Mercedes-Benz targeted by U.S. price-fixing probe

July 20, 2002|By BLOOMBERG NEWS

WASHINGTON - DaimlerChrysler AG said yesterday that the Justice Department is conducting a criminal investigation into allegations the company's Mercedes-Benz subsidiaries took part in a price-fixing scheme among New York-area dealers.

The No. 5 carmaker said in a filing with the U.S. Securities and Exchange Commission that the case is connected to a 1999 proposed class action lawsuit against two Mercedes-Benz units, Mercedes-Benz USA LLC and Mercedes-Benz Manhattan Inc. They were served with grand jury subpoenas in May, the company said.

The 3-year-old lawsuit was filed in U.S. District Court in Newark, N.J., on behalf of consumers who bought new Mercedes-Benz cars. It accuses 27 dealers in New York, New Jersey and Connecticut and Mercedes-Benz USA of conspiring since 1992 "to artificially maintain prices," said Jeffrey W. Herrmann, one of the plaintiffs' lawyers.

U.S. shares of Daimler- Chrysler tumbled $3.90, more than 8 percent, to close at $43.65 on the New York Stock Exchange yesterday.

"It's a massive overreaction," said analyst David Healy of Burnham Securities Inc. "It's just a symptom of the psychotic nature of the market right now." He doesn't own DaimlerChrysler shares.

The lawsuit was based on allegations by a dealer the company tried to fire for poor performance, said DaimlerChrysler spokeswoman Donna Boland. "We think this is without merit."

The dealer, Tamir Shanshab, owner of Coast Automotive Group in Toms River, N.J., alleged that Mercedes-Benz officials frequently relayed complaints by dealers that he sold cars at low prices and advertised aggressively. Mercedes-Benz USA threatened to cancel his franchise if he didn't sell it back to the company, he alleged in the civil case.

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