Menu
Blog Banner Image

The Franchise Memorandum

Federal Court Denies Hyundai’s Motion to Dismiss Antitrust Counterclaims Finding a Relevant Market In Replacement Parts for Hyundai Automobiles
Posted in Antitrust

A federal court in North Carolina recently denied Hyundai’s request to dismiss federal antitrust counterclaims brought against it in a trademark infringement lawsuit. Hyundai Motor Am., Inc. v. Direct Techs. Int’l, Inc., 2018 WL 4110544 (W.D.N.C. Aug. 29, 2018). Hyundai sued Direct Technologies International (DTI) for trademark infringement, false advertising, dilution, unfair competition, intentional interference, and unfair and deceptive trade practices, alleging that DTI imported and sold Hyundai-branded parts through an unauthorized distributor. In response, DTI asserted federal antitrust counterclaims, including violations of the Sherman Act, Clayton Act, and Lanham Act, alleging that Hyundai tried to harm its competitors and monopolize the market for Hyundai replacement parts by threatening not to honor its warranties if its cars were found not to contain genuine Hyundai-made parts.

Hyundai moved to dismiss DTI’s counterclaims arguing, primarily, that DTI did not identify a relevant market or an actual tying relationship (conditioning the sale of one product on the purchase of another). Hyundai also argued that DTI did not allege that the purported conspiracy underlying its claim harmed competition. The court disagreed. The court held that DTI did, in fact, identify a relevant market—the replacement part market for Hyundai automobiles. It further held that DTI adequately alleged a tying relationship under the theory that Hyundai’s vehicle warranties were conditioned on the use of Hyundai-brand replacement parts. The court also held that DTI did, in fact, allege harm to competition under the theory that Hyundai’s agreements with its dealers and distributors affect a substantial volume of interstate commerce in the market for replacement parts for Hyundai automobiles, that Hyundai coerced its dealers into entering its dealer agreement in restraint of trade, and that Hyundai used its agreements to acquire a monopoly. Finally, the court denied Hyundai’s arguments regarding similar claims made under North Carolina’s state antitrust law.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

To subscribe to monthly emails for The Franchise Memorandum, please click here

Topics

Archives

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors