Caterpillar is alleged to have engaged in fraudulent and misleading conduct.
MIAMI, FLORIDA – Venequip S.A., a Venezuelan company, filed a lawsuit seeking more than $100 million in damages from Caterpillar, Inc. In the lawsuit, Venequip alleges that Caterpillar engaged in misleading or fraudulent conduct, including discriminating against Venequip while favoring other dealers, despite repeated oral and written representations otherwise.
One of the largest manufacturers of heavy machinery and engines in the world, including, for the construction, mining and gas and oil industries, Caterpillar trades on the New York Stock Exchange and enjoys a market capitalization of over $170 billion.
From its inception in 1927, Venequip acted as Caterpillar’s only authorized distributor in Venezuela. The partnership between the companies lasted for nearly a century.
In its lawsuit, Venequip alleges that Caterpillar engaged in a discriminatory pricing scheme whereby it sold its products to its favored dealers at substantial discounts by as much as 40% and greenlighted these dealers to sell into Venequip’s territory at prices that Venequip could not. Caterpillar implemented this discriminatory pricing scheme notwithstanding that it forbid Venequip from selling Caterpillar products in the United States and had represented to Venequip that Caterpillar’s dealer pricing was generally the same around the world. These representations were false.
Venequip further alleges that Caterpillar went to great pains to conceal its discriminatory pricing scheme.
According to the lawsuit, when Venequip raised questions with Caterpillar upon learning of the discriminatory pricing scheme, and asked for pricing information, Caterpillar retaliated by terminating the long-standing relationship, making Venequip the only dealer it ever terminated.
The lawsuit observes that Caterpillar has been the target of numerous lawsuits and government investigations in recent years. In April 2024, a Delaware jury handed down a $100 million verdict against it for interfering in a competitor’s ability to import and sell heavy machinery. The New York Times recently reported that Caterpillar’s use of its offshore subsidiaries was the subject of a sprawling U.S. Senate investigation and a DOJ criminal investigation. According to the suit, that investigation resulted in Caterpillar paying a $1 billion penalty to the IRS and shareholder lawsuits against the company. In March 2024, the U.S. Senate Committee on Finance announced yet a new investigation involving Caterpillar’s efforts and tactics to kill the DOJ criminal investigation for tax evasion.
“Unbeknownst to Venequip, CAT’s repeated representations to Venequip that CAT would not undermine Venequip in Venezuela were a lie and its effusive praise of Venequip was designed to lull Venequip into believing that CAT was Venequip’s trusted and committed partner,” according to the lawsuit. In fact, “CAT’s disloyal, misleading, and fraudulent practices: (a) decimated Venequip’s business, preventing Venequip from selling CAT products and servicing CAT equipment; and (b) harmed consumers of CAT equipment and parts in Venezuela.”
Caterpillar has until July 29, 2024 to respond to the lawsuit.
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