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Regal Motors, Inc. v. Fiat Motors





Appeal from the Circuit Court of Cook County; the Hon. David J. Shields, Judge, presiding.


Plaintiff, Regal Motors, Inc. (Regal), originally filed this action against defendant, Fiat Motors of North America, Inc. (FMNA), in 1980 and has amended its complaint on several occasions. The fourth amended class action complaint alleged in relevant part that FMNA had violated section 3(2) of the Illinois Antitrust Act (Ill. Rev. Stat. 1981, ch. 38, par. 60-3(2)) by engaging in "price fixing and/or price discrimination." Plaintiff sought damages and injunctive relief on behalf of the class of all Fiat dealers nationwide. On October 29, 1982, the trial court granted FMNA's motion to dismiss that portion of Regal's complaint containing allegations concerning price fixing and price discrimination. Regal separately appealed that decision to this court. Pursuant to leave of the trial court, Regal subsequently filed an amendment to the fourth complaint adding count II coupled with a request for a temporary restraining order or a preliminary injunction. Count II was based on a letter FMNA sent Regal and all other Fiat dealers in the United States which, in part, terminated their dealer agreements with FMNA. In count II, Regal charged FMNA with violating the Illinois Antitrust Act and with breach of contract. On February 10, 1983, the trial court entered an order dismissing count II and denying Regal's motion to reinstate certain class action allegations contained in the third amended complaint. Regal again filed an appeal from this order which was subsequently consolidated with its prior appeal. In a Rule 23 order, we dismissed both appeals for lack of jurisdiction because both orders lacked sufficient indicia of finality. On remand, Regal elected to stand on its previously dismissed pleadings and requested that the trial court enter an order making the previous dismissals "with prejudice and without leave to amend." The trial court entered such an order, and Regal perfected an appeal to this court pursuant to Supreme Court Rule 304(a) (73 Ill.2d R. 304(a)). Regal still has a separate individual cause of action pending in the trial court based on an alleged illegal tying arrangement. We affirm both dismissals.

We will first address those issues relating to the dismissal of Regal's price-fixing and price-discrimination claims. In its fourth amended complaint, Regal alleged that defendant illegally conspired with several Columbus, Ohio, corporations to sell certain Fiat automobiles to the alleged co-conspirator corporations "in mass volume" and at a price approximately $2,800 below the price paid by Regal to defendant for the same vehicles. The gravamen of plaintiff's complaint is that this agreement amounts to illegal price fixing or price discrimination in violation of section 3(2) of the Illinois Antitrust Act (Ill. Rev. Stat. 1981, ch. 38, par. 60-3(2)). Accepting plaintiff's allegations as true, we do not believe the conduct complained of to be prohibited by our act.

• 1 Cases arising under parallel provisions of the Sherman Act (15 U.S.C. § 1 (1982)) recognize two types of price fixing. There is the horizontal variety, which encompasses agreements between competitors for the purpose or with the effect of fixing prices for goods or services. There is also vertical price fixing, which deals with agreements between a supplier and a customer which attempt to control resale price. (Knuth v. Erie-Crawford Dairy Cooperative Association (W.D. Pa. 1971), 326 F. Supp. 48, modified on other grounds (3d Cir. 1972), 463 F.2d 470, cert. denied (1973), 410 U.S. 913, 35 L.Ed.2d 278, 93 S.Ct. 966.) Horizontal price fixing has been held to be a per se violation of our own act (Ill. Rev. Stat. 1975, ch. 38, par. 60-3(1)(a)). (People ex rel. Fahner v. Carriage Way West, Inc. (1981), 88 Ill.2d 300, 430 N.E.2d 1005.) Whether or not the Illinois act also proscribes vertical-price-fixing agreements has been questioned in at least one decision of this court. (People ex rel. Scott v. Convenient Food Mart, Inc. (1974), 21 Ill. App.3d 97, 104-05, 315 N.E.2d 124; see also Ill. Ann. Stat., ch. 38, par. 60, Bar Committee Comments-1967, at 452 (Smith-Hurd 1967) ("Section 3(1) does not reach vertical agreements, such as agreements between buyers and sellers fixing the price at which the buyer shall resell").) While we agree with the proposition that vertical pricing restraints do not fall within the per se violations enumerated in section 3(1) of our act, they may still be violative of the general prohibition against unreasonable restraints of trade contained in section 3(2). It provides:

"Sec. 3. Every person shall be deemed to have committed a violation of this Act who shall:

(2) By contract, combination, or conspiracy with one or more other persons unreasonably restrain trade or commerce." (Ill. Rev. Stat. 1983, ch. 38, par. 60-3(2).)

