A strange way of price-fixing

At the end of January, the European Commission (EC) announced that it is had begun conducting “unannounced inspections” – commonly known as dawn raids – at the European offices of the world’s leading tyremakers. The investigation intends to find out whether or not “the inspected companies may have violated EU antitrust rules that prohibit cartels and restrictive business practices”. In the days immediately after that news broke, it quickly became apparent that (in alphabetical order) Bridgestone, Continental, Goodyear, Michelin, Nokian and Pirelli all received those visits. All the above companies issued statements denying the allegations and confirming that they are cooperation with the authorities. The EC’s announcement was short on detail and the investigated tyremakers are being understandably tight-lipped about the whole thing, which leaves significant questions about what the grounds for such an investigation were in the first place.

What we do know is that the investigation relates to the suggestion that there has been price-related collusion within the highest levels of the European tyre business. Furthermore, at the time of the initial investigation announcement, the EC reported that “public communication” plays a big role since, the EC is “concerned that price coordination took place amongst the inspected companies, including via public communications.”

A few days after news of the EC investigation broke, the US offices of the same tyremakers were sued in America. The lawyers bringing the class-action suing on behalf of the named plaintiff in that case, Rena Sampayan did so in the State of California. Documents filed in relation to Rena Sampayan versus Tyremakers offer a bit more detail as to the grounds for the actions against some of the best-known tyre brands. In short, the legal action was prompted by two things – the string of tyre price increases the market has witnessed across several different global regions in recent years; and, secondly, the manner in which tyremakers have communicated price information. While no-one has been able to draw a straight line between the EC investigation and Sampayan versus Tyremakers, it is more than likely that the EC investigation provided the inspiration for the action against the same tyremakers in the US. For the same reason, there is likely to be a degree of crossover in the argumentation used in both cases.

A couple of weeks later, in mid-February, a second class-action case was brought against the same tyremakers in America, bringing the legal action total to three – one EC investigation across “various member states” in Europe and two class-action suits in the USA. The latter case was also brought in the Southern District of New York but the fact that Marco A. Torres is named as plaintiff, distinguishes it from Sampayan versus Tyremakers. However, the cases are similar. As in Sampayan versus Tyremakers, Torres versus Tyremakers is driven by the defendants’ alleged “unlawful agreement to fix prices”, an allegation that the plaintiff claims is supported by points including “the sudden and dramatic parallel price increases”, plus “the EC dawn raids of certain Defendants” as well as “the high level of market concentration” in the tyre sector.

Sampayan and Torres differ when it comes to exemplifying specific instances of alleged intra-market pricing communication. For example, Torres versus Tyremakers quotes specific outgoing senior Goodyear executives as saying that they track the prices of nine competitors in order to maximize their “ability to capture value for our business.”

Torqata, which began life as the analytic arm of American Tire Distributors (ATD) before being subsequently spun off, is also named in Torres versus Tyremakers because it self-evidently works to help “[m]anufacturers and distributions can capture demand signals to optimize inventory and production”.

On 27 February 2024, a third class-action case was brought against the same tyremakers in the US, bringing the total number of open cases to four – the EC investigation plus three US class action suits. This time the lawsuit was filed in federal court in Akron, Ohio – the home of Goodyear, of course – and appears to run along similar lines as the two aforementioned class action suits. The Arkon case was brought by two law firms, Korein Tillery P.C. of California and Lowey Dannenberg of New York on behalf of Ohio resident John Bengel. Furthermore, Korein Tillery, is actively seeking clients amongst the millions of people that have bought tyres made by one of the brands named in the case. Indeed, The Korein Tillery’s web site states that  “car and light truck tyre prices rose some 21.4 per cent between 2021 and 2023, more than 70 per cent above core inflation”, revealing the rationale behind their case.

And yet, when we consider pricing trends of SUV tyres – one of the most lucrative segments in the passenger car tyre replacement sector – in the April edition of Tyres & Accessories, the leading article in our SUV tyre feature found it isn’t a question of “the only way is up”.

Speaking of large figures, as we almost were, the April issue of the magazine also features our annual overview of the latest happenings in the off-the-road (OTR) tyre sector.