I have fielded a number of complaints about the interaction between dealer floorplanning company Nextgear Capital and Manheim Auctions. Both Nextgear and Manheim are units of Cox Enterprises, Inc.
To give you some perspectives: in the modern-day car business, buying and selling vehicles at auctions is essential. Because of the marketplace nature of auctions, once an auction becomes entrenched in an area, it is a natural monopoly. Even the largest markets might have only one or two working auctions. According to Wikipedia, Manheim is the largest vehicle auction company in the world, with 145 locations worldwide.
Nextgear Capital, the dealer financing division of Cox Enterprises, doesn't hold the same dominant position as Manheim, but in localized areas may be the only financing alternative, and whether it is the only option available to a dealer, once the dealer signs up, the dealer can be utterly dependent on having a functional relationship with Nextgear.
Because my firm defends dealers who are sued by Nextgear, I hear a lot of complaints by dealers who are unhappy with Nextgear's policies and practices. They have complained about the fees, complained that vehicles were floorplanned that weren't requested, complained that inventory was repossessed without default, and several have complained that when there is a dispute with Nextgear, the dealership gets frozen out of the auto auctions, especially Manheim, but not even limited to Manheim. Of course, I realize in the course of fielding these complaints, I am hearing only one side of the story. There may be facts that I don't even know about. That being said, Nextgear filed over 1,000 suits in Hamilton County, Indiana in the past year. If you are a dealer who is behind with Nextgear, and you can't get things resolved with their collection department, it is a reasonable guess that you will be sued in Indiana.
I started with a working theory that IF Nextgear, a company that probably would not be considered to have monopoly power for purposes of antitrust law, conspires with Manheim, a company which might be held to yield monopoly power, to refuse to let a dealer participate in an auction, that could be conceivably be an illegal vertical tying arrangement pursuant to antitrust law. After coming up with that theory, I reached the conclusion that as a private attorney, it doesn't look like even if the facts can be proven, and that's a big if, neither my firm, nor my clients would be able to finance a private antitrust action. I'm putting this theory out in a public forum for anybody who reads it to look into the facts and into the law, and go further if warranted.This theory may have some bugs and has not been tested in court
What that means is that if you are a dealer who is reading this and has a complaint about an unfair trade practice with Nextgear, you should consider making a formal complaint with the Federal Trade Commission, the federal agency with jurisdiction over the antitrust law. You can file your complaint here. If the FTC doesn't think the complaint is meritorious, it will go nowhere. If the complaints build up, and if the FTC thinks there could be a violation, the FTC could take action.
By the way, even if Nextgear does not violate antitrust law, that doesn't mean that any action taken by Nextgear would be shielded from any scrutiny. Unfair and deceptive acts are also regulated under the Federal Trade Commission Act as well as some state UDAP laws. There is a covenant of good faith and fair dealing in every contract under the Uniform Commercial Code, and if a company intentionally and unjustifiable acts to prevent a company from dealing with a third party, there is a tort called intentional interference with business relations. In addition, if you are a dealer whose vehicles are repossessed and those vehicles are resold in a commercially unreasonable way, you may have a defense to deficiency claims by the floorplanner. If you are sued by Nextgear, you should not necessarily assume that everything Nextgear claims from you is owed, no matter how high the claimed balance, and you shouldn't assume that there is nothing you can do to get the balance down. My firm regularly defends dealers from lawsuits brought by Nextgear in Indiana. We will talk to you on the phone with no obligation to hire us. 317-662-4529.
am used auto dealer in alabama, I purchased some inventory from a local auction,I wrote checks for each individual car, when the titles came in I would take them cash so i could get the titles right then, they never had tme to pull the checks and return them. In june I was informed i ha to raise my prices or they was going to black ball me. Im a new dealer, i said ya rt, The next day they pull evey purchase and run any check they find. puts my account 15,000 in the red. I take receipts to the action with titles and they refuse to honor them. I paid all but 4000 and received a letter from auction insurance demanding 15000 again, I laughed and mailed a certified letter with copies of the certified nsf checks i had paid a 2nd time for. They are still demading I pay 15000 for a 3rd time and have me listed in he KO book. Ther e fore I am out of business. I have been doing my research and come to find out cox enterprise owns kbb which sets the market value, auto trade that sets the market value, adessa, anheim, abc, dealer auction, and every other auction in alabama 2o to be exact, then they own the dealer finance/floor plan ompies, dealer track, next gear, afc, dealer solutions & 4 more, then they own the only 2 auto insurance auction AIA & IAA the only auction insurance companies that insure alabama auctions. thya have the used car industry locked down. i even found published documentaion from KAR that is supposed to be their only competitor showing that cox owns them also and the president of co. states tha when a dealer gets in the ko book " tehy know they are out of business". I know their is at least 9 laws broken so why wont a attorney take the case. I have all the physical documents to prove every statement I have made.
ReplyDeleteHey
DeleteI was reading your post and several others and had similar situations and wanted to know if you have any upper management contact information where I can make contact with someone