Tenneco sets aside $132 million for lawsuits – Manufacturing News

on Jul14

13 July 2017 | 4:00 pm

Automotive supplier Tenneco is establishing a $132 million fund to settle antitrust lawsuits worldwide, in the wake of government investigations on two continents.

The Lake Forest company has emerged largely unscathed from investigations by the U.S. Department of Justice and European Commission into price fixing and bid rigging in the automotive parts industry. But it is facing class-action lawsuits in federal court in Michigan brought by auto dealers and consumers who say anticompetitive practices forced them to overpay for vehicles containing Tenneco’s exhaust systems.

In a July 7 filing with the Securities & Exchange Commission, the company said the fund will be used “to resolve the company’s antitrust matters globally, which primarily involves the resolution of civil suits and related claims.”

“No amount of this reserve is attributable to matters with the DOJ or the (European Commission), and no such amount is expected based on current information,” Tenneco said in the filing.

A spokesman for Tenneco declined to comment on the pending litigation.

For three years the company has been enmeshed in governmental investigations of the automotive parts industry, with the European Commission raiding an office in March 2014. But in April the commission dropped its inquiry into Tenneco, and now the company expects to receive “final leniency” from Justice Department “in the near future,” according to the SEC filing.

Tenneco reported $8.60 billion in revenue in 2016, an increase of 4.8 percent. Net income rose 47 percent to $363 million.

Setting up the reserve represents “a rational business decision” that will give Tenneco “the financial flexibility to do what they think is appropriate,” said Theodore Banks, a partner at Chicago-based Scharf Banks Marmor. It may be better for the company to settle than to engage in expensive litigation that could find Tenneco liable.

When a governmental agency investigates a company, evidence of wrongdoing makes it easy to file a lawsuit, he said. But even “if there isn’t such a finding, it doesn’t mean that you can’t file a suit, it just makes it harder.”



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