ford motor company v. fujikura ltd. and fujikura automotive america llc,
DESCRIPTION
Civil suit filed by FORD MOTOR COMPANY in UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION.TRANSCRIPT
*Applications for Admission forthcoming.
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION FORD MOTOR COMPANY,
Plaintiff,
v. FUJIKURA LTD. and FUJIKURA AUTOMOTIVE AMERICA LLC,
Defendants.
Case No. Hon.
/ KASOWITZ, BENSON, TORRES & FRIEDMAN LLP* Hector Torres Harold G. Levison Edward E. McNally Sarah Gibbs Leivick Robert W. Bosslet
1633 Broadway New York, New York 10019 (212) 506-1700 [email protected] [email protected] [email protected] [email protected] [email protected]
KIENBAUM OPPERWALL HARDY & PELTON, P.L.C. Eric J. Pelton (P40635) Theodore R. Opperwall (P31374) Ryan D. Bohannon (P73394)
280 N. Old Woodward Avenue, Ste. 400Birmingham, Michigan 48009 (248) 645-0000 [email protected] [email protected] [email protected]
Attorneys for Plaintiff /
COMPLAINT AND JURY DEMAND
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TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT ............................................................................... 1
JURISDICTION AND VENUE ................................................................................ 3
PARTIES.................................................................................................................... 5
CO-CONSPIRATORS ............................................................................................... 6
FACTUAL BACKGROUND .................................................................................... 7
A. The Wire Harness ............................................................................................ 7
B. Ford’s Purchases of Wire Harnesses ............................................................... 9
C. The Wire Harness Industry Structure is Conducive to Collusion ................. 13
THE CONSPIRACY................................................................................................ 15
A. The Conduct of Fujikura and Its Co-Conspirators ........................................ 15
B. Fujikura Admits to Participating in the Conspiracy ...................................... 18
C. Fujikura’s Co-Conspirators Also Admit to Participating in the Conspiracy ...................................................... 21
1. Yazaki’s Guilty Plea and Other Admissions ............................................ 22
2. Furukawa’s Guilty Plea and Other Admissions ....................................... 24
D. Government Competition Authorities Investigate and Penalize Anti-Competitive Conduct .................................... 26
FRAUDULENT CONCEALMENT ........................................................................ 30
INJURY TO COMPETITION AND DAMAGES .................................................. 34
FIRST CLAIM ......................................................................................................... 34
PRAYER FOR JUDGMENT .................................................................................. 36
JURY TRIAL DEMAND ........................................................................................ 37
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Plaintiff Ford Motor Company (“Ford” or “Plaintiff”), by and through its
attorneys, Kasowitz, Benson, Torres & Friedman LLP, and Kienbaum Opperwall
Hardy & Pelton, P.L.C., for its complaint against defendants Fujikura Ltd. and
Fujikura Automotive America LLC (“Fujikura America,” and collectively with
Fujikura Ltd., “Fujikura” or “Defendants”), upon knowledge as to itself, and
otherwise upon information and belief, alleges as follows:
PRELIMINARY STATEMENT
1. This action arises from a long-running, global conspiracy by Fujikura
and its co-conspirators to rig bids for, and to fix, stabilize, and maintain the prices
of, automotive wire harness systems and related products (“Wire Harnesses”),
from at least as early as January 2000 until at least February 2010 (the
“Conspiracy”). Wire Harnesses, the nerve center of every vehicle, are automotive
electrical distribution systems used to direct and control electronic components,
wiring and circuit boards.
2. In furtherance of the Conspiracy, Fujikura and its co-conspirators –
each automotive parts manufacturers and/or suppliers – colluded in violation of
Section 1 of the Sherman Act, 15 U.S.C. § 1, to suppress and eliminate competition
for automotive Wire Harnesses sold to Ford and other automobile manufacturers.
3. The Conspiracy has been under investigation by international law
enforcement agencies, including the United States Department of Justice (“DOJ”),
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the Australian Competition and Consumer Commission (“Australian Competition
authority”), the Canadian Competition Bureau (“Canadian Competition
authority”), the European Commission (“EC”), the Japan Fair Trade Commission
(“JFTC”), and the Korea Fair Trade Commission.
4. The DOJ has described its investigation into price-fixing in the
automotive products industry as “the largest criminal investigation the Antitrust
Division has ever pursued, both in terms of its scope and the potential volume of
commerce affected by the alleged illegal conduct.”
5. In June 2012, Fujikura Ltd. pled guilty in the United States to
conspiring to rig bids for, and to fix, stabilize, and maintain the prices of, Wire
Harnesses sold to an automobile manufacturer in the United States and elsewhere.
Fujikura Ltd. was fined $20 million. Fujikura’s co-conspirators collectively have
agreed to pay criminal fines of $670 million in the United States because of their
participation in the Conspiracy.
6. In January 2012, the JFTC issued cease and desist orders and fines,
“surcharge payment orders,” against Fujikura Ltd. and its co-conspirators for
conspiring “in procurement of automotive wire harnesses and related products” in
violation of Japan’s antitrust laws. Fujikura Ltd. was ordered to pay a fine of 1.18
billion yen ($15.4 million). Fujikura Ltd. did not contest the fine and paid the
surcharge.
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7. Ford is one of the largest automobile manufacturers in the world.
During the period of the Conspiracy (“Conspiracy Period”), Ford expended in
excess of $10 billion dollars in the direct purchase of Wire Harnesses in the United
States and elsewhere. During the Conspiracy Period – a time of deepening
financial crisis for the United States automobile industry – Fujikura and its co-
conspirators targeted Ford by, among other things: (i) agreeing not to compete for
Ford’s business, (ii) submitting rigged bids for contracts with Ford for the sale of
Wire Harnesses, and (iii) otherwise agreeing and acting in combination to fix,
stabilize, and maintain the prices of Wire Harnesses sold to Ford. Because of the
Conspiracy, Ford was forced to pay substantially higher prices for Wire Harnesses
than it would have paid absent the conspiratorial conduct.
