Thursday, June 26, 2008

Truck Dealer’s Horizontal, Vertical Price Fixing Claims to Proceed to Jury

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

A heavy truck dealership presented sufficient evidence at trial of a horizontal price fixing agreement between competing dealers and of a vertical price fixing agreement between a heavy truck manufacturer and those dealers to send the matter to a jury, the U.S. Court of Appeals in Philadelphia has ruled.

A trial court's judgment as a matter of law in favor of the defending manufacturer and dealers on the Sherman Act claim was vacated, and that issue was remanded for further proceedings.

Evidence of Conspiracy

The complaining dealership presented direct evidence of "gentlemen's agreements" between dealers banning competition on price. Viewed in the light most favorable to the complaining dealership, the evidence showed a horizontal agreement that was per se illegal, in the court's view.

In addition, the dealership introduced sufficient direct evidence that the manufacturer agreed with the defending dealers to support their anticompetitive agreements by refusing to offer sales assistance to dealers who sought to sell outside the geographic "area of responsibility" designated for them under their dealership agreements with the manufacturer. A jury could rationally conclude that the policy was the result of collaboration between the manufacturer and the dealers.

Price Discrimination

The lower court's rejection of a price discrimination claim was affirmed. The defending manufacturer was not shown to have engaged in price discrimination in violation of the Robinson-Patman Act by allegedly offering the complaining dealership less favorable discounts than were given to other competing dealers, the appellate court also held.

Evidence comparing the average amount of sales assistance offered to the complaining dealer with the average amount offered to other dealers located in the same general geographic area did not prove unlawful discrimination because it did not compare the amount of sales assistance offered to the respective dealers when they actually competed against each other for a sale to the same customer. Merely offering lower prices to a customer did not give rise to a price discrimination claim, the court said.

The Robinson-Patman Act did not apply in a case involving a single sale of a customized good via a competitive bidding process. Although dealers may compete with one another by bidding against each other for the same deal, and the amount of sales assistance manufacturer offered to each dealer may well determine which dealer a customer chooses to accept a bid from, the manufacturer did not sell a truck to the dealer until the customer actually selected a dealer's bid.

The amount of sales assistance it was willing to provide to a particular dealer was part of an offer by the manufacturer to sell, not of a sale itself. Only one sale, not two, actually resulted, the court explained.

The June 17 decision in Toledo Mack Sales & Service, Inc. v. Mack Trucks Inc. appears at 2008-2 Trade Cases ¶76,189.

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