International Construction Products has filed an antitrust lawsuit against the three biggest names in construction equipment, accusing them of colluding to limit competition in the US, Equipment World reports.
The suit was filed yesterday in a US District Court in Wilmington, Delaware, and names Caterpillar, Komatsu America and Volvo Construction Equipment North America as defendants.
The suit alleges the three major manufacturers conspired to exclude ICP from the U.S. market by effectively dismantling its primary distribution channel: online sales.
Specifically, the suit alleges the three manufacturers threatened to boycott online equipment marketplace IronPlanet, a key partnership in ICP’s plan to sell new equipment directly to customers at prices up to 40 percent below those of Cat, Komatsu and Volvo.
The suit also alleges that the recent merger of Cat Auction Services with IronPlanet was designed to make the exclusion of ICP from IronPlanet permanent.
ICP launched last year, with an announcement at the ConExpo/Con-Agg trade show in Las Vegas. The company is led by Tim Frank, the former president of Chinese equipment manufacturer Sany’s U.S. operation, and Wes Lee who was with Volvo CE prior to joining ICP. ICP works with Chinese equipment manufacturers as a marketing and sales partner, and took on the challenge of easing the minds of U.S. contractors and their long-held skepticism of Chinese-made equipment.
In an interview with Equipment World, Lee called IronPlanet, “the engine that drives our online sales, with pricing, warranty, financing, etc., on to the shopping cart and check out.” The company seeks to make buying construction equipment as easy as “buying a sweater.”
The suit frames ICP’s direct sales through IronPlanet as not only having the potential to cause major disruption in the U.S. heavy equipment market, but the company’s best shot at gaining a foot-hold at all. “Selling through IronPlanet is a uniquely efficient distribution channel for new entrants into the new heavy construction equipment market and the only realistic means to surmount the distribution barrier to entry erected by the Manufacturer Defendants,” the suit says.
The suit alleges that Cat, Komatsu and Volvo, “conspired to first eliminate, and then forever bar, ICP’s access to IronPlanet,” by threatening to boycott the site if it sold ICP-represented equipment. The suit alleges IronPlanet’s resulting discontinuation of new ICP equipment on the site was in breach of contract, “leaving ICP without feasible means to efficiently bring its products to market.”
But the suit also pulls IronPlanet’s recent merger with Cat Auction Services under its umbrella of allegations. ICP alleges the merger was designed to eliminate “any possibility that IronPlanet would deal with ICP or any other new entrants in the future.”
In other words, ICP alleges the merger was meant to effectively close off the U.S. market to everyone but the current players. And as a result, “consumers will pay higher prices for heavy equipment,” the suit contends.
ICP is seeking both compensatory and punitive monetary damages as well as a court order to unwind the IronPlanet/Cat Auction Services merger. The suit also seeks an elimination of exclusivity agreements between Cat, Komatsu and Volvo and their dealers.
Representatives from Caterpillar declined comment for this story. Communications to Komatsu and Volvo for comment had not yet been returned at time of publishing.