8. Ford brings this action to recover damages, including three times its
actual damages, costs of suit and reasonable attorneys’ fees, resulting from
Defendants’ violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, and to
obtain injunctive relief.
JURISDICTION AND VENUE
9. The Court has subject matter jurisdiction over this action pursuant to
Section 4 of the Clayton Act, 15 U.S.C. § 15(a). The Court also has subject matter
jurisdiction over this action pursuant to 28 U.S.C. §§ 1331, 1337.
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10. Venue is proper in this District under Sections 4 and 12 of the Clayton
Act, 15 U.S.C. §§ 15, 22, and under 28 U.S.C. § 1391(b), (c) and (d), because a
substantial part of the events giving rise to Ford’s claims occurred in this District, a
substantial portion of the affected interstate trade and commerce has been carried
out in this District, and one or more of the Defendants reside, are licensed to do
business, are doing business, had agents, are found, or transact business in this
District.
11. Defendants are subject to the jurisdiction of this Court because of
their nationwide contacts and activities.
12. This Court has personal jurisdiction over each of the Defendants
because each Defendant, either directly or through the ownership and/or control of
its United States subsidiaries: (a) transacted business in the United States,
including in this District; (b) directly or indirectly sold or marketed substantial
quantities of Wire Harnesses throughout the United States, including in this
District; and (c) were engaged in an illegal price-fixing, bid-rigging and allocation
conspiracy that was directed at, and had a direct, substantial, reasonably
foreseeable and intended effect of causing injury to the business or property of
persons and entities residing in, located in, or doing business throughout the United
States, including in this District. Defendants and their co-conspirators also conduct
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business throughout the United States, including in this District, and they
purposefully have availed themselves of the laws of the United States.
13. Fujikura and its co-conspirators engaged in conduct both inside and
outside of the United States that caused direct, substantial and reasonably
foreseeable and intended anti-competitive effects upon interstate commerce within
the United States. Fujikura’s products are sold in the flow of interstate commerce.
PARTIES
14. Plaintiff Ford Motor Company, a Delaware corporation with its
principal place of business in Dearborn, Michigan, is in the business of designing,
manufacturing and distributing vehicles. As one of the world’s largest automotive
manufacturers, Ford expended in excess of $10 billion dollars for the direct
purchase of Wire Harnesses in the United States and elsewhere from Fujikura’s co-
conspirators during the Conspiracy Period for use in Ford vehicles.
15. Defendant Fujikura Ltd. is a Japanese corporation with its principal
place of business at 1-5-1, Kiba, Koto-ku, Tokyo 135-8512, Japan. Fujikura Ltd. –
directly and/or through its subsidiary Fujikura America, which it wholly owned
and/or controlled – manufactured, marketed and/or sold Wire Harnesses that were
purchased throughout the United States, including in this District, and elsewhere,
during the Conspiracy Period.
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16. Defendant Fujikura Automotive America LLC is a Delaware limited
liability company with its principal place of business at 25865 Meadowbrook
Road, Novi, Michigan. Fujikura America is a subsidiary of, and wholly owned
and/or controlled by, its parent Fujikura Ltd. During the Conspiracy Period,
Fujikura America manufactured, marketed and/or sold Wire Harnesses that were
purchased throughout the United States, including in this District through its
location in Novi, Michigan. At all times during the Conspiracy Period, Fujikura
America’s activities in the United States were under the control and direction of its
Japanese parent, Fujikura Ltd.
CO-CONSPIRATORS
17. Various persons, partnerships, sole proprietors, firms and corporations
not named as Defendants in this action have participated as co-conspirators with
Defendants in the offenses alleged in this Complaint, and have performed acts and
made statements in furtherance of the Conspiracy. Discovery may identify
members of the Conspiracy not presently known to Ford. Defendants are jointly
and severally liable for the acts of their co-conspirators.
18. Any allegation in this Complaint concerning any act, deed or
transaction of any corporation or limited liability entity, means that the corporation
or limited liability entity engaged in the act, deed or transaction by or through its
officers, directors, agents, employees or representatives while they were actively
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engaged in the management, direction, control or transaction of the corporation’s
or limited liability entity’s business or affairs.
19. During the Conspiracy, each Defendant acted as the principal of, or
agent for, the other Defendant and/or their co-conspirators with respect to the acts,
violations and common course of conduct alleged with respect to the Conspiracy.
FACTUAL BACKGROUND
A. The Wire Harness
20. Wire Harnesses are analogous to the central nervous system in the
human body, functioning as the main electrical wiring system through which
information, control functions, signals and electrical power are transmitted
throughout a vehicle.
21. A vehicle’s electrical system is powered by, and dependent on, the
battery and alternator, which supply electricity to all of a vehicle’s electrical
components. The alternator supplies power to a vehicle’s accessories – such as the
radio, lights and horn – during normal engine operation. The vehicle’s battery
supplies the initial charge, which allows the vehicle to be started, and the alternator
then supplies a constant electrical feed. The alternator also recharges the battery
during engine operations.
22. Wire Harnesses are networks of wires that carry electricity from
power sources, such as the battery or alternator, to devices that consume electricity
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(e.g., the radio, headlights and dashboard display). Wire Harnesses also transmit
data and information (e.g., automobile speed information from the wheels and
axles to the speedometer) and are essential to operate vehicle system controls (e.g.,
heating, cooling, braking and other systems). Wire Harnesses include color-coded
wires designed to support specific electrical and electronic automotive features.
23. Related Wire Harness products include: automotive electrical wiring,
lead wire assemblies, cable bond, automotive wiring connectors, automotive
wiring terminals, electronic control units, fuse boxes, relay boxes, junction blocks
and power distributors.
24. Wire Harnesses consist of raw, coiled wire, which is cut to specific
lengths. Individual wire circuits are assembled on a jig or table, inserted into
electrical connectors (plastic and metal clips that enable snap connections to the
various electrical components), and wrapped or taped to form Wire Harnesses.
Vehicles typically contain thousands of yards of wires.
