SENATE BILL REPORT

SB 6295

BYSenators Matson, Vognild, Newhouse, Warnke, Barr, Hansen, Lee, Patrick, Nelson, McMullen, Saling, Anderson, West, Bauer, Johnson and Sutherland

Regulating business relationships between manufacturers and distributors of agriculture equipment and independent retail dealers.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):January 23, 1990; January 24, 1990

Majority Report:  That Substitute Senate Bill No. 6295 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McMullen, Matson, Murray, Saling, Smitherman, Williams.

Senate Staff:Forrest Bathurst (786-7429)

                  January 26, 1990

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, JANUARY 24, 1990

BACKGROUND:

An increasingly adversarial relationship is developing between agricultural implement dealers and manufacturers due to bankruptcies, consolidations, mergers and acquisitions.  The result has been a growing number of threatened and actual cancellations or terminations of dealership contracts without provisions for adequate notification or compensation for dealers.

SUMMARY:

Manufacturers are prohibited from terminating dealership contracts without good cause.  Good cause is defined as failure by the dealer to comply with the dealership agreement if its provisions are essential and reasonable and all dealers are treated in the same manner.

Manufacturers are required to provide dealers with written notice of termination for good cause and allow the dealer 60 days to cure any deficiency. If the deficiency is rectified within 60 days, the notice shall be void.

Manufacturers are prohibited from substantially changing the competitive circumstances of the dealer.

The transfer of the dealership by either sale or gift is facilitated by removing the absolute veto power of the manufacturer.  Standards for outside persons to qualify as dealers are specified and succession agreements shall remain in effect and cannot be unilaterally changed by the manufacturer.

Manufacturers are prohibited from:  (1) forcing dealers to order equipment; (2) forcing dealers not to purchase equipment from other manufacturers; (3) discriminating in prices charged to dealers; and (4) tying arrangements that require the dealer to purchase unwanted equipment as a condition for buying desirable equipment.

EFFECT OF PROPOSED SUBSTITUTE:

Motor vehicle dealers and motorcycle dealers are excluded from the provisions of this act.

Discounted pricing schedules offered to dealers based on volume purchases from the manufacturer are not unfair pricing practices.

Manufacturers shall not prevent the sale or transfer of a dealership to a person or party provided they meet reasonable financial, business experience, and character standards.

Dealers shall be able to bring action for damages against manufacturers that include repurchases at fair market value of any data processing hardware, specialized repair tools, agricultural equipment, provide compensation for loss of business, costs associated with bringing the action, and reasonable attorneys' fees.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Bill Cross, Pacific Northwest Hardware & Implement Association; Wes Loomis, Loomis T&T; John Kabrich, Burrows Tractor, Inc.