information from any 
source concerning a potential violation of any bylaw, rule, or 
regulation required by part V.B. of this order, investigate the 
potential violation, record the findings of the investigation, and 
expel for a period of one (1) year any member who is found to have 
violated any of the bylaws, rules or regulations required by part V.B. 
of this order.

VI

    It is further ordered, that DADA shall, for a period of five (5) 
years from the date this order becomes final, provide to the Commission 
the name and address of any member expelled pursuant to the 
requirements of part V.D. of this order within ten (10) days after such 
expulsion.

VII

    It is further ordered, that within ten (10) days after the date 
this order becomes final DADA shall provide a copy of the order to each 
of its officers, directors, members and employees. For a period of five 
(5) years from the date this order becomes final, DADA shall provide a 
copy to each new member and new employee, within ten (10) days after 
the date the employee is hired or the new member joins DADA.

VIII

    It is further ordered, that DADA and James Daniel Hayes shall, 
within ninety (90) days after this order becomes final and annually 
thereafter for a period of five (5) years, file with the Commission a 
verified written report setting forth in detail the manner and form in 
which they have complied with this order. The requirements of parts 
VIII and IX shall not apply to James Daniel Hayes; provided, however, 
that James Daniel Hayes shall, within ninety (90) days after this order 
becomes final, file with the Commission a verified written report 
stating that he is no longer employed by DADA or any other dealer 
association in the Detroit area and does not own or operate a 
dealership in the Detroit area; provided, further, that if 
circumstances change whereby James Daniel Hayes shall become employed 
by DADA or any other dealer association in the Detroit area, or shall 
own or operate a dealership in the Detroit area, then he shall notify 
the Commission at the earliest practicable date of such a change and 
shall begin complying with the requirements of parts VIII and IX of 
this order.

