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Harley-Davidson hit with antitrust suit over warranty policy

The class action claims the Wisconsin-based motorcycle maker forces customers to use its parts for bike repairs and modifications instead of cheaper alternatives.

CHICAGO (CN) — A pair of Harley-Davidson customers brought a federal class action against the motorcycle manufacturing giant Thursday morning, claiming the company's warranty policy violates U.S. antitrust law by not allowing the use of aftermarket parts.

Filed in Chicago federal court, the suit challenges stipulations in the company's limited warranty agreement. The fine print states that use of non-Harley-Davidson parts for bike repairs or performance modifications can void customers' warranties.

"Use of aftermarket performance parts may void all or parts of your limited warranty," one note on the policy states.

Another note adds that “the use of parts and service procedures other than Harley-Davidson approved parts and service procedures may void the limited warranty.”

It's this language that the customers claim is monopolistic - a tactic allegedly used by the $6.3 billion Milwaukee-based company to inflate its profits in the face of competition, particularly from Japanese bike manufacturers like Honda and Yamaha.

"Harley-Davidson used its warranty to try to force Harley owners to use its own parts, in preference to the many quality aftermarket parts available for its motorcycles," the complaint states.

In one sense, theses allegations have already been vindicated. In June, the Federal Trade Commission found that Harley-Davidson's warranty policy violates the Magnuson-Moss Warranty Act. According to the FTC, the 1975 law prohibits companies from "conditioning a consumer product warranty on the consumer’s using any article or service which is identified by brand name unless it is provided for free."

"The FTC’s complaints charge that [Harley-Davidson's] warranties included terms that conveyed that the warranty is void if customers use independent dealers for parts or repairs," the commission said in a June press release. "The FTC is ordering Harley-Davidson... to fix warranties by removing illegal terms and recognizing the right to repair, come clean with customers, and ensure that dealers compete fairly with independent third-parties."

For Jacqueline and Robert Assise, the customers filing suit against Harley-Davidson, these orders from the FTC are still insufficient to rectify their losses. While the FTC can pressure Harley-Davidson to change its policies for future customers, it cannot recover the overpayments existing customers have already made.

The Assises claim to have paid over $2,800 in parts for their Harley-Davidson Tri-Glide motorcycle since 2019, a price tag they say was artificially inflated by the company's monopolistic warranty policy.

"Plaintiffs purchased Compatible Parts at artificially inflated prices as a result of Harley-Davidson’s anticompetitive, unlawful conduct," the suit states.

The company did not respond to a request for comment on the lawsuit.

To rectify their alleged injury, the Assises are seeking an injunction against Harley-Davidson prohibiting its alleged monopolistic warranty policies. They also seek damages and interest for their alleged overpayments, in an amount to be determined at trial.

The complaint asks for similar relief for the proposed class, which purports members in 27 states and Washington D.C., under respective state laws.

Attorney Carl Malmstrom of the law firm Wolf Haldenstein Adler Freeman & Herz authored the suit. He did not respond to a request for comment.

Harley-Davidson is not the only company to face antirust litigation in the U.S. District Court for the Northern District of Illinois this year. A similar suit was filed in January against Illinois-based heavy equipment manufacturer John Deere, alleging the multibillion-dollar company purposefully withholds the software tools needed to repair its products from farmers and independent repair shops.

That case is still pending.

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Categories / Business, Consumers, National

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