General Motors Corp. illegally discriminates against independent body shops in its methods of distributing certain repair parts for automobiles, a Federal Trade Commission administrative law judge found yesterday.
Judge Joseph P. Dufresene ruled that the GM distribution plan for "crash parts" -- parts used frequently in repairing crash-damaged autos-resulted in independent shops paying more for parts than GM dealers in violation of the Federal Trade Act.
General Motors responded yesterday by saying that the distribution plan in question, which involves "wholesale compensation" to GM dealers, "was instituted by General Motors at the request of the staff of the FTC in 1968." Its purpose was to encourage franchised dealers to sell parts to independent body shops.
"At the time, the commission and GM agreed to the use of wholesale compensation in return for the commission's agreement not to bring an administrative proceeding," said Otis M. Smith, vice president and general counsel of GM.
In any event, Judge Defresne ordered GM to propose a new non-discriminatory plan for distributing parts for its cars.
Under the present system, GM sells the parts directly to its dealers, who then either use them for repairs or sell them wholesale to independent repair shops. When such sales to shops are made, the dealer is given a rebate of about 30 percent on the parts sold.
The system is similar to that used by the other major automakers.
The FTC action was immediately hailed by an independent auto body shop trade association as a "major victory for the small garage owners in their 20-year struggle to gain equality in purchasing parts, such as hoods, fenders and doors for repairing vehicles made by GM."
Don Randell, Washington counsel for the Automotive Service Councils, Inc., said the next step will be to get a fair system approved, one that he said could save consumers "hundreds of millions of dollars."
Randall's group had intervened in the FTC hearings on this matter last year.
Judge Dufresne found that "the evidence here does not show that GM has discouraged, impeded or prevented the rise of new competitors in the new GM crash parts market."
He acknowledged that there was no evidence that GM had any "predatory intent" in instituting its system, and that there appeared to be no "substantially adverse effect on competition attributable to the refusal to sell new GM crash parts to anyone other than GM dealers."