Harley-Davidson Tying Arrangement for Parts Class Action

The complaint for this class action alleges that Harley-Davidson Motor Company Group, LLC has been tying its motorcycles to the purchase of its own parts for repairs and modifications. In fact, it claims that the Federal Trade Commission (FTC) ordered Harley to stop this anticompetitive conduct in June 2022. However, since the FTC does not have the authority to compensate motorcycle owners for their overpayments, this class action aims to do so.

The class for this action is all owners of Harley-Davidson roadgoing motorcycles who indirectly bought Harley-Davidson compatible parts, from January 23, 2017 until the effects of the anticompetitive conduct end, in Alabama, Arizona, Arkansas, California, District of Columbia, Florida, Hawaii, Illinois, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, West Virginia, or Wisconsin.

Harley-Davidson was founded in 1903, and the complaint alleges that it supplies around half of all roadgoing motorcycles with engine displacements of more than 601cc. Its next competitors in the market for large, roadgoing motorcycles are the four Japanese motorcycle makers—Honda, Kawasaki, Yamaha, and Suzuki. However, the complaint alleges that motorcycles often involve a “cultural commitment” and that riders often use their motorcycles to express patriotism—something that might seem incongruous with a foreign motorcycle.

Because the motorcycles are so popular around the country, and because they last a long time, the complaint alleges, a large market exists for Harley parts, with Harley making around 15% of its earnings from sales of parts.

“In order to maximize its parts revenue and profit,” the complaint alleges, “Harley-Davidson has used its warranty to try to force those Harley owners under warranty to use only Harley-Davison’s own parts and to foreclose or suppress competition from aftermarket parts competitors.”

Harley sells its motorcycles with a twenty-four-month warranty, but the complaint alleges that it pushes owners to use only Harley-Davidson parts by threatening to void the warranties if other companies’ parts are used.

The complaint quotes the company’s 2021 warranties as saying, for example, that the “the use of parts and service procedures other than Harley-Davidson approved parts and service procedures may void the limited warranty” and that “[s]ome countries, states, or other locations may require all regular maintenance and service work to be done by an authorized Harley-Davidson dealer for your warranty to remain in effect.”

The complaint alleges, “Harley uses its monopoly power in the large, roadgoing American motorcycle market … to coerce customers not to purchase Compatible Parts from its competitors. … This is illegal under the Magnuson-Moss Warranty Act.”

In June 2022, the FTC required Harley to stop doing this in the future. However, the complaint points out that the FTC cannot itself provide reimbursement to consumers who have paid more for parts than they otherwise would have during the term of Harley’s tying arrangement. This class action therefore asks for damages for them.

Article Type: Lawsuit
Topic: Antitrust
Tags: Anticompetitive Actions, Antitrust, Requiring Consumer to Pay Higher Prices, Tying Arrangement