25. A vehicle’s wiring system is organized into multiple Wire Harnesses.
Wire Harnesses provide organized connection points for multiple wiring
configurations. As illustrated below, the Wire Harness features wires and cables
bound into a bundle, which provides protection against deterioration or damage
from vibration, abrasions and moisture:
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Photograph of a wire harness
26. Wire Harnesses are purchased and installed by Ford and other
automakers, or “original equipment manufacturers” (“OEMs”), in new vehicles as
part of the automotive manufacturing process.
B. Ford’s Purchases of Wire Harnesses
27. During the Conspiracy Period, Ford entered into contracts with
Defendants’ co-conspirators, including Sumitomo Electric Industries, Ltd.
(“Sumitomo”) and certain of its subsidiaries, and Yazaki Corporation (“Yazaki”)
and certain of its subsidiaries, for the purchase of Wire Harnesses.
28. Ford’s purchases of Wire Harnesses in North America during the
Conspiracy Period were directed by Ford’s purchasing team located in Dearborn,
Michigan.
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29. Ford’s purchasing team negotiated the prices, quantities and
conditions that governed Ford’s purchases of Wire Harnesses to be installed in all
Ford vehicles manufactured in North America.
30. During the Conspiracy Period, Ford’s purchasing team issued requests
for quotations (“RFQs”) to manufacturers of Wire Harnesses, including Fujikura
America and its co-conspirators.
31. An RFQ identifies the specifications of the Wire Harness to be
produced, and requests a proposal from the supplier detailing the supplier’s ability
to manufacture and supply the Wire Harness, including information about cost,
design, engineering and logistics.
32. Ford issued RFQs for Wire Harnesses on either a per-model or per-
platform basis. An automobile model refers to a particular line of vehicles, such as
the Ford Explorer or Ford Focus, which is manufactured by a single automaker.
An automotive platform is a common set of structural, design, engineering and
production parameters, including major components such as the chassis, used for
more than one model. Because of the time necessary for the engineering and
design of Wire Harnesses, Ford generally issued RFQs for the manufacture and
supply of Wire Harnesses years before commencement of the manufacture of the
vehicle model or platform covered by the RFQ.
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33. In response to RFQs, suppliers of Wire Harnesses submitted price
quotations, also known as bids, which would be evaluated by Ford for purposes of
selecting a supplier for the Wire Harnesses for the model or platform at issue.
34. Ford’s sourcing of the Wire Harnesses for its 2013 vehicles built on
the CD4 platform is illustrative of Ford’s sourcing process during the Conspiracy
Period. The 2013 CD4 platform was used for, among others, the Ford Fusion and
Lincoln MKZ models. Ford issued an RFQ for the CD4 Wire Harness in March
2009 (“CD4 RFQ”). After two rounds of bidding that Ford believed at the time
were competitive, the supplier was selected in October 2009, and commercial
production was scheduled to begin in June 2012.
35. To assist in assessing the bids from suppliers, Ford developed a
program which attempted to calculate the expected price of Wire Harnesses based
on, among other things, an estimate of the supplier’s cost of production and a
reasonable profit margin. While Ford would attempt to estimate the cost of
manufacturing and supplying the Wire Harnesses, to a certain extent, Ford was
substantially dependent on its suppliers to provide accurate part, material, labor
and other cost information.
36. Beginning in 2006, in an attempt to increase transparency in the
pricing of Wire Harnesses, Ford developed cost models to be used with individual
suppliers, including Fujikura America. The cost model required the supplier to
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identify the prices proposed by the supplier for each Wire Harness component, and
other related costs such as labor and overhead. This information and data enabled
Ford to compare the supplier’s bids to its internal cost estimates, and to other
suppliers’ bids for purposes of negotiating the Wire Harness price. Many
suppliers, including Fujikura’s co-conspirator, Sumitomo, resisted Ford’s efforts
and refused to consent to the use of a cost model or to provide increased
transparency regarding their input costs and pricing.
37. Even in cases where the supplier furnished the information and data
required by the cost model, Ford’s ability to obtain accurate information about the
supplier’s actual cost of Wire Harnesses was still limited in certain material
respects. Ford remained dependent on supplier-provided data concerning the cost
of Wire Harnesses, particularly with respect to the cost of components that were
purchased by the supplier for use in the Wire Harnesses and not purchased by
Ford, as well as certain internal supplier costs, such as total labor costs and
overhead.
38. In addition, affiliates of Fujikura’s co-conspirators manufacture or
“draw” their own wire, which rendered it difficult for Ford to ascertain the actual
costs to those suppliers of copper wire, one of the major input components in the
manufacture of Wire Harnesses. This lack of transparency provided Fujikura and
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its co-conspirators an opportunity to attribute inflated prices to input costs, and to
conceal their conspiratorial manipulation of prices.
39. During the Conspiracy Period, Ford purchased in excess of $10 billion
dollars of Wire Harnesses in the United States and elsewhere.
C. The Wire Harness Industry Structure is Conducive to Collusion
40. Highly-concentrated markets are susceptible to collusion and other
anti-competitive practices. During the Conspiracy Period, the Wire Harness
market was highly-concentrated – both in the United States and globally – and was
conducive to bid-rigging, allocation and price-fixing agreements.
41. Fujikura and its co-conspirators have dominated the Wire Harness
market throughout the Conspiracy Period. In 2009, during the Conspiracy Period,
the top four automotive Wire Harness suppliers controlled approximately 77% of
the global market, and the top seven controlled approximately 88% of the global
market.
42. The global Wire Harness market in 2010 was $26.9 billion, according
to Research in China, an international market research and market data firm.
43. High barriers to entry in the Wire Harness market exist principally
because of the requirement of large capital investments in plants, machinery and
technical expertise. These barriers to entry facilitated the formation and
maintenance of the Conspiracy.
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44. A new entrant into the Wire Harness market faces a lengthy and costly
start-up process, requiring substantial capital costs associated with manufacturing
plants and equipment, energy, transportation, a distribution infrastructure and
skilled labor. A supplier also must develop the reputation that it has the capability
to produce, over an extended period, the necessary volume of supply, meeting
OEM, regulatory and safety standards for quality and consistency.
