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E-Commerce Threatened by Government; Prompts Criticism by Internet Advocates

17 December 1999

E-Commerce Threatened by Government; Prompts Criticism by Internet Advocates

                Ford Motor Company Web Site Shut Down in Texas

    HOUSTON, Dec. 16 -- Leading e-commerce advocates are speaking
out today against a dangerous, precedent-setting effort by government to deny
consumers access to an Internet site designed to provide a convenient
alternative in shopping for pre-owned vehicles.
    Sending a chilling signal to e-businesses, the Texas Department of
Transportation, Motor Vehicle Division -- Enforcement Section (TMVD) warned
Ford and Lincoln Mercury dealerships in the greater Houston area that they are
liable for fines up to $10,000 per violation, per day for participating in the
automaker's "Pre-owned Showroom" program.
    TMVD officials claim that a restrictive state franchise law that prohibits
auto manufacturers from selling vehicles directly to consumers was their
reason for issuing the warning, despite the fact that actual sales of the
vehicles selected through the Web site take place between the consumer and the
dealership.  "The use of the Showroom provides many benefits to Texan Lincoln-
Mercury, including added available inventory ... and the Showroom is available
to consumers 24 hours a day," said Fred Capdevielle, president of Texan
Lincoln-Mercury, Inc., a participating dealer.  "The letter sent to Texan by
TMVD said that to the extent (Texan Lincoln-Mercury) is participating in the
Showroom, it is 'aiding and abetting in the violation of the law.'"
    Patrick Ryan, president of the Texas Chamber of Electronic Commerce, is
concerned that the TMVD's strategy is "both shortsighted and
counterproductive."
    "It limits the choice of Texas consumers and discourages e-businesses from
operating or locating in the state," he said. "If officials really want Texas
to be a world leader in e-commerce, they must move beyond the protection of
special interests and update our laws to embrace this new way of doing
business."
    After temporarily closing the Web site in Houston to protect area dealers,
Ford requested an injunction against TMVD's actions from a federal judge who
ultimately denied injunctive relief.  Ford is currently pursuing legal
remedies available at the state and federal levels.
    "The rapid growth of e-commerce is a reflection of consumer demands for
convenience and flexibility.  Ford and their dealers should not be penalized
for extending this service to the auto industry, nor should consumers be
denied the choice of shopping on the Web," said John Hammond, an automotive
expert and former senior partner at J.D. Power & Associates.  "This is a
dangerous precedent in the government regulation of e-commerce."
    "More than 40 percent of new-car buyers today are using the Internet to
shop for their cars -- partnering with our dealers, we were responding to
consumer demand for the same service in the pre-owned arena," said Andy
McKinnon, Lincoln Mercury Fleet, Lease, ReMarketing Manager.
    Pre-Owned Showrooms are currently operating on the Web to the benefit of
consumers and dealers in the metropolitan areas of Boston, New York, Atlanta
and San Francisco, as well as selected areas of Alabama and Georgia.