Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Indirect purchasers’ price fixing claims against auto parts manufacturer survive motion to dismiss, (Feb 10, 2015)

By Linda O’Brien, J.D., LL.M.

In two consolidated antitrust actions against manufacturers of automotive parts, the federal district court in Detroit ruled that indirect purchasers of automotive HID lamp ballasts can proceed with federal antitrust claims against the manufacturers of the components (In re Automotive Parts Antitrust Litigation, February 9, 2015, Battani, M).

Automobile dealers (ADPs) and consumers who purchased and leased vehicles (end purchaser plaintiffs or EPPs) filed a series of class actions alleging a conspiracy to fix prices and allocate the market for automotive parts, including HID lamp ballasts, by the defendant companies that manufactured and sold the automotive parts. HID lamp ballasts limit the amount of electrical current flowing to an HID headlamp.

North American Lighting, Inc. (NAL), a subsidiary of Japanese-based Koito Manufacturing Co., manufactured HID ballasts that were purchased throughout the United States. NAL, one of the defendant manufacturers in the consolidated actions, moved to dismiss the ADPs and EPPs complaints.

The court found that the plaintiffs sufficiently alleged that Koito’s control over NAL created an inference that NAL participated in the price-fixing conspiracy. NAL’s argument that the indirect purchaser plaintiffs’ complaints failed to plausibly connect it to the alleged conspiracy to fix prices of HID ballasts in the United States was rejected. The court noted that, in January 2014, Koito pleaded guilty to criminal charges and agreed to pay a $56.6 million fine in connection with an investigation by the U.S. Department of Justice (DOJ) for its participation in a conspiracy to fix prices of various automotive parts. In the plea agreement, Koito agreed that both it and NAL would fully cooperate with the DOJ in the ongoing investigation.

The plaintiffs alleged that Koito and NAL participated in several meetings to discuss pricing of HID ballasts. Koito, parent company of NAL, pleaded guilty to the same conduct alleged in the plaintiffs’ complaints. Additionally, Koito controlled the sales, policies, and finances of NAL, which sold the price-fixed HID ballasts in the United States under Koito’s direction. The guilty plea required the full cooperation of both Koito and NAL. Therefore, the plaintiffs’ allegations that the parent’s control over the subsidiary was sufficient to create an inference that the subsidiary participated in the conspiracy and were sufficient to state a claim for relief against NAL, the court concluded.

The cases are No. 2:13-cv-01702, 2:13-cv-01703.

Attorneys: Brendan H. Frey (Mantese Honigman Rossman & Williamson, PC) for Martens Cars of Washington, Inc., Landers Auto Group No. 1, Inc., Hammett Motor Co., Inc., Superstore Automotive, Inc., and Lee Pontiac-Oldsmobile-GMC Truck, Inc. A. Paul Victor (Winston & Strawn LLP) for Panasonic Corp., and Panasonic Corp. of North America. Abram J. Ellis (Simpson Thacher & Bartlett LLP) for Stanley Electric U.S. Co., Inc., Stanley Electric Co., Ltd., and II Stanley Co., Inc. Barbara Wootton (Arnold and Porter LLP) for Koito Manufacturing Co., Ltd. Brian M. Moore (Dykema Gossett) for North American Lighting, Inc. Charles B. Sklarsky (Jenner and Block) for Mitsubishi Electric Corp.

Companies: Martens Cars of Washington, Inc.; Landers Auto Group No. 1, Inc.; Hammett Motor Co., Inc.; Superstore Automotive, Inc.; Lee Pontiac-Oldsmobile-GMC Truck, Inc.; Panasonic Corp.; Panasonic Corp. of North America; Stanley Electric U.S. Co., Inc.; Stanley Electric Co., Ltd.; II Stanley Co., Inc.; Koito Manufacturing Co., Ltd.; North American Lighting, Inc.; Mitsubishi Electric Corp.

Cases: Antitrust MichiganNews