45. The Wire Harness market is also characterized by inelastic demand,
which facilitates collusion. “Elasticity” refers to the sensitivity of supply and
demand to changes in price. Demand generally is considered “inelastic” if an
increase in the price of a product results in only a minimal, if any, decline in the
quantity of that product sold. The purchaser of such products typically lacks the
option to purchase alternative, less costly products of similar quality, and is
compelled to continue to purchase the subject product despite a price increase. For
a cartel to profit from raising prices above competitive levels, demand must be
relatively inelastic to price increases. Otherwise, increased prices would result in
declining sales, revenues and profits, as customers purchase substitute products or
decline to buy altogether. Inelastic demand allows suppliers to raise their prices
without triggering customer substitution and lost sales revenue.
46. The demand for Wire Harnesses is inelastic because the product is an
essential vehicle component for OEMs and accounts for a relatively small fraction
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of the total vehicle cost. When Fujikura and its co-conspirators raised Wire
Harness prices far above the competitive level, the demand for vehicles, and hence
the demand for Wire Harnesses, was little affected. The higher prices from
collusion unlawfully increased the profits of Fujikura and its co-conspirators.
Moreover, with inelastic demand, even small reductions in capacity below the level
that would otherwise prevail can result in substantial and sustained price increases.
THE CONSPIRACY
A. The Conduct of Fujikura and Its Co-Conspirators
47. During the Conspiracy Period, Fujikura and its co-conspirators
formed an international cartel to suppress and eliminate competition for Wire
Harnesses by agreeing to: (a) rig bids for Wire Harnesses; (b) allocate customers,
markets, contracts and supply of Wire Harnesses; and (c) fix, stabilize, and/or
maintain the prices of Wire Harnesses.
48. In furtherance of the Conspiracy, Fujikura and its co-conspirators
participated in meetings, conversations and communications in the United States
and abroad to discuss bids and price quotations for Wire Harnesses to be submitted
to Ford, and whether to refrain from soliciting Ford business, or refrain from
seeking to submit or submitting any bids and quotations to Ford.
49. Fujikura and its co-conspirators attended industry events that provided
the opportunity to meet, disguise their improper discussions and perform acts in
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furtherance of the Conspiracy. For example, Fujikura and its co-conspirators
regularly attended the annual North American International Auto Show in Detroit,
Michigan and the Automotive Aftermarket Products Expo in Las Vegas, Nevada.
50. During those and other meetings, conversations and communications,
Fujikura and its co-conspirators agreed to allocate among themselves the supply of
Wire Harnesses sold to Ford and other purchasers on a model-by-model or
platform-by-platform basis.
51. During those meetings, conversations and communications, Fujikura
and its co-conspirators agreed to coordinate price adjustments requested by Ford
and other purchasers.
52. Fujikura and its co-conspirators limited their production capacity for
purposes of restraining competition for the Wire Harness business of Ford and
other purchasers.
53. Fujikura and its co-conspirators held meetings and conversations in
the United States and elsewhere to monitor and police the bids and prices agreed
upon, and other terms of their agreement, pursuant to the Conspiracy.
54. Fujikura and its co-conspirators undertook measures to maintain the
secretive nature of their unlawful conduct, including, but not limited to, using code
names and meeting at changing private residences and remote locations.
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55. Fujikura and its co-conspirators submitted bids, price quotations and
price adjustments to Ford and other purchasers in accordance with their
conspiratorial agreements.
56. As a result of their conspiratorial agreements, Fujikura and its co-
conspirators at times declined to bid, or submitted bids that were deliberately non-
competitive, in response to RFQs received from Ford and other purchasers.
57. The operation and effects of the cartel on Ford is exemplified in the
responses to the CD4 RFQ that Ford issued in March 2009. The CD4, a global
platform, provided an opportunity for the prevailing supplier to supply Wire
Harnesses for Ford vehicles manufactured around the world. This RFQ offered a
substantial and attractive opportunity for Defendants to obtain important Ford
business.
58. During the first round of bidding, Fujikura America submitted a
completely non-competitive bid, which included non-competitive price quotes for
wire and labor. That bid achieved the intended objective of the members of the
cartel -- Fujikura America was not invited to participate in the second round of
bidding.
59. Fujikura’s co-conspirator, Sumitomo Electric Wiring Systems, Inc.
(“Sumitomo Electric Wiring”), a subsidiary of co-conspirator Sumitomo, pursuant
to the agreement among the conspirators, refused to submit any bid. This refusal
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was based on the claim that the company was not interested in rapid growth and in
assuming responsibility for a large volume of Wire Harness business. The
disclosure of the Conspiracy underscores that this claim was pretextual.
60. Because Fujikura and its co-conspirators subverted the CD4 RFQ
bidding process, Ford agreed to pay, has paid, and is continuing to pay an
artificially inflated and non-competitive price for CD4 Wire Harnesses.
61. During the Conspiracy Period, Ford was damaged substantially as a
result of the Conspiracy because it was forced to pay supra-competitive prices for
the Wire Harnesses that Ford purchased from Fujikura’s co-conspirators. This
substantial harm was caused by, among other things, Fujikura and its co-
conspirators’: (a) submission of rigged bids in response to Ford’s RFQs; (b)
allocation of Ford’s Wire Harness business; (c) fixing of prices charged to Ford for
Wire Harnesses; and (d) limitation of the conspirators’ production capacity
resulting from their conspiratorial agreement not to bid on Ford business.
B. Fujikura Admits to Participating in the Conspiracy
62. On June 21, 2012, Fujikura Ltd. pled guilty to a one-count felony
charge for its role in the Conspiracy to rig bids for and to fix, stabilize, and
maintain the prices of, Wire Harnesses sold to an automaker in the United States
and elsewhere. According to the guilty plea, Fujikura Ltd.’s involvement in the
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Conspiracy lasted from at least as early as January 2006 until at least February
2010.
