WASHINGTON (Reuters) - Chrysler Group LLC will proceed with congressionally mandated arbitration for dealerships that have appealed the automaker’s decision to close them down, the company said on Thursday.
Chrysler terminated franchise agreements with nearly 800 showrooms last June in a bid to operate more efficiently and slightly more than half of them have sought arbitration, Chrysler said in a statement.
It was considering a court challenge to the plan that required by Congress in legislation approved in December. On Thursday, the automaker said it would go forward and “actively participate” in arbitration.
“The company looks forward to the expeditious completion
of the process,” Chrysler said. “A robust dealer network is a critical component of the (strategy) of rebuilding a strong and resilient American automaker.”
More than 1,000 dealerships that are losing some or all of their business with General Motors Co GM.UL have also applied for arbitration.
Both Chrysler and GM reduced their retail networks as part of their government-sponsored bankruptcy restructuring last year.
Many affected dealers have complained that their franchise rights were terminated unfairly. GM has reversed some of its initial closure decisions as part of a limited internal appeals process that has now been replaced by arbitration.
House Majority Leader Steny Hoyer, who spearheaded the legislation that established arbitration, said Chrysler affirmed its “commitment to a strong dealer network” by opting not to challenge the wishes of Congress.
“I want to thank Chrysler CEO Sergio Marchionne for working with us on this issue,” Hoyer said.
The U.S. Treasury owns 60 percent of GM and nearly 10 percent of Chrysler.
The American Arbitration Association (AAA) is convening regional panels to review the appeals. Congress has required that they be resolved within six months, in most cases.
Reporting by John Crawley; editing by Andre Grenon