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Blawg Review #46 is up over at De Novo, and it’s got many juicy posts.

T Tags: Law, Blawgs, Blawg Review

John W. Mayo writes a fascinating essay on the increasingly sophisticated approaches taken by industry monopoly-holders to manipulate public policy and regulation to prevent competition. Professor Mayo uses the current cable TV industry as his example of how an industry seeks to limit competition.

AEI-Brookings Joint Center

There is an interesting flip-side to that discussion, however. That is the approach taken by the insurance industry and involves obtaining an exemption to the antitrust laws in the first place. Exempt from the application of the federal antitrust laws, the insurance industry has developed a virtual stranglehold on other entities that provide services to insureds.

While we typically think of antitrust in terms of control to keep prices artificially high, it can also be used to keep prices artificially low.

Take, for example, how insurers use “usual and customary rates” or “prevailing competitive prices” to set a ceiling for payments to providers. In the collision repair arena, I am unaware of any insurer, other than State Farm, that solicits information on labor rates from shops. Without knowing what the repairers’ posted labor rates are, how can an insurer come up with a “usual and customary rate”?

There is also the issue of the use of aftermarket parts in repairs. There is now a mechanism by which the insurers can source and purchase aftermarket parts directly from a company that has them drop-shipped to the repairers. This removes the decision about which parts are appropriate for the repair from the professional, and it also automatically excludes the original equipment manufacturers (OEM) from competing in the repair parts marketplace.

The point of competition is to benefit consumers, but consumers do not benefit when the best providers of service are not able to command a higher rate for their superior performance. They also do not benefit when product price is virtually the sole component to decision-making, without deference to quality, uniformity, and other factors.

It seems that every time an American auto maker builds a successful product, they branch out with too many models and dilute their products. Now this may happen to Hummer.

Automotive News reports($) that Hummer is considering adding two models to its product line. Why? Because Hummer’s marketing general manager, Susan Docherty, thinks it’s important to attract younger buyers and women and to keep “growing the brand”. She thinks that they could build a product smaller than the H3 or expand into different segments.

Branching a successful product into other market segments is a mistake American auto manufacturers seem to frequently make. Take Hummer. You can’t mistake the urban assault vehicle aspect of that line. But if we end up with the Hummer station wagon, I think some of the star power the brand generates will fade.

Here’s a news flash, Susan. Younger buyers already crave a Hummer. They just can’t afford one.

T Tags: Automotive, Cars, Autos, Hummer,
GM

The Pennsylvania Collision Trade Guild has launched a new website to give consumers and repairers an avenue to address problems with the manner in which damage appraisers do their jobs. Tired of appraisers ignoring regulations and state law and interfering with how vehicles are to be repaired, the PCTG is naming names, posting formal complaints on the site, and sending copies of those complaints to state legislators.

After reading many of filings, the actions complained of begin to sound eerily similar, with the customer trapped as the hapless pawn between the people who know how to fix cars, actually fix cars, and accept the liability for doing so and the people who think they know how to fix cars, do not fix cars, and accept no liability for the repair. It’s quite clear to me who should have the final say on how to fix the car in that mismatch.

PCTG - Pennsylvania Collision Trade Guild

Anyone who hasn’t traveled to New York City in a while should know a few things. First, people in Manhattan are no longer the surly New Yorkers satirized for decades by every late show host. Second, there are now transit personnel stationed at the train and subway stations to assist travelers. Finally, the Federal Transit Administration is spending a bundle to ensure the safety of people who use roads and mass transit. Truthfully, I didn’t even know the FTA had a safety and security page until I ran across it looking for something else. If you are avoiding traveling due to safety concerns, however, you might want to take a look at what the FTA is doing in its effort to protect us.

BMW’s German site BMW.de was expelled from Google’s natural results listings for behaving badly. In this case, the auto maker crammed a “doorway” with keywords to lure Google’s search crawler and boost its natural rankings, while redirecting real visitors to a different page that didn’t have all those keywords.

MediaPost Publications - Google Boots BMW For Web Spam - 02/07/2006

BMW’s spokesperson may have told Forbes that it did nothing wrong, but anyone with even a marginal understanding about optimizing pages and attracting search crawlers, who reads Google’s policies, would understand that BMW “cheated” by using the doorway device.

Google may be having some redirecting fun of its own, however. Some time ago, a German colleague emailed me this suggestion:

Go to Google’s main search page Google.com. Type in the word failure, and hit the “I’m feeling lucky button.” The result is intriguing and may reveal something significant about the Googlians’ personal feelings.

As you may remember, last year saw the enactment of a new federal highway safety act. Pursuant to the terms of that new law, window stickers on new motor vehicles are required to sport the product’s safety rating. Accordingly, the National Highway Traffic Safety Administration has issued a call for comments on the proposed labeling regulations.

Justice Karmeier may be getting a surprise — and it’s not more money for his campaign coffers. Instead, it may be a summons to account for his actions before the Illinois Judicial Inquiry Board.

Common Cause filed a complaint Tuesday (February 7, 2006) asking the Illinois Judicial Inquiry Board to investigate Justice Lloyd Karmeier’s participation in the decisions overturning the two biggest class action verdicts in Illinois history, Avery v. State Farm Mutual Insurance Co., 216 Ill.2d 100, 835 N.E.2d 801 (2005) and Price v. Philip Morris, Inc., No. 96236, 2005 Ill. LEXIS 2071 (Ill. S.Ct. Dec. 15, 2005).

