Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Commercial parking heating manufacturer charged with price fixing conspiracy, (Jul 26, 2016)

By Linda O’Brien, J.D., LL.M.

A manufacturer of commercial climate control systems has conspired to fix the price of parking heaters sold in the aftermarket for use in commercial vehicles, according to a complaint filed in the federal district court in Kansas City, Missouri (New Prime, Inc. v. Espar, Inc., July 25, 2016).

Espar manufactures independent diesel operated air and coolant heater products for use in commercial vehicles. Parking heaters provide heat to the interior compartment of a commercial vehicle without the operation of the vehicle’s engine. Parking heaters are sold to aftermarket customers in the United States and worldwide. New Prime, Inc. is a trucking company located in Springfield, Missouri.

The complaint states that, in March 2015, as a result of a Department of Justice Antitrust Division investigation, Espar pleaded guilty in a criminal case to a one count felony charge for its participation in a conspiracy to fix parking heater prices for commercial vehicles in violation of the Sherman Act. Espar entered into a plea agreement in which the company stated that it (1) participated in communications, discussions, and meetings to discuss aftermarket prices for parking heaters for commercial vehicles; (2) agreed during those conversations and meetings to set a price floor for parking heater kits sold to aftermarket customers in the United States; (3) agreed to coordinate the timing and amount of price increases for parking heaters; and (4) exchanged information for the purpose of monitoring and enforcing adherence to the agreements.

The global market for parking heaters is highly concentrated, with few main competitors. The boundaries of the market are determined by low cross-elasticity of demand and few potential substitutes. A small increase in price for parking heaters would not cause customers to switch to another product. There are also high barriers to entry to the parking heater industry in the form of complex technology, know-how, infrastructure, and significant costs for marketing, advertising, and dealer training, the complaint alleges.

The complaint also states that the plaintiff did not discover and could not have discovered through reasonable diligence that Espar conspired with other parking heater manufacturers to fix prices until March 2015 when a government investigation into the defendants’ misconduct became public. Espar and its co-conspirators had secret discussions about price and output and did not publicly discuss the nature of the price fixing scheme. Further, the defendants’ purported reasons for the pricing of parking heaters were false and misleading. Due to Espar’s fraudulent concealment, any applicable statute of limitations has been tolled.

The plaintiff asserts claims for conspiracy to restrain trade in violation of Section 1 of the Sherman Act. The action seeks declaratory relief, treble damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 6:16-cv-03305-REL.

Attorneys: Stuart H. King (Hosmer King & Royce, LLC) and Justin A. Collins for New Prime, Inc.

Companies: New Prime, Inc.; Espar Inc.; Espar Products Inc.

News: Antitrust MissouriNews