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RBBI 24 June 1998.
Brunswick Must Pay $133 Million
In Antitrust Case Involving Engines
Wall Street Journal 22 June 1998 by Richard Gibson
Twenty-one U.S. and Canadian boat builders, which had accused Brunswick Corp. of exerting a "stranglehold" on the industry, won a $133 million antitrust verdict against the big marine-engine maker.
A U.S. District Court jury sitting in Little Rock, Ark., Friday awarded the manufacturers and their buying cooperative the sum plaintiffs' attorneys said was among the largest ever for a private antitrust case. The jury awarded $44.4 million in damages, which under antitrust law is automatically trebled.
Brunswick, of Lake Forest, Ill., immediately said it would appeal. Brunswick should not be held liable for competing successfully and fairly in the marketplace," Peter N. Larson, chairman and chief executive, said.
If the award is upheld, it could have a big impact on Brunswick's bottom line. For 1997, the company had net income of $150.5 million, or $1.50 a diluted share, on sales of $3.66 billion. In the boating industry, sales have been lackluster for years, prompting a consolidation.
The lawsuit had alleged various illegal practices by Brunswick in the sale of stern-drive and inboard engines. Stern drives, of which the company is the world's largest maker, typically range from 115 to 415 horsepower and are popular on pleasure and recreational power boats.
The independent boat makers had accused Brunswick of various violations of the Clayton and Sherman Antitrust acts, including making acquisitions that lessened competition and of engaging in unreasonable restraint of trade.
Their suit alleged Brunswick sought to extend its control over the industry by imposing contractual terms that forced the plaintiffs to buy Brunswick engines. Discounts were tied to promises of giving Brunswick a high percentage of the boat makers' purchases, the suit alleged.
When the action was brought in 1995, David Ball, head of the Independent Boat Builders Inc. buying cooperative, had said Brunswick's tactics had imposed a "stranglehold on us and on the market" and had forced competitors out of the market.
In December, Brunswick confirmed that it was the subject of an antitrust investigation by the Federal Trade Commission over sales practices relating to the company's stern-drive engines.
Copyright © 1998 Dow Jones & Company, Inc.
Arkansas Democrat- Gazette Saturday 20 June 1998 by Linda FriedliebIn one of the largest awards in Arkansas history, an Illinois-based boat and marine-engine manufacturer must pay $133.1 million to 21 independent boat builders for monopolizing the market on stern-drive and inboard motors.
A federal jury in Little Rock on Friday ordered the Brunswick Corp. to pay $44,371,761 to the boat builders. But federal antitrust laws allow for collection of triple the jury award, instead of punitive damages.
The plaintiffs included Sherwood-based Concord Boat Corp., which the jury awarded $106,459, to be tripled to $319,377.
After 10 weeks in the courtroom, including less than two days of deliberations, the jury decided that Brunswick monopolized the market for stern-drive and inboard motors with its MerCruiser engines since December 1991.
Jurors also found that the company conspired to restrain trade in the market for those motors. They found that Brunswick bought other boat manufacturers to lesson competition in the motor market.
But jurors rejected plaintiffs' arguments that they were entitled to damages from before December 1991 because Brunswick had concealed its actions. The jury also refused to award damages for the future. These antitrust claims operate under a four-year statute of limitations, from the date the lawsuit was filed, unless the plaintiffs can prove fraudulent concealment.
The jury also rejected counterclaims by Brunswick against the boat builders and Independent Boat Builders Inc., a cooperative the builders use to negotiate prices and buy materials for constructing their boats.
After the verdict was read, the plaintiffs and their attorneys stood, smiling, hugging and almost dancing around the fifth-floor courtroom.
"We're ecstatic," confirmed Amy Lee Stewart of the Rose Law Firm who tried the case with partner Jerry Jones, K. Craig Wildfang of Minneapolis' Winthrop and Weinstine and a host of other attorneys. "We really, really believed that Brunswick had monopolized the stern-drive motor market."
Defense attorneys were less pleased. They shook hands with their opponents before quietly leaving the courtroom.
