$9 Million Awarded in Suit Against Bicycle Parts Supplier

A federal jury, ruling that the world’s leading maker of bicycle parts priced products below cost to destroy competition, has ordered Japan-based Shimano Inc. and its U.S. subsidiary in Irvine to pay about $9 million in damages.

The jury reached its verdict Monday in Santa Ana, capping a four-year legal dispute that pitted Shimano against a much smaller competitor, Chicago-based Sram Corp. Shimano said it will appeal.

Sram contended that Shimano and its U.S. unit, Shimano America Corp., violated California law with its pricing strategy by lowering the price of one product while boosting the prices of others. Shimano cut the price on gear shifters--where competition was stiff--while bumping the price of products for which it had little or no competition, Sram President Stan Day said.

“We brought this action because we felt Shimano wasn’t playing by the rules of business,” Day said. If the verdict stands, the industry will have more competitive suppliers, he predicted.

Shimano President Yoshizo Shimano said the jury’s verdict was “erroneous.”

“It represents a sad day for consumers of high-quality, reasonably priced bicycle components,” he said in a statement. “The verdict is not supported by the evidence or the law.” Experts said the ruling is not likely to have a broad impact on the industry.

On the issue of below-cost pricing, the jury awarded $2.9 million, an amount that is tripled under California law, Sram said.

The jury awarded $500,000 to Sram after deciding Shimano had violated terms of a legal settlement that grew out of a previous lawsuit between the two companies. That earlier case helped create more competition because it changed the way Shimano sold parts and opened the market to other component makers, industry insiders said.

Worldwide, Sram’s sales are about $125 million. Shimano America and its parent have worldwide sales of about $2 billion.