Statesville, North Carolina - The Stroud Group, Inc., representing a group of foam buyers across the US, has brought an action for "damages and injunctive relief" against almost all North America's foam makers, alleging that they conspired "to raise and fix the prices of polyurethane foam and polyurethane foam products" and otherwise control competition in the marketplace.
The impetus for the alleged conspiratorial conduct was typically increases in their raw material costs, including polyols and TDI (toluene diisocyanate), the lawsuit says.
Filed on 17 Sept in the western district of North Carolina Statesville division, the lawsuit names firms "which are or were selling polyurethane foam in the United States between 1999 and the present," in a list including Hickory Springs Manufacturing Company, Valle Foam Industries, Inc., Domfoam International, Inc., The Carpenter Company, The Woodbridge Group, Flexible Foam Products, Inc., Scottdel, Inc., Foamex Innovations, Inc., Future Foam, Inc., Vitafoam Products Canada Ltd, Vitafoam, Inc.
The situation came to light in Feb 2010 , the lawsuit claims, when Vitafoam voluntarily approached the US Department of Justice, Antitrust Division, to self-report evidence of illegal antitrust activities involving Vitafoam and other companies and individuals in the industry ('competitors') and to seek acceptance into the Antitrust Division's Corporate Leniency Program.
Since that time, Vitafoam and its employees have been cooperating with this investigation, the lawsuit adds, alleging that, as a result of its application, Vitafoam has received a conditional leniency letter from the DOJ's Antitrust Division.
"This fact, in and of itself, is significant. It means that Vitafoam has admitted to participation in a conspiracy to violate the antitrust laws," Stroud's lawsuit asserts.
Attempts to obtain a comment on this aspect of the case from British Vita plc, Vitafoam's parent company, have so far been unsuccessful.
"This case is brought as a class action on behalf of all persons who, from at least as early as January 1, 1999 to the present, purchased polyurethane foam, directly from one or more of the defendants or their co-conspirators," the deposition says.
It further alleges that the defendants "agreed explicitly with each other to charge inflated prices for polyurethane foam. Every price increase during the period was the result of conspiratorial discussions among defendants to fix prices. defendants also agreed to allocate customers in specific communications between each other."
The Stroud Group is a Pennsylvania corporation with its principal place of business in Bethesda, Maryland and alleges that, "during the relevant time period [it had] purchased polyurethane foam products directly from one or more of the defendants named."
As a result, "the prices Stroud paid to defendants for polyurethane foam was greater than the prices it would have paid " without the conspiracy. "Stroud has therefore been injured in its business and property by reason of defendants' antitrust violations," the firm asserts.
Key allegations say that "discussions frequently took place at meetings of the Polyurethane Foam Association trade group."
In 2010, domestic revenue for the polyurethane foam industry is expected to be about $12 billion. Furniture and furnishings account for 36.7% of industry revenue. The major products in this segment include pillows, seating, cushioning, mattress cores and quilt rolls.
Transportation products account for 19.1 % of industry revenue. This segment includes foam used for automotive seating, protective cushioning and sound insulation in cars and light trucks.
Building and construction account for 12% of industry revenue. Packaging products account for 5.3% of industry revenue. Major packaging products include protective shipping pads and food containers.