Ford’s site, fordpreowned.com, let internet users view a selection of used cars. Users could then arrange to have their choice of car delivered to a local Ford-licensed dealership for a test-drive before possibly purchasing the car.
Under the Texas Motor Vehicle Commission Code, car manufacturers are prohibited from owning a dealership and acting in the capacity of a dealer in the state. Direct sales must also be made by licensed dealers in the state.
The Texas Department of Transportation’s Motor Vehicle Division complained to the Texas Motor Vehicle Board about Ford’s site. In response, Ford filed a lawsuit in the US District Court, challenging the complaint.
The Court upheld the Commission’s Code, rejecting arguments from Ford that the Code was restricting e-commerce within the state. It held that the Code protects the citizens of Texas by only licensing dealers who comply with certain warranties and conditions.