9710065
                                                                  B246377

                          UNITED STATES OF AMERICA
                      BEFORE FEDERAL TRADE COMMISSION

   COMMISSIONERS:
          Robert Pitofsky, Chairman
          Sheila F. Anthony
          Mozelle W. Thompson
          Orson Swindle

                             In the Matter of

                Fair Allocation System, Inc., a corporation.

                             Docket No. C-3832
                             DECISION AND ORDER

   The Federal Trade Commission ("Commission"), having initiated an
   investigation of certain acts and practices of respondent Fair
   Allocation System, Inc. ("FAS"), and the respondent having been
   furnished thereafter with a copy of a draft of complaint which the
   Bureau of Competition proposed to present to the Commission for its
   consideration and which, if issued by the Commission, would charge the
   respondent with violation of the Federal Trade Commission Act; and

   The respondent and counsel for the Commission having thereafter
   executed an agreement containing a consent order, an admission by
   respondent of all the jurisdictional facts set forth in the aforesaid
   draft of complaint, a statement that the signing of said agreement is
   for settlement purposes only and does not constitute an admission by
   respondent that the law has been violated as alleged in such
   complaint, and waivers and other provisions as required by the
   Commission's Rules; and

   The Commission having thereafter considered the matter and having
   determined it had reason to believe that the respondent has violated
   the said Act, and that a complaint should issue stating its charges in
   that respect, and having thereupon accepted the executed consent
   agreement and placed such agreement on the public record for a period
   of sixty (60) days, now in further conformity with the procedure
   described in § 2.34 of its Rules, the Commission hereby issues its
   complaint, makes the following jurisdictional findings and enters the
   following order:

          1. FAS is an incorporated association of franchised automobile
          dealerships (primarily Chrysler, Plymouth, Dodge, Jeep and

                                                                  9710065
                                                                  B246377

                          UNITED STATES OF AMERICA
                      BEFORE FEDERAL TRADE COMMISSION

                             In the Matter of

                Fair Allocation System, Inc., a corporation.
                             Docket No. C-3832

                                 COMPLAINT

   Pursuant to the provisions of the Federal Trade Commission Act, as
   amended, 15 U.S.C. § 41, et seq., and by virtue of the authority
   vested in it by said Act, the Federal Trade Commission, having reason
   to believe that Fair Allocation System, Inc. (hereafter "respondent")
   has violated the provisions of Section 5 of the Federal Trade
   Commission Act, and it appearing to the Commission that a proceeding
   by it in respect thereof would be in the public interest, hereby
   issues this complaint, stating its charges as follows:

   PARAGRAPH ONE: Respondent Fair Allocation System, Inc. is an
   incorporated association of franchised automobile dealerships
   (primarily Chrysler, Plymouth, Dodge, Jeep and Eagle), existing and
   doing business under and by virtue of the laws of the State of
   Montana, with a mailing address at P.O. Box 1691, Helena, Montana
   59624.

   PARAGRAPH TWO: Respondent was formed by its member dealers as an
   entity through which its members could communicate with Chrysler Corp.
   ("Chrysler") concerning Chrysler policies and how those policies might
   affect respondent's members. Respondent's members were initially
   concerned about the practices of a competing dealer whose low prices
   and Internet advertising were attracting car buyers from a broad
   geographic area and taking sales from respondent's members.
   Respondent's members had previously asked Chrysler to reduce the
   number of vehicles it allocates to this dealer, but Chrysler had
   refused. Respondent has approximately 25 members, who are generally
   engaged in the retail sale of new Chrysler, Plymouth, Dodge, Jeep and
   Eagle automobiles. In addition to new car sales, respondent's members
   provide service on Chrysler, Plymouth, Dodge, Jeep and Eagle
   automobiles, including warranty work. Member dealerships are located
   principally in eastern Washington, northern Idaho and western Montana,
   where they constitute a substantial percentage of the Chrysler,
   Plymouth, Dodge, Jeep and Eagle dealerships. In cities and towns along
   Interstate 90 between Ellensburg, Washington, and Missoula, Montana,
   for example, seven of 11 such dealerships are members of respondent.

