General Electric Co. (GE) has sued rival Whirlpool Corp. (WHR)
and two European suppliers, saying the companies ran a price-fixing
cartel that caused GE to overpay for parts for its
refrigerators.
GE alleges that it was hurt by an international conspiracy to
set prices at "supra-competitive levels," to decrease manufacturing
capacity and to limit product availability by a group of global
manufacturers of refrigerator compressors. Compressors create cold
air that keeps food fresh or frozen in refrigerators.
The lawsuit targets Embraco North America Inc., a venture
controlled by Whirlpool; Danfoss A/S of Denmark; and Household
Compressors Holding SpA, an Italian company formerly known as
Appliances Components Companies SpA.
"We are studying the lawsuit and have no comment at this time,
except to say that Embraco does not believe that it has caused any
harm to GE," a Whirlpool spokeswoman said in an email. Danfoss and
Household Compressors weren't immediately available for
comment.
The GE case follows a 2010 guilty plea by Embraco and Panasonic
Corp. (PC, 6752.TO) to federal charges of fixing prices for
refrigerant compressors from October 2004 to December 2007. The two
companies agreed to pay $140.9 million in criminal fines.
GE's 79-page lawsuit claims the defendants met repeatedly over
years to push prices for compressors higher than they would have
been set by the market. One tactic, GE alleged, was to coordinate
on a bargaining strategy that involved coming in with a high price
increase and then agreeing to reduce it slightly.
GE claims the companies agreed at a 2004 meeting in Joinville,
Brazil, to announce a global price increase of 8% to 10%, with the
aim of negotiating a 6% increase.
GE claims that the cartel also deprived it "of innovation that
would have resulted in increased efficiency, as well as increased
sales and profits, in its sales of refrigerators and other
refrigeration equipment," according to the suit, which was filed
late last week in Louisville, Ky., where GE's appliance business is
based. GE is asking for a jury trial in which it will seek three
times the amount of unspecified monetary damages.
The industrial conglomerate tried to sell its appliances
business, but the effort was halted by the financial crisis. Now,
GE is in the middle of trying to reinvigorate the business by
spending about $1 billion to upgrade its whole product line over
four years. The company has reopened production lines in Louisville
to much fanfare and added 2,500 new jobs last year.
Last year, overall U.S. appliance-industry sales fell by about
one million units from a year earlier, and sales this year are
getting off to a slow start, according to GE. That prompted the
company to impose a five-week work stoppage on the second shift of
its refrigerator line this week to allow excess inventory to be
depleted.
Write to Kate Linebaugh at kate.linebaugh@wsj.com
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