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Date: 2015-03-30

Auto Parts Maker SKF Escapes Fla. AG's Price-Fixing Suit

Law360, Los Angeles (March 25, 2015, 8:21 PM ET) -- A federal judge in Michigan on Tuesday dropped Swedish manufacturer AB SKF from an antitrust suit launched by Florida’s attorney general that was added to multidistrict litigation, saying the court wields no jurisdiction over the company because of its scant ties to the United States.

In a related decision also handed down on Tuesday, Eastern District of Michigan Judge Marianne O. Battani ruled Schaeffler USA Group Inc., affiliated with the German Schaeffler AG, must defend itself against the allegations of price collusion.

Judge Battani granted AB SKF’s motion to be dismissed from the suit, reasoning the Florida Office of the Attorney General made “bare allegations” of the Swedish company’s American contacts that don’t satisfy the due process requirements of the Fifth Amendment.

Referring to a July decision in the same court, “The jurisdictional evidence and allegations demonstrated that AB SKF does not manufacture or sell any products in the United States,” Judge Battani wrote in her decision on Tuesday. “In addition, it has no direct contacts with the United States other than through its subsidiary SKF USA.”

Florida Attorney General Pam Bondi sued AB SKF, Schaeffler AG and their U.S. divisions in 2014, alleging the companies and others colluded to artificially inflate the price of ball bearings.

Bondi said that between 2000 and 2011, the prices for ball bearings increased 45 percent despite falling demand in the auto industry. In a competitive market, falling demand would lead companies to decrease prices in order to attract new customers and to ensure their market share, according to the attorney general. Ball bearings are a vital part of many machines, especially automobiles.

The action has become part of multidistrict litigation launched by states across the country involving auto parts pricing.

Like AB SKF, the German parent of Schaeffler USA Group Inc. escaped the litigation because of a lack of jurisdiction. However, the judge did not do the same for its U.S. subsidiary.

Judge Battani denied Schaeffler USA’s motion to dismiss for failure to state a claim. The judge disagreed with the company’s assertion, ruling automobile dealerships and other plaintiffs involved in the multidistrict litigation “provided sufficient allegations for the court to infer a global conspiracy aimed in part at the United States."

“Class plaintiffs ... provided factual allegations that Schaeffler USA met in secret with its co-conspirators at trade shows and directly sold price-fixed bearings in the United States in a market that was ripe for anticompetitive conduct,” Judge Battani said.

Representatives of the Florida Office of the Attorney General, AB SKF and Schaeffler USA Group Inc. did not immediately respond to a request for comment on Tuesday.

Bondi is represented by Timothy Fraser of the Florida Office of the Attorney General.

AB SKF and SKF USA Inc. are represented by Debra H. Dermody and Michelle Mantine of Reed Smith LLP, and Howard B. Iwrey and Brian M. Moore of Dykema Gossett PLLC.

Schaeffler USA Group Inc. are represented by Stacy E. Frazier and Eric J. Mahr of WilmerHale.

The case is In re: Automotive Parts Antitrust Litigation and In re: Bearings, case number 2:12-md-02311, in U.S. District Court for the Eastern District of Michigan.
(Law360)


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