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From Antitrust Law Daily, August 16, 2016

Dealer’s price discrimination damages claim against Chrysler proceeds

By Linda O’Brien, J.D., LL.M.

An automobile dealer’s Robinson-Patman Act price discrimination damages claim against automobile manufacturer Chrysler, that were based on the application of a volume sales incentive program provided to a nearby newly established dealership, could proceed, the federal district court in San Jose, California, has decided. Thus, Chrysler’s motion for summary judgment was denied (Mathew Enterprise, Inc. v. Chrysler Group LLC, August 15, 2016, Freeman, B.).

Mathew Enterprise, Inc., operating as Stevens Creek, is a franchise automobile dealer that sells vehicles manufactured by Chrysler, under the Chrysler, Jeep, Dodge, and Ram (CJDR) brands. Chrysler provides dealers with volume growth incentives, which is a subsidy based on the dealer’s past sales history. In 2010, Chrysler established a second Chrysler dealer, San Leandro, in the same geographic area as Mathew. In 2012, a third Chrysler dealer, Fremont, entered the market. Matthew’s sales decreased upon the establishment of the new dealers and it failed to qualify for the sales incentives for several months. Matthew filed suit against Chrysler for violations of the Robinson-Patman Act.

In October 2015, the court granted dismissal of Mathew’s price discrimination claims against Chrysler for a third time, with prejudice. Of the four initial claims, only the damages claim remained. Before the court was Chrysler’s motion for summary judgment regarding the remaining claim.

Competitive injury. The court found that Mathew presented sufficient evidence of competitive injury to survive summary judgment. The court agreed with Chrysler’s contention that Mathew lacked direct evidence of competitive injury through diversion of sales or profits since it was undisputed that Mathews could not identify any customers who did not buy a vehicle from Mathew due to a surrounding dealer’s offer of a lower price.

However, Mathew established competitive injury with evidence of substantial price discrimination between competitors over time. The court noted that it was undisputed that Mathew lost sales for several months and Chrysler offered incentives to favored competing dealers of $700 per vehicle on average. In rejecting Chrysler’s argument that the $700 price differential was de minimis, the court noted that Mathew presented evidence that the CJDR market was highly competitive, minor price differences significantly affected competitors’ profit margins, and Mathew’s price increase relative to its competitors caused its sales to fall. Thus, Mathew was entitled to an inference of competitive injury, in the court’s view.

Antitrust injury. Additionally, Mathew established antitrust injury necessary for its damages claim. According to the court, like competitive injury, antitrust injury could be inferred through circumstantial evidence. Here, Mathew offered evidence that (1) the CJDR market was competitive and price sensitive; (2) surrounding dealers were favored; (3) those dealers used the incentive payments to lower their prices relative to Mathew; and (4) Mathew’s sales fell during the alleged price discrimination period while those of the surrounding dealers rose. This evidence was sufficient to lead a "reasonable trier of fact to infer both injury and causation," the court concluded.

The case is No. 13-cv-04236-BLF.

Attorneys: Ali Kamarei, Eric A. Baker (Boardman & Clark LLP) and Michael James Flanagan (Law Offices of Michael J. Flanagan) for Mathew Enterprise, Inc. Colin Kass (Proskauer Rose LLP) and Robert Edmund Davies (Donahue Davies LLP) for Chrysler Group LLC.

Companies: Mathew Enterprise, Inc.; Chrysler Group LLC

MainStory: TopStory Antitrust CaliforniaNews

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