State Atty. Gen. Bill Lockyer filed an antitrust lawsuit Thursday against an Orange County firm, alleging that its illegal "tie-in" sales of traffic signal equipment have cost Southern California taxpayers millions of dollars.
According to the suit, Econolite Control Products Inc. of Anaheim violated state antitrust laws by forcing contractors bidding on public projects to buy certain equipment at inflated prices as a condition for using other "proprietary" equipment -- mostly traffic signal controllers and video detection systems -- which only the company can provide.
"When electrical contractors pay inflated prices," said Tom Dresslar, a spokesman for Lockyer's office, "they are passed on to taxpayers. Primarily what we're looking at is to make sure that these guys stop so that taxpayers don't get stuck with the tab."
The firm issued a statement Thursday denying any wrongdoing. "Econolite has not and does not engage in illegal bidding practices," it said. "When bidding its products, Econolite responds to requests from customers exactly as the customer specifies. If the customer requires a lump sum bid for all of the equipment at a specified intersection, Econolite complies with that request. If contractors request that bids be unbundled, Econolite complies with those requests as well."
From 1997 to 2002, according to the lawsuit, Econolite -- a major supplier of traffic signal equipment in Southern California -- did business with 39 cities and counties involving 406 intersections. Among them, the lawsuit says, are Los Angeles, Orange and San Bernardino counties and the cities of Anaheim, Laguna Hills, Laguna Woods, Aliso Viejo, Irvine, San Juan Capistrano, Tustin and Orange.
Cities in Los Angeles, Riverside and San Bernardino counties that have done business with Econolite, according to the suit, include Beverly Hills, Santa Monica, Burbank, Simi Valley, Ontario, Chino, Palm Desert, Chino Hills, Lake Elsinore, Hemet and Rancho Mirage.
While recognizing the proprietary nature of computerized traffic controllers -- which manage the timing of traffic lights, and video detection systems for counting the number of vehicles at intersections -- the lawsuit contests the forced sale of such attendant equipment as emergency vehicle preemption systems, which disrupt normal signal patterns to allow emergency traffic through, as well as the signals themselves.
"Once you go down the road of using Econolite controllers," Dresslar said, "if you build new intersections or modernize existing ones, to make all the lights work as a system you need to use the same brand."
The same requirement does not apply to the purchase of signal lights or preemption systems that, Dresslar said, may be available elsewhere at lower prices.
"A growing number of public entities are turning to Econolite and it may be a great product," he said, "but that isn't the point. We're challenging the tie-in sales."
A similar lawsuit last year involving a company in Northern California, Dresslar said, resulted in a settlement of $105,000 in civil penalties and the prohibition of future tie-in sales.