Wednesday, October 26, 2011

Cement Firms Could Have Conspired to Fix Prices, Allocate Customers and Markets

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

Four vertically-integrated cement companies could have illegally conspired to fix prices and allocate customers and markets for ready-mix concrete in Florida through a course of parallel conduct alleged by direct and indirect purchasers, according to the federal district court in Miami.

The allegations of parallel conduct coinciding with the arrival of an executive at one of the cement producers nudged the claims of the purchasers across the line from conceivable to plausible.

The plaintiffs asserted that the executive made statements shortly after becoming head of one of the defending companies that implied an agreement had been made between the companies to raise the price of ready-mix concrete and to refrain from competing with each other’s customers.

Uniform Price Increases

The plaintiffs documented that the four companies all increased their ready-mix concrete by a uniform amount and eliminated their fuel surcharge in the face of declining demand, and offered specific examples where the companies refrained from competing for each other’s customers, even pointing to one case where a defendant retaliated against a co-conspirator for offering a low bid to one of its customers.

The plaintiffs also related an incident in which an independent trucking company refused to help an independent concrete producer carry mobile-mix concrete out of fear the defending producers would refuse to work with it. In addition, a letter from a division manager at one of the companies to the Department of Justice—expressing concerns about antitrust violations, and a purported corporate cover-up that included retaliation against the manager—lent further support for the existence of a conspiracy.

Taken together, it was plausible to infer a conspiracy among the four producers to fix the price of ready-mix concrete in the areas where they sold it, in the court’s view.

The allegations were, however, insufficient to permit a plausible inference that the conspiracy began before the executive joined the defending company, that the conspiracy involved the cement market, or that six other cement producers were directly involved, the court held.

The decision is In re: Florida Cement and Concrete Antitrust Litigation, 2011-2 Trade Cases ¶77,642.

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