Volume 33, Number 9, September 1998

 

USGAuto News

Texas Antitrust Suit Against Networks Dismissed

Nearly three years after eight independent Texas glass companies filed a lawsuit in federal court against four network chains charging them with violations of the Sherman Antitrust Act and the Clayton Act, the case has been dismissed. A motion by the defendants for summary judgment has been granted with costs taxed against the plaintiffs. The lawsuit, filed in September 1995 in the Eastern District Court in Beaumont, TX, sought to recover $10 million ($1.5 million each) in damages for boycott and tortuous interference with contracts (see USGlass, September 1995, Industry News).

The eight glass companies are: Stewart Glass & Mirror, Inc. of Jasper; Texas Mobil Auto Glass, Inc. of San Antonio; A-1 Glass Company of Beaumont; Freddy’s Auto Glass & Mirror, Inc. of Waco; Nederland Glass Company, Inc. of Nederland; Lone Star Glass Inc. of Houston; Auto Glass Specialists of Irving; and Allied San Jacinto Glass Company, Inc. of Beaumont.

The suit alleged that four glass companies—U.S. Auto Glass Discount Centers, Inc. of Chicago, IL; Windshields America, Inc. of Bedford, NH; Safelite Glass Corporation of Columbus, OH; and Harmon Glass Company, Inc. of Minneapolis, MN—formed and operated glass repair network systems that violate Sections 1 and 2 of the Sherman Act, as well as Texas law. Three of the defendants, U.S. Auto Glass Discount Centers, Windshields America and Safelite, have since been merged under the Safelite name.

Specifically the plaintiffs claimed two intertwined types of conspiracies: vertical agreements between the defendants and third-party insurance companies in restraint of trade, and horizontal agreements between each defendant company in restraint of trade.

The opinion issued by U.S. District Judge Richard A. Schell found that the plaintiffs’ evidence did not support their allegations of horizontal conspiracy through the network system of competing defendant’s shops. "Plaintiffs have not produced direct evidence of conspiracy," it said. "Moreover, plaintiffs’ circumstantial evidence is not sufficient to eliminate the possibility that defendants acted independently. Plaintiffs have not shown a single instance where a defendant actually entered into an agreement with another defendant to participate in illegal conduct."

In addition, the judgment stated, "plaintiffs have not come forward with any specific evidence establishing that defendants steered customers away from plaintiff’s stores."

As for the allegations of vertical conspiracy, the summary judgment compared to the AGR industry’s vertical agreements between networks and insurance companies, the medical care industry’s preferred provider agreements—and plaintiffs conceded that they are similar. "Contrary to plaintiffs’ arguments, they have not produced evidence that these vertical agreements were the product of illegal horizontal agreements between defendants," said the judgment. "The evidence . . . demonstrates that defendants each individually realized that in order to survive in this highly competitive market, they needed to compete at two levels—first as a network and second as a network subcontractor."

According to the opinion, "the plaintiff must . . . come forward with specific facts showing that there is a genuine issue for trial."

It continues that in cases alleging violation of the Sherman Act’s Section 1, "In addition to proving the existence of an antitrust conspiracy, the plaintiff must also prove that it has suffered a cognizable antitrust injury." Further, "conduct as consistent with permissible competition as with illegal conspiracy does not . . . support an inference of antitrust conspiracy." Plaintiffs must prove there is sufficient evidence to create a "reasonable inference of concerted action to engage in illegal conduct."

The independent glass shops had contended that their summary judgment evidence proved that the defendants conspired to form illegal network systems. Among the evidence, they pointed to "an internal Safelite memo" in which, according to the summary judgment, "an executive stated, ‘If we [including the other majors] take share from independents to a point where we ‘control’ service, why can’t we achieve price improvement?’" They also relied on a 1995 Harmon memo "listing several company concerns, one of which was, ‘How long will we [Harmon] share network accounts with independent glass shops[?]’"

The summary judgment follows the trial judge’s September 1996 ruling against the defendants’ motion to dismiss the case (see USGlass, November 1996, USGAuto News).

"Obviously, we’re happy with the outcome," said Gary Jacobson, Harmon Auto Glass’s executive vice president for sales and marketing. "As an organization, we thought it was important to stand our ground for our customers, and we were confident that’s the way it would go all along."

