Abe Fortas

“ The discounters vigorously advertised Chevrolets for sale, with alluring statements as to price savings. The discounters also advertised that all Chevrolet dealers were obligated to honor the new-car warranty and to provide the free services contemplated therein; and General Motors does indeed require Chevrolet dealers to service Chevrolet cars, wherever purchased, pursuant to the new-car warranty and service agreement. Accordingly, nonparticipating dealers were increasingly called upon to service, without compensation, Chevrolets purchased through discounters. ”

“ Beginning in the late 1950's, 'discount houses' engaged in retailing consumer goods in the Los Angeles area and 'referral services' [3] began offering to sell new cars to the public at allegedly bargain prices. Their sources of supply were the franchised dealers. By 1960 a number of individual Chevrolet dealers, without authorization from General Motors, had developed working relationships with these establishments. A customer would enter one of these establishments and examine the literature and price lists for automobiles produced by several manufacturers. ”

“ By the spring of 1961, the campaign to eliminate the discounters from commerce in new Chevrolet cars was a success. Sales through the discount outlets seem to have come to a halt. Not until a federal grand jury commenced an inquiry into the matters which we have sketched does it appear that any Chevrolet dealer resumed its business association with the discounters. ”

“ They argue that General Motors acted lawfully to prevent its dealers from violating the 'location clause,' that the described arrangements with discounters constitute the establishment of additional sales outlets in violation of the clause, and that the individual dealers-and their associations have an interest in uniform compliance with the franchise agreement, which interest they lawfully sought to vindicate. ”

“ Dealers and their salesmen complained to General Motors about sales lost through inability to meet the discounters' price. Moreover, the discounters advertised and actually provided auto loans at interest rates substantially lower than those offered by G.M.A.C., General Motors' financing subsidiary.↑ Dealer Biggs put the same sentiments into a letter to both Keown and Chevrolet's zone manager O'Connor, written on November 5, 1960. The day before, in O'Connor's presence, Keown had challenged Biggs to justify his dealings with the discounters. ”

“ There is in the record ample evidence that one of the purposes behind the concerted effort to eliminate sales of new Chevrolet cars by discounters was to protect franchised dealers from real or apparent price competition. ”

“ Finally, it is conceded that General Motors is intensely concerned that each of its dealers has an adequate 'profit opportunity' (see Finding 17) , a concern which necessarily involves consideration of the price realized by dealers. ”

“ The appellees are the General Motors Corporation, which manufactures, among other things, the Chevrolet line of cars and trucks, and three associations of Chevrolet dealers in and around Los Angeles, California. [2] All of the Chevrolet dealers in the area belong to one or more of the appellee associations.
Chevrolets are ordinarily distributed by dealers operating under a franchise from General Motors. The dealers purchase the cars from the manufacturer, and then retail them to the public. ”

“ There can be no doubt that the effect of the combination or conspiracy here was to restrain trade and commerce within the meaning of the Sherman Act. Elimination, by joint collaborative action, of discounters from access to the market is a per se violation of the Act. ”

“ Perhaps what grated most was the demand that they 'precondition' cars so purchased-make the hopefully minor adjustments and do the body and paint work necessary to render a factory-fresh car both customer- and road-worthy. ”

“ On these basic facts, the Government first proceeded criminally. A federal grand jury in the Southern District of California returned an indictment. After trial, the defendants were found not guilty. The present civil action, filed shortly after return of the indictment, was then brought to trial. ”