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News Briefs

By ALM Staff | Law Journal Newsletters |
May 01, 2004

Ford Settles Lawsuit Launched by Ottawa Dealerships

The Ontario Superior Court of Justice approved a settlement between Ford Motor Co. of Canada Ltd. and about 100 Ford dealers in Canada that will result in Ford creating a fund of up to $47 million (CAN) ($35 million (US)) to compensate dealers who claimed that the carmaker breached contract agreements when it decided to convert its Lincoln-Mercury outlets to the Ford banner. The decision by Judge Lynn Ratushny rejected an objection by two Ottawa dealerships that their share of the settlement would be insufficient.

Ford's dispute with its dealers began in the late 1990s, when the company converted about 125 Lincoln-Mercury dealerships to “Custom Franchises” that could sell Ford models. Previously, Lincoln dealers could sell only Lincoln- and Mercury-model cars, and Ford dealers could sell only Fords. After the change, some Ford dealers soon found that they had a direct competitor located close by, which they alleged was in direct violation of their franchise agreements, which prohibit Ford from setting up another dealership within a 15-kilometer radius. However, if Ford can prove that the market is sufficient to support two nearby dealerships, it can site them accordingly.

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