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From Antitrust Law Daily, September 26, 2014

Indirect purchasers’ price fixing claims against auto parts manufacturers may proceed

By Linda O’Brien, J.D., LL.M.

In two consolidated antitrust actions against manufacturers of automotive parts, the federal district court in Detroit ruled that indirect purchasers of automotive bearings and occupant safety restraint systems can proceed with federal antitrust claims against the manufacturers of the components (In re Automotive Antitrust Litigation, September 25, 2014, Battani, M).

Automobile dealers (automobile dealer plaintiffs or ADPs) and consumers who purchased and leased of vehicles (end purchaser plaintiffs or EPPs) filed a series of class actions alleging a conspiracy to fix prices and allocate the market for automotive parts, including bearings and occupant safety restraint systems (OSS), by the defendant companies, which manufactured and sold the automotive parts. The defendants moved to dismiss the complaints on the grounds that the allegations did not support the existence of a global conspiracy.

Sufficiency. The court found that the plaintiffs sufficiently alleged the existence of an express agreement to fix prices and allocate customers in a market with conditions ripe for conspiratorial conduct. Regulatory authorities in the United States, Canada, Europe, Japan, Australia, Singapore, and Korea coordinated global investigations into a conspiracy involving the manufacturers of automotive parts. Executives from JTEKT Corporation, NSK, Ltd., and TRW Deutschland pleaded guilty and paid fines relating to their participation in conspiracies to fix prices of various automotive parts. The investigations and guilty pleas created a reasonable expectation that discovery would reveal evidence of an illegal agreement, according to the court.

The plaintiffs also alleged that (1) market structure, such as a highly concentrated market and high barriers to entry, rendered it conducive to price fixing and market allocation; (2) the defendant manufacturers dominated the automotive parts market; and (3) the defendant manufacturers had ample opportunities to conspire at industry events. Thus, the plaintiffs’ allegations about the market conditions created an inference that an antitrust conspiracy flourished for the relevant years.

Standing. To demonstrate the constitutional requirement for standing, a plaintiff must allege an injury that is (a) concrete and particularized and (b) actual or imminent. Because the ADPs and EPPS were indirect purchasers, their complaints also must have included (1) that the defendants overcharged direct purchasers and (2) some or all of the overcharge was passed on to them in the distribution chain. The ADPs identified the brands of vehicles they sold, alleged that the manufacturer for each brand was supplied by one or more of the defendants, and detailed the physical chain of distribution. The EPPs alleged that they purchased indirectly from one or more of the defendants during the relevant time period. The plaintiffs also alleged that the defendants caused them economic injury, since the overcharges affected the price of vehicles containing the component parts as well as the cost of replacement parts. These allegations were sufficient to satisfy the plaintiffs’ pleading burden, the court determined.

Statute of limitations. The plaintiffs sufficiently demonstrated wrongful concealment to toll the statute of limitations, according to the court. The plaintiffs alleged that they did not discover sufficient facts until government investigations into automotive part price fixing became public. The plaintiffs also contended that the doctrine of fraudulent concealment applied, since the defendants met in secret and used coding systems to hide the identity of producers of documents and spreadsheets.

State antitrust claims. Finally, the ADPs sufficiently alleged an antitrust injury to establish antitrust standing as component parts purchasers. Specifically, the plaintiffs asserted that the markets for the automotive component parts and vehicles were inextricably intertwined because the markets for the parts existed to serve the vehicle market. Additionally, the parts remained identifiable physical products which could be traced through the product distribution chain. Since the plaintiffs showed a causal connection, directness of the injury, and low risk of duplicative recovery, the court declined to dismiss most of the ADP’s state antitrust claims. However, the ADP’s antitrust claims under Illinois law were dismissed because state law prohibited an indirect purchaser plaintiff from maintaining an antitrust claim as a class action.

The cases are No. 2:12-cv-005022:12-cv-00602.

Attorneys: Brendan H. Frey (Mantese Honigman Rossman & Williamson, PC) for Martens Cars of Washington, Inc., Landers Auto Group No. 1, Inc., Hammett Motor Company, Inc., Lee Pontiac-Oldsmobile-GMC Truck, Inc., and Westfield Dodge City, Inc. Craig D. Bachman (Lane Powell PC) for Nachi-Fujikoshi Corp. Brian M. Akkashian (Paesano Akkashian, PC) for JTEKT Corp. David A. Ettinger (Honigman, Miller, Schwartz and Cohn LLP) for NSK, Ltd., and NSK Americas, Inc. Eric J. Mahr (Wilmer Cutler Pickering Hale and Dorr LLP) for Schaeffler AG. Brian M. Moore (Dykema Gossett) for AB SKF, and SKF United States of America Inc. Fred K. Herrmann (Kerr, Russell and Weber, PLC) for NTN Corp., and NTN United States of America Corp. Alison R. Welcher (Sherman & Sterling LLP) for Koyo Corporation of United States of America, and JTEKT North America Corp. Richard D. Bisio (Kemp Klein Law Firm) for Nachi America Inc. Meredith Jones Kingsley (Alston and Bird LLP) for Autoliv, Inc., Autoliv ASP, Inc., Autoliv B.V. & Co. KG., Autoliv, Inc., Autoliv Japan, Ltd., and Autoliv North America, Inc. Robert J. Wierenga (Schiff Hardin LLP) for Takata Corp., TK Holdings, Inc., Tokai Rika Co., Ltd., and TRW Deutschland Holding GmbH. David F. DuMouchel (Butzel Long) for TRAM, Inc. Benjamin W. Jeffers (Dykema Gossett) for TRW Automotive Holdings Corp.

Companies: Martens Cars of Washington, Inc.; Landers Auto Group No. 1, Inc.; Hammett Motor Company, Inc.; Lee Pontiac-Oldsmobile-GMC Truck, Inc.; Westfield Dodge City, Inc.; Nachi-Fujikoshi Corp.; JTEKT Corp.; NSK, Ltd.; Schaeffler AG; AB SKF; SKF United States of America Inc.; NTN Corp.; NTN United States of America Corp.; Koyo Corporation of United States of America; JTEKT North America Corp.; Nachi America Inc.; NSK Americas, Inc.; Schaeffler Group United States of America Inc.; Autoliv, Inc.; Autoliv ASP, Inc.; Autoliv B.V. & Co. KG.; Autoliv, Inc.; Autoliv Japan, Ltd.; Autoliv North America, Inc.; Takata Corp.; TK Holdings, Inc.; Tokai Rika Co., Ltd.; TRW Deutschland Holding GmbH; TRAM, Inc.; TRW Automotive Holdings Corp.

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