PHOENIX (CN) - Braun Corp. conspired to monopolize the $540 million market for "lowered-floor minivan conversions," used by people in wheelchairs, a competitor claims in a federal antitrust complaint. Braun admits it controls at least 65% of the U.S. and Canadian market - more than three times the market share of its closest competitor, plaintiff Vantage Mobility International, VMI says.
VMI claims that Braun abused its market power to destroy competition by forcing dealers to enter into long-term supplier agreements. Braun is "engaging in anticompetitive, unfair, exclusionary, and deceptive conduct - through which Braun has stifled, and endeavored ultimately to foreclose altogether, VMI's ability to compete in the relevant market," the complaint states.
Both companies operate by cutting the original equipment floor out of minivans and reinstalling "a lowered floor that will accommodate the height of an occupied wheelchair," VMI says.
VMI claims that Braun's "attitude toward competition was recently summarized by its founder and chief executive officer, Ralph W. Braun, who in his 2010 autobiography
entitled 'Rise Above' stated that 'If any of my competitors were drowning, I'd stick a hose in their mouth and turn on the water.'"
The complaint states: "This month, at Braun's 2010 Dealer Conference in Las Vegas, Braun President Nick Gutwein proclaimed in his keynote address that Braun's share in the American and Canadian market is at least 65%. Braun's share exceeds that of its nearest competitor, VMI, by nearly three-to-one. Faced with an emerging competitive threat from VMI, and, in particular, with the success of VMI's Honda Odyssey conversion, Braun embarked on an unlawful scheme to drive VMI out of the market. The scheme continues to this day and, if not stopped, will prevent effective competition, increase prices, and eliminate choice for the wheelchair-bound consumer who is reliant on the conversions for independence and mobility."
VMI claims that Braun "has misused, and continues to misuse, its monopoly position in the market by offering dealers who carry Braun products substantial, and in some cases below-cost, discounts on pricing provided that the dealers agree not to sell or offer, and, in fact, refrain from selling or offering, VMI or other competitor products."
Beginning in 2008, Braun pressured dealers to enter into 4-year supplier agreements that would allow it to terminate any dealer who "purchase[s] less than 65 percent of their total annual consumer lowered-floor conversions from Braun," the complaint states.
VMI says that these agreements force independent dealers "to preserve Braun's monopoly and market share" and are a "death knell" for dealers whose sales of VMI products come to more than 35 percent of their annual sales.
Braun has 208 of the 300 dealer locations "tied up in long-term contracts either committing all or the vast majority of their market share to Braun," VMI says.
VMI claims that Braun "has sought to deprive dealers of the freedom to make competitive choices about which products should be offered to their end user consumers and the ability to diversify their products to best serve end user consumers' needs."
VMI says it has repeatedly asked GE Capital for floor-plan financing, only to be told that "there is no room at the proverbial inn, and that GE Capital cannot provide financing to VMI because GE Capital is bound by an exclusive agreement with Braun for the wheelchair accessible and/or occupied, lowered-floor minivan conversion market."
VMI seeks compensatory damages and treble damages for antitrust violations. It is represented by Mark Nadeau and Laura Kam with DLA Piper.