CNH Industrial (NYSE: CNHI) Sued for U.S. Antitrust Violations, Fraud, and Conspiracy in Financial Tying Arrangement

RACINE, WI – 12/8/2016 (PRESS RELEASE JET) — CNH Industrial America, LLC and its wholly owned subsidiary, CNH Capital America, LLC, have been sued for conspiring to monopolize portions of the U.S. agricultural wholesale equipment market and otherwise unduly terminate dealers in an allegedly unlawful wholesale financing tying arrangement.  

CNH Industrial (NYSE: CNHI) Sued for U.S. Antitrust Violations, Fraud, and Conspiracy in Forced Financial Tying Arrangement

The lawsuit, filed in the District Court of Oklahoma by New Holland dealer Wootton New Holland, LLC alleges that CNH Industrial and CNH Capital conspired to unlawfully perpetrate a scheme of fraud to circumvent The Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act of Oklahoma.

Specifically, the complaint alleges that CNH INDUSTRIAL and CNH CAPITAL acted to constructively and unlawfully terminate New Holland Brand Dealer Agreements by extinguishing lines of credit in an alleged “arm’s length” manner, while subsequently refusing to sell products and services to dealers on a cash basis or through other lenders. The complaint also alleges that the CNH Companies engaged in this conduct all while refusing to accept payment for orders in an effort to unlawfully retain payments due and owing to the dealers in order to reduce their own risk. The complaint further alleges that CNH Capital’s sole reason for existence is to circumvent dealer fair treatment statutes existing nationwide in the U.S..  The Plaintiff further alleges that CNH Industrial requires all dealers to purchase financing from CNH Capital at above market rates as a condition of sale and maintaining its dealer status with CNH Industrial.    

As the complaint explains, the CNH Entities division of functions between Industrial and Capital is “a design or scheme to perpetrate fraud.” Moreover, Capital “is so organized and controlled and its affairs so conducted that it is merely an instrumentality or adjunct of” CNH Industrial.  The complaint further explains that CNH Industrial has a history of engaging in illegally activity as part of their schemes to put dealers out of business. In Chili Implement Co., Inc. v. CNH America, LLC, 362 Wis.2d 540 (Wis. Ct. App. 2015),  a jury found that CNH lacked good cause to terminate its dealer, the Wisconsin Court of Appeals affirmed the jury’s finding and the Wisconsin Supreme Court refused to even entertain CNH’s final appeal.  After hearing the evidence, the jury found that CNH imposed nonessential and unreasonable requirements upon Chili Implement that unfairly discriminated against it as compared to other CNH dealers, then terminated its Dealer Agreement when Chili Implement was unable to comply with such nonessential, unreasonable and discriminatory requirements.  Id., 362 Wis.2d 540, *6. The Wisconsin Court of Appeals emphasized that CNH does not “mak[e] termination decisions uniformly.” Moreover, CNH’s approach to discounts was inconsistent and arbitrary, and that CNH’s approach unfairly disadvantaged small dealers like Chili.

The complaint further explains the alleged tying arrangement in that “CNH Capital’s own representatives have testified before this Court as follows: Capital is wholly owned by and is under the exclusive control of CNH Industrial America.  Both entities are wholly owned by and under the exclusive control of CNH Industrial, NV.  Every New Holland and Case dealer in the United States – more than 1000 dealers in total – is required to execute a wholesale financing and security agreement with CNH Capital in order to enter into a dealer agreement with CNH Industrial.  CNH Industrial does not, in the ordinary course of its business, accept payment from any party other than CNH Capital.”  “CNH Capital is the sole financier of all wholesale purchases of CNH Industrial America products.  Moreover, CNH Capital’s sole line of business is the financing of purchases of CNH Industrial products.  Based upon such testimony, it is an inescapable conclusion that CNH Capital’s sole reason for existence is to facilitate the sale of CNH Industrial America products, ergo it is absolutely integral to the wholesale distribution of such products.”

“Given CNH Industrial’s recent booking of a $500 million charge relating to the European Commission’s Cartel Investigation into their breach of Antitrust Regulations, combined with a rich history of inconsistent and capricious treatment of dealers like Chili Implement and Wootton New Holland, I am not at all surprised by their continued behavior. It would appear as though CNH Industrial feels that it can continue operate with impunity and drive toward their outcomes no matter the cost and free of consequence.” said Sean Raimbeault, CEO of Wootton New Holland, LLC.

The matter has also been referred to the Attorney General of The United States and is currently pending.

About CNH Industrial: CNH Industrial N.V. (NYSE: CNHI /MI: CNHI) is a global leader in the capital goods sector with established industrial experience, a wide range of products and a worldwide presence. Each of the individual brands belonging to the Company is a major international force in its specific industrial sector.  The Company’s Executives are Sergio Marchionne (Chairman) and Richard J.Tobin (CEO).  CNH Industrial’s principle executive offices are located at 25 St. James’s Street, LONDON     SW1A 1HA, P: +441268.533000

About CNH Industrial Capital:  CNH Industrial Capital LLC is an indirect wholly owned subsidiary of CNH Industrial N.V. and is headquartered in Racine, Wisconsin. As a captive finance company, the primary business of CNH Industrial Capital LLC and its subsidiaries is to underwrite and manage financing products for end-use customers and dealers of CNH Industrial America LLC and CNH Industrial Canada Ltd. (collectively, “CNH Industrial North America”) and provide other related financial products and services to support the sale of agricultural and construction equipment sold by CNH Industrial North America. CNH Industrial Capital LLC and its subsidiaries also provide wholesale and retail financing related to new and used agricultural and construction equipment manufactured by entities other than CNH Industrial North America. The Company’s Executives are Brett Davis (CEO) and Tom Mariani (Chief Credit Officer).  CNH Industrial Capital LLC’s principal executive offices are located at 5729 Washington Avenue, Racine, WI 53406, and the telephone number is +1(262) 636-6011.

For further information please contact:

Mark McEneaney – Wootton New Holland, LLC.

Source: CNH Industrial (NYSE: CNHI)

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Media Contact
Company Name: Wootton New Holland, LLC
Contact Person: Sean Raimbeault
Phone: 7203575542
Country: United States