04/24/2001 01:55 PM Senate L&C

                      SB 176-DISTRIBUTORSHIPS                                                                               
                                                                                                                              
CHAIRMAN PHILLIPS announced SB 176 to be up for consideration.                                                                  
                                                                                                                                
MR. JOHN HAXBY,  Waukeshaw Alaska Corporation of Anchorage,  said he                                                            
would answer questions.                                                                                                         
                                                                                                                                
MR.  ED  SNIFFEN,  Department  of  Law, said  they  don't  have  any                                                            
concerns with  this bill, but he has two recommendations.  One deals                                                            
with the definition  of the required  payment by a distributor  to a                                                            
dealer of merchandise  that's held as inventory. On  page 2, line 6,                                                            
language currently  requires the distributor  to pay the  dealer 100                                                            
percent of  the net cost  of any merchandise  that he might  have in                                                            
his  inventory  at  the time  of  a  termination  of  a dealership.                                                             
Inventory depreciates over  time and it may or may not be worth what                                                            
the dealer  pays, but  he suggested  changing it  to something  more                                                            
like on page 3,  lines 11 and 12, which states that  the distributor                                                            
is required  to pay  a commercially  reasonable  business value  for                                                            
that inventory.                                                                                                                 
                                                                                                                                
Also,  under  the   exemption  section  on  page   5,  line  5,  the                                                            
distributorship  agreement  for  the sale,  repair  or servicing  of                                                            
motor  vehicles that  are required  to get registered  are  excluded                                                            
from the  bill and MR. SNIFFEN  said he would  add some language  to                                                            
that definition that would  include "franchise agreement" to make it                                                            
clear that  automobile  franchise agreements  between manufacturers                                                             
and dealers are also excluded.                                                                                                  
                                                                                                                                
He  said other  than  those  recommendations,  Mr. Sniffen  said  he                                                            
supports the bill.                                                                                                              
                                                                                                                                
MR. HAXBY responded  to the issue of depreciating  merchandise, that                                                            
in many cases  while it may depreciate for tax purposes,  many times                                                            
the inventory  valuation increases  as the sectors increase  prices.                                                            
So, he thought  it would be better  to leave the language  as it is.                                                            
                                                                                                                                
MS. DEBORAH LUPER, Eagle River, said she would answer questions.                                                                
                                                                                                                                
MR. SNIFFEN clarified  that these really aren't technical  problems;                                                            
they're more  suggestions  and they don't  have strong feelings  one                                                            
way or another about any of those things.                                                                                       
                                                                                                                                
SENATOR TORGERSON  noted page 2, line  6, where it says 100  percent                                                            
of net  merchandise  except for  repair  parts, and  said the  first                                                            
thing  that  came   to  his  mind  is  what  happens   if  you're  a                                                            
merchandiser of repair parts.                                                                                                   
                                                                                                                                
MR. HAXBY  said he  understood what  he was saying  and that  he was                                                            
correct.                                                                                                                        
                                                                                                                                
SENATOR  TORGERSON moved  on page  2, line  6, to  delete ",  except                                                            
repair parts,". There were no objections and it was so ordered.                                                                 
                                                                                                                                
MR. HAXBY concurred with the motion.                                                                                            
                                                                                                                                
SENATOR  LEMAN asked  if that  amendment  would affect  language  on                                                            
lines 2 that said:  "85 percent of the current net  price for repair                                                            
parts."                                                                                                                         
                                                                                                                                
MR.  HAXBY answered,  "It  should  not affect  it  as line  2 is  to                                                            
include superceded parts."                                                                                                      
                                                                                                                                
SENATOR LEMAN  moved to pass CSSB 176 (L&C) from committee  with the                                                            
accompanying fiscal note  and individual recommendations. There were                                                            
no objections and it was so ordered.