Titanium dioxide producers settle claims they fixed prices

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Case in Point

February 4, 2014

Titanium dioxide producers settle claims they fixed prices 

A class action on behalf of 537 product manufacturers alleged that several producers of the chemical powder conspired to fix artificially high prices in violation of the Sherman Act. In re: Titanium Dioxide Antitrust Litig.

Titanium dioxide is a chemical powder used as a white pigment in paints, coatings, plastics, paper, and other products. Because there is no good substitute for it, the products’ manufacturers are willing to pay price increases to keep their supply. But because the titanium dioxide produced by one company is easily substituted for another’s, the product manufacturers make purchase decisions almost solely based on price.

A small group of suppliers—including E.I. DuPont de Nemours and Co.; Huntsman International; Kronos Worldwide, Inc.; and the National Titanium Dioxide Co. Ltd., known as Cristal—produce almost all of the titanium dioxide purchased globally. Executives from each company belonged to several organizations and attended multiple seminars annually, where they allegedly met secretly to determine prices and share proprietary information.

Beginning in 2002, after years of titanium dioxide prices falling significantly, the producers started increasing prices in concert with each other. Over the next several years, they made multiple increases despite flat or decreasing demand during the recession. Often, they would send notices of upcoming increases to each other’s customers, which was allegedly a way to keep each other informed without calling attention to it. Many price-increase announcements came only weeks after the executives attended a meeting. They also started applying “energy surcharges” to account for what they said were rising oil prices, which they continued to charge even after oil prices began decreasing.

The producers also monitored each other’s capacity plans, including plant closures and expansions and inventory levels. To ensure capacity didn’t increase—which would cause more supply than demand, decreasing prices—they regulated how much titanium dioxide was available. For example, between 2002 and 2005, the producers announced price increases nearly every quarter but were operating at only an 87 percent capacity rate.

The government began investigating the companies for antitrust violations after they announced three price increases and two energy surcharges in only 14 weeks.

A paint manufacturer and a urethane foam manufacturer filed a class action on behalf of 537 product manufacturers against DuPont, Cristal, Kronos, and Huntsman, alleging they conspired to fix artificially high prices in violation of the Sherman Act.

After the plaintiffs settled with Huntsman and DuPont, the court denied Cristal’s and Kronos’s motion for summary judgment. On the eve of trial, they agreed to be part of a global settlement of $163.5 million. DuPont will pay $72 million, Cristal will pay $50 million, Kronos will contribute $35 million, and Huntsman will pay $6.5 million. The court has granted final approval.

Citation: In re: Titanium Dioxide Antitrust Litig., No. 1:10-cv-00318 (D. Md. Dec. 13, 2013).

Plaintiff counsel: AAJ members Brendan P. Glackin, Daniel M. Hutchinson, and Eric B. Fastiff, Joseph R. Saveri, Lisa J. Leebove, Kevin E. Rayhill, Ryan J. McEwan, Solomon B. Cera, and C. Andrea Dirksen, all of San Francisco; and AAJ member Paul M. Sandler and Robert B. Levin, both of Baltimore.

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