The Prevent Group, an automotive parts supplier, filed suit against Volkswagen AG and Volkswagen Group of America, Inc. alleging violations of federal antitrust laws, civil conspiracy, and tortious interference. (Case No. 19-13400).
Prevent, represented by litigation powerhouse Boies Schiller Flexner LLP, alleges that Volkswagen used anticompetitive tactics to stop larger suppliers like Prevent from acquiring smaller auto parts suppliers in the U.S., including at least seven based in Michigan.
Small, fragmented, and pushed to the brink of insolvency, Volkswagen's lower-tier suppliers typically have no choice but to "comply or die" with Volkswagen's unfair terms and prices, the complaint states.
When Prevent acquired a company called Car Trim that had been a supplier of parts for Volkswagen vehicles, this was the "last straw" for Volkswagen, the complaint alleges.
The complaint alleges that these efforts escalated in the wake of Volkswagen's agreement to pay $15.5 billion to settle public and private lawsuits resulting from its "Dieselgate" scandal.
Prevent Group was a direct target of this anticompetitive campaign. For the past 15 years, Prevent Group has grown by acquiring smaller, Tier 2 and Tier 3 auto parts suppliers around the world, increasing their efficiency and output.
Volkswagen deployed "Project 1" to block at least seven other acquisitions by Prevent in the United States, the complaint alleges. The tactics detailed in the complaint included extracting written agreements from management of target companies not to sell their business to the Prevent Group.
Duane L. Loft, a partner at Boies Schiller Flexner who represents the Prevent Group, said: "This lawsuit painstakingly lays out the existence of a scheme by Volkswagen to maintain its stranglehold over automotive component parts suppliers, to stop acquisitions that would have been good for competition, and to harm consumers of automobiles. We look forward to justice being done and for Volkswagen to answer for its misconduct in open court."
Prevent is seeking damages in excess of $750 million and injunctive relief for Volkswagen's alleged violations in the Eastern District of Michigan, the federal court in Detroit.