I have fielded a number of complaints about the interaction between dealer floorplanning company Nextgear Capital and Manheim Auctions. Both Nextgear and Manheim are units of Cox Enterprises, Inc.
To give you some perspectives: in the modern-day car business, buying and selling vehicles at auctions is essential. Because of the marketplace nature of auctions, once an auction becomes entrenched in an area, it is a natural monopoly. Even the largest markets might have only one or two working auctions.
According to Wikipedia, Manheim is the largest vehicle auction company in the world, with 145 locations worldwide.
Nextgear Capital, the dealer financing division of Cox Enterprises, doesn’t hold the same dominant position as Manheim, but in localized areas may be the only financing alternative, and whether it is the only option available to a dealer, once the dealer signs up, the dealer can be utterly dependent on having a functional relationship with Nextgear.
Because my firm defends dealers who are sued by Nextgear, I hear a lot of complaints by dealers who are unhappy with Nextgear’s policies and practices. They have complained about the fees, complained that vehicles were floorplanned that weren’t requested, complained that inventory was repossessed without default, and several have complained that when there is a dispute with Nextgear, the dealership gets frozen out of the auto auctions, especially Manheim, but not even limited to Manheim. Of course, I realize in the course of fielding these complaints, I am hearing only one side of the story. There may be facts that I don’t even know about. That being said, Nextgear filed over 1,000 suits in Hamilton County, Indiana in the past year. If you are a dealer who is behind with Nextgear, and you can’t get things resolved with their collection department, it is a reasonable guess that you will be sued in Indiana.
I started with a working theory that
IF Nextgear, a company that probably would not be considered to have monopoly power for purposes of antitrust law, conspires with Manheim, a company which might be held to yield monopoly power, to refuse to let a dealer participate in an auction, that could be conceivably be an illegal vertical tying arrangement pursuant to antitrust law. After coming up with that theory, I reached the conclusion that as a private attorney, it doesn’t look like even if the facts can be proven, and that’s a big if, neither my firm, nor my clients would be able to finance a private antitrust action. I’m putting this theory out in a public forum for anybody who reads it to look into the facts and into the law, and go further if warranted.This theory may have some bugs and has not been tested in court
What that means is that if you are a dealer who is reading this and has a complaint about an unfair trade practice with Nextgear, you should consider making a formal complaint with the Federal Trade Commission, the federal agency with jurisdiction over the antitrust law.
You can file your complaint here. If the FTC doesn’t think the complaint is meritorious, it will go nowhere. If the complaints build up, and if the FTC thinks there could be a violation, the FTC could take action.
By the way, even if Nextgear does not violate antitrust law, that doesn’t mean that any action taken by Nextgear would be shielded from any scrutiny. Unfair and deceptive acts are also regulated under the Federal Trade Commission Act as well as some state UDAP laws. There is a covenant of good faith and fair dealing in every contract under the Uniform Commercial Code, and if a company intentionally and unjustifiable acts to prevent a company from dealing with a third party, there is a tort called intentional interference with business relations. In addition, if you are a dealer whose vehicles are repossessed and those vehicles are resold in a commercially unreasonable way, you may have a defense to deficiency claims by the floorplanner.
If you are sued by Nextgear, you should not necessarily assume that everything Nextgear claims from you is owed, no matter how high the claimed balance, and you shouldn’t assume that there is nothing you can do to get the balance down. My firm regularly defends dealers from lawsuits brought by Nextgear in Indiana. We will talk to you on the phone with no obligation to hire us. 317-662-4529.