According to a response issued by Safelite Glass Corp., "The outcome was particularly satisfying to Safelite because summary judgments are rare in cases such as this that allege antitrust violations." It continues, "The evidence presented shows that each of the defendant companies–Safelite included–took legal and proper actions designed to win business for their own companies. That’s essentially what every glass company–independent or network– wants to do."

The attorney for the plaintiffs, Dennis Dylewski, partner of Dylewski and Douglas, said of his clients, "They’re disappointed to say the least. They believe fact issues do exist and they deserve a chance to prove that before a jury." He added that the plaintiffs are considering filing an appeal.

 

NAGS Issues Comparisons

NAGS has released a chart comparing the current list and expected new benchmark averages of 10,488 parts and labor from the May 1998 NAGS Calculator.

    LIST     LABOR  
  Old New % Old New %
All Parts $789.92 $371.09 47% 2.46 1.97 80%
All Windshields $1,220.34 $389.63 32% 3.46 2.68 77%
All Tempered $672.56 $366.03 54% 2.19 1.77 81%
Domestic W/S $1,222.97 $396.46 32% 3.33 2.43 73%
Foreign W/S $1,218.80 $385.65 32% 3.53 2.83 80%
Domestic C/T $812.73 $430.90 53% 2.24 1.77 79%

 

NAGS has also released a chart comparing the current list and expected new benchmark averages of 6,522 parts that have an OEM equivalent price from the May 1998 NAGS Calculator.

 

      List    
  Old New OEM %Old %New
All Parts $711.17 $358.71 $383.42 54% 107%
All Windshields $1,119.34 $362.36 $56.55 32% 156%
All Tempered $649.09 $358.16 $355.57 55% 99%
Domestic W/S $1,232.68 $406.95 $677.02 33% 166%
Foreign W/S $1,051.29 $335.59 $500.23 32% 149%
Domestic C/T $815.86 $437.03 $459.55 54% 105%
Foreign C/T $465.54 $271.35 $241.13 58% 89%

NAGS Revaluation becomes effective January 1.

 

Government Certifies Head Air Bags

The government has certified a new generation of air bags aimed at protecting the heads of automobile passengers during side-impact crashes and rollovers, according to an Associated Press report.

Mercedes-Benz and Volvo are offering automobiles with roof-mounted airbags, while American manufacturers and BMW are planning to offer similar technology beginning this fall. In response to this, Transportation Secretary Rodney Slater has announced that the government is expanding its head protection standards so that head airbags will satisfy safety requirements, according to the report.

ADCO and AGS Receive Registration

The ADCO Unit of AlliedSignal Specialty Chemicals of Michigan City, MI, and Auto Glass Specialists of Madison, WI, have recently received certifications. The ADCO unit has been registered for ISO 9001 and QS 9000 compliance by Entela, Inc. Quality System Registration of Grand Rapids, MI. The ADCO unit is a supplier of adhesives and sealants for the automotive and construction industries.

Auto Glass Specialists says it is the first auto glass repair and replacement company in the United States to receive ISO 9000 certification.

"Our goal has always been complete customer satisfaction. ISO 9000 certification is like a seal of approval, telling our customers that we use only high-quality supplies from approved vendors, and that auto glass repair and installation is done by the book every time, by every technician, in every one of our service centers," said Robert Birkhauser, president of the chain.

 

The Dwyer Group Completes Acquisition of Glass Doctor

The Dwyer Group, Inc. completed its acquisition of Glass Doctor Corporation in a deal that is expected to add an estimated $1.5 million in annual revenues to the company and build on its goal of creating a comprehensive line of repair and maintenance franchises. The acquisition was funded by a combination of cash, a note and the issuance of 333,333 shares of the company’s common stock.

"As an industry leader, Glass Doctor will complement the other companies that make up the Dwyer Group and will benefit from the cross-brand marketing power of our national and international strength," said Robert Tunmire, president and chief executive officer of the company. "We consider Glass Doctor, which is poised for national expansion, a perfect fit for the Dwyer Group. The acquisition makes a statement to our customers around the world that we intend to be their comprehensive service provider."

Windshield Repair Warehouse Offers Free Resin Samples

Windshield Repair Warehouse of Telluride, CO, is offering free samples of its resins for a limited time. According to the company, the offer is intended to allow repair technicians to test the performance of its resins without risk.

 


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