"We feel that the jury reached the wrong result, and we shall recommend that their decision be appealed," said one of the lead defense attorneys, W.H. "Buddy" Sutton of Little Rock law firm Friday, Eldredge and Clark. The defense has filed motions asking the judge to rule in their favor as a matter of law, regardless of the jury verdict.
Brunswick, a Delaware corporation with its primary place of business in Lake Forest, Ill., manufactures and sells engines and boats. The original complaint identifies Brunswick as the "dominant firm" in the marine industry with $1.77 billion in sales in its boating segment during the first three quarters of 1995.
Brunswick's Mercury Marine division manufactures and sells Mercury, Mariners and Force outboard motors as well as MerCruiser gasoline and diesel inboard and stern-drive engines. The complaint identifies Brunswick as controlling about 85 percent to 90 percent of the market for stern-drive engines. The company also manufactures several brands of boats, encompassing most kinds of recreational boats.
The jury verdict does not end the long-running case, filed in December 1995. U.S. District Judge James M. Moody split the case in two, letting the claims involving damages for monopolization of the inboard and stern-drive motor market go to the jury while reserving equitable claims, including one involving outboard motors, for a later ruling.
Any appeal to the 8th U.S. Circuit Court of Appeals in St. Louis will have to wait until Moody resolves other issues and enters a judgment in the case. If the verdict and award stand, the plaintiffs' attorneys will be able to collect attorneys' fees from Brunswick.
Among matters Moody will have to decide is whether Brunswick will have to sell Bayliner and Sea Ray, two boat manufacturers that the company acquired in 1986, or any of several smaller boat manufacturers acquired later.
Bayliner offers jet-powered boats, family runabouts, cabin cruisers, sports fishing boats and luxury motor yachts while Sea Ray offers luxury motor yachts, cabin cruisers, fishing boats, runabouts, water-skiing boats and jet-powered boats.
The plaintiffs claimed the acquisitions were part of a long-term strategy to seal up the stern-drive and inboard motor market by buying the boat manufacturers that were large enough to interfere with Brunswick's ability to charge artificially high prices.
Stern-drive and inboard motors are similar and are used by the plaintiffs in recreational boats ranging from 16-feet-long runabouts to 40-foot boats similar to yachts, according to Stewart. Most of the boats fall in the 16-feet-long to 28-feet-long range.
The plaintiffs are boat builders that participate in a cooperative called Independent Boat Builders Inc. The cooperative was formed in 1991 to buy materials used in making boats.
Mariah Boats, an Illinois-based boat builder, will take home the largest chunk of the award. The jury awarded it $16,626,171, to be tripled to $49,878,513. Other plaintiffs awarded more than $1 million by the jury include Malibu Boats, Powerquest Boats Inc., Silverton Marine Corp., Thompson Boat Co., Armada Manufacturing, Caravelle Boats Inc., Campion Marine Inc., Harris Kayot, and KCS International.
Plaintiffs awarded less than $1 million include: Concord, Albemarle Boats Inc., Century Craft Industries, Vanguard Industries F.R.P. Industries, G.W. Invader, Galaxie Boatworks, Mirage Boats Inc., Ohio Marine Distributors, Sea Arrow Marine Inc. and Weeres Industries.
The jury-awarded damages are based on the difference between the price Brunswick charged as a monopolistic seller of inboard and stern-drive engines and the price that would have existed in a competitive market, Stewart said.
"I hope that what [boat buyers] are going to see is some increased competition once the market opens up," Stewart said. "That should help to bring prices down."
Copyright 1998, Little Rock Newspapers, Inc.
06:20 p.m Jun 19, 1998 Eastern
LITTLE ROCK, Ark., June 19 /PRNewswire/ -- Rose Law Firm attorneys Jerry C. Jones and Amy Lee Stewart, together with co-counsels Craig Wildfang, Brooks Poley and Chris Madel of the Minneapolis firm Winthrop & Weinstine, today won a $133 million antitrust suit brought by 21 independent boat builders and Independent Boat Builders, Inc. against the Brunswick Corporation of Lake Forest, Ill.
