Opinion ID: 331362
Heading Depth: 2
Heading Rank: 1

Heading: Challenged Practices

Text: 27 It is undisputed that Chrysler financially subsidized factory dealerships. It provided the initial capital for these businesses, thereby eliminating cost of capital. Chrysler also provided significant operating loss subsidies (see n.2 supra). These funds enabled the factory dealerships to spend significantly greater amounts of money than could Coleman on larger, more attractive showrooms and on advertising. See n.3 and 4 supra. 28 Chrysler contends that the advertising campaign was intended to increase overall sales of Dodge vehicles in Allegheny County. It is fair to state this increase could have been achieved by spreading advertising loss subsidies over all dealers, both independent and factory. Subsidization of Boulevard Dodge's advertising losses in substantial sums cannot be justified over an eight-year period on the basis that Boulevard Dodge was a new entrant in the Dodge retail market in need of assistance in order to survive--in its first year of operation, Boulevard Dodge had cornered 39 percent of the Dodge market. 29 It is also notewarthy that when plaintiff went out of business, one of its close competitors, Boulevard Dodge, decreased its advertising expenditures. Between 1969 and 1971 (the first year it made a profit since 1965) Boulevard Dodge reduced its advertising expenditure from $59,403 to $29,861. Expenditures an new car advertising were reduced from $37,679 to $11,856. 30 There was some testimony that defendants discriminated in favor of the factory dealerships and against the private dealerships in the release of new automobiles. In 1962 when defendants for the first time marketed a full size car which had wide public acceptance, all the Dodge dealers advertised in advance about the release of the car, but only the factory dealership at Boulevard Dodge received immediate delivery of the car. 31 There was also evidence that Chrysler paid the salaries of key managerial employees of factory dealerships at various times; that Chrysler paid the salaries of accountants and the two Chrysler board members of factory dealerships; and that Chrysler provided free furniture, tools, and equipment to the factory dealership at Cloverleaf Dodge. 32 When plaintiff lost its used car lot to the redevelopment authority, it arranged to move to a new location four blocks away. Plaintiff's franchise agreement required it to seek permission from Chrysler, which was refused. 33 Vernon Staley, former president of Boulevard Dodge, testified that he informed Chrysler's regional manager Harris after several months of operation of his concern for the amount of losses his company was sustaining. Staley stated that Harris told him not to worry: 'Just roll those cars out. We will make our money at the front end, and, if you can get this somewhere close to a breakeven we will be satisfied.' Staley further testified that when Harris was attempting to engage him for the Dodge franchise, Harris indicated that Chrysler intended 'to reduce the number of Dodge dealers in Allegheny County from 16 to 11, under their new marketing program.' 9