SRAM v Shimano: Round two

The European Commission believes there is enough evidence to begin proceedings against Shimano and is seeking further evidence from the industry. A decision wont come quickly. In fact it could take until the end of 2001 although representations from the industry have to be in within the next four weeks.

This isnt the first time SRAM has accused Shimano of predatory practices. SRAM USA sued Shimano USA at the back end of 1999 and the jury found in favour of SRAM, stating that Shimano had been operating contrary to Californias Unfair Practices Act, including pricing products below cost to harm its nearest competitors. Shimano is still appealing that decision, and has come out with all guns blazing over the European dumping allegations.

Frank Peiffer, Marketing Director, Shimano Europe made the following statement at the beginning of the week:

Shimano was surprised to learn that the European Commission initiated an

anti-dumping investigation against Shimano’s Nexus internal hub gears pursuant to a complaint lodged by SRAM. The European Commission decided to initiate the investigation based on SRAM’s evidence but anti-dumping duties will only be imposed if, and only if, all of the following three elements are satisfied.

1 The prices of Shimano’s Nexus internal hub gears in the EU market are lower than the prices of the equivalent components in Japan.

2 The European manufacturers of comparable components, such as SRAM, have suffered injury as a result of Shimano’s alleged dumped imports.

3 It will be in the European Community’s interest to impose anti-dumping

duties on Shimano’s Nexus components.

Shimano will fully cooperate with the European Commission in the investigation to prove that SRAM’s allegations are unfounded and the proceeding should be terminated without the imposition of anti-dumping duties.

Shimano’s initial responses to SRAM’s complaint and the initiation of the

investigation by the European Commission are as follows.

1 Shimano uses the same price structure when selling its products in Japan, Europe, the U.S.A., and other geographical areas. Customers of Shimano all over the world are treated the same by Shimano in terms of pricing and services. We are confident that all the data and materials that we will submit to the European Commission within the next 40 days will prove that there is no price discrimination of Shimano’s internal hub gears.

2. Who are the European manufacturers of comparable components in the internal hub gear market? They are SRAM, which filed this anti-dumping complaint, and Sturmey Archer. SRAM has approximately a little over 60% of this market, and Sturmey Archer has approximately 10%. Shimano’s market share is the remaining 25 to 30%. However, the drastic depreciation of the Euro against Japanese yen during the last 10 months caused the prices of Shimano’s Nexus components to go up, and this has hurt the sale of Nexus components significantly. As a result, Shimano’s EU share in the European internal hub gear market decreased. How

could the European manufacturers of comparable components have been injured when Shimano has been losing its market share? In addition, there was a strong demand for internal hub gears during the first half of this year, and customers experienced a longer-than-usual lead time for the delivery. We do not see how under these conditions, SRAM or any other European manufacturer of internal hub gears can claim injury.

3. We strongly believe that it will be against the European Community’s

interest to impose anti-dumping duties on Shimano’s Nexus components. First of all, customers all over Europe want the same thing reasonable prices and prompt delivery. The internal hub gear market is already suffering from its inability to deliver products on time due to the heavy demand for internal hub gears. If Shimano can no longer supply Nexus components to the European market due to the anti-dumping duties, European customers would suffer a further shortage of supply and longer lead time for delivery. In addition, if Shimano cannot supply Nexus components to the European market, there would be less competition overall. As a result, innovation and market development in the internal hub gear market would be adversely affected. How can these situations

be considered good for the Community? How can these situations be considered good for bicycle industry and consumers?

NB

Sturmey Archer and Rohloff are not parties with SRAM in the Commissions complaint against Shimano but they may be able to provide evidence to either clear or implicate Shimano.