FOR IMMEDIATE RELEASE                                          AT
WEDNESDAY, SEPTEMBER 20, 1995                      (202) 616-2771
                                               TDD (202) 514-1888


JUSTICE DEPARTMENT CHARGES NATIONAL AUTOMOBILE DEALERS ASSOCIATION
     WITH LIMITING PRICE COMPETITION IN CAR SALES TO CONSUMERS
                                         

     WASHINGTON, D.C. -- The Justice Department reached an
agreement today with the National Automobile Dealers Association,
an association which represents more than 80 percent of all U.S.
franchised car dealers, that will put an end to the association's
illegal efforts to limit price competition in car sales to
consumers.  
     The Department said that if NADA had succeeded in its goal
to lessen price competition, it could have substantially driven
up the cost of new cars to consumers.  For example, one of NADA's
objectives was to eliminate direct manufacturer to consumer
rebates that reduced the price at which cars were sold.  These
rebates saved consumers as much as one thousand dollars per car.
     The Department's Antitrust Division filed a lawsuit in U.S.
District Court in Washington, D.C., charging NADA with actively
engaging in a campaign to lessen price competition in retail
sales of automobiles, and engaging in a variety of different
practices to accomplish its goal.  At the same time, the
Department filed a proposed consent decree, that if approved by
the court, would resolve the suit and the Department's concerns
about NADA's anticompetitive behavior.
     Anne K. Bingaman, Assistant Attorney General in charge of
the Antitrust Division, said, "NADA stepped well over the line by
trying to keep various players in the auto industry from taking
steps that would reduce car prices for consumers.  Trade
associations must not be allowed to become a cover for cartel-like
 activity."
     The complaint alleged that NADA:
      Tried to persuade car dealers to boycott or reduce their
purchases from auto manufacturers that offered rebates to
consumers.
      Tried to persuade member car dealers to stop "invoice
advertising,"--advertising retail prices based on the dealer's
wholesale cost.  The Department said that NADA opposed invoice
advertising because it believed that it led to lower retail
prices.
      Called for its member dealers to reduce their inventories
in order to pressure auto manufacturers to reduce discounts known
as, "fleet subsidies"--high-volume discounted sales to fleet
buyers, which often resold slightly used cars to consumers at
prices substantially below the price of similar new cars at most
franchised retail dealers.   
      Urged its members to boycott auto brokers that buy cars at
discount prices from some dealers and resell the cars to the
public.
     The proposed consent decree prohibits NADA from among other
things:
      Urging or encouraging dealers to adopt specific prices or
pricing systems or specific policies with respect to the
advertisement of prices.
       Urging dealers to boycott businesses including
manufacturers or auto brokers.
       Terminating from membership any dealer for reasons
relating to the dealer's prices or advertising policies. 
     NADA is a trade association based in McLean, Virginia, whose
25,000 members account for about $375 billion in sales of
automobile products and services nationwide.  
     As required by the Tunney Act, the proposed consent decree,
along with the Department's competitive impact statement, will be
published in the Federal Register.  Any person may submit written
comments concerning the proposed decree during the 60-day public
comment period to Mary Jean Moltenbrey, Chief, Civil Task Force
II, Antitrust Division, Department of Justice, Room 300, Liberty
Place Building, 325 7th Street N.W., Washington, D.C. 20530.   
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