Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Solar panel predatory pricing claims properly dismissed, (Aug 21, 2015)

By Greg Hammond, J.D.

A bankrupt domestic solar panel manufacturer could not persuade the federal district court in Detroit to reconsider its order dismissing predatory pricing claims against Chinese solar panel manufacturers. The court denied the manufacturer’s motion, finding the plaintiff failed to demonstrate a palpable defect in the court’s conclusion that the plaintiff was required to plead a dangerous probability of recoupment (Energy Conversion Devices Liquidation Trust v. Trina Solar Limited, August 20, 2015, Cleland, R.).

Energy Conversion Devices produced flexible, thin-film photovoltaic solar panels from 2003 to 2012. After its revenues dropped in 2010 and 2011, Energy filed for bankruptcy. Energy later filed suit against Chinese solar panel manufacturers Trina Solar Limited, Yingli Green Energy, and Suntech Power Holdings Co., and their U.S. subsidiaries, alleging violations of Section 1of the Sherman Act and the Michigan Antitrust Reform Act (MARA). Specifically, Energy alleged that the defendants, through a leading trade association for alternative energy, agreed to sell solar panels at artificially low and/or below cost prices and simultaneously reduced prices at rates in tandem by approximately 75 percent. As a result, 20 U.S. companies were forced out of the market, and the defendants’ collective market share exceeded 80 percent, the plaintiff charged. The court previously dismissed the complaint, finding that Energy failed to adequately allege antitrust injury caused by predatory pricing because the complaint did not allege that the competitors had a dangerous probability of recouping its investment in below-cost prices. Energy moved for reconsideration.

Energy first argued that recoupment is not required to plead antitrust injury in the instant Section 1 case. The court noted, however, that the Supreme Court’s logic for such a requirement in decisions concerning Section 2 of the Sherman Act applies with equal force to claims brought under Section 1.

The plaintiff additionally claimed that it demonstrated antitrust injury in the form of loss of consumer choice and innovation because, as a result of the defendants’ conduct, at least 12 domestic manufacturers were shut down and ten domestic companies have been forced out of business. However, the court determined that this argument was just another way of claiming that the plaintiffs need not allege recoupment to state a claim of an unlawful predatory pricing scheme in violation of Section 1 of the Sherman Act.

Finally, Energy contended that it alleged a dangerous probability of recoupment, but this argument was rejected because it was substantially similar to arguments addressed by the court in its previous order. The court noted that the complaint does not allege that defendants intend to raise prices to, and sustain prices at, supracompetitive levels sufficient to recoup the losses with interest that were allegedly sustained a s a result of below-cost pricing. Rather, the complaint merely stated that, in light of defendants’ 80 percent market share, the defendants had the ability to raise prices to such a level.

The court concluded that Energy failed to demonstrate a palpable defect in the court’s conclusion that Energy was required to plead a dangerous probability of recoupment in order to state a claim of predatory pricing in violation of Section 1 of the Sherman Act and that Energy failed to do so. The motion for reconsideration was therefore denied.

The case number is 13-14241.

Attorneys: W. Gordon Dobie (Winston & Strawn LLP) for Energy Conversion Devices Liquidation Trust. Daniel Edward Laytin (Kirkland & Ellis LLP) for Trina Solar Ltd. and Trina Solar U.S., Inc. Jonathan C. Sanders (Simpson Thacher & Bartlett LLP) for Yingli Green Energy Holding Company Ltd. and Yingli Green Energy Americas, Inc. Catherine T. Dobrowitsky (Rivenoak Law Group, PC) for Suntech America, Inc.

Companies: Energy Conversion Devices Liquidation Trust; Trina Solar Ltd.; Trina Solar U.S., Inc.; Yingli Green Energy Holding Company Ltd.; Yingli Green Energy Americas, Inc.; Suntech America, Inc.

Cases: Antitrust MichiganNews