HBA-DMD, ATS H.B. 965 76(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 965
By: Swinford
Business & Industry
7/30/1999
Enrolled



BACKGROUND AND PURPOSE 

A common practice in the agricultural equipment industry is for
manufacturers to create their own franchise of dealerships, to own an
interest in the dealerships, and to enter into agreements with the
dealerships.  In such dealer agreements, the manufacturers specify the type
of equipment the dealer is obligated to sell and define the territory where
such equipment is to be sold.  Chapter 19 of the Business & Commerce Code
was created to protect agricultural equipment dealers in this state from
agreements which restricted how they operated their dealerships and to whom
they could sell their dealerships. Prior to the 76th Legislature, under the
code, the term "dealer" did not include a person whose principal business
is the sale of off-road construction equipment. Corporate mergers and other
industry changes have allowed off-road construction equipment manufacturers
to circumvent the law by either manufacturing agricultural equipment
themselves or by merging with companies that manufacture agricultural
equipment. 

H.B. 965 redefines the term "dealer" by providing that a dealer is not a
single line dealer primarily engaged in the retail sale and service of
off-road construction and earth-moving equipment.  This bill also redefines
"equipment" by including forestry harvesting equipment and off-road
construction equipment within the statutory definition.  It defines a
"single line dealer" to mean a person who has purchased 75 percent or more
of a dealer's total new product inventory from a single supplier and has
total annual average sales in excess of $100 million for the preceding
three years with that single supplier for the territory for which the
dealer is responsible in this state.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends the heading to Chapter 19, Business & Commerce Code, as
follows: 

New heading: CHAPTER 19.  FARM, INDUSTRIAL, OFF-ROAD CONSTRUCTION, FORESTRY
HARVESTING EQUIPMENT, AND OUTDOOR POWER EQUIPMENT DEALER AGREEMENTS.  

SECTION 2.  Amends Section 19.01, Business & Commerce Code, by amending
Subdivisions (5) and (8) and adding Subdivision (12), as follows: 

(5)  Provides that the definition of  "dealer" does not include a single
line dealer primarily engaged in the retail sale and service of off-road
construction and earth moving equipment, rather than a person whose
principal business is the sale of offroad construction equipment.  

(8)  Includes "off-road construction equipment" and "forestry harvesting
equipment" in the definition of  "equipment." 

(12)  Defines "single line dealer" as an individual , partnership, or
corporation who has purchased 75 percent or more of the dealer's total new
product inventory from a single  supplier under all agreements with that
supplier, and has a total annual average sales in excess of $100 million
for the preceding three years with that single supplier for the territory
for which the dealer is responsible in this state. 

SECTION 3.  Amends Section 19.43(a), Business & Commerce Code, to make
conforming changes. 

SECTION  4.  Effective date: September 1, 1999.
                        Makes application of this Act prospective.

SECTION 5.  Emergency clause.