63. In its Plea Agreement, Fujikura Ltd. admitted that, if the United States
had proceeded with its case against Fujikura Ltd. at a trial, the United States would
have presented evidence sufficient to prove:
[4](b) [From at least as early as January 2006 until at least February 2010, Fujikura Ltd.],1 through certain of its employees participated in a conspiracy with other persons and entities engaged in the manufacture and sale of automotive wire harnesses and related products, the primary purpose of which was to rig bids for, and to fix, stabilize, and maintain the prices of, automotive wire harnesses and related products sold to an automobile manufacturer in the United States and elsewhere. In furtherance of the conspiracy, [Fujikura Ltd.], through certain of its employees, engaged in discussions and attended meetings with co-conspirators involved in the manufacture and sale of automotive wire harnesses and related products. During such meetings and conversations, agreements were reached to (a) allocate the supply of automotive wire harnesses and related products sold to an automobile manufacturer on a model-by-model basis, (b) rig bids quoted to an automobile manufacturer for automotive wire harnesses and related products, and to fix, stabilize, and (c) maintain the prices, including coordinating price adjustments requested by an automobile manufacturer, of automotive wire harnesses and related products sold to an automobile manufacturer in the United States and elsewhere.
(c) During the relevant period, automotive wire harnesses and related products sold by one or more of the conspirator firms, and equipment and supplies necessary to the production and distribution of automotive wire harnesses and related products, as well as payments for automotive wire harnesses and related products, traveled in interstate and foreign commerce. The business activities of the defendant and its co-conspirators in connection with the production
1 All emphasis supplied unless otherwise indicated.
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and sale of automotive wire harnesses and related products that were the subject of this conspiracy were within the flow of, and substantially affected, interstate and foreign trade and commerce.
(d) The conspiratorial meetings and conversations described above took place in Japan, and automotive wire harnesses and related products that were the subject of the conspiracy were sold to an automobile manufacturer by [Fujikura Ltd.’s] United States subsidiary [Fujikura America], which is located in the Eastern District of Michigan.
64. Wire Harness “related products” were defined in the Fujikura Plea
Agreement as cable bond, automotive wiring connectors, automotive wiring
terminals and fuse boxes.
65. At the June 21, 2012 hearing during which Fujikura Ltd. pled guilty to
violating the Sherman Act, the authorized representative of Fujikura Ltd. described
the Conspiracy as follows:
During the period of the conspiracy, which is from approximately January 2006 to February 2010, certain employees of the company engaged in discussions and attended meetings with competitor companies involved in the manufacture[] and sale of automotive wire harnesses and related products.
During such meetings and conversations, agreements were reached to A, allocate the supply of automotive wire harnesses and related products sold to an automobile manufacturer on a model by model basis; B, to rig bids quoted to an automobile manufacturer for automotive wire harnesses and related products, and C, to fix, stabilize and to maintain the prices, including coordinating price adjustments requested by an automobile manufacturer of automotive wire harnesses and related products sold to an automobile manufacturer in the United States, and that manufacturer is Subaru of Indiana Automotive, Incorporated.
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During the relevant period, automotive wire harnesses and related products sold by one or more of the conspirator firms and equipment and supplies necessary to the production and distribution of automotive wire harnesses and related products, as well as payments for automotive wire harnesses and related products, traveled [in] interstate and foreign commerce.
The business activities of the company, Fujikura Limited and its co-conspirators in connection with the production and sale of automotive wire harnesses and related products that were the subject of this conspiracy, were within the flow of and substantially affected inte[r]state and foreign trade and commerce.
The meetings and conversations described above took place in Japan, and automotive wire harnesses and related products that were the subject of the conspiracy were sold to an automobile manufacturer in the United States, that is Subaru of Indiana Automotive by the company’s United States subsidiary, which is located within the Eastern District of Michigan.
As an enterprise, Fujikura [Ltd.] employed more than 5,000 individuals during the relevant time period. Fujikura sales of automotive wire harnesses and related products affecting an automobile manufacturer in the United States totaled approximately $32 million during the period of January 2006 to February 2010.
66. Fujikura Ltd. was fined $20 million.
C. Fujikura’s Co-Conspirators Also Admit to Participating in the Conspiracy 67. Fujikura’s co-conspirators, Yazaki and Furukawa Electric Co., Ltd.
(“Furukawa”), and certain of their executives, also have pled guilty or otherwise
admitted their participation in the conspiracy.
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1. Yazaki’s Guilty Plea and Other Admissions
68. On January 30, 2012, Yazaki agreed to plead guilty to three counts of
violating Section 1 of the Sherman Act for its participation in the Conspiracy.
According to the DOJ press release describing the three-count felony charge:
Yazaki engaged in three separate conspiracies: to rig bids for and fix, stabilize and maintain the prices of automotive wire harnesses and related products from 2000 through 2010; to rig bids for and fix, stabilize and maintain the prices of instrument panel clusters from 2002 through 2010; and to fix, stabilize and maintain the prices of fuel senders from 2004 through 2010. All three conspiracies involved products sold to customers in the United States and elsewhere.
As part of its guilty plea, Yazaki agreed to pay a fine of $470 million – the second
largest criminal fine ever imposed for an antitrust violation. Yazaki pled guilty
and was sentenced on March 1, 2012.
69. On March 26, 2012, four Yazaki executives, Tsuneaki Hanamura
(“Hanamura”), Ryoji Kawai (“Kawai”), Shigeru Ogawa (“Ogawa”) and Hisamitsu
Takada (“Takada”) – each of whom held managerial positions at both Yazaki and
Yazaki North America during the Conspiracy Period – pled guilty to violating
United States antitrust law. The DOJ issued four separate one-count felony
charges against Hanamura, Kawai, Ogawa and Takada, alleging that “each
engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices
of automotive wire harnesses and related products sold to customers in the United
States and elsewhere.”
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70. Ogawa and Takada, both of whom served as directors of Yazaki North
America during portions of the Conspiracy Period, were each sentenced to 15
months in prison, and Hanamura and Kawai were each sentenced to two years in
prison. The DOJ stated that “[t]he two-year sentences would be the longest term of
imprisonment imposed on a foreign national voluntarily submitting to U.S.
jurisdiction for a Sherman Act antitrust violation.” Each of the four executives
agreed to pay a $20,000 criminal fine.
