Berman DeValerio Files Suit Alleging Auto Makers and Dealers Illegally Conspired To Stop Canadian Imports, Costing U.S. Consumers Billions.

Business Editors/Legal Writers/Automotive Writers

BOSTON--(BUSINESS WIRE)--Feb. 19, 2003

A conspiracy by automobile manufacturers and dealers to block Canadian imports has cost U.S. consumers thousands of dollars extra for each new car purchased since at least 2001 - billions of dollars overall, according to an antitrust lawsuit announced today.

The law firm of Berman DeValerio Pease Tabacco Burt & Pucillo brought the suit late Friday in federal courts for the District of Massachusetts and the Northern District of California. Similar actions are being filed in other federal courts. Coincidentally, the complaints came as dealers geared up to promote low prices on Presidents' Day weekend.

The complaint names most major carmakers as defendants, along with associations representing U.S. and Canadian dealerships. It says the defendants conspired to eliminate the import of lower-priced new cars from Canada into the United States to illegally stifle competition. As part of the alleged conspiracy, for example, U.S. dealerships refused to honor new car warranties on cars purchased in Canada.

Canadian dealers pay manufacturers 10% to 30% less for cars than their U.S. counterparts, despite the elimination of duties and tariffs by the North American Free Trade Agreement (NAFTA) in 1993 and the subsequent harmonization of safety and environmental regulations for new cars, the complaint alleges.

"Talk about sticker shock: Car makers have rigged the deck to make U.S. consumers pay thousands of dollars more per vehicle than Canadians for virtually the same cars," said Joseph J. Tabacco, Jr., a Berman DeValerio partner. "These auto manufacturers were all for NAFTA if it meant getting cheaper parts and labor. But when free trade threatened to cut into their U.S. profits, they worked to get around it - and broke the law to keep prices high."

The complaint alleges that the conspiracy permitted manufacturers to maintain higher prices on virtually every car sold in the United States compared to prices of the same vehicles in Canada. In one example cited in the complaint, Ford's 2002 Windstar LX minivan had a Manufacturers Suggested Retail Price (MSRP) of $16,448 in Canada and $22,340 in the United States - a difference of 26%. In a second example, the MSRP for a 2002 Lexus SC43 was 13% lower in the Canada than the United States, $53,151 compared to $61,055.

According to the complaint, the manufacturers conspired to block Canadian imports to the United States even though the Canadian cars were, for all practical purposes, identical and conformed to U.S. regulations. The only differences were metric vs. imperial measure speedometers and odometers; and, in some cases, daytime running lights, all of which could easily be adapted.

Named as defendants are the General Motors Corporation and its Canadian subsidiary; the Ford Motor Company and its Canadian subsidiary; the Toyota Motor Corporation of Japan and its U.S. subsidiary; the Honda Motor Company, Ltd. of Japan and its U.S. subsidiary; DaimlerChrysler Aktiengesellschaft of Germany and its Canadian subsidiary; the Nissan Motor Company of Japan and its U.S. and Canadian subsidiaries; Bayerischen Motor Werken Aktiengesellschaft (BMW) of Germany and its U.S. subsidiary.

Also named are the Canadian Automobile Dealers Association (CADA) of Toronto, which represents over 3,000 franchised new automobile dealerships in Canada; and the National Automobile Dealers Association (NADA) of McLean, Va., which represents over 43,000 franchised automobile dealerships across the United States. U.S. and Canadian franchise dealerships for the above manufacturers are cited as unnamed co-conspirators in the complaint.

Berman DeValerio Pease Tabacco Burt & Pucillo prosecutes class actions nationwide on behalf of institutions and individuals, chiefly victims of securities fraud, antitrust law violations, and consumer fraud. The firm consists of 33 attorneys in Boston, San Francisco, and West Palm Beach, Florida.

For more information or a copy of the complaint, contact Richard Lorant at 617-542-8300 or (mobile) 617-230-0903 or via e-mail at [e-mail].