A federal judge has dismissed an antitrust suit challenging Jaguar Land Rover’s ban on overseas resale of vehicles it sells to U.S. customers.
The suit was brought on behalf of U.S. owners of Jaguars and Land Rovers, and asserts that they could resell their vehicles in China or Russia for three or four times their cost here if not for a no-export policy the company imposes on new car buyers. The suit asserts that the vehicles’ manufacturer requires its U.S. dealers to enforce the policy, and dealers that fail to do so are given a reduced allocation of vehicles.
But the complaint fails because the plaintiff did not establish a concerted action by the defendants that produced anti-competitive effects within the relevant product and geographic markets, U.S. District Judge William Martini of the District of New Jersey ruled Monday, dismissing the suit with prejudice.
Demand in China Land Rovers shows no sign of abating, despite soaring prices, the South China Morning Post reported. The publication said that popularity of the company’s vehicles was helped by their exposure in a TV drama, with lines such as, “This is no ordinary jeep. It is called Range Rover. A vehicle specially designed for the British royal family … any courageous man would want a Range Rover.”
Jaguar Land Rover enacted its no-export policy in 2013, and in 2014 and 2015 China loosened restrictions on automobile imports, the suit claims.
The named plaintiff, Brian Baar of San Diego, was required to sign a no-export agreement when he bought his 2015 Range Rover HSE. The agreement subjected him to a penalty or fine if he sold the vehicle within one year of its purchase. Baar said he would purchase more of the company’s vehicles for overseas resale if not for the policy. Baar claimed that the policy’s purpose “is to prevent purchasers from taking advantage of an arbitrage opportunity that exists in foreign countries, such as China, to obtain and maintain higher profits abroad.”
His suit named Jaguar Land Rover North America, based in Mahwah, New Jersey, and its British parent company, Jaguar Land Rover Ltd., as defendants.
Martini said for a violation of Section 1 of the Sherman Act, a plaintiff must prove a concerted action by the defendants, and that the action produced anti-competitive effects within the relevant product and geographic markets. But the judge concluded that the undisputed facts of the case indicate that the antitrust claims fall short because the plaintiff fails to allege an illegal concerted action and fails to identify a cognizable relevant market under the rule of reason.
Baar says the defendants, their dealers, and a third-party consultant that advised Jaguar Land Rover on the policy engaged in an antitrust conspiracy.
But Martini noted that Baar only alleges that the dealers complied with the policy, and does not assert that they actually conspired with the defendants to develop and implement the policy. The complaint made clear that the defendants developed the export ban unilaterally, and required its dealers to enforce it, Martini said.
Department of Justice guidelines on vertical restraints have stated that intrabrand restraints should not be considered agreements to conspire, and manufacturers may unilaterally impose restraints without giving rise to an antitrust action, Martini said. The judge also said that Jaguar Land Rover’s hiring of a consultant to assist in the drafting of the policy does not constitute a concerted action. The defendants “unilaterally decided to implement the policy to preserve their prices in foreign markets,” Martini said.
The judge also found the plaintiff failed to identify the relevant market under the rule of reason. Baar said the relevant market is the U.S. market for exporting Jaguar Land Rover vehicles for resale. That market is “unique” because “consumers recognize Jaguar Land Rover vehicles’ long-standing reputation as dependable, rugged, all-terrain, expeditionary vehicles,” the plaintiff claimed. But Martini said that market definition failed to take into account the many competitors selling luxury SUVs.
“While the court finds it entirely possible that consumers prefer defendants’ products for a variety of reasons, consumer preference does not transform an otherwise dynamic market with dozens of interchangeable and cross-elastic products into a singular market,” Martini said.
Michelle Zolnoski of Motley Rice in New York, representing plaintiff Baar, declined to comment on the ruling. The lawyer for Jaguar Land Rover, Brian Sullivan of Fox Rothschild in Roseland, New Jersey, did not respond to a phone message about the case.