Monday, April 26, 2004
Lockyer Sues Traffic Signal Firm for Antitrust Violations
From Staff and Wire Service Reports
Attorney General Bill Lockyer has filed an antitrust lawsuit against a traffic signal company, saying it cost taxpayers millions of dollars by artificially inflating prices for traffic lights.
In the suit filed Thursday in Los Angeles Superior Court, Lockyer accuses Anaheim-based Econolite Control Products of antitrust violations in 39 cities and counties between 1997 and 2002. The suit seeks $2,500 for each violation and asks the court to permanently bar the company from so-called “tie-in” sales.
Lockyer’s suit claims the firm violated antitrust law by requiring contractors bidding on traffic signal projects, who need proprietary Econolite products to install in high-tech coordinated signaling equipment, to also purchase nonproprietary equipment from Econolite. The firm charges higher prices for the nonproprietary equipment than contractors would have to pay buying it from other companies, the suit contends.
Those costs are eventually passed on to public entities and the taxpayers who support them, the attorney general alleges.
The tie-in sales violate the Cartwright Act and the state’s Unfair Competition Law, the suit claims.
“The company’s unlawful business practices already have cost Southern California taxpayers too much money, and they need to be stopped to prevent further harm,” Lockyer said in a statement.
The company defended its practices, saying it had done nothing wrong and was cooperating fully with the attorney general.
“Econolite has not and does not engage in illegal bidding practices,” the firm said in a statement.
Governments using the company’s products include Los Angeles, Orange and San Bernardino counties as well as Beverly Hills, Santa Monica, Burbank and Palm Desert.
The firm’s practice, according to the allegations of the complaint, is to send out “bundled quotes” which offer to sell both proprietary and nonproprietary equipment needed for a specific intersection project for a lump sum. Between 1997 and 2002, Econolite sent out 988 bundled quotes covering installation work at 406 Southern California intersections, the complaint asserts.
In a statement, the Attorney General’s Office noted that a similar suit against a Livermore company was settled in November for $105,000. The company, J.A. Momaney Services Inc., had cornered the market for traffic signal equipment in Northern California, the statement said.
The settlement in that case also barred Momaney from engaging in further tie-in sales.
Copyright 2004, Metropolitan News Company