71. On September 26, 2012, a fifth Yazaki executive, Kazuhiko
Kashimoto (“Kashimoto”), pled guilty for his role in the Conspiracy. Kashimoto,
who was employed by Yazaki and Yazaki North America as a manager and team
leader during the Conspiracy Period, was sentenced to 14 months in prison and
fined $20,000.
72. On April 18, 2013, Yazaki pled guilty and was fined 30 million
Canadian dollars ($29.2 million) by the Ontario Superior Court of Justice for its
participation in a bid-rigging conspiracy involving the sale of Wire Harnesses in
Canada to be installed in 2005-2006 model year vehicles. According to a press
release issued by the Canadian Competition authority, the fine was “the largest
ever ordered by a court in Canada for a bid-rigging offence.”
73. On July 10, 2013, the European Commission announced that it had
fined Yazaki € 125.3 million ($160.2 million) for Yazaki’s participation in the
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Conspiracy. The EC also fined a Yazaki subsidiary, S-Y Systems Technologies
Europe GmbH (“S-Y Systems”), € 11.1 million ($14.2 million) for its participation
in the Conspiracy.
2. Furukawa’s Guilty Plea and Other Admissions
74. On September 29, 2011, the DOJ announced that Furukawa and three
Furukawa executives agreed to plead guilty to participating in a conspiracy “the
primary purpose of which was to rig bids for, and to fix, stabilize, and maintain the
prices of, automotive wire harnesses and related products sold to automobile
manufacturers in the United States and elsewhere,” in violation of the Sherman
Act. The Furukawa Plea Agreement defined “related products” as automotive
electrical wiring, lead wire assemblies, cable bond, automotive wiring connectors,
automotive wiring terminals, electronic control units, fuse boxes, relay boxes,
junction blocks and power distributors.
75. Furukawa’s involvement in the Conspiracy lasted from at least as
early as January 2000 until at least January 2010. Furukawa agreed to pay a $200
million fine and the three executives agreed to serve prison time in the United
States. Furukawa pled guilty and was sentenced on November 14, 2011.
76. In the September 29, 2011 DOJ press release announcing the
Furukawa guilty plea, Acting Assistant Attorney General Sharis A. Pozen of the
DOJ’s Antitrust Division stated that “[a]s a result of this international price-fixing
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and bid-rigging conspiracy, automobile manufacturers paid noncompetitive and
higher prices for parts in cars sold to U.S. consumers.” According to Pozen, “[t]his
cartel harmed an important industry in our nation’s economy, and the Antitrust
Division with the Federal Bureau of Investigation will continue to work together to
ensure that these kinds of conspiracies are stopped.”
77. In the same September 29, 2011 press release, FBI Special Agent in
Charge Andrew G. Arena stated: “When companies partner to control and price fix
bids or contracts, it undermines the foundation of the United States’ economic
system . . . . The FBI is committed to aggressively pursuing any company
involved in antitrust crimes.”
78. On October 24, 2011, two Furukawa executives pled guilty for their
participation in the Conspiracy: (a) Hirotsugu Nagata, who was employed as Chief
Financial Officer of a U.S. subsidiary of Furukawa from January 2004 to March
2009, was sentenced to 15 months in prison and fined $20,000, and (b) Junichi
Funo, who was employed by Furukawa and a U.S. subsidiary as a sales
representative and manager during the Conspiracy Period, was sentenced to 12
months and one day in prison and fined $20,000.
79. On November 10, 2011, Tetsuya Ukai (“Ukai”) of Furukawa pled
guilty to participating in the Conspiracy. Ukai, who was employed by Furukawa
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as a manager and unit chief during the Conspiracy Period, was sentenced to 18
months in prison and received a $20,000 fine.
80. On April 4, 2013, Furukawa pled guilty and was fined 5 million
Canadian dollars ($4.9 million) by the Ontario Superior Court of Justice for its
participation in an international bid-rigging conspiracy involving the sale of
electrical boxes, including fuse boxes, relay boxes and junction blocks in Canada
from 2000 through 2010.
81. On July 10, 2013, the EC announced that it had fined Furukawa € 4
million ($5.1 million) for Furukawa’s participation in the Conspiracy.
D. Government Competition Authorities Investigate and Penalize Anti-Competitive Conduct
82. Governmental authorities in other jurisdictions, including Australia,
Canada, the European Union, Japan and South Korea, currently are investigating
anti-competitive conduct in connection with the sale of various automotive
products, including Wire Harnesses.
83. On February 24, 2010, officials from the Competition Directorate of
the EC raided the offices of several Wire Harness manufacturers in Germany,
France and the United Kingdom. In a February 25, 2010 press release, the EC
confirmed its investigation into a “suspected cartel in the sector of automotive
electrical and electronic components suppliers.” The press release stated: “The
Commission has reason to believe that the companies concerned may have violated
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EU antitrust rules that prohibit cartels and restrictive business practices.” Yazaki
Europe Ltd., a United Kingdom subsidiary of co-conspirator Yazaki, confirmed
that the company’s office was raided by the EC. Automotive products suppliers
Leoni AG (“Leoni”), Lear Corporation and S-Y Systems also confirmed that they
were targets of the EC’s raids.
84. On February 24, 2010, the JFTC raided the Japanese offices of
Fujikura’s co-conspirators Yazaki, Sumitomo and Furukawa on suspicion of their
participation in a price-fixing cartel involving Wire Harnesses. In 2010, these
three manufacturers had a combined 90% share of the Japanese Wire Harness
market.
85. In a June 30, 2011 announcement, Fujikura Ltd. disclosed that the
JFTC had issued the company an advance notice of disciplinary action for
violating antitrust laws related to the sale of Wire Harnesses.
86. On January 19, 2012, nearly two years after the raids, and after the
JFTC’s evaluation and assessment of, among other things, the documents, data and
other information seized from members of the Wire Harness cartel, the JFTC
announced that that it had issued cease and desist orders and “surcharge payment
orders” against Fujikura Ltd. and co-conspirators Yazaki, Sumitomo and Furukawa
for violating Japan’s antitrust laws through their participation in the Conspiracy.
