FTC Staff Comment Before the Illinois State Senate Regarding Senate Bill 2629, Which Would Repeal Certain Provisions of the Illinois Vehicle Code That Currently Prohibit the Sale or Long-Term Lease of New or Used Automobiles on Sunday in Illinois

UNITED STATES OF AMERICA
Federal Trade Commission
WASHINGTON, D.C. 20580
Office of Policy Planning
Bureau of Competition
Bureau of Economics
March 26, 2014
The Honorable James Oberweis
Senator, 25 th District
105 A State House
Springfield, IL 62706
Re: Request for Comment on Senate Bill 2629
Dear Senator Oberweis:
The staffs of the Federal Trade Commission’s Office of Policy Planning, Bureau of
Competition, and Bureau of Economics 1 appreciate this opportunity to respond to your invitation
to provide comments on the likely competitive impact of Illinois Senate Bill 2629 (“S.B.
2629”).2 S.B. 2629 would repeal certain provisions of the Illinois Vehicle Code that currently
prohibit the sale or long-term lease of new or used automobiles on Sunday in Illinois.3 As is
explained more fully below, the Federal Trade Commission (“FTC” or “Commission”) staff
believe that repeal of these mandatory Sunday closing provisions will likely be procompetitive
and beneficial to consumers.
The existing Code provisions effectively ban the sale or long-term lease of both new and
used automobiles (except private sales) on Sunday throughout Illinois. They therefore eliminate
the possibility of competition among dealers to determine the hours of operation on Sunday that
might be most responsive to consumer preferences and most beneficial to automobile dealers.
Further, because automobile dealers also provide repair services and sell replacement parts, the
probable effects of mandatory Sunday closing laws extend beyond vehicle sales. The principal
harms to competition from such laws likely include: (1) increased consumer search costs that
impede comparison shopping; (2) a market that is unresponsive to consumer preferences for
hours of operation; and (3) diminished competition among dealers for both automobile sales and
1 This staff letter expresses the views of the Federal Trade Commission’s Office of Policy Planning, Bureau of
Competition, and Bureau of Economics. The letter does not necessarily represent the views of the Federal Trade
Commission or of any individual Commissioner. The Commission, however, has voted to authorize staff to
submit these comments.
2 S.B. 2629, 98th Gen. Assemb. (Ill. 2013).
3 See 625 I LL. COMP . S TAT. 5/5-100, 5/5-102.1, 5/5-106 (2013). Section 5-106 provides: “No person may keep
open, operate, or assist in keeping open or operating … any place of business for the purpose of buying, selling …
or leasing for … 1 year or more … any motor vehicle, whether new or used, on the first day of the week,
commonly called Sunday ….”). Section 5-100 contains the words “excluding Sundays” in the definition of an “off
site sale,” and Section 5-102.1(a)(3) states “An off-site sale permit does not authorize the sale of vehicles on a
Sunday.” The bill would delete these words, as well as the entire Section 5-106.

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a range of related services. Collectively, these effects may lead to higher prices and reduced
output for sales of new and used automobiles and related automobile services than would
otherwise be the case.
I. 	Interest and Experience of the Federal Trade Commission in Competition Advocacy
The FTC is an independent administrative agency charged with protecting consumers by
preventing anticompetitive, deceptive, and unfair business practices, enhancing informed
consumer choice and public understanding of the competitive process, and accomplishing this
without unduly burdening legitimate business activity.4 To secure these goals, since its creation,
the FTC has played a significant role in promoting competition and consumer protection law and
policy through both law enforcement and the study of industries and business practices. The
FTC’s enabling statute confers a range of research, education, and outreach tools to support the
FTC’s policy and scholarship function, in addition to its enforcement authority.5
To further the agency’s mission to protect consumers by supporting competitive markets,
and to share our learning with other policymakers, the FTC and its staff regularly engage in
various forms of competition and consumer protection advocacy. One important type of
advocacy is the submission of staff comments on proposed state legislation or regulation. When
a state legislator requests a comment regarding a bill under active consideration by a state
legislature, or when an open public comment opportunity exists with respect to a proposed
regulation, FTC staff may respond with a comment that evaluates the potential competition and
consumer protection issues raised by the pending bill or proposed regulation.
