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Michelin Sues Bandag for Retreader Freedom of Choice

17 November 1999

Michelin Sues Bandag for Retreader Freedom of Choice

    GREENVILLE, S.C., Nov. 17 -- Michelin Retread Technologies,
Inc. (MRTI) and Michelin North America, Inc. today filed a lawsuit against
Bandag, Inc. contending that Bandag has engaged in exclusionary conduct to
maintain its monopoly position in the sale and distribution of retread tire
systems.  The lawsuit is part of a formal response to the suit filed by Bandag
against Michelin on September 19.
    "We believe dealers should have the freedom to choose which retreading
system is best for their customers," said John Rice, chief operating officer
for Michelin Americas Truck Tires.   "If given that choice, we believe many
would certainly consider switching to the MRTI system."
    According to Michelin's lawsuit, Bandag has, among other actions:

    * Used highly restrictive long-term franchise agreements that prohibit
      franchisees from using retread processes other than the Bandag system;
    * acquired commercial truck tire dealers in order to prevent them from
      converting to Michelin's system;
    * offered substantial financial incentives to not convert to the Michelin
      retread system;
    * violated the terms of an injunction issued by a federal court in
      Baltimore ordering Bandag not to illegally restrict competition from
      mold-cure retreading systems; and,
    * threatened and commenced litigation against commercial truck tire
      dealers who desired to and/or left the Bandag system.

    Michelin has asked the Court to award it damages and to prohibit Bandag
from enforcing the illegal terms of its franchise agreements.  The company
also has asked the United States District Court for the Southern District of
Iowa to immediately dismiss most of Bandag's claims filed in the Sept. 19
lawsuit.  Michelin has denied the remaining claims in its answer to Bandag's
complaint.
    "We believe these claims are completely without merit," said Rice.  "It's
illogical and incorrect to allege that Michelin is attempting to monopolize
the retreading market -- we only have 30 retread locations compared to
Bandag's more than 400 locations.  We are merely a new entrant in a market
long monopolized by Bandag."