A new lawsuit aims to bust a “Rouse Cartel” allegedly formed by Rouse Services, RB Global and the big five U.S. equipment rental companies.
Berger Montague, a Philadelphia-based class action law firm, along with co-counsel Edelson and Hausfeld, alleged in an antitrust lawsuit filed April 2 on behalf of plaintiff AXG Roofing that the nation’s largest construction equipment rental companies have formed a cartel that inflated rental prices across the United States.
The complaint, filed in U.S. District Court for the Northern District of Illinois Eastern Division, targets H&E Equipment, Herc Rentals, Sunbelt Rentals, Sunstate Equipment and United Rentals, in addition to RB Global and Rouse Services, accusing them of working through Rouse Services, a subsidiary of RB Global, to coordinate pricing in violation of the Sherman Act.
The lawsuit claims that the once-fragmented construction equipment rental market has become increasingly concentrated since 2011. During that time, the defendants’ combined market share grew from about 25% to a majority of the industry, the filing states.
“This case is an important effort to control costs in the equipment rental industry, and we are looking forward to litigating this case on behalf of those who have been charged artificially inflated prices,” Michaela Wallin, shareholder in the Antitrust and Employment Law practice groups at Berger Montague, told Equipment Finance News.
With greater control, the companies allegedly used Rouse to overcome competitive pressures and collectively raise prices, according to the filing. Instead of setting rates independently, the companies shared sensitive internal data with Rouse, which aggregated the information and calculated a common “Rouse Rental Insights” price.
Industrywide rate increases
Participating companies then used that benchmark to align their pricing, discouraging competition and enabling steady, industrywide rate increases, according to the filing. The complaint asserts that Rouse marketed its services as a tool to maximize profits and prevent undercutting among competitors.
“The alleged Rouse Cartel targets as victims those companies shouldered with the responsibility of building our nation’s housing, commercial centers and infrastructure,” Hausfeld partner Gary Smith said in the release.
Clients referred to the pricing system as a “cheat code” that ensured rates remained high, according to the filing. As a result, rental prices for equipment such as lifts, dozers, excavators and loaders increased, leading to record profits for rental companies and higher costs for businesses that depend on rentals, according to the lawsuit.
“We believe we’ll be able to prove to a jury that these companies are taking money out of the pockets of hardworking Americans by artificially driving up prices across the country,” Natasha Fernandez-Silber, a partner in complex litigation and antitrust law at Edelson, said in the release.
The plaintiff is seeking to prevent further damages and an award of three times the damages suffered, alleging that the Rouse-facilitated cartel has violated U.S. antitrust laws and caused widespread harm to renters nationwide, according to the filing.
The defendants did not respond to requests for comment before publication.
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