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From Antitrust Law Daily, July 7, 2014

Indirect purchasers’ price fixing claims against auto parts manufacturers proceed

By Linda O’Brien, J.D., LL.M.

In three consolidated antitrust actions against manufacturers of automotive parts, the federal district court in Detroit ruled that indirect purchasers of automotive instrument panel clustersheater control panels, and fuel senders may proceed with federal antitrust claims against the manufacturers of the components and seek injunctive relief (In re Automotive Parts Antitrust Litigation, July 3, 2014, Battani, M.).

Automobile dealers and consumers who purchased and leased of vehicles, indirect purchaser plaintiffs (IPPs), filed a series of class actions alleging a conspiracy to fix prices automotive parts—including instrument panel clusters (IPCs), heater control panels (HCPs), and fuel senders—by Denso Corporation, Yazaki Corporation, and other companies that manufactured and sold the automotive parts. The defendants moved to dismiss the complaints regarding the IPCs, HCPs, and fuel senders.

Sufficiency. The court found that the IPPs sufficiently alleged the existence of an express agreement to fix prices and allocate customers in a market with conditions ripe for conspiratorial conduct. In February 2010, regulatory authorities in the United States, Europe, and Japan began investigations into a conspiracy involving the manufacturers of automotive parts. Executives from Denso, Yazaki, and other companies pleaded guilty and paid fines relating to their participation in conspiracies to fix prices of various automotive parts. The investigations and guilty pleas created an inference of an expansive industry wide component parts conspiracy, according to the court.

The IPPs also alleged (1) characteristics of the automotive parts markets, such as a highly concentrated market, high barriers to entry, and inelasticity of demand, rendered it conducive to an antitrust conspiracy; (2) the defendant manufacturers’ domination of the automotive parts market; and (3) the defendant manufacturers’ ample opportunities to conspire at industry events under the guise of legitimate business. Further, the plaintiffs’ allegations that the overcharges for the component parts were passed through the distribution chain to consumers were sufficient at the current stage of the litigation to show the existence of an illegal agreement, the court noted.

Standing. Additionally, the IPPs adequately pleaded antitrust standing—each IPP purchased the parts indirectly from one or more of the defendants, the conspiracy impacted the prices IPPs paid for the parts, and the overcharges levied on the direct purchasers were passed through the distribution chain to indirect purchasers. Thus, the court found a reasonable inference that the defendants’ anticompetitive conduct harmed businesses and impacted the prices consumers paid for new vehicles.

Injunctive relief. Finally, in determining that the IPPs established a claim for injunctive relief, the court found that the IPPs alleged sufficient facts to establish a real or immediate threat that they will be harmed from the continuing price fix conspiracy. The plaintiffs adequately alleged that there was some cognizable danger of recurrent violation. The fact that some defendants have pleaded guilty to criminal charges did not prevent further misconduct from occurring in the future, the court concluded.

The cases are Nos. 2:12-cv-002022:12-cv-004022:12-cv-00302.

Attorneys: Adam T. Schnatz (The Miller Law Firm) and Hollis Salzman (Robins Kaplan Miller & Ciresi L.L.P) for the plaintiffs. Brian C. Smith (Wilmer Cutler Pickering Hale and Door LLP) for Denso Corporation. John V. Biernacki (Jones Day) for Yazaki Corporation.

Companies: Denso Corporation; Yazaki Corporation

MainStory: TopStory Antitrust MichiganNews

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