Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Automobile dealers allege conspiracy to fix prices and rig bids for automotive lamps, (Jul 11, 2013)

By Tobias J. Gillett, J.D., LL.M.

Automobile dealers have filed a complaint in the federal district court in Detroit on behalf of themselves and other indirect purchasers charging that manufacturers of automotive lamps conspired to rig bids and fix prices for the lamps, in violation of the Sherman Act and state antitrust and consumer protection statutes (Martens Cars of Washington, Inc. v. Koito Manufacturing Co., Ltd., July 9, 2013).

The automobile dealers allege that manufacturers of automotive lamps for vehicles, such as headlamps, rear combination lamps, stop lamps, turn signal lamps, and backup lamps, conspired to fix the prices of the lamps and to rig bids submitted to automobile manufacturers. The automobile dealers purchase the lamps indirectly when buying new vehicles or repairing damaged vehicles.

The complaint notes that the Japanese Fair Trade Commission (JFTC) has been conducting an investigation of the automotive lamps market since at least March 2012, and that U.S. and European Union antitrust authorities have been conducting a broad investigation of the automotive parts industry. The complaint asserts that the JFTC has levied a $36 million fine against lamp manufacturer Koito Manufacturing Co., Ltd. and a $13.1 million fine against manufacturer Ichikoh Industries, Ltd., as well as issued cease and desist orders against them. The JFTC found manufacturer Stanley Electric Co., Ltd. also violated antitrust laws, but did not impose a cease and desist order on it.

According to the complaint, when purchasing automotive lamps automobile original equipment manufacturers (OEMs) issue requests for quotations (RFQs) to automotive parts suppliers, and the suppliers submit bids in response, with the winning bidder usually awarded a contract for four to six years. The lamp manufacturers allegedly colluded on bids submitted to the automobile manufacturers.

The complaint alleges that the structure of the automotive lamp market is conducive to collusion. New entrants to the market would allegedly face barriers to entry from “costly and lengthy start-up costs”; patents owned by the existing lamp manufacturers; and the inability of OEM vehicle manufacturers to change suppliers after a vehicle has been designed to incorporate a particular lamp. Demand is inelastic due to a lack of substitutes for the lamps and the necessity of including them in new vehicles. The manufacturers had “ample opportunities to conspire” at industry events and other meetings.

The conspiracy resulted in higher prices for automotive lamps and vehicles, and for subsequent indirect purchasers of the lamps, according to the complaint. The automobile dealers suffered damages through paying overcharges for lamps and vehicles sold to them by direct purchasers. The dealers contend that the statute of limitations does not bar their claims because they did not and could not have discovered the claims until the JFTC announced its fines in March 2013, at the earliest, and because the manufacturers fraudulently concealed their actions.

The complaint asserts claims for unreasonable restraint of trade in violation of Section 1 of the Sherman Act; for violation of the antitrust statutes of Arizona, California, the District of Columbia, Hawaii, Illinois, Iowa, Kansas, Maine, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, South Dakota, Tennessee, Utah, Vermont, West Virginia, and Wisconsin; for violation of the state consumer protection statutes of Arkansas, California, the District of Columbia, Florida, New Mexico, New York, North Carolina, South Carolina, and Vermont; and for unjust enrichment.

The complaint seeks a declaration that the manufacturers’ conduct violated the Sherman Act and the state laws, damages and treble damages for the violations, restitution and disgorgement of profits, a permanent injunction against similar conduct, pre- and post-judgment interest, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 5:13-cv-12964-JCO-DRG.

Attorneys: Gerard V. Mantese (Mantese Honigman Rossman & Williamson, P.C.) for Martens Cars of Washington, Inc.

Companies: Martens Cars of Washington, Inc.; Kotio Manufacturing Co., Ltd.; Ichikoh Industries, Ltd.; Stanley Electric Co., Ltd.; Mitsuba Corp.

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