Antitrust Law Daily Wrap Up, ANTITRUST—Cal. App.: Ford Canada faces claims it conspired to curb exports, (Jul 6, 2016)

By Greg Hammond, J.D.

A group of alleged automobile purchasers provided sufficient evidence of meetings, parallel conduct, and economic incentive, as well as possible direct evidence of an agreement, to create a genuine issue of material fact as to whether Ford Motor Co. of Canada and its competitors entered into an illegal conspiracy to restrict the export of lower-priced Canadian vehicles to the United States. The California Court of Appeal in San Francisco consequently reversed the trial court’s grant of summary judgment in favor of Ford Motor Co. of Canada on the purchasers’ California Cartwright Act and Unfair Competition Law claims (In re Automobile Antitrust Cases I and II, July 5, 2016, Reardon, T.).

The automobile purchaser plaintiffs claimed that various automobile manufacturers and dealer associations violated California’s Cartwright Act and Unfair Competition Law by conspiring to keep lower-priced, yet virtually identical, new cars from being exported from Canada to the United States, thereby keeping new vehicle prices in California higher than they would have been in a properly competitive market. The trial court granted summary judgment in favor of Ford Motor Co. (Ford U.S.) and Ford Motor Co. of Canada (Ford Canada), the only two remaining defendants in the case. The plaintiffs appealed, arguing that the evidence presented in this case was more than sufficient to raise a triable issue of material fact as to the existence of an illegal agreement to curb exports.

Ford U.S. The appellate court first affirmed summary judgment with regard to Ford U.S., finding that the evidence was insufficient to raise a triable issue of material fact with regard to Ford U.S.’s participation in the alleged conspiracy to restrict Canadian exports. In particular, the plaintiffs identified a collection of materials that were prepared in advance of a November 2001 meeting between Ford U.S. and Ford Canada on the issue of unauthorized Canadian exports. Although the evidence could show that Ford U.S. had motive to conspire with other automobile manufacturers to restrict Canadian exports, this, without more, was insufficient to prove conspiracy, according to the court. There was nothing in the materials that tended to exclude the possibility that Ford U.S. was acting independently and in its own self-interest, rather than collusively with other alleged co-conspirators.

Ford Canada. There was sufficient evidence, however, that tended to exclude the possibility that Ford Canada acted independently rather than collusively, the appellate court next decided. First, there was significant evidence of telephone and in-person meetings among the manufacturers, aided by the Canadian Automobile Dealers Association (CADA), the express purpose of which was to come up with a joint approach to stamping out the gray market export of Canadian vehicles to the United States. The record also demonstrated that the participants were aware of the legal problems inherent in concerted activity among the manufacturers, but they still met and discussed working together on restricting exports. This evidence, according to the court, could be viewed as tending to exclude the possibility that the manufacturers acted independently rather than collusively with respect to exports.

Moreover, additional evidence was provided to support the existence of an illegal agreement to restrict Canadian exports, including possible direct evidence of an agreement, in the form of an alleged co-conspirator’s conclusion that there was a "general support for the approach" of trying to keep Canadian vehicles in Canada. Evidence of parallel conduct also supported the existence of an illegal agreement, including evidence that all of the manufacturers continued to enforce export restrictions in the wake of a May 2001 CADA meeting, with many "stepping up" their efforts; continued meetings and other communications concerning the export issue during the alleged conspiracy period, demonstrating a high level of interfirm communication; and continued sharing of information throughout the conspiracy period, including know-how with a rival that would reduce export costs or help protect its dealer network, which would not be in Ford’s unilateral self-interest absent receipt of something in return.

Finally, there was also motive evidence in the record, suggesting that the alleged co-conspirators had no economic incentive to maintain or increase export restraints during the timeframe of the alleged conspiracy in the absence of an illegal agreement.

The case is No. A134913.

Attorneys: Theresa Driscoll Moore (Alioto Law Firm) for George Silva. Margaret M. Zwisler (Latham & Watkins) for Ford Motor Co.

Companies: Ford Motor Co.; Ford Motor Co. of Canada Ltd.

Cases: Antitrust CaliforniaNews