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Detroit Diesel Corp., a leading manufacturer of truck engines, was hit with a pair of class action antitrust suits in U.S. District Court in Philadelphia brought by truck dealers who claim the company orchestrated an illegal group boycott and price-fixing scheme after it became a subsidiary of DaimlerChrysler. Attorneys Wayne A. Mack, J. Manly Parks and Bruce Hanson filed the suits on behalf of classes that consist of hundreds of International and Volvo truck dealers. The cases, Cumberland Truck Equipment Co. v. Detroit Diesel and Diamond International Trucks Inc. v. Detroit Diesel, were assigned to U.S. District Judge Berle M. Schiller. In addition to Detroit Diesel, the suits name 17 of its distributors as defendants. According to the complaints, Detroit Diesel and its independent distributors engaged in a group boycott of truck dealers not affiliated with DaimlerChrysler by terminating those dealers’ rights to perform major warranty repairs on Detroit Diesel engines in trucks that they had sold. At the same time, the suits allege, Detroit Diesel and its distributors also agreed to an across-the-board increase on the prices the terminated dealers paid for Detroit Diesel parts. As a result, the suits allege, the dealers lost their ability to perform engine-overhaul warranty work on Detroit Diesel engines in trucks they had sold, and were forced to pay higher prices for engine parts than truck dealers whose brands are affiliated with DaimlerChrysler. The suits allege that the group boycott and price-fixing schemes were designed to restrict the ability of International and Volvo truck dealers to compete for engine repairs and truck sales. A second motive of the schemes, the suits allege, was to force International and Volvo to enter into long-term supply contracts with Detroit Diesel to install its engines in those manufacturers’ new trucks. A spokesman for Detroit Diesel did not return a phone call seeking comment on the suits. According to the suits, DaimlerChrysler acquired Detroit Diesel in October 2000. DaimlerChrysler also owns three truck manufacturers — Freightliner, Western Star Trucks and Sterling Trucks. After Detroit Diesel was acquired, Volvo and International announced that they would no longer install Detroit Diesel engines in their trucks because it was affiliated with three of their major competitors. The suits say that the plaintiffs — a class of Volvo and International dealers — “had no control over the decision by these respective manufacturers to stop purchasing and installing Detroit Diesel engines.” But when Detroit Diesel and its distributors retaliated, the suits allege, it was the dealers who suffered. The suits allege that Detroit Diesel and its distributors “entered into a conspiracy to boycott plaintiffs … and to raise the prices the distributors charged plaintiffs … for Detroit Diesel parts to non-competitive levels so as to eliminate competition between plaintiffs … and Freightliner, Western Star and Sterling dealers.” The plaintiffs claim the conspiracy was “orchestrated and enabled” by Detroit Diesel, and that all of its distributors agreed that they would “sever their existing business relationships” with the plaintiffs. The plaintiffs also claim they were stripped of the authorization to perform maintenance on Detroit Diesel engines. The suits also allege that the distributors jointly agreed not to extend any discounts to the plaintiffs, and to “substantially raise” the prices they charged the plaintiffs for Detroit Diesel parts. The price increases were so steep, the suits allege, that it became “impossible for plaintiffs … to service their customers.” After the price increases took effect, the suits allege, the plaintiffs were being charged 35 percent more than competing Freightliner, Western Star or Sterling dealers for Detroit Diesel parts. According to the suits, Detroit Diesel not only orchestrated the price-fixing conspiracy, but also “engaged in coercive tactics to make sure that the distributors adhered to the price schedule and monitored the distributors’ compliance.” The plaintiffs complain that the alleged conspiracy has irreparably harmed their businesses because they have sold or leased to their customers many trucks with Detroit Diesel engines that are still in service and which will remain in service for an extended period of time. “Owners of heavy duty trucks with Detroit Diesel engines frequently need to purchase parts and repairs for the Detroit Diesel engines in such trucks at the same time that they purchase parts and repairs for the chassis and/or non-engine components in such trucks,” the suit says. “In order to place the truck back in operation as quickly as possible it is not feasible for the owner to take the truck to one seller for parts and repair of the Detroit Diesel engine and to another seller for parts and repair of the chassis and/or non-engine component.” Owners of trucks with Detroit Diesel engines are “locked-in” to having the repairs performed by authorized dealers or distributors, the suit says, “and there are no reasonable substitutes for the same since the terms of the warranty require that the repairs be performed by an authorized dealer or distributor.”

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