Paper Maker, Competitor Could Have Agreed to Fix Prices

This posting was written by E. Darius Sturmer, Editor of CCH Trade Regulation Reporter.

Evidence of a publication paper manufacturer’s communications with a competitor, in the context of several industry-wide, parallel price increases in the publication paper industry, could establish that it participated in a price fixing conspiracy, the U.S. Court of Appeals in New York City has ruled.

Because a jury could reasonably find that the manufacturer—Stora Enso North America Corporation (SENA)—reached an unlawful agreement to raise the price of publication paper and this agreement injured a class of complaining purchasers, a trial court’s granting of summary judgment to SENA (2010-2 Trade Cases ¶77,293) was erroneous and was vacated in part.

Testimony in which a co-conspirator—an executive of a competing manufacturer—acknowledged that he understood his numerous communications with a SENA executive to reflect a price fixing agreement was strong evidence of a collusive scheme between the competitors, the appellate court decided. In addition, a finding that the companies engaged in price fixing was supported by evidence that the industry was conducive to collusion, that the two executives had shared pricing strategies in private phone calls and meetings, and that they had developed a joint strategy to conceal from the government the true nature of their communications.

From this behavior, the court said, a jury could infer that both men were aware that their communications and related pricing actions violated the law.

The evidence further sufficed for a jury to find that the agreement actually caused the price increases that occurred, the court held. The causal link could be presumed to be particularly strong, since the agreement was between executives at rival companies, each of whom had final pricing authority. There was scant evidence to support SENA’s contention that it had historically been a market follower rather than a market leader, and that any agreement was therefore of no effect. T

he alleged agreement between the executives would have been valuable to SENA because it significantly reduced the company’s risk in raising prices, by assuring that the company could follow competitors’ price increases secure in the knowledge that its rival would not undercut it.

European Entity’s Participation

A sister company based in Europe—Stora Enso Oyj (SEO)—was entitled to summary judgment, in the court’s view. The purchaser class offered testimony showing that an SEO executive met with an executive of a competitor, and that during the meeting they agreed that the competitor’s company would lead a price increase for publication paper in Europe that SEO would then match. However, the purchasers failed to offer any concrete evidence in support of their theory that the success of SEO’s price fixing efforts in Europe depended on its ability to ensure that its competitors fixed the price of publication paper in the United States.

The record also was devoid of any evidence that SEO had any direct involvement in decisions regarding the marketing, sale, or pricing of publication paper in the United States, the court concluded.

The decision is In re Publication Paper Antitrust Litigation, 2012-2 Trade Cases ¶78,000.