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Car Makers Put Brakes on Pricing Parity

By Anwar Ali, National Review of Medicine

Dealers slash stickers but costs still 20-30% higher than US...

Specialty importer Fournier Leasing Co. and used car dealer Canadian Auto Associates allege the two luxury automakers, Transport Canada and the Canada Border Services Agency worked together or arranged to prevent or lessen competition of services on vehicles imported from the United States.

Fournier, of Oakville, and Canadian Auto of Guelph say in a claim filed with the Ontario Superior Court of Justice that Mercedes-Benz and the two agencies conspired to unreasonably jack up prices of the automaker's cars in Canada at least as early as 2005.

Putting additional restrictions and unnecessary procedures on imported vehicles caused importers to pay additional fees and charges, according to the claim.

In the case of Mercedes, the claim says the fees prevented more competitively priced vehicles from entering Canada and therefore allowed Canadian dealers to charge higher prices for new models sold and leased here.

The two plaintiffs now need a court order to certify the claim as a class action to proceed further.

The two companies say in their statement that Transport Canada made them pay thousands of dollars to Mercedes and BMW for model recall information and unnecessary vehicle modifications and import approvals.

"Vehicle importers suffered damages as they were obliged to pay fees for unnecessary procedures, vehicle modifications and certifications as a result of the dissemination of inaccurate and false information by Transport Canada."

The government does not impose those costs on other auto importers and they are not required under Canadian law, the claims stated.

The claim, which has not been proved in court, stated Transport Canada was negligent in releasing false information about import requirements for Mercedes and BMW vehicles and imposing additional hurdles for importing them despite there being no requirements under the law.

The two firms said in a subsequent statement that the automakers compelled consumers to make the modifications at Mercedes and BMW dealerships instead of other repair shops at "exorbitant" prices.

Fournier and Canadian Auto are seeking $1 billion - general damages of $250 million and $250 million for restraint of trade; $250 million for negligence and another $250 million for breaches of the federal Competition Act.

Mercedes, BMW and Transport Canada said yesterday the plaintiffs had not served them yet.

"We have not yet been served with any legal documents and cannot comment before we have reviewed the allegations in detail," BMW Group Canada spokesperson Stacy Morris said.

The two plaintiffs now need a court order to certify the claim as a class action to proceed further.

The dispute arose in the past year as growing numbers of consumers shopped south of the border for less-expensive autos. Similar autos cost thousands of dollars less in the U.S. than in Canada despite a narrowing currency gap between the two countries.

To import an auto, a consumer must confirm its admissibility with Transport Canada; complete modifications to meet national safety standards; ensure it is not subject to recalls; fill out special forms and pay a $195 fee plus GST.