Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Japanese bearings maker, U.S. subsidiary remain in price fixing suit, (Aug 27, 2014)

By Jeffrey May, J.D.

Japanese automotive bearings maker NTN Corporation and its U.S. subsidiary, NTN USA Corporation (NTN USA), were not entitled to dismissal of price fixing claims brought by direct purchasers of bearings, as well as indirect purchasers (automobile dealerships and consumers), the federal district court in Detroit has decided. The court concluded that the allegations were sufficient to state a claim against NTN for its involvement in a price fixing conspiracy directly aimed at the U.S. automotive industry and to support an inference that NTN USA participated in the conspiracy under the direction of NTN (In re Automotive Parts Antitrust Litigation, August 26, 2014, Battani, M.).

The plaintiffs seek damages and other relief from NTN, NTN USA, and additional defendants based on an alleged worldwide conspiracy to fix the prices of automotive bearings sold in the United States. Bearings are defined in the plaintiffs’ complaints as “friction-reducing devices that allow one moving part to glide past another moving part” and are used in the manufacture of automobiles.

The existence of foreign and domestic investigations and guilty pleas of co-conspirators rendered the plaintiffs’ claims of a conspiracy directed at the United States plausible, the court decided. NTN had admitted to participating in a conspiracy to fix the price of bearings in Japan in a Japan Fair Trade Commission (JFTC) probe. The JFTC fined NTN 7.2 billion yen, the largest fine amongst the conspirators, the court noted. Moreover, several of NTN's alleged coconspirators, major participants in the international bearings market, had pleaded guilty to price fixing or were under investigation in the United States, Europe, Australia, Canada, Korea, and Japan.

Alter-ego theory of liability. The plaintiffs’ allegations were sufficient to state a claim against NTN USA under an alter-ego theory of liability. It was plausible that NTN USA sold price-fixed bearings under the direction and control of its parent, NTN, according to the court.

NTN USA contended that “the fact that no NTN company has pled guilty or been charged in the United States after [receiving a DOJ subpoena two years ago] can only weaken, not support, Plaintiffs’ claims.” However, the actions of the Justice Department did not operate to limit the scope of the alleged conspiracy, in the court's view. The investigation was ongoing, and there were several factors, including government resources and strategy, which affected such decisions.

Foreign Trade Antitrust Improvements Act. Lastly, the court rejected the NTN defendants’ contention that the plaintiffs raised a new theory of global United States antitrust jurisdiction prohibited by the Foreign Trade Antitrust Improvements Act. The conduct at issue in the case was not the type of conduct Congress sought to exclude from the Sherman Act’s reach, the court explained.

This is Case 2:12-cv-00500-MOB-MKM (Master File No. 12-md-02311).

Attorneys: Brent W. Johnson (Cohen Milstein Sellers & Toll PLLC) and Solomon B. Cera (Gold Bennett Cera & Sidenar LLP) for McGuire Bearing Co. Darryl Bressack (Fink + Associates Law), Douglas A. Abrahams (Kohn, Swift and Graf, PC), and Eugene A. Spector (Spector Rosemam Kodroff & Willis, PC) for SPS Spindle Parts and Service, LLC. Brendan H. Frey (Mantese Honigman Rossman & Williamson, PC) for Martens Cars of Washington, Inc., Landers Auto Group No. 1, Inc., and Hammett Motor Co., Inc. A. Paul Victor (Winston & Strawn LLP) for NTN Corp. and NTN USA Corp.

Companies: NTN Corp.; NTN USA Corp.

Cases: Antitrust MichiganNews