Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Commercial parking heating manufacturer charged with price fixing conspiracy, (Mar 17, 2015)

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 Brooklyn, New York (Triple Cities Acquisition, LLC v. Espar, Inc., March 16, 2015).

Espar manufactures independent and compact fuel operated air and coolant heater products for use in commercial vehicles and is one of the largest suppliers of parking heaters in North America. Parking heaters provide heat to the cabin of a commercial vehicle without the need for the driver to remain idle in the vehicle for rest breaks or other purposes. Parking heaters are sold by manufacturers through distributors, dealers and to original equipment manufacturers.

Triple Cities Acquisition is a parts supplier to the trucking industry and also offers repair services and sales of new and used vehicles.

The complaint states that, in January 2015, the Department of Justice Antitrust Division began investigating unlawful and anticompetitive conduct in the parking heater industry. As a result of the investigation, a criminal case was brought in the Eastern District of New York. In March 2015, Espar pleaded guilty 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.

According to the complaint, 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. Espar also agreed to pay a criminal fine of $14,970,000. Sentencing is scheduled for June 5.

There are three companies that dominate the market for heating systems: Espar, Webasto Products North America, and Marine Canada Acquisition Inc. The global market for parking heaters is highly concentrated, with Webasto alone accounting for 75 percent of the global parking heater market. Parking heaters allegedly have few substitutes since alternative technologies cost substantially more and are more complex to install. There are also high barriers to entry to the parking heater industry in the form of technology, manufacturing expertise, and access to distribution channels, 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 February 2015, when a government investigation into the defendants’ misconduct was publicly revealed. Espar and its co-conspirators allegedly employed acts and techniques that were calculated to conceal the existence of the unlawful conduct, including clandestine meetings at which information was exchanged. Due to Espar’s fraudulent concealment, any applicable statute of limitations has been tolled.

The plaintiff asserts claims for unlawful restraint of trade in violation of the Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorney fees, and any other just and proper relief.

In a related action, Espar participated in a conspiracy to suppress competition for and fix prices of parking heaters for commercial vehicles sold to aftermarket customers in the United States, according to a complaint filed by a freight shipping and trucking company and a truck driver in the federal district court in Brooklyn, New York (Raccoon Valley Transport, Inc. v. Espar, Inc., March 16, 2015). As a result of the conspiracy, purchasers paid more for parking heaters than they would have absent the price fixing conspiracy, the complaint charges.

The cases are Nos. 1:15-cv-01343 and 1:15-cv-01338.

Attorneys: Brent W. Landau, Michael D. Hausfeld, and Bonny E. Sweeney (Hausfeld LLP) and Arthur N. Bailey for Triple Cities Acquisition, LLC. Jason Zweig, Steve W. Berman, and Elizabeth A. Fegan (Hagens Berman Sobol Shapiro LLP), J. Barton Goplerud (Hudson Mallaney Shindler & Anderson PC), and David Freydin (Law Offices of David Freydin Ltd.) for Raccoon Valley Transport, Inc. and Audrius Labaciauskas.

Companies: Triple Cities Acquisition, LLC; Raccoon Valley Transport, Inc.; Espar Inc.; Espar Products Inc.

News: Antitrust NewYorkNews