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GM is suing FCA for … you’ve got to read this, it’s nuts

by David Zatz on

Having finished its absurdly long negotiations with the United Auto Workers (UAW) union, General Motors is turning its attention to the possibly devastating FCA-PSA hookup.

FCA merging with PSA would be bad for GM in a few ways. PSA owns GM’s former European brands Opel and Vauxhall, with the designs for those cars. PSA’s advanced work in hybrids and small engined-cars would boost FCA exactly where it needs help in North America.

Perhaps that’s the real motivation behind GM’s sudden announcement of a racketeering lawsuit against FCA. The suit claims that Sergio Marchionne, conspired with the UAW to merge FCA with GM, partly by giving GM tougher labor terms than FCA. By putting FCA at a labor-cost advantage, the suit claims, and leveraging the UAW’s member of GM’s board, the canny Marchionne figured he could take over General Motors.

Allpar readers may recall that the actual merger effort was essentially Marchionne trying to set up a meeting with GM and failing to do so, then talking to the media about it, and finally giving up.

The lawsuit claims that FCA paid “millions of dollars in bribes to obtain benefits, concessions and advantages in the negotiation, implementation and administration of labor agreements over time.” The goal was allegedly two-fold: to give FCA easier terms, and to sabotage talks with GM. We can ignore the fact that at least one GM negotiator and his counterpart at the UAW have also been implicated in the same bribery scandals.

Aside from giving FCA terms, the suit seems to imply that FCA made the UAW give GM harsh terms, to make a merger of FCA and GM easier. As some may recall, the point of a union is to negotiate the best possible terms for its members—so the idea of making things tougher on GM is odd, on the face of it. Giving FCA easier terms, one can see; but the membership was not bribed (except by signing bonuses, which GM employees also got), and approved the terms, albeit grudgingly.

FCA’s official reply is:

We are astonished by this filing, both its content and its timing. We can only assume this was intended to disrupt our proposed merger with PSA as well as our ongoing negotiations with the UAW. We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it.

Highly informal analysis from Allpar’s “Mr. Fusion” is:

* Didn’t you just suffer a nasty strike by UAW?
GM: “Trust us, this has nothing to do with that.”
* You just completed negotiating your contract with UAW, and now FCA is in the middle of their own negotiations…
GM: “The timing is just a coincidence.”
* FCA just announced an ambitious and hopefully beneficial merger with PSA.
GM: “This is definitely not an attempt to throw cold water on that!  Really!!”
* Didn’t two of the convicted FCA racketeers also work for GM?
GM: “Er…hey, look over there!”[/QUOTE]

 

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