Skip to main content
Sister Publication Links
  • Middle East Foam & Polyurethane
  • UTECH Asia/PU China
  • UTECH Europe
  • UTECH Las Americas
Subscribe
  • My Account
  • Login
  • Subscribe
  • Coronavirus
  • News
    • Asia
    • Americas
    • Europe
    • M & A
    • Financial results
    • Automotive
    • Perma-Pipe uses PU in Indian pipeline insulation project
      MPOB develops palm oil polyol
      BPCL Polyol project in doubt
      Japan's lacklustre PU production continued in November 2020
    • World automotive registrations recover in H2 2020
      Mlily to increase US market share following anti-dumping duties
      US footwear imports up 25% in November 2020
      Introducing UTECH Southeast Asia 2022
    • Wheat waste transformed into PU foam
      EC approves Kingspan's TeraSteel and Wetterbest purchases
      BTC Europe to distribute BASF’s polyurethane ingredients
      World automotive registrations recover in H2 2020
    • BPCL Polyol project in doubt
      PPG buys polyurea company Versaflex
      Recticel buys FoamPartner
      Recticel upgrades Q3 outlook despite raw material tightness
    • BPCL Polyol project in doubt
      Huafon estimates 2020 profit will be up to 40% higher than 2019
      Mlily to increase US market share following anti-dumping duties
      Stellar Q4 performance saves Wanhua 2020 earnings
    • World automotive registrations recover in H2 2020
      Car sales down 25% in Western Europe in 2020
      Patchy coronavirus effects hit global car sales in November
      November continues fall in Western Europe's car sales
  • Data
  • Information
    • Country Overview
    • Market Sector overviews
    • Technical articles
    • Company profiles and strategies
    • China’s PU industry on the path to recovery; plans for technology upgrades
      Chinese cold chains grow bigger
      Flexible foam rises to challenges in the Middle East and Africa
      Life at the cross-roads: what does the GCC offer PU?
    • Europe's flexible foam makers face rising prices as outages hit markets
      Western European car registrations rebound slowed in September
      Western European car registrations regained some ground in August
      Western European Car registrations rebound continued in July
    • Take out the VOC with hybrid release agents
      Batteries give pultrusions power
      Seeing a way through VOC and FOG
      Aromatic polyols for simpler rigid PU formulations
    • Hennecke and Frimo: an automotive partnership
      Pushing ahead: AutoRIM drives KM’s UK growth
      BASF opens it first ‘Creation Center’ in Mumbai with a PU twist
      Persistence pays off for CTM
  • Events
    • Exhibitions
    • Conferences
    • Webinars / Livestreams
    • Become a Speaker
  • Advertise
  • Contact Us
  • Issues
  • Subscribe
MENU
Breadcrumb
  1. Home
  2. Information
March 11, 2013 11:00 PM

Civil consequences of a polyurethane cartel in the US

Simon Robinson
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Court documents filed in Ohio have outlined some of the background to a successful Canadian prosecution of a polyurethane cartel involving 12 companies. The documents are available from the United States District Court for the Northwestern District of Ohio Western Division.

    The Carpenter Co; Crest Foam Industries Inc; Domfoam International, Inc; Flexible Foam Products Inc; FXI-Foamex Innovation, Inc; Future Foam Inc; Hickory Springs Manufacturing Co; Inoac International Co Ltd; Inoac USA Inc; Mohawk Industries, Inc; Ohio; Decorative Products, Inc; Otto Bock Polyurethane Technologies Inc; Plastomer Corporation; Leggett & Platt Inc, Scottdel Inc; Valle Foam Industries Inc; Vitafoam Products Canada Limited; Vitafoam, Inc; Woodbridge Foam Corporation; Woodbridge Sales & Engineering Inc; Woodbridge Foam Fabrication, Inc and were all named as defendants in the action. According to council for Legget & Platt, which denies the allegations and plans to vigorously defend itself, the matter is likely to come to trial in this case in December this year or early 2014. Plastomer Corporation and its staff have been dismissed from the proceedings without prejudice.

    The plaintiffs were 17 individuals and trade purchasers for international hotel chains who claimed to have bought “products containing flexible polyurethane foam manufactured or distributed by one or more the defendants.

    The class action has led to Vitafoam and Domfoam setting up a website and offering to pay at least $5m to settle their part in the class action. The website at www.flexiblepolyurethanefoamsettlement.com gives details. The court in Ohio agreed that this was a suitable settlement for Vita and Domfoam to make on 21 June 2013. A further 779 companies in the US have excluded themselves from the settlement. This gives them the option to pursue the companies separately. It is not clear what will happen to the other defendants in the class action.

