Aftermarket Autoparts Manufacturers Lose Bid To Stop Antitrust Class Action

Taiwanese manufacturers of aftermarket auto parts will have to continue litigating an antitrust class action as a result of the denial of their motion to dismiss the second amended complaint in Fond Du Lac Bumper Exchange Inc. v. Jui Li Enterprise Co. Ltd. et al.

Judge Lynn Adelman of the U.S. District Court for the Eastern District of Wisconsin rejected the arguments of defendants Taiwan Kai Yih Industrial Co., Ltd., Gordon Auto Body Parts, Auto Parts Industrial, Ltd., Jui Li Enterprise Company, Ltd., TYG Products, L.P. and Cornerstone Auto Parts, LLC that the plaintiffs failed to properly state a claim.

The defendant companies are not the original manufacturer of the car parts.  Instead, they make or distribute aftermarket, or AM, auto parts, which are less expensive versions of the original.  Consumers often use AM parts for replacements and repairs.

The defendants’ motion to dismiss argued that because the plaintiffs are indirect purchasers, and buy the parts from retailers at the least expensive price, they failed to prove antitrust injury.

Judge Adelman disagreed, noting that “[s]ince AM parts travel down the chain of distribution substantially unchanged, the price charged by the manufacturer will largely determine the price paid by the end user.”  The court also concluded that if the plaintiffs’ allegation that the companies conspired to control 95 percent of the AM parts market is correct, that would increase the likelihood that higher prices would get passed on to the consumer.

The court found that the second amended complaint had sufficient allegations that the companies made an agreement in 2003 to stop competing with each other and to set market prices.

The plaintiffs’ allegations were buttressed by public comments made by the companies’ executives stating the group had created a monopoly with high profits.  For example, an executive from TYG Products said his company “does not compete with its major rivals—all from Taiwan, but has been trying to form a strategic alliance to jointly develop the world’s largest single market.”

The court also refused to dismiss claims under antitrust and consumer protection laws in eight states: Arkansas, Florida, Minnesota, New Mexico, Tennessee, California, Massachusetts and Vermont.