L.A. County Fire Chief Anthony Marrone
LOS ANGELES — Los Angeles County has filed a federal lawsuit against companies in the fire truck market, alleging that the firms violated antitrust laws through industry consolidation and profiteering and caused the cost of trucks and their parts to soar.
The lawsuit was filed on Feb. 12 in the Central District of California against numerous entities, including the private equity firm American Industrial Partners (AIP) and truck manufacturers REV Group, Oshkosh Corp. and Boise Mobile Equipment. The county accuses the defendant companies of unfair business practices and acquisitions and mergers that violated state and federal antitrust and unfair competition laws.
“Through their illegal schemes, defendants have reaped extraordinary profits on the backs of fire departments, taxpayers, cities and counties,” the complaint states. “The L.A. County plaintiffs have suffered substantial overcharges and lost equipment value as defendants have shut down plants, substantially increased prices and severely extended delivery timelines. …”
The lawsuit also accuses Oshkosh and Pierce Manufacturing Inc. of constraining the county’s ability to purchase replacement parts for its fire engines.
“... The markets for fire apparatuses, chassis and Pierce replacement parts are no longer competitive,” the complaint says. “They are markets dominated by powerful behemoths. These manufacturers bought their way to dominance, and they are now in full extraction mode, deliberately suppressing output, withholding supply, delaying deliveries, restricting competitive options and charging supracompetitive prices without consequence.”
The lawsuit describes a dozen acquisitions or mergers that have concentrated the industry in recent years, resulting in hundreds of layoffs, the massive growth of order backlogs and price hikes.
The plaintiffs, including the county’s Fire Department, are seeking treble damages for overcharges, civil penalties, restitution of funds, a declaration that the defendants violated antitrust laws and the divestiture of the industry to restore healthy competition.
The private equity firm AIP said it will rebut the allegations in court.
“AIP disagrees with the allegations in the complaint and intends to defend itself vigorously,” the company said in a statement emailed to the Southern California Record.
During congressional hearings, executives in the industry have attributed the recent spikes in the cost of fire trucks and replacement parts to inflation, rising labor and raw material costs, and COVID-19-related supply-line disruptions. They also argue that demand for new trucks has soared because local governments have accumulated more property tax revenues in the years after the COVID-19 pandemic.
But the lawsuit calls such explanations “subterfuge,” and Hilda L. Solis, who chairs the county’s Board of Supervisors, said the county cannot stand by while taxpayers are being bilked through higher fire truck prices.
“These companies have driven up prices, delayed deliveries to unprecedented lengths and forced our communities to shoulder the cost,” Solis said in a prepared statement. “Fire trucks are essential to protecting public safety, and we are taking action to hold these companies accountable, recover overcharges and ensure fair competition so taxpayers are never left paying more for the tools our first-responders need.”
The county’s fire chief, Anthony Marrone, also affirmed that his department has been dealing with dramatic price spikes and delays in the delivery of new firefighting vehicles.
“These market conditions strain our budget and are a wasteful diversion of public funds needed to support our mission of protecting lives, environment and property,” Marrone said.
The damages sought by the county include many millions of dollars in overcharges as well as attorney fees and court costs, according to the lawsuit. In addition to attorneys in the County Counsel’s Office, several private attorneys from the firms Baron & Budd PC and New York-based Simonsen Sussman LLP are members of the county’s legal team.
