The racketeering lawsuit brought by General Motors against Fiat Chrysler Automobiles is a legal bombshell for the U.S. car industry.
GM’s broadside lays out in forensic detail how FCA allegedly conspired over many years to funnel payments to UAW officials, corrupt the collective bargaining process on wages and thus secure a competitive advantage. In essence, it’s trying to rewrite the American auto industry’s past decade of history, which saw both GM and Chrysler bounce back dramatically from Chapter 11 bankruptcy.
In GM’s telling, the merger of Italy’s Fiat with Michigan’s Chrysler and their subsequent renaissance under the leadership of Sergio Marchionne was built on corruption. It may have a hard time proving parts of its case, particularly its assertion that the goal of the alleged conspiracy was to weaken GM and force it into a merger with Fiat.
The Italian company says the lawsuit is groundless, implying that any bribe-paying would have been a case of a few bad apples. This is an awkward defense, though: Federal prosecutors have accused FCA managers of trying to keep union officials “fat, dumb and happy” and three of the company’s executives have pleaded guilty to various charges.
Regardless of whether GM succeeds in extracting billions of dollars compensation from its rival, the lawsuit seems calculated to punish Fiat and destabilize its recovery. Fiat’s proposed merger with France’s Peugeot SA, a prospective labour deal with the UAW and the reputation of the deceased Marchionne are in the balance. Relations between the two carmakers and with America’s trade unions will never be the same again.