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Statement by the President Upon Signing Bill Relating to Suits by Automobile Dealers Against Manufacturers.

August 08, 1956

I HAVE TODAY signed S. 3879. The bill enables franchised automobile dealers to sue in Federal Court for damages stemming from automobile manufacturers' "coercion, intimidation, or threats of" same in performing, cancelling, or not renewing dealer franchise contracts.

The Senate Judiciary Committee, in explanation of the purpose of the legislation, unanimously found

"... that great pressure had been exerted, at least by the dominant automobile manufacturers, upon dealers to accept automobiles, parts, accessories, and supplies which they did not need, did not want, or did not feel their market was able to absorb. Many dealer witnesses asserted that while they were ostensibly independent businessmen, the factory dominated and controlled almost every phase of their operations at all times .... This vast disparity in economic power and bargaining strength has enabled the factory to determine arbitrarily the rules by which the two parties conduct their business affairs."

The legislation represents a serious Congressional effort to deal with abuses Congress found to exist. At best I believe it constitutes only a partial solution to the problem. In addition, it presents legal problems, some of which could be of the most serious character.

Ordinarily when parties enter into a business agreement outside the realm of public utilities, legislative action which qualifies their rights to terminate or renew the agreement in the manner provided by this legislation would be considered an unwarranted intrusion by the Federal Government into an area traditionally reserved to private enterprise. Therefore, this bill represents a new departure in the exercise of Federal authority, a point which will undoubtedly come to the attention of the courts. However, in view of the findings of Congress on the special conditions in the automobile industry, which may be of a temporary nature, I am approving the bill. At the same time I am directing the anti-trust enforcement agencies of the Government to review the conditions in the industry which brought about the demand for the legislation, to determine whether they continue to exist, to study alternative or different solutions to the problem, and to make recommendations for appropriate action by the next Congress.

Note: As enacted, S. 3879 is Public Law 1026, 84th Congress (70 Stat. 1125).

Dwight D. Eisenhower, Statement by the President Upon Signing Bill Relating to Suits by Automobile Dealers Against Manufacturers. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/233027

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