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The four companies “conspired in procurement of automotive wire harnesses and
related products . . . ordered by automobile manufacture[r]s.”
87. Defendant Fujikura Ltd. was ordered to pay a fine of 1.18 billion yen
($15.4 million) as result of misconduct occurring from at least as early as July
2000 until at least February 2010. Yazaki was fined 9.6 billion yen ($125 million)
as a result of misconduct occurring from at least as early as July 2000 until at least
February 2010. Sumitomo was fined 2.1 billion yen ($27.4 million) as a result of
misconduct occurring from at least as early as December 2000 until at least
February 2010. None of the companies contested the surcharge payment orders,
and each paid the fine imposed.
88. Sumitomo and Furukawa told authorities in Tokyo and Washington
D.C. about bid-rigging, according to a February 15, 2013 Wall Street Journal
article entitled “Japan Probe Pops Car-Part Keiretsu.” In the article, a spokesman
for Sumitomo confirmed that the company received leniency in Japan in exchange
for providing information to the JFTC.
89. In Delphi Automotive PLC’s (“Delphi”) 2011 10-K statement filed on
February 17, 2012, Delphi disclosed that it had “received requests for information
from antitrust authorities at the European Commission seeking information about
conduct by [Delphi] in connection with an investigation of automotive parts
suppliers concerning possible violations of antitrust laws related to the supply of
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wire harnesses to vehicle manufacturers,” and was cooperating with European
authorities.
90. On August 9, 2012, the EC announced it had opened proceedings
“against suspected participants in several cartels for the supply of automotive wire
harnesses.” The EC press release stated: “This case is part of a wider effort to
investigate possible cartels in the automotive sector.”
91. On July 10, 2013, the EC announced it had imposed fines totaling
approximately € 141 million ($180.2 million) against Yazaki, S-Y Systems,
Furukawa and Leoni for their participation in the Conspiracy. In its press release
announcing the fines, the EC stated that due to their “cooperation and the extent to
which the evidence they provided helped the Commission to prove the respective
cartels,” all of the companies received “reductions of fines ranging from 20 to
50%.” In addition, the companies received an additional 10% reduction because
they “acknowledged their participation in the cartel and their liability in this
respect.”
92. Although the EC found that Sumitomo was a participant in the
Conspiracy, Sumitomo was not fined by the EC because the company received
immunity “for revealing the existence of the cartels to the [EC],” according to the
EC press release announcing the fines.
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93. On December 13, 2012, the Australian Competition authority
announced that it had commenced civil proceedings against Yazaki and its
Australian subsidiary, alleging that, from between 2003 until at least late 2009, the
companies had “engaged in cartel conduct, market sharing and price fixing,” in the
sale of Wire Harnesses in Australia.
FRAUDULENT CONCEALMENT
94. Throughout the Conspiracy Period and beyond, Fujikura and its co-
conspirators affirmatively and actively concealed their unlawful conduct from
Ford.
95. As part of the Conspiracy, Fujikura and its co-conspirators conducted
their wrongdoing in secret, concealed the true nature of their unlawful conduct and
acts in furtherance of the Conspiracy, and actively concealed their activities
through various other means and methods to avoid detection. The Informations
filed by the DOJ to which Fujikura Ltd. and its co-conspirators pled guilty assert
that, as part of the Conspiracy, Fujikura and its co-conspirators “employ[ed]
measures to keep their conduct secret, including but not limited to, using code
names and meeting at remote locations.”
96. Fujikura and its co-conspirators affirmatively concealed their anti-
competitive conduct from Ford by misrepresenting that their pricing activities were
unilateral, rather than collusive, and based upon legitimate business purposes, such
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as increased costs. In making those false representations, Fujikura and its co-
conspirators misled Ford and others as to the true, collusive, and coordinated
nature of their fixing of prices charged to Ford for Wire Harnesses, their rigging of
bids for Ford contracts for Wire Harnesses, their allocation of customers, markets,
contracts and supply of Wire Harnesses with Ford and others and other illegal anti-
competitive activities.
97. During the Conspiracy Period, Ford employed a confidential bidding
process for purposes of attempting to identify and select, on a competitive basis,
suppliers from whom to purchase Wire Harnesses. Fujikura and its co-
conspirators, however, completely subverted and corrupted that process. They
affirmatively presented a false and misleading appearance of competition by
submitting, under the guise of competitive bidding, coordinated and pre-arranged
complementary losing bids. By not submitting bids completely free of the
conspiratorial agreement, Fujikura and its co-conspirators deprived Ford of the
lower bids a competitive market would have provided. Through these affirmative
measures, Fujikura and its co-conspirators concealed their collusion and
successfully evaded Ford’s detection of their anti-competitive conduct. The false
appearance of competition was created by pre-arranging losing responses to Ford’s
RFQs to appear as though legitimate commercial or technical reasons – not
collusion – caused the submission of losing bids.
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98. Certain Fujikura co-conspirators simply refused to submit any bids for
Ford business, and limited their production capacity in furtherance of the
Conspiracy by their agreements to allocate Ford business among the conspirators
such that Ford’s demand for Wire Harnesses would be met only by Yazaki and
certain other co-conspirators.
99. During the Conspiracy Period, co-conspirator Sumitomo Electric
Wiring, a subsidiary of Sumitomo, refused to bid on very attractive Ford business,
including the global CD4 program in 2009. Sumitomo Electric Wiring represented
to Ford that it was not interested in rapid growth and in assuming responsibility for
a large volume of Wire Harness business. Sumitomo Electric Wiring’s
representation appeared commercially reasonable to Ford at that time, and Ford
had no reason to suspect that Sumitomo Electric Wiring’s refusal to bid was the
result of its participation in a conspiracy with Fujikura and other Wire Harness
suppliers.