IX

    It is further ordered, that for a period of five (5) years from the 
date this order becomes final, DADA shall notify the Commission at 
least thirty (30) days prior to any proposed change in corporate status 
(such as dissolution, assignment, or sale) that results in the 
emergence of a successor corporation, the creation or dissolution of 
subsidiaries, or any other change in DADA which may affect compliance 
obligations arising out of the order. James Daniel Hayes shall, for 
five (5) years from the date the order becomes final, promptly notify 
the Commission of the discontinuance of his present business or 
employment and of any new affiliation or employment with any dealer or 
dealer association. Such notice shall include his new business address 
and a statement of the nature of the business or employment in which he 
is newly engaged, as well as a description of his duties and 
responsibilities in connection with the new business or employment.
    DADA of 1800 W. Big Beaver Rd., Troy, Michigan 48084 and James 
Daniel Hayes of 2845 Palmerston Rd., Troy, MI 48084 hereby agree to the 
terms and conditions of the Consent Agreement containing an order to 
cease and desist from engaging in the acts and practices identified in 
Count I of the complaint in In the Matter of Detroit Auto Dealers 
Association, Inc. a corporation, et al., Docket No. 9189.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement to a proposed consent order from Detroit 
Automobile Dealers Association, Inc. (``DADA'') and James Daniel Hayes, 
a former officer of the association.
    The proposed consent order has been placed on the public record for 
60 days for reception of comments by interested parties. Comments 
received during this period will become part of the public record. 
After 60 days, the Commission will again review the agreement and the 
comments received and will decide whether it should withdraw from the 
agreement or make final the agreement's proposed order.
    On December 20, 1984, the Commission issued an administrative 
complaint alleging that DADA, James Daniel Hayes and certain automobile 
dealers and dealer associations agreed among themselves and with others 
to limit competition in the sale of new motor vehicles in the Detroit, 
Michigan area in violation of section 5 of the Federal Trade Commission 
Act, by adopting and adhering to a schedule limiting hours of operation 
for the sale or lease of motor vehicles in the Detroit area. The 
alleged agreement limited weekday evening hours to Mondays and 
Thursdays and eliminated Saturday hours altogether, except for 
occasional special sales.
    On July 14, 1987, the Administrative Law Judge (``ALJ'') issued an 
Initial Decision dismissing the complaint. The ALJ found that the 
dealers and the other respondents had acted in response to employee 
demands for shorter hours and, therefore, that the dealers' agreement 
was exempt from the antitrust laws by reason of the nonstatutory labor 
exemption.
    Counsel supporting the complaint appealed the Initial Decision to 
the Commission. On February 22, 1989, the Commission issued a decision 
reversing the ALJ. The Commission held that the dealers were not 
entitled to the nonstatutory labor exemption because their uniform 
hours restrictions were not the result of any collective bargaining 
activity with employees; on the contrary, the dealers had agreed among 
themselves in order to avoid collective bargaining. The Commission's 
Final Order, among other provisions, prohibited the dealers from 
conspiring in any way to fix hours of operation. As a corrective 
measure the Final Order also required the dealers to remain open a 
minimum of 64 hours a week for one year. The Commission found that ``a 
cease and desist order alone would be inadequate to remedy the 
respondents' violations of section 5.'' Because of the history of 
violent enforcement of the hours restrictions, the Commission found 
that ``[d]ealers individually will decide to remain closed for fear of 
reprisals if they try to extend hours. Only if many dealers are open at 
the same time, making enforcement of the restriction difficult or 
impossible, will the fear of being singled out for enforcement be 
overcome.'' Detroit Auto Dealers Ass'n, Inc., 111 F.T.C. 417, 506 
(1989). The Commission's Final Order also required DADA to print 
newspaper advertisements informing the Detroit-area public that dealers 
were now required to maintain expanded hours for a one year period 
pursuant to the Commission's order.
    DADA, James Daniel Hayes, the respondent dealers and other 
respondents appealed the Commission's decision to the United States 
Court of Appeals for the Sixth Circuit. On January 31, 1992, the Court 
of Appeals affirmed the Commission's decision in substantial part and 
remanded the case to the Commission for the ``limited purpose'' of 
reconsidering certain issues.
    On January 24, 1994, the Commission accepted, and on February 10, 
1994, published for public comment, an Agreement Containing a Consent 
Order to Cease and Desist in order to resolve the allegations in the 
administrative complaint as to 146 respondents, consisting of 
dealerships, owners or managers of dealerships and dealer associations. 
Detroit Automobile Dealers Ass'n, Inc., Proposed Consent Agreement With 
Analysis to Aid Public Comment, 59 F. R. 6263 (Feb. 10, 1994). DADA and 
James Daniel Hayes were not parties to that agreement.
    DADA and James Daniel Hayes subsequently entered into a separate 
Agreement Containing a Consent Order to Cease and Desist to resolve the 
allegations in the administrative complaint against them. Under part I 
of the proposed order, DADA and James Daniel Hayes would be prohibited 
from entering into, continuing or carrying out any agreement to 
establish, fix or maintain any hours of operation.
    Part II.A of the proposed order would prohibit DADA and James 
Daniel Hayes from exchanging information or communicating with any 
dealer or association concerning hours of operation, except to the 
extent necessary: (i) To comply with any order of the Commission, (ii) 
after two (2) years from the date the order becomes final, to 
incorporate individual dealers' hours of operation in lawful joint 
advertisements, and (iii) in connection with special sales events or 
promotions sponsored or coordinated by DADA, such as the North American 
International Auto Show.
    Part II.B of the proposed order would prohibit DADA and James 
Daniel Hayes from requesting, recommending, coercing, influencing, 
inducing, encouraging or persuading any dealer or dealer association to 
maintain, adopt or adhere to any hours of operation.
    Under part III of the proposed order, DADA would be required to 
place four weekly advertisements, specified in part III.B of the order, 
in the Detroit News and Detroit Free Press for a four-week period, 
stating that certain dealers are required by Commission order to 
maintain extended hours for a one-year period, and listing the dealers 
subject to such a requirement. The advertisements must be printed in a 
``clear and prominent manner'' using a banner headline in 24 point or 
larger bold type and twelve point or larger type for the principal 
portion of the text so that it can be readily noticed.
    Under part IV of the proposed consent order, DADA would be required 
to maintain detailed certified minutes of any meeting at which hours of 
operation are discussed.
    Part V of the proposed order would require DADA to amend its 
bylaws, rules and regulations to:
    (i) Eliminate any provision inconsistent with any provision of the 
order;
    (ii) Incorporate a provision that prohibits its members from 
discussing hours of operation at any meeting; and
    (iii) Expel from membership any member who violates such 
prohibition.
    DADA would also be required to furnish a copy of the amended 
bylaws, rules and regulations to every member and new member, and 
within 60 days after receiving information concerning a potential 
violation of any bylaw, rule or regulation required by the order, 
conduct an investigation and expel for one year any person who is found 
to have committed a violation. Under part VI of the proposed order, 
DADA would be required to provide to the Commission the name and 
address of each member expelled pursuant to paragraph V.
    The remainder of the proposed order contains provisions regarding 
compliance, record-keeping and distribution of the order to various 
persons. Part VII would require DADA to give a copy of the order to 
each employee and member, and to each new employee and member, as the 
case may be. Part VIII would require DADA and James Daniel Hayes to 
file annual compliance records for a period of five years. The 
reporting requirement for James Daniel Hayes would be waived, provided 
that he submits an initial verified report stating that he is no longer 
employed by DADA or any other dealer association and does not own or 
operate a dealership in the Detroit area. The reporting requirement 
would be re-activated if he again becomes employed by DADA or another 
dealer association or comes into ownership or operation of a dealership 
in the Detroit area. Part IX of the proposed order would require DADA 
and James Daniel Hayes to report any change of status that may affect 
their obligations under the order.
    The purpose of this analysis is to facilitate public comment on the 
proposed order, and it is not intended to constitute an official 
interpretation of the agreement and the proposed order or to modify in 
any way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 94-11107 Filed 5-6-94; 8:45 am]
BILLING CODE 6750-01-M



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