According to the law firm press release, Stockholm, Sweden-based Autoliv, Inc. develops, markets and manufactures automotive safety products, including airbags, seatbelts, safety electronics, steering wheels, anti-whiplash systems, seat components and integrated child seats as well as active safety systems such as night vision, vision and radar systems.
The Complaint alleges that prior to and during the Class Period, Autoliv engaged in wrongful anti-competitive business practices with other automotive industry suppliers. These practices were designed to control the market prices of the products sold by Autoliv and others. As a result, Autoliv reported quarter after quarter of “record” gross margins and earnings during the Class Period, causing artificial inflation in its stock price and seemingly justifying the payment of millions of dollars worth of salary increases and non-equity incentive awards to the Company’s executives.
The Complaint further alleges that by February 2011, the United States Department of Justice (“DOJ”) had begun investigating Autoliv’s anti-competitive practices and potential antitrust violations. Between the 7th and 9th of June 2011, the antitrust authorities of the European Commission (the “EC”) raided Autoliv’s German subsidiary seeking evidence of Autoliv’s anti-competitive misconduct. As the market assimilated the news of the EC raid disclosed on July 8, 2011, followed closely by statements during the Company’s July 25, 2011 second quarter earnings conference that the Company had already spent upwards of $4 million on legal fees and could no longer predict what impact the antitrust investigations would have on its previously reported and future gross margins and earnings, the price of Autoliv stock plummeted, closing below $62 per share on August 2, 2011.
On June 6, 2012, the DOJ announced that Autoliv had agreed to plead guilty to price fixing of automobile parts installed in U.S. cars and to pay a $14.5 million criminal fine. In so doing, Autoliv admitted to its role in a conspiracy to fix prices of seatbelts, airbags and steering wheels installed in U.S. cars to one automobile manufacturer and a separate conspiracy to fix prices of seatbelts to another car manufacturer.
According to the Complaint, these known, but covert, illegal practices existed over an extended time frame and subjected the Company to material undisclosed risks, including monetary and reputational risks. These undisclosed risks are of particular significance to Autoliv since it is heavily dependent on a relatively small number of automobile manufacturers. In fact, Autoliv’s five largest customers accounted for 53% of its consolidated 2010 sales, the loss of any of which would result in a material adverse effect on the Company’s business.
On August 6, 2013, the Court issued an order appointing Electrical Workers Pension Fund Local 103 IBEW, Monroe County Employees Retirement System, and Construction Laborers Pension Trust of Greater St. Louis as lead Plaintiffs in this action; and the law firms of Robbins Geller Rudman & Dowd LLP and Labaton Sucharow LLP as lead Counsel.
On October 21, 2013, the Plaintiffs filed an Amended Complaint for Violation of the Federal Securities Laws against the Defendants.
On August 15, 2014, the parties entered into a Stipulation and Agreement of Settlement. The Court granted preliminary approval of the Settlement on August 20. On October 29, 2014, the Court granted final approval of the Settlement and entered Final Judgment.