    How it came to light

    Vitafoam went to the Competition Bureau of the Canadian Government voluntarily in February 2010 “to self-report” evidence of illegal antitrust activities amongst itself and other companies… and to seek acceptance into the Antitrust Division’s Corporate Leniency programme. By admitting that it had been involved in price fixing and being the first to tell the DOJ, Vitafoam became immune from criminal prosecution.

    The Canadian Bureau obtained wire tap authorisations and raided five sites.

    According to the Ohio documents: “Defendants established a practice where they would communicate and reach an agreement or understanding on the percentage and timing of price increases and market allocation in the sales and supply of polyurethane foam.”

    Trade associations cleared

    Although the meetings “often coincided with the bi-annual meetings held by the Polyurethane Foam Association, the International Sleep Products Association and Surfaces “a trade group that includes polyurethane carpet backing,” according to the Ohio document. The Ohio document, clearly states that “discussions took place outside of the formal meetings”.

    People working for the defendants “would avoid detection by communicating through the fax machines at a local Staples or other store so that the identification of the sender would be hidden on the fax transmittal, says the Ohio document.

    The Ohio document adds, “Defendants viewed price fixing as necessary because, if defendants did not increase their foam prices by the same percentage amount at around the same time period the attempted price increase would fail.”

    The document alleges that sales people at Vitafoam in the US were instructed by senior management to send draft letters detailing price rises to their competitors and obtain their competitors’ drafts. Senior managers at Vita also used phone conversations and email to ensure that the price rises were agreed but to police the conspiracy and ensure compliance, says the document.

    The Ohio document also alleges that “former Vitafoam executives and the Defendants agreed to avoid each other’s customers and refrain from taking business or market share from one another.”

    The Canadian Competition Commission interviews included retired Vitafoam staff.

    The defendants to the Ohio class action were named in a statement to support a search warrant by Pierre-Yeves Guay of the Commissioner of Competition in Canada on 21July,2010 which named the 12 companies that later found themselves in court in Ohio defending the civil class action in the US. The Ohio document, names 13 people in including president, vice-president sales and executive vice-president automotive at the companies.

    The Ohio document also claims that defendants also violated the Clayton and Sherman Acts, two of the most important pieces of federal antitrust legislation in the US and a total of 23 state antitrust laws, 18 state laws relating to consumer protection and unfair competition and 25 individual state laws covering unfair enrichment.

    The agreement reached with the court in Ohio covers Domfoam and Vitafoam.

     

    Key documents and links

    The Ohio document

    http://www.millerlawllc.com/content/WYSIWYG/Poly_Indirect_Pls_Complaint.pdf

     

    The Court’s acceptance of Vitafoam and Domfoam’s class action compensation plan.

    http://www.ohnd.uscourts.gov/assets/Clerks_Office_and_Court_Records/MDL/2196/Order597.pdf

     

    Full Ohio court documentation relating to the case

    http://www.ohnd.uscourts.gov/home/clerk-s-office-and-court-records/multidistrict-litigation-cases/mdl-2196/

     

    What to expect

    If your company is suspected of operating in an anti-competitive way you may expect in some jurisdictions to find

    • Your telephone calls and faxes are intercepted by the authorities
    • Your offices entered by the police supporting the competition authorities
    • Your senior management and staff at all levels to be interviewed by the competition authorities
    • You may be named personally in a criminal or civil court case
    • Your businesses’ reputation will suffer
    • Legal costs
    • Compensation payments to customers
    • Criminal fines and possible imprisonment

     

     

     

     

    Recommended for You
    EU production growth heads eastwards
    EU production growth heads eastwards
    Making the case for TPUs
    Making the case for TPUs
    From cell to slope
    From cell to slope
    Latest Issue
    Click HERE for Free Download
    View All Archives
    Get our newsletters

    Breaking news and in-depth coverage of essential topics delivered straight to your inbox.

    Subscribe today

    Register to access our archive of leading information on the polyurethanes industry.

    Subscribe now
    Connect with Us
    • Twitter
    • LinkedIn
    • Facebook
    • Youtube

    Follow us on social media for the latest polyurethanes industry news and event updates.

    Logo
    Contact Us

    Office 127,
    61, Willow Walk,
    London
    SE1 5SF
    E-mail us
    +44 (0) 203 287 5979

    Customer Service:
    +1 313 446 0450

    Resources
    • Advertise with Us
    • Media Kit
    • Staff
    • Careers
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • Coronavirus
    • News
      • Asia
      • Americas
      • Europe
      • M & A
      • Financial results
      • Automotive
    • Data
    • Information
      • Country Overview
      • Market Sector overviews
      • Technical articles
      • Company profiles and strategies
    • Events
      • Exhibitions
      • Conferences
      • Webinars / Livestreams
      • Become a Speaker
    • Advertise
    • Contact Us
    • Issues
    • Subscribe