By PHILIP A. JANQUART
OAKLAND, Calif. (CN) – Solyndra, whose 2011 bankruptcy set off political howls in the United States, sued three Chinese companies in Federal Court, claiming they violated antitrust law by dumping solar panels in the United State for less than cost.
Republicans made political hay out of the fact that Solyndra received $25 million in tax breaks from California and $535 million in federal loan guarantees before it filed for Chapter 11 and laid off its entire workforce in September 2011. The tax breaks came from California’s Alternative Energy and Advanced Transportation Financing Authority and the federal loan guarantees from the Energy Policy Act of 2005 as amended by the American Recovery and Reinvestment Act, one of many so-called federal “bailouts” of struggling industries.
The Massachusetts Institute of Technology once christened Solyndra a leading innovator in solar panel design, for its solar photovoltaic system for commercial and industrial rooftop energy systems.
In its federal complaint, Solyndra claims that Suntech Power Holdings Co., Trina Solar, and Yingli Green Energy Holding Company, all run from China no matter where they were incorporated, and their U.S. subsidiaries conspired to ruin Solyndra because its technology was an obstacle to their plan to dominate the U.S. market.
To add insult to injury, Solyndra claims the Chinese companies conspired to achieve their goal with money partially raised through American investors.
“Defendants initially came to the United States to raise money from American investors by selling American Depository Shares (ADS) on the New York Stock Exchange,” the complaint states. “Incredibly, defendants elected to deploy the capital they raised from Americans to destroy American solar manufacturers like Solyndra. To achieve this goal, defendants employed a complex scheme in collaboration, with each other and raw material suppliers and certain lenders, to flood the United States solar market with solar panels at below-cost prices.”
Solyndra claims the plan to monopolize sales of the products in the United States was coordinated through Chinese trade associations and “certain government-related” commercial entities, with the goal of cornering the U.S. market by exporting at least 95 percent of their product to this country.
Solyndra claims the defendants dropped their prices “in tandem” by 75 percent in four years. Two of the defendants, Yingli and Trina, share a physical address, and two senior executives work together on the China New Energy Chamber of Commerce, “with the stated purpose of ‘collaboration,'” according to the complaint.
Solyndra claims China’s National Energy Administration aided the conspiracy by issuing commercial directives for the Chinese solar industry.
“For example, its five-year plan for the solar photovoltaic industry sets forth the goals for solar photovoltaic (PV) production, domestic energy consumption and export,” the complaint states. “Importantly, the five-year plan calls for the promotion and expansion of China’s top PV manufacturers, such as defendants.”
China exported $20.2 billion worth of solar products in 2010, ignoring its own energy needs and environmental issues in order to gain a foothold in the U.S. market, Solyndra says.
Essential to the conspiracy were “below-market” rates on $17 billion of loans the three Chinese companies got from the China Development Bank, the Bank of China and the Export-Import Bank of China.
“Defendant Suntech has admitted that its $7.3 billion below-market credit line is used to expand capacity – all as part of defendants’ goal of gaining market share at the expense of American companies,” the complaint states.
Chinese Polysilicon manufacturers such as GCL-Poly Energy Holdings, Jiangsu Shunda and Daqo New Energy Corp. contributed to the scheme by agreeing to provide essential raw materials at prices “unavailable to Solyndra and other American manufacturers,” the complaint states.
The results have been devastating to U.S. companies such as Solyndra and Energy Conversion Devices, both of which were forced into bankruptcy under the power of China’s combined 65 percent hold on the commercial and industrial rooftop market, according to the complaint.
The U.S. Department of Commerce and the International Trade Commission found through investigation that at least 12 U.S. companies have been forced to shut down as a result of the Chinese conspiracy, Solyndra claims.
“Defendants occupy a dominant position in the United States commercial and industrial rooftop solar market, enabling them to exercise their market power as oligopolists,” the complaint states.
Solyndra says that now that the Chinese dominate the U.S. market, it will be difficult if not impossible for other companies to enter it, considering the enormous costs associated with startup, including the almost $1 billion cost to build a manufacturing facility.
“In addition to profiting by running Solyndra and other American manufacturers out of business, defendants, their executives and their co-conspirators all stand to benefit by reason of the Chinese nonmarket economy,” the complaint states. “For example, defendants’ executives stand to gain significant compensation that is not related to the profitability of the company – Suntech’s CEO is often referred to as the world’s first ‘green’ billionaire.”
Solyndra demands $1.5 bill for “price fixing at predatory levels,” in violation of the Sherman Antitrust Act, the Cartwright Act and the California Business & Professions Code.
Its lead counsel is W. Gordon Dobie with Winston & Strawn, of Chicago.