GREENVILLE, S.C.—Barring any last-minute settlement, Michelin North America Inc. is set to proceed to trial to defend its policies against accusations of pricing discrimination outlined by Atlanta's DeKalb Tire Co. Inc. in a federal antitrust lawsuit filed in 1997.
In that suit, scheduled to be heard by a jury in federal court in Atlanta beginning April 23, Ray Bennett, owner of the four-outlet dealership, charges that the Greenville-based tire maker offered preferential tire prices to some of its larger customers—such as mass merchandisers and price clubs—to the detriment of DeKalb. He also maintains that DeKalb lost substantial profits off lost sales due to the alleged price differences.
According to a DeKalb attorney, the litigation covers the years 1993 through the present, though DeKalb was a direct dealer with Michelin until 1997.
In a front-page story in the March 12 issue of Tire Business, Michelin said it would fight the case in court, but abide by "whatever the court asks us to do."
Then, as it continued to prepare for trial, the company issued a subsequent statement to TB. In it, Michelin Americas Small Tires (MAST) noted that, over the past 25 years, "dramatic changes have taken place in retailing, both inside and outside of the tire business.
"These changes (mass merchandisers, category killers, clubs etc.) offer all of us, as consumers, far more options in terms of convenience, price and service. Despite the predicted demise of the independent tire dealer in this more competitive environment, dealers remain the largest channel of distribution today.
"This is due to their adaptability as demonstrated by the improvement in operations and improvements in customer service."
The tire maker went on to claim that, since 1993, its dealers "have seen record growth," based on initiatives introduced by Michelin, such as:
The MAST "Alliance" dealer program, which debuted in 1996;
A multi-brand product portfolio of the "highest-quality" tires;
Effective national advertising;
A "dramatically improved" supply chain; and
"Best-in-class customer service."
As a direct result of those programs, MAST maintains that its sales to independent dealers "have been more than double the industry growth rate" since the introduction of the Alliance program.
MAST further stated that its pricing "is fair and legally defensible," adding that "if this case goes to trial, a jury understanding what the law is and the competitive factors in the tire business would also conclude that MAST's pricing is fair and legal."
While Mr. Bennett contends that, in essence, his direct supply chain to Michelin was eventually cut off, in its statement the tire maker claimed that it "did not terminate its relationship with DeKalb Tire.
"In fact, MAST offered DeKalb the opportunity to become one of the first Alliance dealers in the country. That offer was rejected."
One of DeKalb's Atlanta-based lawyers, Terry Howell with the firm Lord, Bissell & Brock, said he could not comment at this time on Michelin's allegation.
The final point made in the company's statement was that "MAST has never controlled the prices at which independent distributors sell its products."