Dive Brief:

• The seven major U.S. HVAC manufacturers conspired to raise and keep prices of their commercial and residential products high after the pandemic, a lawsuit filed in a federal district court in Michigan last week alleges.  
• Executives of the companies used public statements, industry meetings and their participation in an information-sharing program managed by an industry trade group to set prices that outpaced broader price indexes and exceeded what they would have been in a competitive market, according to the lawsuit, Berg v. Robert Bosch, LLC, et al., filed by a Michigan consumer. 
• “Through a series of frequent and repeated secret meetings, information sharing, communications, and public signaling, Defendants drove the prices of HVAC Equipment to historic levels,” says the lawsuit, which is seeking class action status. “Additionally, Defendants used two key organizations to facilitate their conspiracy.” The lawsuit named, but didn’t charge, the Air Conditioning, Heating, and Refrigeration Institute, or AHRI, and the publisher of ACHR News, a trade publication.

Dive Insight:

The lawsuit alleges that manufacturers increased HVAC prices starting in 2020 at a pace that exceeded by 8% what would otherwise have been justified based on some 20 variables, including the cost of copper, aluminum, steel, resin, plastic and compressors. Other factors — like trends in labor, electricity rates and inflation — were included in the comparison as well. 

“Although these Defendants offered many excuses for the conspiracy, such as cost increases from COVID-19, updated efficiency standards, and the phasedown of hydrofluorocarbons mandates by the American Innovation and Manufacturing Act of 2020 … these were pretextual justifications, unsupported by the actual data,” lawyers for the plaintiff say on their website.  

The seven companies — Bosch, Carrier, Trane, Daikin, Lennox, Rheem and AAON — control about 90% of the U.S. residential and commercial HVAC market when their subsidiaries are included. 

The lawsuit alleges that company executives signaled to one another their pricing intentions in public statements, remarks at industry meetings, in ACHR News articles and through information sharing through an app that AHRI launched in 2020. Availability of the app is limited to members and its contents are based on data that members agree to share.  

“This exciting new tool is designed to enhance the user’s experience by providing access to data related to individual product performance, which can then be compared to the data of other AHRI certification program participants, along with predictive analysis,” AHRI says in a description of the app, according to the lawsuit. 

The role of this type of information sharing in antitrust cases has been coming under increasing scrutiny. In a closely watched case, the U.S. Department of Justice in 2023 sued a company called AgriStats for compiling competitors’ data in a similar way. In that case, which involves poultry and pork prices, the industry producers are alleged to use the reports, which are based on data they agree to share with one another, to inform how they set their prices. 

AgriStats knows that “meat processors [use] these reports for anticompetitive purposes,” DOJ says in its complaint. That case is set to go to trial in May. 

The lawsuit says public statements of the HVAC executives and in ACHR News are part of the conspiracy as a means of signaling to one another their pricing intentions. “Defendants extensively and nearly exclusively relied on ACHR News to immediate[ly] publish and disseminate their price increase announcements throughout the Class Period,” the lawsuit says. 

As an example, Johnson Controls’ residential and light commercial HVAC business, which is now a subsidiary of Bosch following its acquisition in 2024, used ACHR News to announce in August 2020 that it was “‘implement[ing] a price increase of up to six percent on residential and commercial heating and cooling products,’” the lawsuit says. “Trane was the next to announce a price increase of up to 6% on September 30, 2020.”

The lawsuit lists several dozen instances between 2020 and the present in which the companies followed each other’s pricing statements with their own pricing statements. “Defendants [used] coded language to conceal the conspiracy and maintain the information flow among co-conspirators,” the lawsuit says. 

The lawsuit quotes Alok Maskara, Lennox CEO, in a July 2023 statement that alludes to the way the companies monitor each others’ pricing strategies. “Regarding price versus inflation, we are pleased to report that the industry pricing remains disciplined and our own mid-year price increase has been broadly successful,” he said, according to the lawsuit. 

In emailed statements, Carrier and Trane say they embrace competition, and Bosch says it doesn’t comment on pending litigation. 

"We deny the baseless allegations in this lawsuit and will fight it vigorously,” Carrier says. “Carrier embraces competition and operates lawfully and with integrity.”

“We strongly dispute the allegations made in this lawsuit and intend to vigorously defend ourselves against these baseless claims,” Trane says. “Trane remains committed to operating with integrity, complying with applicable laws and regulations, and providing value to our customers through our sustainable, reliable solutions.”