Brunswick sues Yamaha
September 27, 2004
Filed under Market Outlook
FOND DU LAC, Wisc. – Brunswick Corp., Mercury Marine Division, has filed an anticipatory breach of contract lawsuit against Yamaha Motor Co. Ltd. attempting to stop a 91.6-percent price increase on the 80 – 115 HP powerheads it buys from the Japanese engine manufacturer.
In a complaint filed earlier this month in the U.S. District Court, Eastern Court of Wisconsin, Mercury Marine said Yamaha has threatened to cease delivery of the powerheads as of Nov. 1, unless Mercury agrees to that price increase.
Mercury alleges in its lawsuit that Yamaha’s actions violate a basic sales agreement the companies entered into on May 29, 1998 when, “Yamaha agreed to provide Brunswick with a long-term supply of certain models of marine-engine powerheads and replacement parts at specified prices.”
Mercury said that shortly after the Department of Commerce released its preliminary finding in early August – which found that Japanese outboard engine manufacturers had engaged in dumping of outboard engines and powerheads – Yamaha said it would go ahead with the price increase.
Brunswick set that investigation in motion earlier this year when it alleged the Japanese manufacturers had violated U.S. anti-dumping laws.
“Yamaha announced the 91.6-percent price increase for Powerheads as retaliation against Brunswick for petitioning the Department of Commerce to initiate an antidumping investigation,” Mercury’s lawsuit states. “Yamaha has announced an intent to willfully and intentionally breach the agreement.”
Officials at Yamaha could not be reached for comment as of press time, but in a statement issued by the company in late July, Phil Dyskow, president of the Marine Group of Yamaha Motor Corp., U.S.A., said increases to the F75, F90 and F115 four-stroke powerheads it sold to Brunswick were likely on the way.
“These price increases are part of Yamaha’s on-going efforts to restructure its prices in Japan and the United States to meet the requirements of the current business climate,” Dyskow said in the statement. “Yamaha is required to increase these prices in order to protect its commercial position in the United States.”
Mercury says solution simple
In a telephone interview this morning, Mercury Marine director of Communications Steve Fleming said the issue at hand is a simple one.
“We have an agreement until 2006 for them to supply these engines at an established price,” Fleming said. “It’s very simple. We have a contract that’s six-years-old, and it’s still good for two more years, that says we have a total of approximately 70,000 engines or powerheads coming from them at the agreed upon prices. We’re simply asking that they live up to the terms of the contract.
“For them to change that would be a breach of contract. We are trying to stop them from breaking the contract and asking the court to force Yamaha to live up to its contractual obligations.”
Fleming said Mercury is still receiving powerheads from Yamaha, but that with the Nov. 1 deadline approaching, his company has asked the court to take action quickly, and he believes it will.
In addition to the speedy hearing that has been requested, the court papers reveal that Brunswick has also asked the court for the following:
– Damages in the amount to compensate Brunswick for Yamaha’s anticipatory breach of its contractual obligations;
– A declaration by the Court that Yamaha cannot increase its prices on powerheads sold to Brunswick;
– A preliminary injunction prohibiting Yamaha from increasing its price on powerheads to Brunswick;
– Such other and further relief as the court deems proper.
Brunswick said in the papers that it also “demands a trial by jury as to all issues triable by a jury.”
Settlement still possible?
Despite the legal action underway, Fleming said the companies were still in contact with one another regarding the issue and he did not close the door on some sort of out-of-court settlement.
“We don’t want to speculate on what the courts will do or what Yamaha might do, so we are going to continue to follow the legal process, unless it’s resolved prior to it reaching that stage,” Fleming said. “I believe there is still discussion at high levels. I think you always hope that something that can be resolved the easiest way possible. So I guess we’ll wait and see what happens with that.”
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