Court orders GTY to deliver tyres to Toyo

ERJ staff report (TB)

San Francisco, California -- Toyo Tire Holdings of Americas Inc. has obtained a preliminary injunction against Continental Tire the Americas and Yokohama Tire Corp., which had shut off Toyo's supply of truck tyres from the GTY Tire Co., a joint manufacturing venture between the three tyre makers.

Toyo filed suit Jan. 11 to force GTY to reinstate Toyo's supply of tyres, to enjoin Continental and Yokohama from terminating Toyo's status as a joint venture partner in GTY and from interfering with Toyo's relationships with its customers and potential customers. Toyo's supply of tyres from the GTY venture at Conti's Mount Vernon, Ill., plant ended in January.

The District Court for the Central District of California has ordered Conti and Yokohama to comply with the GTY partnership agreement by providing Toyo with its allocation of the truck and bus radial tyres from the GTY plant.

The injunction will remain in force until the International Court of Arbitration in Geneva has convened a panel and ruled on Toyo's request for interim injunctive relief. The joint venture agreement among the three companies specified that they would take any disputes to the international arbitration court.

The court order requires the defendants to submit a timetable for filling Toyo's outstanding tyre orders for the past seven months. The US Court of Appeals in San Francisco denied Conti's and Yokohama's appeal to stay or recall the preliminary injunction on July 14.

Toyo anticipated sourcing up to 290,000 tyres from GTY this year-a total that represents more than 60 percent of the firm's annual truck tyre sales in North America, according to testimony in Toyo's lawsuit.

Conti, Toyo and Yokohama established GTY Tire in 1988 and have cooperated in the venture since. Conti is majority owner of GTY, with 51 percent. Yokohama owns a third and Toyo owns 16 percent, according to company records.

However, earlier this year Conti and Yokohama sought to terminate Toyo's status as a partner and refused to sell or deliver GTY-manufactured tyres to Toyo.

Conti and Yokohama claim Toyo Tire Holdings' parent company, Toyo Tire & Rubber Co. Ltd., is involved in a technology exchange with Bridgestone Corp., a major competitor, which they consider grounds for terminating Toyo's participation in the GTY venture.

Toyo Tire and Bridgestone disclosed in 2008 they were exploring a technology and production cooperation agreement, but Toyo Tire Holdings argued in court briefs this involves the firms' Japanese parent companies and is focused on consumer tyres, not commercial tyres.

From Tire Business (A Crain publication)