Competition is at the core of America’s economy, and vigorous competition among
sellers in an open marketplace gives consumers the benefits of lower prices, higher quality
products and services, and greater innovation.6 The goal of our advocacy program is to enhance
understanding of the competitive process and provide a framework for thinking about public
policy issues from competition and consumer protection perspectives. We urge decision makers
to consider the likely competitive impact of proposed legislation or regulations; how they might
affect consumers; what justifications might exist for any restrictions on competition; and whether
less restrictive alternatives would adequately protect consumers and fulfill other public policy
goals.7
4 See generally Federal Trade Commission Act, 15 U.S.C. § 45.
5 Sections 6(a) and (f) of the FTC Act authorize the FTC “[t]o gather and compile information concerning, and to
investigate from time to time the organization, business, conduct, practices, and management of any person,
partnership, or corporation engaged in or whose business affects commerce,” and “[t]o make public from time to
time such portions of the information obtained by it hereunder as are in the public interest ….” 15 U.S.C. §§
46(a), (f).
6 See Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 695 (1978) (“The assumption that competition is
the best method of allocating resources in a free market recognizes that all elements of a bargain—quality,
service, safety, and durability—and not just the immediate cost, are favorably affected by the free opportunity to
select among alternative offers.”); Standard Oil Co. v. FTC, 340 U.S. 231, 248 (1951) (“The heart of our national
economic policy long has been faith in the value of competition.”).
7 FTC and staff advocacies take many forms, including letters or comments addressing specific policy issues,
Commission or staff testimony before legislative or regulatory bodies, and amicus briefs. See, e.g., FTC Staff
Comments Before the District of Columbia Taxicab Commission Concerning Proposed Rulemakings on

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II. 	Past Federal Trade Commission Involvement in Automobile Distribution Issues
The FTC has a longstanding interest in the automobile industry and FTC staff have
specifically examined and opposed limits on hours of operation by automobile dealers, whether
imposed by state law or through agreement among dealers. This includes prior experience with
Sunday closing laws in Illinois. In 1988, FTC staff submitted an advocacy letter to the Governor
of Illinois opposing a bill that would have amended the Illinois Vehicle Code to extend the
already existing prohibition of buying or selling new and used motor vehicles on Sunday8 to
include a ban on long-term leasing. 9 Earlier, in 1985, staff of the FTC’s Chicago Regional Office
testified in favor of repealing the Illinois Sunday closing laws for automobile dealers.10 Staff
testified that mandated Sunday closing made it more difficult for consumers to comparison shop
and thus might lead to increased prices and less favorable terms of sale. FTC staff took the
position that prohibiting long-term leasing of automobiles would have similar adverse effects on
consumers and therefore should not be added to the existing Code provisions. The FTC staff’s
position that Sunday closing laws are harmful to consumers, as stated in the previous letter and
testimony, has been consistent over time and remains the same today.
The FTC also has used its enforcement authority to oppose anticompetitive restrictions on
hours of operation. In the late 1980s, the FTC investigated and issued a complaint against several
automobile dealerships in the Detroit area and the Detroit Auto Dealers Association (“DADA”)
for imposing similar restrictions on hours of operation. These dealers had reached an agreement,
orchestrated by the DADA, to limit the number of hours that they would be open for business.
The FTC concluded that the agreement was anticompetitive, a conclusion that was later affirmed
by the U.S. Court of Appeals for the Sixth Circuit.11
In addition to specific consideration of regulations and agreements relating to hours of
operation, the FTC has more broadly been concerned with state-level regulations that limit the
scope of competition for automobile sales. In 1986, for example, the FTC’s Bureau of
Economics issued a report on the effect on retail automobile markets of state regulation that
restricts the establishment of new automobile dealerships in the vicinity of present dealers selling
Passenger Motor Vehicle Transportation Services (June 7, 2013), available at
http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comments-district-columbia-
taxicab-commission-concerning-proposed-rulemakings-passenger/130612dctaxicab.pdf; FTC Staff Comments to
The Electronic Payment Association Concerning Proposed Revisions to the NACHA Operating Rules (Jan. 13,
2014), available at http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-
nacha-electronic-payments-association-regarding-proposed-revisions-nacha-
operating/140124nachastaffcomment.pdf.
