Tuesday, August 19, 2003

Antitrust News: Cellulose Antitrust Classes Certified

This from law.com:

A federal judge in Pennsylvania has certified three separate classes of purchasers to pursue antitrust claims against two of the world's top manufacturers of microcrystalline cellulose, or MCC, a binding agent used in pills and vitamins and as a food additive.

In a significant victory for the plaintiffs in the case, In re Microcrystalline Cellulose Antitrust Litigation, the judge applied the "Bogosian short-cut" -- named for a 1977 decision by the 3rd U.S. Circuit Court of Appeals -- in which the court presumes that all buyers of that product have suffered an antitrust injury where the anti-competitive behavior artificially raised the price of a product.

In the suit, purchasers allege that Chicago-based FMC Corp. set out to neutralize competition in the MCC market and to secure monopoly power for itself in North America by conspiring with a Japanese firm, Asahi Kasei Co., to divide the world MCC market into two territories.

The alleged conspiracy came to light in December 2000 when the Federal Trade Commission filed a complaint that said FMC had agreed not to sell any MCC product to customers in Japan or East Asia without Asahi's consent, while Asahi promised not to sell in North America or Europe without the consent of FMC.

The FTC suit also accused FMC of trying to secure agreements with three smaller Asian manufacturers of MCC in order to maintain its monopoly position.

FMC and Asahi settled the suit with a consent decree in which both companies offered no admission of wrongdoing but nonetheless pledged to end the practice.

Under the terms of the settlement, FMC and Asahi were prohibited from agreeing with competitors to divide or allocate markets; agreeing with competitors to refrain from producing, selling or marketing MCC; and inviting or soliciting other companies to enter into agreements not to compete.

The settlement sparked a flurry of lawsuits brought by purchasers of MCC -- pharmaceutical companies, vitamin producers and food manufacturers -- that said the illegal practice had inflated MCC prices since 1984. Now Senior U.S. District Judge Thomas N. O'Neill Jr. has certified the suit as a class action on behalf of three classes of FMC's customers -- vitamin producers, pharmaceutical companies, and companies that purchased MCC to be used as a food additive.
The lure of treble damages is a powerful incentive.

No comments: