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General Motors' world headquarters. Photo: Paul Hennessy/SOPA Images/LightRocket via Getty Images

General Motors filed a lawsuit on Wednesday against Fiat Chrysler Automobiles, alleging its competitor was involved in racketeering by paying millions of dollars in bribes to corrupt the bargaining process with the United Auto Workers union, likely costing GM billions of dollars.

The big picture: The suit, filed in U.S. District Court in Detroit, aligns with the ongoing federal probe into corruption among some of UAW's top people and FCA's involvement. GM's accusation also comes as FCA and UAW are negotiating a contract fresh off a six-week strike at GM. Meanwhile, FCA is working on a planned merger with French automaker PSA.

The state of play: GM is alleging that former FCA CEO Sergio Marchionne — who was historically revered for his leadership in the auto industry — was a "principal figure in the conspiracy." Marchionne died in 2018.

  • On a press call with GM General Counsel Craig Glidden, the company referred to a “pattern of racketeering” by FCA between 2009 and 2015, which resulted in GM paying higher wages than FCA. It also allowed FCA to use more temporary workers and lower-paid second-tier workers than GM.
  • “As part of this bribery scheme, and to lock in the competitive efficacy of the purchased benefits, concessions and advantages for FCA, GM was denied similar union commitments and support,” the lawsuit states.
  • It goes on to claims that "after a failed bid to take over GM in 2015, FCA corrupted the collective bargaining process by structuring terms through bribed UAW officials that 'forced unanticipated costs on GM,'" Reuters reports.
  • The company won't know the extent of the damage until the discovery process is completed, but because the alleged scheme went on for years, the damages are expected to be "substantial."
  • The company clarified the lawsuit has nothing to do with the merger of PSA and FCA, and GM does not intend to file suit against UAW, whose acting President Rory Gamble recently announced ethics reform measures in the wake of the scandal.

What they're saying:

Glidden: “This lawsuit is intended to hold FCA accountable for the harm its actions have caused our company and to ensure a level playing field going forward."

Fiat Chrysler Automobiles: "We are astonished by this filing, both its content and its timing. We can only assume this was intended to disrupt our proposed merger with PSA as well as our negotiations with the UAW.  We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it."

Kristin Dziczek, vice president for the Center for Automotive Research: "This GM RICO case against FCA is unprecedented. Pattern bargaining conveys 'first-mover advantages' to the lead company where they can craft an agreement that is advantageous to them but more difficult for one of their competitors. ... The GM RICO case alleges that FCA went beyond traditional first-mover advantages and that it was enabled by the bribery and corruption that has already been proven in the government’s case."

GM said all damages collected "will be invested in the U.S. to benefit our employees and grow jobs."

Read the complaint:

Go deeper: UAW strike is a $3 billion hit to GM's 2019 earnings

Go deeper

Updated 3 hours ago - Science

Nor'easter slams East Coast with flooding rain and powerful winds

A residential area in Middlesex County as floodwater from the nor'easter covers streets in New Jersey on Tuesday. Photo: Tayfun Coskun/Anadolu Agency via Getty Images

A monster storm was slamming the Northeast with record rainfall and powerful winds over Tuesday night — causing flash flooding that resulted in people having to be rescued in New Jersey and New York roads to close.

Threat level: All of southern New England westward to New York City and northern New Jersey was under the threat of flash flooding and coastal flooding from the nor'easter through Tuesday night into early Wednesday, per the National Weather Service.

3 hours ago - World

Blinken speaks with Sudan prime minister after his release

Sudan's Prime Minister Abdallah Hamdok. Photo: Ebrahim Hamid/AFP via Getty Images

Secretary of State Tony Blinken spoke on the phone on Tuesday evening with Sudan’s Prime Minister Abdalla Hamdok after the military released him from custody.

Why it matters: Hamdok’s release was a result of pressure on Sudan’s military leader General Abdul Fattah al-Burhan from the U.S. and other countries but also from the different political parties in Sudan and massive protests in the streets.

Updated 6 hours ago - World

Brazil senators vote to recommend criminal charges for Bolsonaro

Brazilian senators vote on probe into President Bolsonaro's handling of pandemic. Photo: Gustavo Minas/Bloomberg via Getty Images

A Brazilian Senate committee Tuesday voted to approve a report recommending President Jair Bolsonaro be charged with a raft of criminal indictments, including crimes against humanity over his response to the COVID-19 pandemic, per AP.

Why it matters: Bolsonaro has become the face of a right-wing approach to the pandemic that includes repudiating vaccines and masks and resisting lockdowns and other mitigation measures. The Senate report holds him personally responsible for half of the country's 600,000 deaths.