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Caterpillar Confirms Review by Justice Officials : Manufacturing: Heavy equipment maker says antitrust probe will find no violations of the law.

From Bloomberg Business News

Caterpillar Inc., one of the nation’s biggest manufacturers of heavy construction equipment, acknowledged Sunday that the Justice Department is conducting a review of its marketing practices.

Keith Butterfield, a spokesman for the Peoria, Ill.-based company, said Caterpillar is in the process of responding to a Justice Department inquiry. He said the company is confident the agency will find no “violations of the law.”

The Peoria Journal Star reported Saturday that the Justice Department is investigating Caterpillar for possible antitrust violations.

The newspaper said the probe is aimed at determining whether Caterpillar tried to restrain or even monopolize trade in the replacement parts market.

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A Justice spokeswoman was quoted as saying the government is investigating the heavy construction equipment industry for charges of anti-competitive violations.

The spokeswoman, citing department policy, refused to identify the corporate target of the probe. The department’s weekend spokesman said he was unaware of the investigation.

Butterfield, reached at his home outside Peoria, said in a telephone interview: “We have received an inquiry from the Justice Department.”

He said the firm is responding to it.

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“We are confident and have every reason to believe that the Justice Department will understand that our practices are not a violation of the law,” he said.

Butterfield said a company attorney advised him of a Justice Department letter of inquiry but said he did not know when that correspondence was received.

The Journal Star said the Justice Department’s interest was piqued by a series of lawsuits against Caterpillar in recent years that alleged:

* Businesses were blacklisted from buying Caterpillar parts.

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* Caterpillar’s dealers were kept from buying competitive parts from other suppliers.

* A supplier alliance was set up to restrict sales of competitive parts into the “aftermarket,” parts needed by Caterpillar users when a machine breaks down.

Caterpillar has enjoyed a very good year financially. On July 21, for the second time in 1994, the company reported record quarterly results.

Caterpillar said second-quarter net income more than tripled to $240 million, or $2.36 a share, from $67 million, or 66 cents.

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During the same quarter, revenue jumped 24% to $3.61 billion.


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