Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Automobile dealers allege conspiracy to fix prices of occupant safety restraint systems, (Jul 9, 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 occupant safety restraint systems for automobiles conspired to fix the prices of the systems, in violation of the Sherman Act and state antitrust and consumer protection statutes (V.I.P. Motor Cars Ltd. v. Autoliv, Inc., July 3, 2013).

The automobile dealers allege that manufacturers of occupant safety restraint systems for automobiles, such as seatbelts, airbags, and steering wheels, conspired to fix the prices of the systems. The automobile dealers purchase occupant safety restraint systems indirectly when buying new vehicles or repairing damaged vehicles.

The complaint notes that competition authorities in the United States and the European Union have been conducting an investigation of the occupant safety restraint system industry, and that two of the manufacturers, Autoliv, Inc. and TRW Deutschland Holding GmbH, have agreed to plead guilty and pay fines for their participation in price fixing conspiracies. The complaint asserts that Autoliv and TRW admitted to conspiring to fix the prices of occupant safety restraint systems in the United States.

According to the complaint, the top three manufacturers of occupant safety restraint systems control almost 75% of the roughly $18.1 billion market for the systems. The complaint alleges that the structure of the market is conducive to collusion. New entrants to the market would allegedly face barriers to entry from “costly and lengthy start-up costs”; the inability of OEM vehicle manufacturers to change suppliers after a vehicle has been designed to incorporate a particular system; research and development costs; and patents owned by current manufacturers. Demand is inelastic due to a lack of substitutes for the systems and the necessity of including them in new vehicles. The market is highly concentrated, and the manufacturers had “ample opportunities to conspire” at industry events and other meetings.

The conspiracy resulted in higher prices for occupant safety restraint systems and vehicles, and in higher prices through each level of vehicle distribution, according to the complaint. The automobile dealers suffered damages through paying overcharges for systems 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 Autoliv’s plea agreement was announced, 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; and for violation of the state consumer protection statutes of Arkansas, California, the District of Columbia, Florida, New Mexico, New York, North Carolina, and South Carolina; 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. 2:13-cv-12921-AJT-DRG.

Attorneys: Gerard V. Mantese (ManteseHonigmanRossman and Williamson, P.C.) for V.I.P. Motor Cars Ltd.

Companies: Autoliv, Inc.; Takata Corp.; TK Holdings, Inc.; Tokai Rika Co., Ltd.; Tram, Inc.; TRW Automotive Holdings Corp.; TRW Deutschland Holding GmbH; V.I.P. Motor Cars Ltd.; Desert European Motorcars, Ltd.; Stranger Investments; John O’Neil Johnson Toyota, LLC; Hartley Buick GMC Truck, Inc.; Lee Oldsmobile-Cadillac, Inc.; Lee Auto Malls-Topsham, Inc.; Landers of Hazelwood, LLC; Cannon Chevrolet-Oldsmobile-Cadillac-Nissan, Inc.; Cannon Nissan of Jackson, LLC; Hudson Charleston Acquisition, LLC; Shearer Automotive Enterprises III, Inc.; Apex Motor Corp.

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