Due to frustration over State Farm’s parts procurement pilot through PartsTrader, several shop operators have discussed ‘banding together’ to boycott the program. Does it cross any antitrust guidelines when businesses unify for that purpose?
Erica Eversman, chief counsel for Vehicle Information Services Inc.
There is nothing improper about repair businesses independently determining that they will not do business with State Farm due to the PartsTrader program. There also isn’t anything improper about businesses and associations voicing opinions about the value of the program. It is beneficial for repairers to disseminate and receive information that fosters rational decision-making for their business. It is perfectly legal for shops to make their own business decisions, and choose whether or not to participate with State Farm’s voluntary program for whatever reason.
However, repair facility owners need to be mindful of the fact that collectively agreeing to boycott a company, or its products and services, can be a violation of federal and state antitrust laws. It is unlawful for competing businesses to collectively agree to a boycott. To be actionable as a boycott, agreements refusing to deal with a particular company must occur between repair shops that are in direct competition with one another. Shops that are not in the same geographic region or that don’t compete for the same types of repairs are unlikely to be liable for engaging in a group boycott.
It would be improper for multiple repairers in a single local market, either themselves or along with a trade association, to cohesively agree to a State Farm boycott. It is the agreement to act in concert by competitors in an anticompetitive manner that is illegal.
Repair shops and trade associations should be wary of making statements about “banding together to drop State Farm as a DRP,” or anything similar.
