Michelin Countersues Bandag

November 23, 1999

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Michelin has filed a countersuit against the Bandag, accusing the retreader of trying to keep it out of the retread business.

Two months ago, Bandag filed suit against Michelin Retread Technologies and Michelin North America, claiming that the tire maker has been trying to drive the retreader out of business by misappropriating trade secrets, spreading false rumors about Bandag, engaging in predatory pricing, and pressuring Bandag dealers to convert to Michelin's retreading system.
Last week, the two U.S.-based Michelin divisions filed a lawsuit against Bandag, contending that Bandag has "engaged in exclusionary conduct" to keep its monopoly position in the retread tire business.
In the suit, Michelin alleges that Bandag has, among other things:
* Used highly restrictive long-term franchise agreements that prohibit franchisees from using other retread processes.
* Acquired commercial truck tire dealers to prevent them from converting to Michelin's system.
* Offered substantial financial incentives for dealers not to convert to the Michelin system.
* Violated the terms of an injunction issued by a federal court ordering Bandag not to illegally restrict competition from mold-cure retreading systems.
* Threatened and commenced litigation against commercial truck tire dealers who left the Bandag system or wanted to.
Michelin has asked the court to award it damages, prohibit Bandag from enforcing the illegal terms of its franchise agreements, and to immediately dismiss most of Bandag's claims filed in its Sept. 19 lawsuit.
"It's illogical and incorrect to allege that Michelin is attempting to monopolize the retreading market," said John Rice, chief operating officer for Michelin Americas Truck Tires. "We have only 30 retread locations compared to Bandag's more than 400 locations. We are merely a new entrant in a market long monopolized by Bandag."
Bandag declined to comment, citing a policy against commenting on items currently in litigation.

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