Pub. 15 2016-2017 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 4 , 2 0 1 6 20 new jersey auto retailer into expensive settlements. The FTC has also gone back after dealers who have violated the provisions of the settlement agreements they have entered. Given the longstanding authority of the FTC to regu- late deceptive advertising, unless the FTC needs to divert resources elsewhere as a result of budgetary constraints, it is unlikely that its scrutiny of dealer advertising will stop in a Trump Administration. In this regard, dealers should take note that the FTC has guidelines for social media advertising and just as much care must be taken with those advertisements as with all other types. Last year, the FTC also began an investigation into motor vehicle franchising. Generally speaking, the FTC was asking whether the franchise systembenefittedconsumers andwhether franchise practices legislation, designed to even the playing field and regulate the relation- ship between manufacturers and dealers, is still necessary. Early in 2016, theFTCheld a hearing on these and related topicswhich seemed to have been orchestrated for the FTC by the manufacturers and dis- tributors. Most of the witnesses presented negative views regarding franchise legislation.Whatwill happen to theFTCinvestigationduring theTrumpAdministration cannot be predicted. Muchwill dependon how its relationship with motor vehicle manufacturers and distribu- tors develops, its views on legislation designed to protect individual business groups, and the priority manufacturers and distributors give to trying to roll back franchise laws as opposed to other concerns such as CAFE and mobility regulation. Mobility – specifically self-driving vehicles – is the latest craze. Tra- ditional vehicle manufacturers, as well as Silicon Valley enterprises, are all engaged in research and testing with the aim of marketing self-driving vehicles. Tesla has already brought a version to market with mixed results. For self-driving vehicles to become mainstream, the vehicles will have to be able to see and adjust to each other, road conditions, signs and other factors. Federal agencies have been working on uniform standards for the vehicles’ testing and driving conditions. However, some in the industry have expressed concern that the newadministra- tionwill be less aggressive inmoving forwardwithFederal regulation, leaving it to each state to set its own standards. State-by-state regula- tions can result in inconsistent requirements that will set back the production of self-driving vehicles for wide-spread use. Many foreign vehicle manufacturers are contemplating entering the UnitedStatesmarket. Whilemost of themintend to rely on franchised dealers for their distribution networks, some have beenmaking noises about direct sales to customers similar to what Tesla has been doing. Laws in many states, however, require that all newmotor vehicles be sold only through franchised dealers. Spurred on by Tesla, such laws have beenunder attackon a state-by-state basiswithvarying degrees of success in court and state legislatures. Where those attacks have been successful, the changes in the lawhave often been ones to benefit Tesla only and not subsequent market entrants. Federal action overruling the state laws, therefore, may be sought at some point. On this issue, franchiseddealers andmost existingmanufacturers and distributors are united that franchises should be required. Moreover, the newPresident has expressed little sympathy for foreign importers, particularly those that jeopardize American jobs. Federal action to overturn the state laws requiring that new vehicles be sold by franchi- sees would therefore seem to face an uphill fight. The atmosphere inWashington is certainly going to be different once the newadministration comes into office. It is likely that this changed atmosphere will impact Federal efforts to regulate the automotive retailing and manufacturing industries. Time will tell. Marvin J. Brauth, Esq. is a shareholder with Wilentz, Goldman & Spitzer, P.A in Woodbridge, New Jersey. He has been representing automobile retailers for over 35 years in connection with issues affecting their dealerships. Mr. Brauth can be reached at 732.855.6084 or mbrauth@wilentz.com. CRYSTAL BALL  continued from page 19 Generally speaking, the FTC was asking whether the franchise system benefitted consumers and whether franchise practices legislation, designed to even the playing field and regulate the relationship between manufacturers and dealers, is still necessary.