Former dealer sues Caterpillar for $100m in damages

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Venequip claims to have been Caterpillar’s only authorised distributor in Venezuela, with the partnership between the two companies lasting nearly a century.

Its lawsuit alleges that Caterpillar engaged in a “discriminatory pricing scheme” whereby it sold products to its favoured dealers at discounts of as much as 40% and “greenlighted” these dealers to sell into Venequip’s territory “at prices that Venequip could not”.

A statement on behalf of Venequip in relation to the filing of the lawsuit added, “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.”

Venequip’s lawsuit also observed that Caterpillar “has been the target of numerous lawsuits and government investigations in recent years.”

In April 2024, a Delaware jury concluded that Caterpillar must pay $100 million to an importer following a legal dispute between the two companies.

Venequip also claimed that Caterpillar had to pay out $1 billion in relation to an investigation by the US Internal Revenue Service (IRS). However, Caterpillar’s 2023 annual report indicated that having reached a settlement in 2022 with the US Internal Revenue Service (IRS) in relation to issues including disputed tax treatment of profits earned by Caterpillar SARL from certain parts transactions, which Caterpillar “vigorously” contested, the manufacturer resolved all issues for tax years 2007 through to 2016 without any penalties.

Caterpillar has until 29 July 2024 to respond to the lawsuit.

A spokesperson for Caterpillar said, “We don’t comment on pending litigation.”