GREENVILLE, S.C. (Feb. 23, 2001) — In its request for an injunction against Bandag Inc. and Bridgestone/Firestone Inc., Michelin North America Inc. is charging the two firms with offering Bandag retreaders financial incentives not to license Michelin´s retreading system. Greenville-based Michelin, which filed an expedited hearing request Feb. 2 with the U.S. District Court in Davenport, Iowa, claims its two competitors worked closely together outside of a formal agreement or joint venture and threatened with franchise termination dealers who considered Michelin´s system.
A hearing to rule on the injunction request is scheduled for April 16. The suit is set to go to trial in early 2002.
Tire Business obtained a copy of the introduction to the 70-page brief that outlines Michelin´s grievances and allegations that Bandag and BFS "conspired" to inhibit Michelin´s growth in the U.S. retread market. Most of the brief is under seal with the court.
The hearing notice asks the court to force BFS and Bandag to separately identify every tire dealer to whom inducements were offered, or to whom threats of franchise termination were made in return for that dealer´s agreement not to deal with competing retread systems.
The notice cited White Tire Distributors Inc., Bob Sumerel Tire Co. and Valley Tire Co. Inc. as among the dealerships whose franchise agreements with Bandag are, Michelin claims, a "direct result of the anticompetitive and concerted action between Bridgestone and Bandag."
White Tire, of Roanoke, Va., did not return phone calls seeking comment. Todd Sumerel, of Bob Sumerel Tire Co. in Erlanger, Ky., declined to comment on the injunction request.
When contacted by Tire Business, Jim Stankiewicz, president of Charleroi, Pa.-based Valley Tire, was unaware his dealership was named in Michelin´s federal injunction request. He declined to comment on the advice of his attorney, but remarked that somehow Michelin is "dragging me into their battle of the giants."
The document filed by Michelin asks the court to enjoin BFS and Bandag from "taking any further action by agreement, concerted action, coordination, joint undertaking or mutual understanding" that precludes Michelin´s access to retread dealers and retread customers. It also includes the following alleged activities:
*Conditioning...any grant, availability of funds, franchise rights or anything else of value to any tire dealer based upon that dealer´s agreement not to deal with, license or become a franchisee of Michelin´s retread system;
*Enforcing any exclusivity provision or clause in any contract between Bandag and any dealer or between Bridgestone and any dealer that would forbid or discourage a dealer from adopting, licensing or becoming a franchisee of Michelin´s system. Specifically, this refers to enforcing any radius of miles or geographic territories in which a dealer may not deal with, adopt, license or become a franchisee of a competing precure or mold-cure system;
*Communicating with each other about trucking fleets, retread system competitors, tire dealers, retread prices, retread products, research and development, and retread tire manufacturing processes and retread tire distribution;
*Selling, assigning, leasing or otherwise transferring any assets to each other, including intellectual property, know-how, fixed asset, contract, trademark, and/or wholly owned tire dealership or other distribution asset;
*Forming any joint venture, alliance, merger, joint undertaking, joint marketing or joint distribution agreement or any combination of the assets, stocks, business interests or pursuits of or between Bandag and BFS that relate to retreading; and
*Coordinating the investment of resources into distribution channels, including but not limited to truck tire dealer facilities, equipment for manufacturing, marketing or distributing retread tires, marketing and advertising, and financial assistance to dealers.
The injunction request is the latest in a series of legal manuevers between Bandag and Michelin since 1999, when Bandag first sued Michelin for allegedly trying to eliminate Bandag´s business. Michelin answered with a countersuit and in January added BFS to its complaint against Bandag.