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


Office of House Bill AnalysisH.B. 965
By: Swinford
Business & Industry
2/22/1999
Introduced



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.  Under the code, the term "dealer" does
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 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, AND
OUTDOOR POWER EQUIPMENT DEALER AGREEMENTS.  Adds "off-road construction" to
existing heading. 

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.  

(6)  Includes "off-road construction 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 a
conforming change. 

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

SECTION 5.  Emergency clause.