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Ford Being Sued for Monopolizing Service Contracts

March 21, 2005

Marathon Financial Insurance Co. is suing Ford and Ford Motor Credit for alleged antitrust violations. The insurance company claims Ford is illegally monopolizing service contract business at its dealerships.

According to Automotive News, Marathon alleges that Ford has illegally limited its competition for service contracts by not financing plans that are not backed by highly rated insurers. Marathon is an insurer of independent service contract providers.

Lenders commonly use insurer ratings to determine their ability to pay claims. Services such as A.M. Best Co. decide insurer ratings. Ford Credit requires an A-minus or higher rating in order to finance a service plan. General Motors also requires an A-minus, while Toyota Financial and DaimlerChrysler Services require at least a B-plus.

Marathon, which was started in 2001, doesn't yet have a rating. Marathon attorney Greg Casas said Marathon applied with A.M. Best for a rating but hasn't been in business long enough to get one. However, the A.M. Best Web site says it rates startup companies as well.

The suit also accuses Ford of providing dealers that sell factory service contracts with larger numbers of popular vehicles, giving them price breaks on floorplan financing and financing more of their higher-risk customers, reported Automotive News.

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