Class-action lawsuit involving BMW and Mercedes-Benz

Ottawa sued over car import rules

GREG KEENAN
From Thursday's Globe and Mail
February 28, 2008 at 1:48 AM EST


Two vehicle leasing companies have launched a class-action lawsuit on cross-border vehicle shopping with a new twist, alleging Transport Canada and the Canada Border Services Agency were participants in a conspiracy to keep vehicle prices high.

The two arms of the government have been named along with BMW Canada Inc., Mercedes-Benz Canada Inc. and Mercedes-Benz USA LLC in a lawsuit that alleges actions they required of people or companies trying to import U.S. vehicles into Canada reduced competition and enabled prices of vehicles sold here to be 20 per cent to 35 per cent higher than similar U.S. models.

The auto makers, Transport Canada and the CBSA imposed restrictions on vehicle importers that created additional fees and charges, said a statement of claim filed with the Ontario Superior Court.

Fournier Leasing Co. Ltd. and Canadian Auto Associates Ltd. are seeking damages that total in excess of $1-billion.

“These additional charges, fees procedures and restrictions prevent more competitively priced Mercedes vehicles from entering into the Canadian market, thereby enabling the Mercedes defendants to charge higher prices for new vehicles sold and leased by them in Canada,” the statement said.

For Mercedes and BMW, “these additional fees and charges are not payable under Canadian law,” the lawsuit said.

The charges have not been proven in court and none of the defendants in the lawsuit has filed a statement of defence.

JoAnne Caza, a spokeswoman for Mercedes-Benz Canada, would not comment. BMW Canada spokeswoman Stacy Morris said the auto maker was not aware that any such lawsuit has been filed.

The two luxury auto makers were among the first companies to offer cash incentives in Canada last fall when the Canadian dollar hit par against the U.S. currency. The rise of the loonie enabled Canadians to potentially save tens of thousands of dollars in the U.S. on such luxury vehicles as those sold by BMW and Mercedes Benz.

Luxury vehicles are believed to represent the bulk of the record 189,738 vehicles imported into Canada last year.

Transport Canada is named in the suit because of its role in certifying vehicles imported into Canada through the Registrar of Imported Vehicles program, which maintains a list of vehicles allowed to be imported and outlines the modifications necessary to make sure vehicles comply with Canadian regulations.

Among the requirements is one that importers provide proof to the CBSA that any repairs required under recalls have actually been made.

The auto makers forced importers to pay “artificially high fees and charges” for information about recalls, the lawsuit alleges.

BMW Canada's website says importers require a letter of admissibility from the company that costs $350. The fee for a letter saying the vehicle has been repaired under any recall orders is $500.

“There is a process. The law is quite clear that if you follow that process, you're entitled to import a vehicle into Canada,” said Brian Osler, one of the lawyers for the two leasing companies.

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