The largest ever civil verdict in Arkansas was handed down today by a jury in the U.S. District Court for the Eastern District of Arkansas. The decision is thought to be one of the biggest private antitrust verdicts in the nation, according to Jones.
The ruling awarded the plaintiffs $44.3 million, which is trebled automatically under the antitrust laws and subject to attorneys' fees. Brunswick was sued on three points -- monopolization of the stern drive and inboard marine engine market for pleasure boats under Section 2 of the Sherman Act; engaging in unreasonable restraint of trade under Section 1 of the Sherman Act; and acquisitions which had the effect of substantially lessening competition in the stern drive and inboard marine engine market under Section 7 of the Clayton Act.
Winthrop & Weinstine is a Minneapolis/St. Paul based law firm with 75 attorneys. Rose Law Firm is the fourth largest legal firm in Arkansas with 33 attorneys. SOURCE Rose Law Firm
Copyright 1998, PR Newswire
Jury Finds Against Brunswick Corp. In Antitrust Suit
Dow Jones Newswires 19 June 1998LAKE FOREST, Ill. -- Brunswick Corp. (BC) said an Arkansas jury awarded about $130 million to a group of boat builders and the group's buying cooperative, Independent Boat Builders Inc., in a verdict in an antitrust suit against Brunswick.
The jury awarded damages of $44.4 million and said the amount should be trebled.
Brunswick said it plans to appeal the verdict and damage award.
In a press release Friday, Brunswick said it was charged with unlawfully monopolizing, unreasonably restraining trade, and substantially lessening competition in the market for sterndrive and inboard marine engines in the U.S. and Canada. The plaintiffs were seeking $78 million in damages, which would have been trebled under antitrust laws.
Brunswick said it expects an appeals court to rule the company did not monopolize the market.
Brunswick Corp. makes indoor and outdoor recreational products.
Copyright © 1998 Dow Jones & Company, Inc.
05:11 p.m Jun 19, 1998 Eastern
LAKE FOREST, Ill., June 19 /PRNewswire/ -- Brunswick Corporation said it intends to appeal an adverse verdict reached today by a jury in an antitrust suit tried in the United States District Court for the Eastern District of Arkansas.
The suit, brought by a group of boat builders and its buying cooperative, the Independent Boat Builders, Inc. (IBBI), alleged that, by means of acquisitions and other conduct, the company unlawfully monopolized, unreasonably restrained trade, and substantially lessened competition in the market for sterndrive and inboard marine engines in the United States and Canada. The plaintiffs claimed $78 million in damages, which would have been trebled under the antitrust laws. In finding for the plaintiffs, the jury awarded $44.4 million, which will be trebled.
"In our view, both the decision and the damage award are in error, and we will vigorously pursue all available avenues of appeal," said Chairman and Chief Executive Officer Peter N. Larson. "We believe that the appellate process will reach the conclusion that Brunswick should not be held liable for competing successfully and fairly in the marketplace."
Brunswick Corporation is the global leader in active recreation with consumer products that include such brands as Zebco and Quantum fishing equipment; American Camper and Remington camping gear; Igloo coolers and ice chests; Mongoose, Roadmaster and Ride Hard bicycles; Brunswick bowling and family entertainment centers, equipment and consumer products; Brunswick billiards tables; Life Fitness, ParaBody and Hammer Strength exercise equipment; Sea Ray, Bayliner and Maxum pleasure boats; Baja high-performance boats; Boston Whaler and Trophy offshore fishing boats; Mercury, Mariner and Force outboard engines and MerCruiser sterndrive and inboard engines. SOURCE Brunswick Corporation
Copyright 1998, PR Newswire
Brunswick Stock Goes in the Toilet
RBBI 24 June 1998Brunswick stock has slid some since the verdict was announced June 19th. On June 11th Brunswick made a major announcement stating the projected 2nd quarter earnings were not going to be reached due to the Asian economy problems. The stock took a monstrous dive in heavy trading as can be seen in the chart below. It is unknown how much or if any, the anticipated outcome of this lawsuit had upon the stock price. However, the tremendous legal costs (and they might have to pay legal costs from both sides), the potential exposure to a huge court award, and the general tarnishing of the Brunswick name could not have helped much.
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