Tesla direct-sales bans frowned upon by FTC

Apr 24, 2014
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Tesla direct-sales bans frowned upon by FTC

In a post today on its website, the FTC has voiced its opposition to state bans on direct car sales, the most notable of which being those that block Tesla's direct-to-consumers Model S sales model. The three directors behind the post go on to compare direct sales to other modern industry changes.

The statement was made by FTC directors Andy Gavil, Debbie Feinstein, and Marty Gaynor, all of whom point to changes in the way markets work over time: the Internet replacing mail order catalogs and services like Uber changing how one hails a taxi.

With the state direct sales ban, such industry innovation isn't taking place for car buyers, the trio says. "For decades, local laws in many states have required consumers to purchase their cars solely from local, independent auto dealers. Removing these regulatory impediments may be essential to allow consumers access to new ways of shopping that have become available in many other industries."

Tesla is used as the prime example of this issue, having had local and state regulators nix its sales model through legislation, something the FTC calls "bad policy for a number of reasons." Ultimately, the state bans become protectionist, aiding car dealers to the detriment of car buyers.

The agency summed up its thoughts, saying, "Regulators should differentiate between regulations that truly protect consumers and those that protect the regulated. We hope lawmakers will recognize efforts by auto dealers and others to bar new sources of competition for what they are—expressions of a lack of confidence in the competitive process that can only make consumers worse off."


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