Utah Senate Leadership Supports Bill Restricting Auto Manufacturer’s New Franchise Deals

08.31.2009 by Elizabeth Ziegler

(KCPW News) The Utah Senate leadership team supports passing legislation to stop automaker Chrysler from giving a contract to a new dealer, after closing 11 in the state earlier this year under a bankruptcy agreement. Senate President Michael Waddoups says he normally does not want the state to intervene in business. But he believes the federal government created an uneven playing field when it allowed the company to back out of its franchise agreements in the first place.
“They need to be fair with these people that they’ve basically put out of business,” Waddoups says. “They can’t just put them out of business, in my mind, and then put somebody else in, chasing a dollar, when it’s not a fair process.”

According to the Salt Lake Tribune, State Representative Patrick Painter and his father both lost their franchises. Waddoups says Painter, Senator Curt Bramble and Senator Dan Liljenquist have been working on the bill for two months. The Tribune says the lawmakers hope to call a special session just to pass the bill, in order to prevent a St. George dealership from getting a new contract.

Waddoups says he has no problem with legislation intervening in the free market when someone has been given an unfair competitive advantage, which he believes happened in this case.

“To use the bankruptcy court to cancel existing contracts, I just think is wrong,” Waddoups says. “And to say, ‘OK, you’re out of here. We’re going to give this lucrative business to someone else,’ I think that is government interference in the free enterprise system, not free enterprise in and of itself.”

Waddoups doesn’t know if he’ll recommend the bill for a special session because he hasn’t seen the final draft, yet. He says legislative staff is still working to ensure that it would pass legal or constitutional challenges.