Pub. 7 2017 Issue 2

8 AUTOMOBILE DEALER NEWS ILLINOIS www.illinoisdealers.com COUNSELOR’SCORNER I llinois franchised new car dealers are among the most industrious, hard-working, community-oriented busi- ness executives in today’s economy. Franchised dealers are committed to their status as independent businesses. Indeed, in Illinois, under the Motor Vehicle Franchise Act (815 ILCS 710/1 et seq.), with certain, very narrow and limited exceptions, manufacturers and distributors are prohibited directly or indirectly from owning or operating a motor vehicle franchise. However, with the increase over the past several years of manufacturer incentive programs, the dealership’s ability to maintain its operating independence has been diminished. Many dealers in recent years have experienced reduced margins on new vehicle sales and increasing factory pro- gram incentives or payments to supposedly account for the difference. In some cases, dealers rely on these incentives and programs in the quest to be competitive, however, these programs tend to allot to the manufacturers more inf luence over dealership operations. While, at one time, these pro- grams may have been arguably voluntary in nature, they have gained a lifeblood prominence which some suggest is as in- tegral as the terms of the franchise agreement itself. The net effect for many dealers is that to achieve competitive grosses, they must participate in the incentive programs and thereby realize a diminution of their dealership operational control. Factory incentive programs have been the subject of state and federal legal challenges. For example, in recent years, there has been an increased prevalence of legal challenges against many of the manufacturers, foreign and domestic alike, under the provisions of the federal Robinson-Patman Act, which amended the Clayton Act enacted in 1936. The Robinson-Patman Act has been criticized by some commenta- tors as having narrow application. Yet, in some cases, dealers have withstood dismissal of their claims due to their meticu- lous compilation and preservation of evidence in support of their claims and their ability to satisfy the elements necessary to establish a prima facie violation of price discrimination under the federal law. The analysis of these claims is beyond the scope of this article due to space limitations. It is impor- tant, however, to note that individual dealers have challenged these programs with varying outcomes and degrees of success. BY JULIE A.CARDOSI, LAW OFFICE OF JULIE A. CARDOSI, P.C. MANUFACTURER INCENTIVE PROGRAMS: CONCERNS OVER DIMINISHED DEALER INDEPENDENCE AND PRICE DISCRIMINATION