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General Motors Sues FCA

By Kay Burk

General Motors sued rival Fiat Chrysler on Wednesday, Nov. 20, asserting that it bribed United Auto Workers officials in contract negotiations to get an advantage on GM over the course of a decade.


The company argues that the illegal activity was authorized by Fiat Chrysler’s chief executive at the time, Sergio Marchionne, and helped Fiat Chrysler win union acceptance of cost concessions that were denied to GM in labor contracts in 2011 and 2015. The suit also contends that Fiat Chrysler executives bribed union leaders to win support for Fiat Chrysler’s highly public effort to pressure GM into a merger in 2015.


GM alleges it was harmed as a result of “corrupted” collective bargaining involving FCA leaders bribing union officials in unfair labor costs and “patterned” bargaining deals that were not offered to GM.


Three former Fiat Chrysler executives and several U.A.W. officers have already pleaded guilty. Corporate and union leaders siphoned off millions of dollars — some of which was meant for a training center.


GM said that it would seek billions of dollars in damages, without giving a specific amount. The suit names Fiat Chrysler and the three convicted former executives as defendants, but no current Fiat executives.


The lawsuit and the turmoil at the top of the union stem from long-running Justice Department investigations into financial wrongdoing at the union and Fiat Chrysler. Hours after GM filed the lawsuit, in federal court, the union’s president, Gary Jones, resigned as the UAW took steps to oust him.


The two companies have had a contentious relationship in addition to fighting for buyers of their vehicles. In 2005, after a legal battle, Marchionne, who died in 2018, forced GM to pay Fiat $2 billion after a partnership in which the companies jointly produced engines and transmissions in Europe soured.


Mr. Marchionne later engineered Fiat’s merger with Chrysler and in 2015 publicly announced he wanted Fiat Chrysler to merge with GM, an offer GM’s chief executive, Mary T. Barra, rebuffed.


In a statement that Wednesday night, Fiat Chrysler Automobiles said that it will defend itself vigorously against the lawsuit filed by General Motors.


“FCA believes General Motors’ claims are nothing more than a meritless attempt to divert attention from that company’s own challenges.


“This astonishing ploy comes at a time when FCA is proving itself to be an ever more formidable competitor that continues to create significant value for all its stakeholders through the successful implementation of its long-term strategy. This includes the proposed merger with PSA, which itself completed the successful turnaround of the European businesses it acquired not long ago from General Motors.


“FCA will deal with this extraordinary attempt at distraction through the appropriate channels and will stay focused on continuing to deliver record results while realizing an exciting vision for the future of the industry. FCA is confident that it will prevail in defending itself against these claims in court and will also pursue all available remedies in response to this groundless lawsuit.”


FCA says its merger talks with French automaker PSA will continue and the $50 billion deal will be signed this year. The merger would create the world’s fourth-largest automaker. PSA Groupe manufactures Peugeot, Citroen, DS, and Opel/Vauxhall. FCA produces nine brands including Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Lancia, Maserati, and Ram. Reportedly, all 13 brands will continue under the new PSA-FCA alliance.


One thing is for sure: this is sure to continue to play out in 2020. 



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