Volvo Acquires OMC Stern Drive Joint Venture<br> and Sues BC

Volvo Acquires OMC Stern Drive
Joint Venture and Sues BC

In late December 1998, Volvo acquired OMC's interest in their Lexington TN stern drive joint venture. Then in early January 1999, Volvo sued Brunswick for monopolizing the stern drive business.


Waukegan, Ill. and Chesapeake, Va., - December 23, 1998 - Outboard Marine Corporation and Volvo Penta of the Americas, Inc. announced today that Volvo Penta has acquired OMC's interest in the Volvo Penta Marine Products L.P., a stern drive manufacturing joint venture. Terms of the agreement, which closed December 8, 1998, were not disclosed. The joint venture partnership, which manufactured stern drive engines for powerboats, was formed in 1993.

Concurrently, OMC and Volvo Penta signed a long-term agreement for the supply of stern drives to OMC-owned boat companies, and in which each party agrees to supply service parts to the other.

Outboard Marine Corporation is a leading manufacturer and marketer of internationally-known boat brands, including Chris-Craft®, Four Winns®, Seaswirl®, Javelin®, Stratos®, Lowe®, Hydra-Sports®, and Princecraft®; marine accessories and marine engines, under the brand names of Johnson® and Evinrude®; and FICHT® fuel injection - the industry's premier low-emission, two-stroke engine technology.

Volvo Penta of the Americas, Inc., is a wholly owned subsidiary of AB Volvo Penta, a leading supplier of marine propulsion systems for pleasure and commercial applications, as well as heavy-duty diesel engines for industrial applications. Volvo and Volvo Penta are registered trademarks of AB Volvo, which has its core business in cars, trucks, bus, construction, marine and aerospace activities.

Suit Filed Against Brunswick

PR Newswire
5 Jan 1999
LAKE FOREST, Ill., Brunswick announced today that it has been served with a lawsuit filed recently in Federal District Court in Virginia claiming Brunswick violated various provisions of the antitrust laws in connection with its sales of MerCruiser sterndrive and inboard engines. The suit was filed by Volvo Penta of the Americas, Inc., seeking damages in an unspecified amount and injunctive relief. Brunswick said it believes the suit is without merit and will aggressively defend itself against it.

The complaint invokes the allegations contained in a suit brought in Little Rock, Ark., where, as previously reported, a jury awarded a group of 22 boat builders treble damages totaling $133 million in June 1998. The company is in the process of appealing this verdict. While there can be no assurances, the company believes the jury verdict will ultimately be reversed.


Chicago Tribune
6 Jan 199
by Sallie L. Gaines
Brunswick Corp., already enmeshed in two antitrust lawsuits, said Tuesday it has been hit with a third one, accusing the Lake Forest-based company of unfairly monopolizing the marine engine market.

The latest suit was filed in federal court in Virginia by Volvo Penta of the Americas Inc. Volvo, based in Chesapeake, Va., manufactures stern drives for boats. The suit calls for unspecified damages, Brunswick said.

Brunswick said the suit is without merit, but noted that it includes essentially the same charges as a suit the company lost last year in federal court in Little Rock, Ark.

In that case, brought by Independent Boat Builders Inc., a jury decided Brunswick was guilty of restraint of trade and levied a fine of $44.4 million. Because fines in antitrust cases are tripled, the levy against Brunswick totaled $133 million.

Brunswick is appealing the verdict.

That verdict prompted another antitrust case, filed in October in federal court in Minnesota by two boat builders.

The issue in all three cases is Brunswick's dominance in the marine-engine industry through its Mercury Marine subsidiary, based in Fond du Lac, Wis.

Brunswick also is a major manufacturer of powerboats through its acquisition of popular brands including Sea Ray, Maxum, Baja, Trophy and Boston Whaler.

Boat builders have argued that Brunswick's acquisitions have unfairly lessened competition.

They also have argued that Brunswick gives its own boat-building units better deals on engines than outside manufacturers. Builders also say Brunswick requires them to commit to buy unrealistically high numbers of engines to get the best prices.

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