FTC officials signal agency support of Tesla in direct-sales battle
A blog post by three Federal Trade Commission officials caused a stir when it defended Teslaês effort to sell cars directly to consumers and said efforts to protect existing middlemen from new competition is bad policy. The middlemen these bloggers reference, of course, is regulator-speak for auto dealers.
The blog post, headlined Who decides how consumers should shop? attacks the entire dealer franchise system. For decades, laws in many states have required consumers to purchase their cars solely from local, independent auto dealers. Removing these regulatory impediments may be essential to allow consumers access to new ways of shopping that have become available in many industries.
Maryland and Virginia, along with Arizona, New Jersey and Texas, have reaffirmed auto retail licensing laws that disallow automakers from selling directly to consumers. Says the FTC post, Instead of protecting,ê these state laws became protectionist,ê perpetuating one way of selling cars the independent car dealer.
The post is written by the directors of the Office of Planning Policy, the Bureau of Competition and the Bureau of Economics at the FTC. A note with the post says the views are their own and donêt necessarily reflect the views of the FTC or individual commissioners.
NADA rebutted the blog post in a statement to Automotive News. If a factory owned all of its stores, it could set prices and buyers would lose virtually all bargaining power, spokesman Jonathan Collegio told Automotive News.Download Bulletin PDF