Bandag Sues Michelin For Unfair Competition
September 17, 1999
Bandag Inc. is suing two U.S.-based divisions of Michelin, claiming that the tire maker has been trying to drive the retreader out of business by misappropriating trade secrets, spreading false rumors about Bandag, and engaging in predatory pricing.
The suit, filed for undisclosed damages in the U.S. District Court for the Southern District of Iowa, claims that Michelin North America and Michelin Tire Retread Technologies used pressure and, in some cases, significant financial inducements, to persuade seven major dealers to convert to Michelin's retreading system.
Bandag also alleges that Michelin misappropriated confidential information, and made false and derogatory statements about Bandag and false, unsupported claims about its own products. Furthermore, the retread specialist said Michelin uses predatory pricing tactics.
The suit also alleges that Michelin wrongfully obtained confidential, proprietary and trade secret information from Bandag, using it to create and refine the Michelin retread system.
"We believe Michelin's goal is to control the truck retread tire market and then shift the product mix from retreads to costlier new replacement tires," says Bandag CEO Martin G. Carver. "This would eliminate significant competition, ultimately raise prices and decrease consumer choices."
Michelin entered the tire retreading business in the fall of 1997 through its subsidiary, Michelin Retread Technologies Inc. Last April MRTI announced it would build a new tread-pressing plant in Covington, GA, to press Pre-Mold treads to meet a retread demand that was growing faster than Michelin had originally anticipated.
Michelin currently has 28 U.S. retreading franchises. Bandag, which pioneered retread tires 40 years ago, has more than 400 franchised locations throughout the United States.
Michelin officials expect to release a statement regarding the lawsuit early this week.