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UNITED STATES v. VOLKSWAGEN OF AMERICA

February 24, 1960

UNITED STATES of America, Plaintiff,
v.
VOLKSWAGEN OF AMERICA, INC., et al., Defendants



The opinion of the court was delivered by: FORMAN

This action has been brought pursuant to Title 15 U.S.C.A. §§ 4 and 25, which are respectively Sections 4 of the Sherman Act and 15 of the Clayton Act, alleging violations of Section 1 of the Sherman Act, 15 U.S.C.A. § 1, and Section 3 of the Clayton Act, 15 U.S.C.A. § 14. The defendants are Volkswagen of America, Inc., (hereafter referred to as VOA), appointed exclusive importer of Volkswagen products effective January 1, 1956 by Volkswagenwerk G.m.b.H., and the fourteen distributors of those products in the United States. *fn1" The alleged co-conspirators not made defendants are Volkswagenwerk G.m.b.H., the German manufacturer (hereinafter referred to as VW), Volkswagen United States (hereinafter referred to as VUS) and the Volkswagen dealers in the United States.

The complaint alleges that since 1953 the defendants and co-conspirators have engaged in an unlawful conspiracy in violation of Section 1 of the Sherman Act and in violation of Section 3 of the Clayton Act. More specifically, paragraphs 6, 16, 17, 20 and 21 of the complaint, as amended by stipulation, allege the following:

 '6. Volkswagenwerk G.m.b.H. (hereinafter referred to as 'Volkswagenwerk'), a corporation organized and existing under the laws of the German Federal Republic has participated as a co-conspirator in the violation of Section 1 of the Sherman Act and in the violation of Section 3 of the Clayton Act as hereinafter charged, but is not made a defendant herein.'

 '16. Beginning in or about 1953, and continuing up to and including the date of the filing of this complaint, the defendants and the co-conspirators have been and now are engaged in a combination and conspiracy, and have been and are now parties to unlawful contracts, agreements and understandings among themselves, in unreasonable restraint of interstate trade and commerce in Volkswagen automobiles and parts, in violation of Section 1 of the Sherman Act.'

 '17. The unlawful combination and conspiracy has consisted of a continuing agreement and concert of action among the defendants and the co-conspirators, the substantial terms of which have been and are that:

 '(a) Distributor defendants will sell Volkswagen automobiles and parts to dealers at wholesale prices fixed by Volkswagenwerk, VUS and VOA;

 '(b) Co-conspirator dealers will sell Volkswagen automobiles and parts to purchasers at retail prices fixed by Volkswagenwerk, VUS and VOA;

 '(c) Distributor defendants will sell Volkswagen automobiles and parts to franchised Volkswagen automobile dealers only;

 '(d) Co-conspirator dealers will not sell Volkswagen automobiles to others for resale;

 '(f) Each co-conspirator dealer will sell Volkswagen automobiles and parts to those customers only who reside within the exclusive territory assigned to such dealer;

 '(g) Distributor defendants and co-conspirator dealers will not deal in or sell any automobiles or parts competitive with Volkswagen automobiles or parts;

 '(h) Distributor defendants will terminate the sales agreements of, or reduce the quantities of Volkswagen automobiles allocated to, those dealers who do not adhere to the terms of the conspiracy.'

 '20. Beginning in or about 1953 and continuing up to and including the date of the filing of this complaint, VUS and defendant VOA while engaged in the aforesaid interstate commerce and in the course of such commerce, have sold Volkswagen automobiles and parts for resale in the United States to the distributor defendants on the condition, agreement and understanding that said distributors shall not deal in new foreign-manufactured automobiles or parts of any competitor of Volkswagenwerk, VUS or VOA. The effect of the aforesaid transactions may be to substantially lessen competition or tend to create a monopoly in the distribution and sale of new foreign-manufactured automobiles and parts in interstate commerce in violation of Section 3 of the Clayton Act.

 '21. Beginning in or about 1953 and continuing up to and including the date of the filing of this complaint, the distributor defendants while engaged in the aforesaid interstate commerce and in the course of such commerce have sold Volkswagen automobiles and parts in the United States to dealer co-conspirators on the condition, agreement and understanding that said dealers shall not deal in new foreign-manufactured automobiles or parts of any competitor of Volkswagenwerk, VUS or VOA. The effect of the aforesaid transactions may be to substantially lessen the competition or tend to create a monopoly in the distribution and sale of new foreign-manufactured automobiles and parts in interstate commerce in violation of Section 3 of the Clayton Act.'

 The defendant VOA has made a motion under Rules 12(c) and 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A., in which the distributor defendants have joined

 '* * * for an other directing dismissal of the following parts of the complaint or, alternatively, pursuant to Rule 16 thereof, for a pretrial order precluding the taking of testimony under the following parts of the complaint: 'Part A:

 '(1) The allegations in paragraphs 16 and 17 of the complaint that the defendants and alleged co-conspirators conspired prior to January 1, 1956 to sell Volkswagen ...


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