     _________________________________________________________________

                     Analysis of Proposed Consent Order
                           To Aid Public Comment
     _________________________________________________________________

   The Federal Trade Commission has accepted a proposed consent order
   from Fair Allocation System, Incorporated ("FAS"). FAS is an
   organization of twenty-five automobile dealerships from five Northwest
   states that was formed to address dealer concerns over the marketing
   practices of automobile manufacturers. In particular, FAS members were
   concerned about an automobile dealership -- Dave Smith Motors of
   Kellogg, Idaho -- which was attracting customers from around the
   Northwest and taking substantial sales from FAS members by selling
   cars for low prices and marketing them on the Internet.

   According to the complaint, because of these concerns, the members of
   FAS collectively attempted to force Chrysler to change its vehicle
   allocation system. Chrysler allocates vehicles based on the dealer's
   total sales; FAS members wanted Chrysler to allocate vehicles based on
   the expected number of sales from a dealer's local area, which would
   have substantially reduced the number of cars available to a
   dealership like Dave Smith Motors that drew customers from a wider
   geographic area. According to the complaint, the members of FAS
   threatened to refuse to sell certain Chrysler vehicles and to limit
   the warranty service they would provide to particular customers unless
   Chrysler changed its allocation system so as to disadvantage dealers
   that sold large quantities of vehicles outside of their local
   geographic areas.

   The complaint charges that FAS's agreements or attempts to agree with
   its dealer members to coerce Chrysler violate Section 5 of the FTC
   Act, as amended, 15 U.S.C. §45. According to the complaint, FAS
   members constitute a substantial percentage of the Chrysler, Plymouth,
   Dodge, Jeep and Eagle dealerships in eastern Washington, Idaho, and
   western Montana, and FAS's threats would have harmed competition and
   consumers in those areas. In particular, FAS's efforts would have
   deprived consumers of local access to certain Chrysler models and to
   warranty service, and would have reduced competition among automobile
   dealerships, including rivalry based on price or via the Internet.

   The goal of the boycott was to limit the sales of a car dealer that
   sells cars at low prices and via a new and innovative channel -- the
   Internet. FAS's threatened action against Chrysler is a per se illegal
   group boycott. In United States v. General Motors, 384 U.S. 127
   (1966), the Supreme Court held per se illegal a comparable dealer
   cartel in Los Angeles that sought to prevent other area dealers from
   selling automobiles through discount brokers. Since General Motors,

                          UNITED STATES OF AMERICA
                      BEFORE FEDERAL TRADE COMMISSION

                             In the Matter of

                Fair Allocation System, Inc., a corporation.

                             File No. 971 0065

                     AGREEMENT CONTAINING CONSENT ORDER

   The Federal Trade Commission, having initiated an investigation of
   certain acts and practices of Fair Allocation System, Inc. ("FAS"),
   and it now appearing that FAS, hereinafter sometimes referred to as
   "proposed respondent," is willing to enter into an agreement
   containing an order ("Agreement") to cease and desist from the use of
   the acts and practices being investigated and providing for other
   relief:

   IT IS HEREBY AGREED by and between proposed respondent, by its duly
   authorized officers and attorneys, and counsel for the Federal Trade
   Commission that:

     1. Proposed respondent FAS is an incorporated association of
     franchised automobile dealerships (primarily Chrysler, Plymouth,
     Dodge, Jeep and Eagle), organized, existing and doing business
     under and by virtue of the laws of the State of Montana, and has a
     mailing address at P.O. Box 1691, Helena, Montana 59624.

     2. Proposed respondent admits all the jurisdictional facts set
     forth in the draft of complaint here attached.

     3. Proposed respondent waives:

     a. any further procedural steps;

     b. the requirement that the Commission's decision contain a
     statement of findings of fact and conclusions of law;

     c. all rights to seek judicial review or otherwise to challenge or
     contest the validity of the order entered pursuant to this
     Agreement; and

     d. any claim under the Equal Access to Justice Act.

     4. This Agreement shall not become part of the public record of the
     proceeding unless and until it is accepted by the Commission. If
     this Agreement is accepted by the Commission it, together with the