I was gratified to discover that I am not the only person outraged by what I see as the inappropriate participation of Justice Karmeier in these decisions. Independent film director Wayne Ewing has released his documentary “Benched: The Corporate Takeover of the Judiciary” about the contentious election and the corporate interests that buoyed Lloyd Karmeier to the Illinois Supreme Court bench. Common Cause, likewise, was pointed in its assertion that his participation in these decisions violated Illinois’ judicial cannons.

Common Cause spotlights a glaring issue with Karmeier in that he participated in Avery when it seemed he knew his vote was imperative to overturn the case, yet he recused himself from participating in the Gridley v. State Farm Mutual Insurance Co. decision bacause the necessary majority already existed to make the case disappear without his vote.

The Common Cause complaint is supported by legal ethicist Geoffrey Hazard, Jr., which means that, with Monroe Freedman’s agreement, the gurus of legal and judicial ethics are stacked up against Justice Karmeier. More damning for him, however, is the assertion on page 4, footnote 1 in the CC complaint that:

In response to a 2001 request by the then President of the Illinois State Bar Association to the Chair of its Bench and Bar Section Council, a subcommittee was appointed to develop standards defining an “excellent” judge. Justice Karmeier became Co-Chair of that subcommittee and co-authored the standards, which included the statement that,
“A judge must always avoid even the appearance of bias or injustice because confidence in the entire system of justice is diminished when any single judge engages in conduct that lowers public trust in the fair and impartial administration of justice.”

I guess that means Karmeier is not an excellent judge, by his own standards. Or maybe it’s easy to espouse ideals until someone comes along with enough money to put them to the test.

HT to Jerry Brown

As always, George Wallace of Declarations and Exclusions presents a fine analysis of the resurgence of California’s Proposition 103 and other issues pertaining to insurance regulation. The regulation centers on auto insurance and how rates can be set. Mandatory rate cuts required by Prop. 103 were stricken by the California Supreme Court as unconstitutional. As George explains:

The California Supreme Court promptly declared that portion of the initiative to be unconstitutional, on the ground that it violated due process requirements by depriving insurers of the opportunity, permitted to every other business enterprise, to at least attempt to obtain a reasonable return on investment.

I know that collision repair facilities would heartily agree that businesses have a right to make a reasonable profit and could make the same argument about insurers setting their labor rates, dictating permissible parts markups, and setting price caps on paints and materials — irrespective of how much was necessary in the repair.

Anyone interested in the California auto insurance market should read George’s commentary.

They’re at it again. BMW and Nissan are wrangling over which automaker owns a letter of the alphabet.

BMW recently sued Nissan and asked a Canadian court for injunctive relief for Nissan’s alleged use of BMW’s M trademark in promotions for the Infiniti M35 and M45. BMW is crying foul as Nissan has used a capital M (which is strikingly similar to the German maker’s) and a Nissan logo in its Canadian ad campaign hyping “the M is coming”. Automotive News($) reports the German car company claims it has “invested at least $260.7 Million internationally over nearly 30 years promoting its M series.”

What? That’s all? $260.7 Million internationally for almost 30 years? I have to wonder if somewhere along the way, there has been a mistranslation of Milliarden, which in German is billion not million. Otherwise, we all need to take lessons in marketing from BMW.

But back to the topic. Let’s not forget that this is not the first time these two brands have quarreled over a letter of the alphabet. The last time, it was over Z and Nissan was in the driver’s seat doing the complaining. Back in 2002, Nissan sued BMW for Lanham Act violations for naming its sports car the “Z3″. Nissan Motor Co. v. Bmw Holding Corp., 64 U.S.P.Q.2D (BNA) 1797, 2002 U.S. Dist. LEXIS 20744 ($) (D. Ill. 2002)

Plaintiff trademark holder, an automaker, sued defendant user (also automakers using a similar mark), alleging trademark dilution, infringement, and unfair competition under the Lanham Act, 15 U.S.C.S. §§ 1114 (l) and 1125(a) & (c), and pendent state law trademark claims.

Nissan didn’t make out so well last time, as BMW asserted a laches defense and argued that Nissan ZZZZed on its rights. Nissan’s current use of the M almost looks like an attempt to get back at BMW for Z-swiping. Unlike Nissan, however, BMW was only catnapping and didn’t wait until Nissan was well into production before letting the fur fly.

T Tags: Automotive, Cars, BMW, Nissan

For those who think that we have an ineffective and uncaring bureaucracy, here is some good news. In July of 2004 the National Highway Traffic Safety Administration (NHTSA) created its Four Year Plan for Hydrogen, Fuel Cell and Alternative Fuel Vehicle Safety Research to study and help resolve potential safety issues with alternative fuel vehicles. It’s refreshing to know that somewhere in the U.S. government lurk people who are thinking about solving problems before they arise.

Be still my beating heart! And I do mean beating. Paul Tan posted information on The Ariel Atom which is a dynamic little speedster.

Consisting essentially of a chassis, motor, and seats, this beauty has a fantastic power-to-weight ratio making it a road-hugging rocket. Check out the video of the Ariel Atom and its face-bending abilities. The Atom is a perfect present and I wouldn’t mind one at all, thank you very much.

There is only one word for it. Brilliant!

T Tags: Automotive Cars

HT Ed

What will they think of next? Mini USA is encouraging people to drop by its ROOFSTUDIO to design personalized Mini roof art. This puts a whole new spin on “paint your wagon.”

HT Have Opinion, Will Travel and Ed n Chef