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Harley-Davidson Facing Its Third Antitrust Class Action Of The Year – Antitrust, EU Competition



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Agency’s announcement is important to anyone engaged in
foreign investments or real estate transactions.

The road back from the COVID-19 pandemic hasn’t been easy
for Harley-Davidson. Although the company shipped more than 194,000
motorcycles globally last year, it failed to meet its growth
targets. Now the firm is facing legal troubles, too.

This past August, plaintiffs filed “right-to-repair”
class action lawsuits against the firm in Wisconsin and California.
Then, on November 3, plaintiffs filed yet another federal class
action lawsuit against Harley-Davidson in Chicago.

The Chicago lawsuit alleges the company used its warranty to
force Harley owners to use Harley parts instead of “quality
aftermarket parts available for its motorcycles.” Doing so,
the suit alleges, violates state and federal antitrust laws.

Specifically, the complaint accuses Harley Davidson of violating
the Magnuson-Moss Warranty Act by using its “monopoly power in
the large, roadgoing American bike market (and specifically the
manufacturer’s warranty bundled with the new bike) to coerce
customers not to purchase Compatible Parts from its
competitors.” The complaint alleges that up until September
2022 Harley wrongfully tied its warranty to its OEM parts. It did
so “by requiring customers who bought its bikes to only use
Harley-Davidson’s Compatible Parts – or else risk voiding
the warranty.”

This purportedly allowed the company – which generates
approximately 15 percent of its annual revenue from parts –
to charge more for its parts than it would have had its warranties
not required the use of OEM parts. The suit alleges that the terms
of the warranty deprived Harley riders of access to the full range
of aftermarket parts in the market. Harley owners with bikes under
warranty were foreclosed from the vast selection of parts because
they risked losing warranty coverage, the complaint alleges.

Jacqueline and Robert Assise, plaintiffs in the Chicago lawsuit,
bought a new 2019 Harley-Davidson Tri-Glide, and purchased
Harley-Davidson compatible parts on numerous occasion for the next
two years so as not to void their warranty. The cost of parts
totaled $2,868.52.

The complaint claims the company’s conduct injured
competition in the parts market. “The injury to competition
has caused injury to its competitors, as well as antitrust price
injury for its independent dealers – injury that is then
passed on, all or in part, to the ridership in the form of
anti-competitive pricing. Harley bike owners have paid higher
prices for parts because of the tying, which has also impermissibly
limited competitive choice for the riders,” the complaint
states.

FTC Approves Final Order Against Harley-Davidson and Other
Manufacturers

Back in June, the Federal Trade Commission (FTC) issued an
administrative complaint ordering Harley-Davidson to refrain from
further violating of the Magnuson Moss Warranty Act. The FTC
ordered the firm to add specific language to its warranties to the
effect that using unaffiliated repair shops or third-party parts
would not void coverage. The FTC order also requires
Harley-Davidson to “inform[…] customers that their
warranties will remain in effect even if they buy aftermarket parts
or patronize independent repairers.” On October 27 the FTC approved the final order against
Harley-Davidson, as well as similar orders against grill maker
Weber-Stephen Products, and the manufacturer of Westinghouse
outdoor power equipment, MWE Investments, for illegally restricting
customers’ right to repair their purchased products.

However, as the complaint notes, the FTC cannot recoup the
overpayments for parts paid by affected Harley owners. Accordingly,
the Chicago lawsuit was filed on behalf of a class of customers
similarly situated to the Assises who owned a Harley under factory
warranty and purchased compatible after August 1, 2018. The suit
seeks injunctive relief, damages, attorneys’ fees, and
interest.

The case is Assise, et al. v. Harley-Davidson Inc.
(Case No. 1:22-cv-06068 N.D. Ill, filed Nov. 3, 2022).

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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