In the early 1960s, Attorney General Robert F. Kennedy directed the United States Department of Justice to investigate the market conduct activity of certain insurers and insurance sponsored associations with respect to appraisals and repairs of insured damaged automobiles. The investigation found that 265 insurance companies, represented primarily by three national associations, were in violation of the Sherman Antitrust Act. The Department of Justice filed a civil suit in U.S. District Court in New York against the insurers and charged them with violation of Sections 1 and 3 of the Sherman Act.

Prior to trial, the parties agreed to a Consent Order which was approved by the court and signed on October 23, 1963. Section IV of the Final Judgment, as approved by the court, stated the defendants and co-conspirators would not operate or participate in any plan, program or practice that recommended appraisers, steer to any business or person, or away from any appraiser or repairer, control activities of appraisers, allocate customers-markets-business of appraisers, or fix, establish or control prices paid for appraisals or charged by repair shops for the repair of damage to automotive vehicles or for replacement parts or labor in connection therewith, whether by coercion, boycott or intimidation or by the use of flat rate or parts manuals or otherwise.

Below is the relevant passage.

(A) Each defendant is enjoined from placing into effect any plan, program or practice which has the purpose or effect of: (1) sponsoring, endorsing or otherwise recommending any appraiser of damage to automobile vehicles; (2) directing, advising or otherwise suggesting that any person or firm do business or refuse to do business with (a) any appraiser of damage to automobile vehicles with respect to the appraisal of such damage, or (b) any independent or dealer franchised automotive repair shop with respect to the repair of damage to automobile vehicles; (3) exercising any control over the activities of any appraiser of damage to automotive vehicles; (4) allocating or dividing customers, territories, markets or business among any appraisers of damage to automotive vehicles; or (5) fixing, establishing, maintaining or otherwise controlling the prices to be paid for the appraisal of damage to automotive vehicles, or to be charged by independent or dealer franchised automotive repair shops for the repair of damage to automotive vehicles or for replacement parts or labor in connection therewith, whether by coercion, boycott or intimidation or by the use of flat rate or parts manuals or otherwise.
 
It is our understanding that the 1963 Consent Decree, so-called, remains in effect today and is enforceable by the Department of Justice, which has sole standing privileges. As such, we also understand that several organizations and individuals have tried to get the U.S. Department of Justice to enforce the Decree over the years, and that a renewed effort is underway by many representatives of the collision repair industry. We wish to express to you our support of the concerns of these entities, and make a request of our own.
 
The Society of Collision Repair Specialists (SCRS) is a 27-year-old national collision repair association, and the only national association in the United States dedicated solely to advancing the collision repair professional. Through its direct members and 35 affiliate associations, SCRS is comprised of over 6,000 collision repair businesses and 58,500 specialized professionals who work with consumers and insurance companies to repair collision-damaged vehicles. On behalf of our membership, we are asking that you not only investigate whether the tenets of the 1963 Consent Decree are being violated, but initiate a parallel investigation into probable violations of the Sherman Act and related federal anti-trust and/or restraint of trade statutes by entities which are operating within the collision repair industry currently. Today’s market conduct seemingly is unfortunately very similar to that of the 1960s.

It is not the intention of SCRS to accuse all who participate in the collision repair process of illegal behavior; however, such participants may include, but are not limited to, insurance companies, appraisers, repair facilities, dealers and more, and there is no doubt that certain entities today operate in a manner that is clearly inconsistent with the intent, if not the letter, of the law. In part, our industry is being held captive by the market conduct practices of certain insurers that seemingly control almost all facets of the collision repair process. In addition to steering, or deceptively referring, consumers to shops they favor, they dictate what they will pay for labor, parts, procedures, storage, sublet items, towing and more – with no regulatory accountability or intervention. These practices, in fact, are those which the insurers that signed the 1963 Consent Decree agreed were unacceptable and illegal behavior which they would not resort to in the future.

SCRS is prepared to assist your office with any requests or inquiries you may have to help facilitate a thorough investigation of these practices. Please feel free to have your staff contact our executive director, Aaron Schulenburg, by calling him at (302) 423-3537 or e-mailing [email protected].