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GM Sues Fiat Chrysler, Alleges Racketeering And Corruption In UAW Negotiations

GM Sues Fiat Chrysler, Alleges Racketeering And Corruption In UAW Negotiations

General Motors Company (NYSE: GM) is suing rival Fiat Chrysler Automobiles NV (NYSE: FCAU), alleging Fiat executives bribed union officials to gain an advantage over GM in how its contracts were structured.

The alleged corruption has also been the focus of a federal criminal probe into Fiat Chrysler and the United Auto Workers.

What To Know About The GM-FCA Accusations

Three former FCA executives named as defendants in the racketeering lawsuit filed by GM have already pleaded guilty in the federal criminal case, which has embroiled Fiat and the UAW.

Fiat Chrysler's stock was down sharply in afternoon trading.

The lawsuit filed Wednesday in U.S. District Court in Detroit alleges Fiat Chrysler corrupted the collective bargaining process between the UAW and FCA during talks in 2015 and earlier.

GM alleges Fiat Chrysler was able to secure lower wages than GM and concessions on the use of temporary workers that favored FCA because of the corruption.

The lawsuit alleges Fiat Chrysler was the "clear sponsor" of millions of dollars paid in bribes intended "to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration of labor agreements over time."

FCA Responds

In a statement sent by email to Benzinga, a Fiat spokesperson said the lawsuit was without merit and appears intended to disrupt a proposed merger with Peugeot SA (OTC: PUGOY) parent Groupe PSA, as well as ongoing negotiations with the UAW.

"We are astonished by this filing, both its content and its timing," the FCA statement said. "We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it.”

GM also alleges former FCA CEO Sergio Marchionne was the driving force behind the alleged wrongdoing, though Marchionne died last year.

“We have no present intent to pursue the UAW," GM General Counsel Craig Glidden told The Detroit Free Press. "Our focus is on FCA. We believe the responsibility firmly rests on the orchestrater of the wrongdoing … and we plan to hold FCA responsible.”

GM hasn't named a dollar amount it's seeking in the suit. Glidden told the Free Press the amount would be "substantial."

Fiat Chrysler shares were down 4.11% to $14.95 at publication time. GM shares were also trading lower, down 2.89% to $35.33.

Related Links:

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