8 However, this prohibition did not extend to motorcycles or motor homes. See 625 I LL. COMP . S TAT. 5/5-106 (5),
(7).
9 Comment from FTC Staff to James R. Thompson, Governor of Illinois (Dec. 22, 1988), available at
http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-governor-james-
r.thompson-concerning-s.b.1870-limit-auto-base-rental-charges-alter-allocation-costs-and-risks-damage-or-theft-
and-ban-long/v890008.pdf.
10 See id. at n.4.
11 Detroit Auto. Ass’n v. FTC, 955 F.2d 457 (6th Cir. 1992).

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cars of the same make.12 The report found that these state laws caused automobile prices to rise,
and therefore harmed consumers. In 2001, then-Commissioner Thomas Leary expressed concern
about decades-old state laws that insulate automobile dealers from competition from automotive
manufacturers. While dealers at one time tended to be small businesses, he observed, in 2001
they were frequently much larger entities; meanwhile, the once highly concentrated automobile
manufacturing industry had become far more competitive. Commissioner Leary questioned,
therefore, whether continued regulatory protections for dealers could still be justified, especially
because they tended to interfere with the development of new and potentially more efficient
methods of motor vehicle distribution, such as e-commerce.13
III. 	Discussion and Analysis of the Likely Effects of S.B. 2629
In almost all other industries, suppliers independently decide how and when to promote
and sell their products or services, based on competition and their interaction with consumers. In
states where automobile sellers are not subject to Sunday closing laws, the competitive process
determines automobile dealers’ hours of operation – just as competition also determines prices,
inventory of available automobiles, showroom appearance and facilities, availability of trained
salespeople, and perceived quality of service. Under current Illinois law, in contrast, auto dealers
are deprived of the discretion to determine their own hours of operation on Sunday. In
considering repeal of the current Sunday closing laws, we urge the Illinois legislature to consider
the likely effects on competition of the current Sunday sales restrictions, the probable effects of
repeal, and any legitimate justifications for retaining the Sunday closing laws.
A. Anticompetitive Effects of Sunday Closing Laws
As explained above and in the FTC’s prior advocacy efforts related to Illinois’ Sunday
closing laws, such laws reduce competition among automobile dealers. Indeed, an agreement
among automobile dealers not to open on Sunday would be a clear antitrust violation. FTC staff
recognize that Sunday automobile dealer closings in Illinois appear to be a function of state law,
and we are currently unaware of any allegations of private agreements among competing dealers
in Illinois to limit their hours of operation. Still, the case law on unlawful agreements to limit
hours is instructive, because the anticompetitive effects are identical, whether the restriction is
imposed by legislative command or by agreement.
It is well established that an agreement among competitors to limit their hours of
operation is anticompetitive. Both courts and commentators have concluded that such a
restriction is a form of output reduction that violates federal antitrust laws. In discussing the
FTC’s case against the Detroit automobile dealerships, a leading antitrust treatise explains why:
12 ROBERT P. ROGERS , BUREAU OF ECON., F ED. TRADE COMM ’ N, THE EFFECT OF S TATE ENTRY R EGULATION ON
RETAIL A UTOMOBILE MARKETS (1986) (Bureau of Economics Staff Report), available at
http://www.ftc.gov/sites/default/files/documents/reports/effect-state-entry-regulation-retail-automobile-
markets/231955.pdf.
13 Thomas B. Leary, Comm’r, Fed. Trade Comm’n, State Auto Dealer Regulation: One Man’s Preliminary View,
Speech at The International Franchise Association 34th Annual Legal Symposium (May 8, 2001), available at
http://www.ftc.gov/public-statements/2001/05/state-auto-dealer-regulation-one-mans-preliminary-view.

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[A]n agreement among automobile dealers to restrict showroom hours was an
‘output’ reduction warranting presumptive condemnation. As the FTC had noted,
automobile dealers do not merely sell cars. They sell packages of automobile
service, plus other amenities, and a decision to reduce showroom hours reduced
relevant output just as much as a decision to reduce warranty service, to eliminate
test drives, or simply to fix prices of the cars themselves.14
The imposition of the equivalent restraint by law or regulation is likely to result in similarly
anticompetitive effects.
