Antitrust Law Daily Wrap Up, ANTITRUST—DDel: Purchasers Adequately Allege Conspiracy Claims Against Truck Makers, Truck Transmission Maker, (Oct 17, 2012)

By Jeffrey May, J.D.

The federal district court in Delaware has refused to dismiss an action brought on behalf of a proposed class of purchasers of Class 8 trucks, such as cement trucks, dump trucks, and long-distance freighters, alleging violations of 18 state antitrust laws by truck manufacturers and Eaton Corporation—the dominant American manufacturer of Class 8 transmissions. The court rejected the defendants’ assertions that the purchasers failed to allege antitrust injury or a conspiracy (Avenarius v. Eaton Corp., October 16, 2012, Robinson, S.).

The truck purchasers alleged an antitrust injury as consumers who paid inflated prices. They were indirect purchasers of Class 8 transmissions. They asserted that, as a result of the conspiracy between Eaton and the truck makers, they paid higher prices for Class 8 transmissions than they would have had to pay if no conspiracy had existed.

The purchasers alleged a hub-and-spoke conspiracy, in which Eaton individually agreed to work with each truck manufacturer and the manufacturers in turn agreed to work together. The court ruled that sufficient parallel conduct and plus factors had been set forth to survive a motion to dismiss.

One recognized, and important, plus factor was parallel action that was contrary to self interest, the court explained. The complaint alleged that Eaton and each manufacturer negotiated and put into place similar long term agreements that provided for lucrative rebates in exchange for meeting shared penetration goals; the agreements also contained other provisions that minimized a competing transmission maker’s market share.

According to the complaining purchasers, the truck manufacturers’ parallel action essentially resulted in the installation of Eaton as a monopolist in their supply chain and the elimination of a supplier with desirable products. This would have been contrary to their self interest. Although the truck manufacturers contended that it would not make economic sense for them to install a monopolist in the supply chain, they might have benefitted economically, in the form of rebates, making the conduct economically practicable at least in the short term, according to the court.

Thus, the court denied the defendants’ motion to dismiss with respect to the state antitrust claims. However, the purchasers’ “boilerplate consumer protection allegations,” which “contain[ed] essentially identical allegations, save for citations to state statutes,” and unjust enrichment claims were dismissed with leave to amend.

The case is 11-09-SLR.

Ian Connor Bifferato and Kevin G. Collins (Bifferato LLC) for plaintiffs. Donald E. Reid (Morris Nichols, Arsht & Tunnell) for Defendant Eaton Corp.

Cases: Antitrust DelawareNews