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

CNH Industrial America, LLC and its wholly owned subsidiary CNH Capital America, LLC, have been sued for allegedly conspiring to monopolize portions of the U.S. agricultural wholesale equipment market and otherwise unduly terminate dealers in an unlawful wholesale financing 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 dealer alleges that CNH INDUSTRIAL and CNH CAPITAL acted to constructively and unlawfully terminate New Holland Brand Dealer Agreements by terminating lines of credit in an alleged “arm’s length” manner, while subsequently refusing to sell products and services to dealers on a cash basis. The dealer also alleges that the companies engaged in this conduct all while refusing to accept payment for orders in an effort to unlawfully to retain payments due and owing to the dealers in order to reduce their own risk. The dealer further alleges that CNH Capital’s sole reason for existence is to circumvent valid dealer fair treatment statutes existing nationwide in the United States. Also, the Plaintiff alleges that CNH Industrial requires all dealers to purchase financing from CNH Capital, at exorbitant rates, as a condition of sale and maintaining its dealer status with CNH Industrial.

Counsel for the dealer explains through filings that 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". 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.

Court Filings further explain 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.”