Sunday closings impair competition and harm consumers by making it more difficult for
consumers to search for the vehicle that best meets their needs and the dealer who offers their
desired car at the lowest price and best terms of sale.15 Especially for consumers who work on
weekdays, cutting the available weekend shopping time in half may leave consumers with no
choice but to shop at less convenient (and hence costlier) times, possibly causing them to curtail
the scope of their search for the best possible match for their needs and the best deal. In
economic terms, a law requiring automobile dealers to close on Sunday may increase a
consumer’s “search costs,” which can lead the consumer to pay more for the car of his or her
choice.16 The way this effect could occur is straightforward: if comparison shopping is more
difficult because Sunday shopping is unavailable, consumers’ ability to compare prices of the
same (or similar) automobiles among various dealers is diminished and they may not locate the
lowest price in the market. Furthermore, if consumers shop fewer hours, then dealers may have
less incentive to compete on price, leading to higher prices overall or a greater range between the
highest and lowest prices in the market.17
Mandatory Sunday closing laws can also restrict the availability of ancillary services,
such as parts and repair services, leading to the same types of anticompetitive effects with
14 P HILLIP E. A REEDA & H ERBERT H OVENKAMP , A NTITRUST LAW: A N A NALYSIS OF A NTITRUST P RINCIPLES AND
THEIR A PPLICATION ¶ 1912(f) (3d ed. 2011); See also Leech v. Highland Memorial Cemetery, Inc., 489 F. Supp.
65 (E.D. Tenn. 1980) (agreement by cemeteries not to perform burials on Sundays was a violation of Section 1 of
the Sherman Act).
15 See Fiona Scott Morton, et al., What Matters in a Price Negotiation: Evidence from the U.S. Auto Retailing
Industry, 9 Q UANTITATIVE M ARKETING & ECON. 365 (2011), available at
http://link.springer.com/content/pdf/10.1007%2Fs11129-011-9108-1.pdf.
16 See Jennifer F. Reinganum, A Simple Model of Equilibrium Price Dispersion, 87 J. P OL. ECON. 851 (1979),
available at http://www.jstor.org/stable/pdfplus/1831011.pdf; Dale O. Stahl II, Oligopolistic Pricing with
Sequential Consumer Search, 79 A M. ECON. REV. 700 (1989), available at
http://www.jstor.org/stable/pdfplus/1827927.pdf. For a review of economic theory and empirical evidence
concerning the effect of search costs on price, see Michael R. Baye, et al., Information, Search, and Price
Dispersion, in H ANDBOOKS IN ECONOMICS AND I NFORMATION S YSTEMS 323 (T. Hendershott ed., 2006). In
economic terms, making some task, such as searching for a car, more difficult is considered to be a “cost” to the
consumer.
17 For empirical evidence that consumers with higher search costs pay more for the cars they purchase, see Morton
et al., supra note 15. For empirical evidence that higher search costs lead to higher prices in other markets, see
Alan T. Sorensen, Equilibrium Price Dispersion in Retail Markets for Prescription Drugs, 108 J. P OL. ECON. 833
(2000), available at http://www.jstor.org/stable/pdfplus/10.1086/316103.pdf; and Jeffrey R. Brown & Austan
Goolsbee, Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry, 110 J.
P OL. ECON. 481 (2002), available at http://www.jstor.org/stable/pdfplus/10.1086/339714.pdf.

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respect to such services. Consumers will not be able to comparison shop as easily for these
services, which may reduce competition and lead to higher prices.
In sum, Sunday closing laws directly interfere with the interaction of supply and demand
between automobile dealers and consumers. They impede the ability of dealers to compete in
response to perceived consumer demand and prevent the competitive process from determining
hours of operation, along with related sales and service activities.
B. There Are No Cognizable Efficiencies to Support the Ban
Government restrictions on competition may be justified if they are narrowly tailored to
serve some important public purpose, such as consumer safety. In addition, it has long been
recognized that some privately imposed restrictions on the distribution of products, such as
automobiles, may be procompetitive. For example, manufacturers can designate exclusive
territories for their dealers in an effort to provide them with the incentive to invest in an
attractive showroom and training employees, which can benefit consumers and promote
competition with dealers of other brands.
