U.S. Puts Brakes on Car Dealers’ Price Coaching : Autos: Action marks end to 16-month probe of antitrust violations. Trade group admits no wrongdoing.

The nation’s largest automobile dealers association agreed Wednesday to stop coaching its members on how to limit price competition, marking an end to a major 16-month Justice Department investigation of the industry.

The goal of the National Automobile Dealers Assn. often was to undermine discounts, deals and rebates offered by the Big Three--General Motors Corp., Ford Motor Co. and Chrysler Corp.--according to Anne K. Bingaman, assistant attorney general in charge of the antitrust division at the Justice Department.

“NADA stepped well over the line by trying to keep various players in the auto industry from taking steps that would reduce car prices for consumers,” Bingaman said. “Trade associations must not be allowed to become a cover for cartel-like activity.”’

Bingaman said the Justice Department could not put a dollar figure on how much consumers might have lost as a result of the trade group’s activities over the past six years. But she said the association has 25,000 franchise members, or 84% of U.S. auto dealers, who see about $375 billion in sales every year. And one of the perks the group was trying to stop was the $1,000 buyer rebate often offered by the major auto makers, she said.

“We’re very proud of this consent decree and we think it offers substantial protection for consumers for a good period of time,” Bingaman said.

The Justice Department sued the NADA in U.S. District Court in Washington, where it also filed a proposed consent decree in which the trade association agreed to stop trying to control dealerships and limit price competition. If approved by the court, the settlement will last for 10 years.

The McLean, Va.-based trade group said it agreed to settle only to avoid costly litigation and it admitted no wrongdoing.

“NADA strongly disagrees that any of its actions have been in violation of antitrust laws,” the group said in a statement. “NADA has argued that addressing these and the many other issues confronting dealers is a proper function of a trade association.”

According to the Justice Department complaint, the association:

* Urged car dealers to boycott or reduce their purchases from auto makers that offered rebates to consumers.

* Suggested that members stop “invoice advertising,” prices based on a markup of the dealer’s wholesale cost.

* Encouraged dealers to reduce inventories to only a 15- to 30-day supply in order to pressure auto makers to reduce “fleet subsidies,” in which high volumes of cars are bought for resale at lower prices.

* Urged members to boycott auto brokers that buy cars at discount prices from dealers for resale to the public.

Under the settlement, the association cannot encourage dealers to adopt specific prices or pricing systems or policies. The group is also prohibited from suggesting boycotts of auto makers or brokers.