100. During the Conspiracy Period, Ford exercised due diligence in
attempting to ensure competition and to prevent collusion among potential Wire
Harness suppliers by, among other things, employing a confidential bidding
process and then carefully reviewing and evaluating the bids before awarding the
Ford business. When assessing bids or renegotiating contracts for Wire Harnesses
during the Conspiracy Period, Ford applied an evolving set of methodologies to
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attempt to estimate the suppliers’ input costs for the manufacture of Wire
Harnesses. Ford exercised this diligence in an attempt to determine whether bids
submitted by Fujikura and its co-conspirators were competitive and commercially
reasonable.
101. As a result of Fujikura and its co-conspirators’ active and effective
concealment of their criminal conduct, Ford did not discover, and could not have
discovered through the exercise of reasonable diligence, that Fujikura and its co-
conspirators were violating the antitrust laws until at the earliest February 24,
2010, the date on which the DOJ and other governmental competition authorities
publicly disclosed their investigations of Fujikura and its co-conspirators.
102. As a result of the concealment of the Conspiracy by Fujikura and its
co-conspirators, any and all statutes of limitations or repose otherwise applicable to
the claims asserted in this Complaint have been tolled.
103. Moreover, the statute of limitations governing the claims in this
Complaint was suspended, pursuant to Section 5(i) of the Clayton Act, 15 U.S.C. §
16(i), on September 29, 2011, the date the United States filed an Information in the
United States District Court for the Eastern District of Michigan, thus instituting a
criminal proceeding against Fujikura’s co-conspirator, Furukawa, to prevent,
restrain, or punish violations of the antitrust laws.
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INJURY TO COMPETITION AND DAMAGES
104. The Conspiracy among Fujikura and its co-conspirators was intended
to, and did, suppress price competition among manufacturers of Wire Harnesses.
During the Conspiracy Period, Ford entered into many contracts with Defendants’
co-conspirators for the purchase of Wire Harnesses. As a direct result of
Defendants’ unlawful Conspiracy, Ford paid more for Wire Harnesses than it
would have paid in a competitive market.
FIRST CLAIM
Violation of § 1 of the Sherman Act, 15 U.S.C. § 1
105. Plaintiff hereby realleges and incorporates by reference the allegations
contained in paragraphs 1 through 104 as if fully set forth herein.
106. Beginning at least as early as January 2000 and continuing until at
least February 2010, Defendants engaged in a horizontal conspiracy in
unreasonable restraint of trade in violation of Section 1 of the Sherman Act, 15
U.S.C. § 1, and Section 4 of the Clayton Act, 15 U.S.C. § 15.
107. During the Conspiracy Period, Fujikura and its co-conspirators
engaged in a combination and conspiracy consisting of a continuing agreement,
understanding, and concert of action to rig bids for, and to fix, stabilize, and
maintain the prices of, Wire Harnesses sold to Ford in the United States and
elsewhere.
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108. Fujikura and its co-conspirators succeeded in rigging bids, fixing,
raising, maintaining and stabilizing the prices of Wire Harnesses sold to Ford
during the Conspiracy Period.
109. In furtherance of the Conspiracy, Fujikura and its co-conspirators did
those things that they combined and conspired to do, including the following:
a. participated in meetings, conversations and communications in the United States and Japan to discuss the bids and price quotations to be submitted to Ford and others;
b. agreed, during those meetings, conversations and
communications, on bids and price quotations to be submitted to Ford and others;
c. agreed, during those meetings, conversations and
communications, to allocate customers, markets, contracts and supply of Wire Harnesses sold to Ford and others on a model-by-model or platform-by-platform basis;
d. agreed, during those meetings, conversations and
communications, to coordinate price adjustments requested by Ford and others;
e. submitted bids, price quotations and price adjustments to Ford
and others in accordance with the agreements reached;
f. sold Wire Harnesses to Ford and others in the United States and elsewhere at collusive and non-competitive prices;
g. accepted payment for Wire Harnesses sold to Ford and others at
collusive and non-competitive prices; h. engaged in meetings, conversations and communications in the
United States and elsewhere for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme; and
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i. employed measures to keep their conduct secret, including, but
not limited to, using code names and meeting at private residences or remote locations.
110. The Conspiracy had the effect of restraining trade by suppressing and
eliminating competition in the global market for Wire Harnesses. The result of this
unlawful restraint on trade was artificially high prices for the Wire Harnesses sold
to Ford.
111. As a direct and proximate result of Defendants’ unlawful conduct,
Ford has suffered injury to its business or property because Ford has paid
artificially high prices for Wire Harnesses during the Conspiracy Period and paid
and continues to pay artificially high prices after the end of the Conspiracy Period.
PRAYER FOR JUDGMENT
WHEREFORE, Plaintiff prays for relief as follows:
a. A decree that the unlawful contract, combination and conspiracy alleged in this Complaint constitutes a violation of Section 1 of the Sherman Act, 15 U.S.C. § 1;
b. Entry of a joint and several judgment for Plaintiff against the Defendants for three times the amount of the actual damages sustained by Plaintiff and the costs of Plaintiff’s suit, including reasonable attorneys’ fees, as provided by Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 4 of the Clayton Act, 15 U.S.C. § 15(a);
c. Entry of an injunction preliminarily and permanently enjoining Defendants from continuing any unlawful contract, combination and conspiracy, including that alleged in this Complaint;
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d. An award of pre-judgment interest, as provided by Section 4(a) of the Clayton Act, 15 U.S.C. § 15(a); and
e. Such further and other relief as is just and proper.
JURY TRIAL DEMAND
Plaintiff hereby demands trial by jury on all triable issues.
Dated: July 16, 2013
Respectfully submitted,
KASOWITZ, BENSON, TORRES & FRIEDMAN LLP
Hector Torres Harold G. Levison Edward E. McNally Sarah Gibbs Leivick Robert W. Bosslet
1633 Broadway New York, New York 10019 (212) 506-1700
KIENBAUM OPPERWALL HARDY & PELTON, P.L.C. By: s/ Eric J. Pelton
Eric J. Pelton (P40635) Theodore R. Opperwall (P31374) Ryan D. Bohannon (P73394)
280 N. Old Woodward Avenue, Ste. 400Birmingham, Michigan 48009 (248) 645-0000 [email protected]
Attorneys for Plaintiff
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