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A Venezuelan company has sued Caterpillar for more than $100 million claiming it was stabbed in the back through fraudulent conduct.
Venequip filed its complaint July 9 in federal court against Caterpillar Inc. Venequip has been ranked as one of Venezuela’s top 50 companies. Caterpillar is one of the largest manufacturers of heavy machinery and engines in the world. And, Venequip has been Caterpillar’s only authorized distributor in Venezuela in a partnership that began in 1927.
In the 43-page complaint, Venequip alleges Caterpillar engaged in misleading or fraudulent conduct, including discriminating against Venequip while favoring other dealers, despite repeated oral and written representations otherwise.
"After a century-long relationship and repeated assurances that we were a trusted and valued partner, Caterpillar enabled other dealers and resellers to invade our territory and undercut our business even though Caterpillar represented this would not occur," Nathalie Conners, Venequip’s legal manager, told The Florida Record. "We are confident that the court will agree Caterpillar’s discriminatory conduct against its dealer was grossly unethical and unlawful.”
Caterpillar engaged in a discriminatory pricing scheme whereby it sold its products to its favored dealers at substantial discounts by as much as 40 percent and greenlighted these dealers to sell into Venequip’s territory at prices that Venequip could not, according to the complaint.
The plaintiff claims Caterpillar implemented this discriminatory pricing scheme notwithstanding that it forbid Venequip from selling Caterpillar products in the United States and had represented to Venequip that Caterpillar’s dealer pricing generally was the same around the world. Venequip says these representations were false.
Venequip also claims Caterpillar went to great pains to conceal its discriminatory pricing scheme.
When Venequip raised questions with Caterpillar upon learning of the discriminatory pricing scheme and asked for pricing information, the complaint claims Caterpillar retaliated by terminating the long-standing relationship, making Venequip the only dealer it ever terminated.
“Unbeknownst to Venequip, CAT’s repeated representations to Venequip that CAT would not undermine Venequip in Venezuela were a lie and its effusive praise of Venequip was designed to lull Venequip into believing that CAT was Venequip’s trusted and committed partner,” the complaint states. “CAT’s disloyal, misleading, and fraudulent practices: (a) decimated Venequip’s business, preventing Venequip from selling CAT products and servicing CAT equipment; and (b) harmed consumers of CAT equipment and parts in Venezuela.”
According to the complaint, Venequip says it has invested significant capital into developing Caterpillar’s market presence, brand recognition and service infrastructure in Venezuela, including a large network of state-of-the-art service shops for Caterpillar machinery and engines across Venezuela. Caterpillar has certified most of Venequip’s service shops with the highest possible ratings, the complaint states.
The lawsuit also notes that Caterpillar has been named in numerous lawsuits and government investigations in recent years.
In April, a Delaware jury handed down a $100 million verdict against it for interfering in a competitor’s ability to import and sell heavy machinery. Media reports show Caterpillar’s use of its offshore subsidiaries was the subject of a sprawling U.S. Senate investigation and a Department of Justice criminal investigation. That investigation resulted in Caterpillar paying a $1 billion penalty to the IRS and shareholder lawsuits against the company, according to Veneuip’s complaint.
In March, the U.S. Senate Committee on Finance announced another investigation involving Caterpillar’s efforts and tactics to kill the DOJ criminal investigation for tax evasion.
Venequip is being represented by Francisco O. Sanchez, Carlos Jose Andreu Collazo, Gabriel Aizenberg and Daniel Pulecio-Boek of Greenberg Traurig. The case has been assigned to U.S. District Chief Judge Cecilia Altonaga.
U.S. District Court for the Southern District of Florida case number 1:24-cv-22583