Maryland, the District and West Virginia yesterday accused Mid-Atlantic Toyota Distributors Inc. of Glen Burnie and approximately three dozen regional Toyota dealers with conspiring to artificially inflate the price of cars by an estimated $500 each since late 1979.
In antitrust suits -- filed in U.S. district courts here and in Baltimore and Charleston for residents of the three jurisdictions -- D.C., West Virginia and Maryland ask that damages be paid and that an alleged conspiracy to set prices be halted. The distributing company immediately denied the charges.
In the case of Maryland, Attorney General Stephen Sachs estimated that the state is seeking $9 million in damages because of alleged agreements by the Toyota supplier and retail dealers to increase the price of new cars by including a protective package whether customers wanted it or not. The figure cited by Sachs in three times the amount of alleged damages to Marylanders, as provided under antitrust laws.
The suit filed by D.C. Corporation Counsel Judith Rogers, alleging violations of the Clayton and Sherman antitrust acts, said the protective package included one or more of the following: exterior paint sealant, rust-proofing, undercoating, textile or vinyl sealant and a motor club membership. The D.C. suit was filed on behalf of city residents who bought Toyotas from dealers in the Maryland and Virginia suburbs.
Sachs alleged that customers were forced to pay higher prices for the cars because normally optional equipment was included in the cars delivered by the distributor -- which has the sole wholesale franchise for Toyota cars and parts in Maryland, Virginia, West Virginia, Delaware, Pennsylvania and the District -- to 102 Toyota dealers in the region.
The suits allege that during meetings with Mid-Atlantic last fall, dealers were encouraged to have all of their cars purchased from Mid-Atlantic treated with protective coatings applied by Crown Atlantic Corp.
One of the defendants in the suit, Mid-Atlantic president Frederick R. Weisman, also is chief executive officer of Crown Atlantic, which now goes by the name of Carecraft Industries Ltd., the port handling agent for Mid-Atlantic, according to the court document.
Weisman could not be reached for comment but a spokesman for his company, John Matt, said "we did not engage in any illegal acts whatsoever. Some dealers did not order [the protection package], some ordered heavily and some lightly. If a car comes with equipment the dealers don't want, they can refuse it."
Court documents charged, however, that in response to the fall meeting, "the Toyota dealers agreed with each other and MAT to increase uniformly the suggested retail price of those Toyota motor vehicles approximately $500 by having Crown Atlantic apply the protective package on substantially all" Toyotas they bought from the distributor for resale.
Other states involved are expected to join D.C. and Maryland by filing their own suits in the near future, officials said yesterday.
Sachs declared that if the agreement to accept the protective package "was reached in the same room at the same time, if that's true, that's the heart of the violation of the laws of competition." That would indicate "the essense of this case in the conspiracy to restrain trade," he added.
He said about 8,000 Toyotas were treated between September 1979 and May 1980, when the attorney general's office began investigating about 50 complaints from consumers who said they were unable to buy a Toyota without the package.
Said D.C. counsel Rogers: "Persons residing in the Mid-Atlantic region and others have been denied the benfits of free and open competition among Toyota dealers."