Stifling Competition – MO HB 1124 w/ Senate Amendments

Today I read about the MO HB 1124 that had passed the Missouri House & moved into the Senate only to be amended with anti-competitive language. The Senate addition included in section 407.826 part 3 & 4 would exclude a manufacturer from selling vehicles directly to consumers.

The original Statute was enacted to protect Franchisee’s from their own Franchisors. The original idea being that a manufacturer shouldn’t be able to give a franchisee territory & then compete against them in the future after the Franchisee is fully invested in their opportunity.

Fair Enough right.

Well what if a manufacturer did not have any Franchisees in the state? It shouldn’t apply right – as there aren’t any Franchisee’s to compete against and no Franchisee to protect.

Apparently the Missouri Senate disagreed with logic as they included language that essentially blocks a manufacturer from selling in the state w/o using a franchise structure. They are trying to force a business model on all future vehicle manufacturers. It is equivalent to saying anyone on the internet shouldn’t be allowed to sell to consumers directly if there are competitors that use a different business model.

The existing vehicle manufacturers made a business decision to sell in the Franchise manner. They didn’t have to make this decision, but they did. Another comparison would be the computer industry. What if Dell or Gateway or Apple weren’t allowed to sell online simply because HP decided to use mass-distributors to sell its product. What if they were all forced to create their own brick-and-mortar locations or strike contracts with existing distributors? Would that be better for the consumer?

The amendment in HB 1124 is essentially an attempt to reduce competition in the vehicle market by creating additional barriers to entry that currently don’t exist & shouldn’t exist. This is a shot at Tesla specifically as they are one of the few new vehicle manufacturers to take on the existing players.

Here is language I just sent to my Missouri House Reps since the Bill will probably head back there. Feel free to copy/paste it into an email to them as well.  (You can find your Missouri Legislature representatives here)

Mr. ________,
I just read that HB 1124 had passed the House & moved to the Senate at which point an amendment was added that would expand the scope of the existing law beyond its original intent.
Specifically portion of the Bill under 407.826 part 3 & 4 which relate to the ability of a company with a different business model than the existing competitors to sell directly to consumers.

As the original intent of the Statute was to protect the franchisee from its own franchisor, there is no reason why a manufacturer without a franchisee should be prohibited from making its own business decisions on how to sell its product.

I don’t believe this amendment is in the interest of the MO consumers as it would unnecessarily create additional layers of cost for the consumer.

To use an example in a different industry, it would be like saying Amazon can’t sell directly to consumers and would have to set up book stores for no other reason than the existing book stores want to force their business model on an innovative competitor.

As I believe this Bill will come back to the House with the mentioned amendment, I would hope you take my comments into consideration when discussing/considering further action on the Bill.

Thanks for your time,

 

 

 

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