Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Direct purchasers allege price fixing conspiracy among vehicle carriers, (Oct 18, 2013)

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

A direct purchaser of vehicle carrier services has filed a complaint in the federal district court in San Francisco on behalf of itself and a class of such purchasers against providers of those services, alleging that the vehicle carriers engaged in a conspiracy from 2006 to the present to restrict the output of the services, fix, raise, maintain, and/or stabilize their prices, and to allocate markets and customers (Cargo Agents, Inc. v. Nippon Yusen Kabushiki Kaisha, filed October 11, 2013).

According to the complaint, Roll On/Roll Off ships, or vehicle carriers, are ships specifically designed to carry vehicles. Vehicle carrier service providers use the ships to transport all kinds of wheeled cargo to and from major shipping ports.

The complaint alleges that the prices for vehicle carrier services during the relevant period are consistent with collusion, because prices have increased 23 percent from 2006 to 2012, more than the increase in demand, and despite declining demand for vehicles and overcapacity in the supply of vehicle carrier services. Moreover, the vehicle carrier market is allegedly highly concentrated, with defendants NYK Line, Mitsui O.S.K. Lines, “K” Line, EUKOR, Wallenius Wilhelmsen Line, Nissan M.C.C., CSAV, and TOYOFUJI holding over two-thirds of the global market.

Other aspects of the vehicle carrier market also purportedly support the existence of collusion, including the commodity-like nature of the services; the high barriers to entry from multi-million dollar start-up costs; distribution infrastructure; skilled labor and sales force; significant variable costs; high switching costs for shippers; economies of scale possessed by the defendants; demand inelasticity from a lack of substitutes; excess capacity in the market; and opportunities for conspirators to communicate through trade association meetings and vessel sharing agreements.

The complaint notes investigations of the vehicle carrier industry currently being conducted by United States, Canadian, Japanese, and European competition authorities. The Japanese and European authorities have allegedly raided the offices of some of the defendants, while all four authorities have requested information from carrier companies. A grand jury has also been convened in Baltimore to investigate alleged anticompetitive conduct in the vehicle carrier services market.

The defendants’ conduct has allegedly resulted in reduced competition in the market, supra-competitive prices paid by the direct purchasers, and customers and markets allocated among the defendants. According to the complaint, the statute of limitations would not prevent or limit the plaintiffs’ recovery, because they did not have knowledge of the anticompetitive activities prior to the announcement of the global investigation on September 6, 2012, or alternatively because the carriers fraudulently concealed their conduct.

The complaint asserts a claim for violation of Section 1 of the Sherman Act. It seeks a declaration that the defendants violated that law, recovery of damages and treble damages, costs of suit, attorneys’ fees, a permanent injunction, and any other just and proper relief.

The case is No. 1:13-cv-07216-UA.

Attorneys: Gregory K. Arenson (Kaplan Fox & Kilsheimer LLP) for Cargo Agents, Inc.

Companies: Cargo Agents, Inc.; Nippon Yusen Kabushiki Kaisha; NYK Line North America Inc.; Wilh. Wilhelmsen Holding ASA; Wilh. Wilhelmsen ASA; Mitsui O.S.K. Lines, Ltd.; Kawasaki Kisen Kaisha, Ltd.; “K” Line America, Inc.; EUKOR Car Carriers Inc.; Wallenius Welhelmsen Logistics ASA; Wallenius Welhelmsen Logistics Americas LLC; Wallenius Lines AB; Compania Sud Americana de Vapores S.A.; Toyofuji Shipping Co., Ltd.; Nissan Motor Car Carrier Co., Ltd.; CSAV Agency North America, LLC

News: Antitrust NewYorkNews