FTC staff are unaware, however, of any procompetitive efficiencies or other justifications
for mandatory Sunday closing laws for automobile dealers. As noted above, in virtually all other
industries, hours of operation are determined by the competitive process. We urge Illinois
legislators to consider whether there is anything unique about the automobile industry to support
arguments that limiting hours of operation will decrease costs, expand output, improve quality,
or provide any other consumer benefits that would justify such a significant restraint on dealers’
hours of operation.
We are aware that Illinois state and local dealer associations have expressed their support
for the current law and their opposition to S.B. 2629. As we understand it, some dealers have
expressed the view that if the ban on Sunday closing is repealed, some dealers will choose to
open on Sundays – presumably in response to consumer demand – and most others likely will
follow. FTC staff believe this argument demonstrates exactly why more competition, not less, is
good for consumers. If the Sunday closing laws were repealed, dealers would have to compete to
determine their hours of operation. Each dealer would make an independent decision, based on
its own assessment of profitability and responsiveness to consumer preferences.
To the extent that opponents of repeal cite other justifications to prohibit Sunday sales,
these, too, appear to reflect the anticompetitive consequences of the current ban. For example,
opponents argue that automobile salespeople would have to work seven days a week, and since
most workers cannot (or do not want to) work all seven days, it would be difficult to hire
qualified, competent sales staff. In addition, opponents have argued that Sunday bank closings
make it difficult or impossible for dealers to complete the financing on an automobile; dealers
expect to sell a certain set number of cars per week, regardless of whether they are closed on
Sunday, and therefore they can reduce their overhead by being closed on that day; and customers
prefer to have one day in which they can look at the available cars without being hounded by

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salespeople.18 These arguments directly challenge the value of competition and the competitive
process.19 At best, they may constitute reasons an individual dealership might choose not to open
on Sunday, but they are not arguments for why a total ban imposed by the state on all Sunday
sales benefits consumers. In addition, it is impossible to reconcile these arguments with the fact
that many other businesses chose to open on Sunday, including many automobile dealers in
states that do not mandate Sunday closings.
C. Conclusion
Based on our prior experience with the automobile industry, our competition and
economic expertise, and our analysis of Illinois Senate Bill 2629, FTC staff believe that its
passage would enhance competition and provide significant benefits for Illinois consumers.
Repealing the Sunday sales ban would ensure that the competitive process, not legislative
directive, determines auto dealers’ hours of operation and the availability of other related
services. The current law makes it more difficult for Illinois consumers to comparison shop and
raises their search costs, which may lead to higher prices, less favorable terms of sale and lease,
reduced output of sales and service, and a market that is unresponsive to consumer preferences.
Respectfully submitted,
Andrew I. Gavil, Director
Office of Policy Planning
Deborah Feinstein, Director
Bureau of Competition
Martin S. Gaynor, Director
Bureau of Economics
18 See generally John Cody, State Senator Oberweis Wants to End Ban On Sunday Car Sales in Illinois, CBS
CHICAGO (Nov. 20, 2013, 3:24 PM), http://chicago.cbslocal.com/2013/11/20/state-sen-oberweis-wants-to-end-
ban-on-sunday-car-sales-in-illinois/ (quoting David Sloan, president of the Chicagoland Automobile Trade
Association); Kurt Erickson, Car Dealers Don’t Buy Plan to Allow Sunday Sales, P ANTAGRAPH (Nov. 20, 2013,
10:00 AM), http://www.pantagraph.com/news/state-and-regional/illinois/government-and-politics/car-dealers-
don-t-buy-plan-to-allow-sunday-sales/article_310fa162-51a8-11e3-a4a6-0019bb2963f4.html (quoting Peter
Sander, president of the Illinois Automobile Dealers Association.)
19 In Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679 (1978), the Supreme Court ruled that the Sherman
Act precludes inquiry into whether competition is “good” or “bad.” See also Editorial: Sunday car sales? Not in
Illinois, CHICAGO TRIBUNE (Nov. 26, 2013), available at http://articles.chicagotribune.com/2013-11-
26/opinion/ct-sunday-car-sales-edit-1126-20131126_1_illinois-supreme-court-sunday-car-sales-auto-dealers
(endorsing S.B. 2629).