Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Daimler Truck charged with price discrimination between dealer franchises, (Aug 1, 2016)

By Linda O’Brien, J.D., LL.M.

Daimler Trucks North America, a manufacturer of commercial vehicles, engaged in price discrimination and deceptive franchise practices by providing a favored franchisee with more favorable pricing in its bid to sell trucks to the state transportation department than it did to a second franchisee where both franchisees were competing on the same transaction, according to a complaint filed in the federal district court in Hammond, Indiana (Truck City of Gary, Inc. v. Daimler Trucks North America LLC, July 29, 2016).

Truck City of Gary, a franchisee of commercial vehicle manufacturer Daimler Trucks North America, is in the business of selling Freightliner and Western Star trucks, which are made by Daimler.

The complaint states that, in July 2014, Truck City and Daimler executed Freightliner and Western Star dealer sales agreement, which renewed Truck City’s right to sell Freightliner and Western Star trucks. The dealer agreements allegedly contained numerous provisions that were prohibited by Indiana franchise laws, including: (1) releasing Daimler from liability under the Indiana Deceptive Franchise Practices Act; (2) limiting litigation for breach of the dealer agreements; (3) allowing Daimler to modify the agreements without Truck City’s consent; (4) allowing Daimler to compete with Truck City within a reasonable area; (5) requiring Truck City to participate in advertising campaigns; and (6) permitting termination of the franchise without good cause or in bad faith.

Trucks are typically sold through a competitive process where a customer invites price quotations from multiple dealers, some of which may sell the same brand of truck. Following standard industry policy, Daimler is required to equalize pricing offered to competing dealers when multiple Daimler dealers compete on the same transaction, the complaint alleges.

According to the complaint, in 2015, Truck City and competing Daimler dealer Stoops Freightliner each submitted bids to sell 50 trucks to the Indiana Department of Transportation (INDOT)—a large purchaser of heavy duty trucks. In anticipation of the INDOT bid, Truck City devoted a full-time sales person to work on specifications, building a relationship with INDOT, and preparing the bid documentation. Truck City asked for pricing from Daimler in connection with the INDOT bid and relied on that pricing to prepare its bid.

The pricing Daimler provided to Stoops in connection with its INDOT bid was significantly better than the pricing Daimler provided to Truck City. Given Daimler’s more favorable pricing, Stoops was awarded the INDOT bid in the first round and INDOT elected to forego the negotiated portion of the bid process. Truck City claims that Daimler conceded that it provided Stoops more favorable pricing and did not follow its policy of equalizing concessions between dealers bidding on the same transaction. As a result of Daimler’s price discrimination, Truck City suffered lost profits on the sale of the trucks, lost service revenue, and a lost opportunity to sell additional trucks to INDOT.

The plaintiff asserts claims for violations of the Robinson Patman Act, Automobile Dealers Day in Court Act, and Indiana Deceptive Franchise Practices Act. The action seeks injunctive relief, damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 2:16-cv-00348.

Attorneys: Robert D. MacGill, Jessica M. Lindemann, and Justin D. Rumer (Barnes & Thornburg LLP) for Truck City of Gary, Inc.

Companies: Truck City of Gary, Inc.; Daimler Trucks North America LLC

News: Antitrust FranchisingDistribution IndianaNews