However, the facts alleged here do not amount to price fixing of either the horizontal or vertical variety.

Price fixing is not present merely because FMNA agreed to sell automobiles at a reduced price to the Ohio corporations. The facts alleged make it clear that these corporations were customers, not competitors, of FMNA. Accordingly, there was no horizontal price fixing because there was no agreement among competitors to fix prices. The complaint is also devoid of any allegations that FMNA and the Ohio corporations entered into an agreement which fixed the price at which the corporations would resell Fiat automobiles to third parties. Consequently, there are no facts alleged which would support a claim of vertical price fixing.

• 2 Regal also alleged that the agreement between FMNA and the Ohio corporations amounted to price discrimination because it discriminates in price "between purchasers of commodities of like grade and quality." Initially, we note that the Illinois act contains no explicit restrictions against price discrimination. However, plaintiff contends that price discrimination is prohibited under the general provisions of section 3(2) if it results in an unreasonable restraint of trade or commerce. We disagree.

Our supreme court has recognized that the Illinois Antitrust Act was patterned after the Sherman Act (15 U.S.C. § 1 et seq. (1976)) and "consciously omitted the Clayton Act (15 U.S.C. § 12 et seq. (1976))." (Emphasis added.) (People ex rel. Scott v. Schwulst Building Center, Inc. (1982), 89 Ill.2d 365, 369, 432 N.E.2d 855.) Yet, present Federal law against price discrimination is contained in the Robinson-Patman amendments to the Clayton Act (15 U.S.C. § 13 (1982)), not the Sherman Act. In fact, since the time of its original enactment in 1914, it was the Clayton Act which prohibited price discrimination. (38 Stat. 730, sec. 2 (1914).) Our General Assembly could have specifically prohibited price discrimination just as it specifically prohibited price fixing, monopolization, horizontal allocation of markets, and other acts proscribed by the Federal antitrust laws. The fact that the legislature did not do so, when coupled with the fact that it consciously omitted the Clayton Act in favor of a Sherman-type statute, evinces a legislative intent that price discrimination prohibited under the Clayton Act not be actionable under the Illinois statute. Accordingly, plaintiff's complaint fails to state a cause of action for price discrimination.

In view of the foregoing, we find that the trial court properly dismissed plaintiff's price-fixing and price-discrimination claims. Since Regal has failed to state an individual cause of action in these areas, the attempted class action must also fail.

• 3 Next, we address those issues relating to the trial court's dismissal of count II of the fourth amended complaint because it failed to state a cause of action against FMNA. Count II is based on a January 21, 1983, letter which FMNA sent to Regal and all other franchised dealers in the United States. The letter terminated the franchisees' dealer agreements and all current FMNA incentive programs; offered Regal and all other franchisees a "Fiat Service and Parts Center Agreement" (service agreement); and offered special retail incentives and discounts on FMNA's remaining inventory to dealers accepting the service agreement. In count II, Regal charged FMNA with having violated section 3(2) of the Act and with breach of contract.

The first wrongdoing alleged is a purported conspiracy among FMNA, Carrozzeria Bertone S.p.A. (Bertone), the manufacturer of the Fiat X 1/9 sports car, and Industrie Pininfarina S.p.A. (Industrie), the manufacturer of the Spider 2000 sports car, and Regal as an "unwilling coconspirator," to improperly terminate the dealer agreements of all Fiat dealers in violation of section 3(2). Assuming, arguendo, that the terminations were improper, we believe Regal has failed to state a violation of our act.

Preliminarily, we note that there is a significant difference between section 3(2) of the Illinois Antitrust Act and section 1 of the Sherman Act. As the district court observed in Evanston Motor Co., Inc. v. Mid-Southern Toyota ...

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