Price fixing allegations rock TiO2

By Simon Moores
Published: Thursday, 25 February 2010

DuPont, Huntsman, Kronos, Millennium & Cristal accused; Anti-trust class action filed over 2001 Finland meeting; Haley Paint Co. seeks three-fold damages

North American paint company, Haley Paint Co. is alleging that five titanium dioxide (TiO2) producers have conspired to fix pigment prices in a federal anti-trust class action in Baltimore, Maryland USA.

The accusations are levelled at four US companies: DuPont, Huntsman International LLC, Kronos Worldwide, Inc. and Millennium Inorganic Chemicals; and, Saudi Arabia’s National Titanium Dioxide Company Ltd (Cristal).

Millennium Inorganic Chemicals is now a wholly owned subsidiary of Cristal, although they were independent companies when the alleged price fixing began.

Since the matter is pending litigation, all the titanium dioxide pigment producers questioned stated that it would be inappropriate for them to comment to IM.

The complaint states the alleged price-fixing began in 2001 when the market for TiO2 was depressed and prices low. In March 2002, after a meeting of the Titanium Dioxide Manufacturers’ Association in Finland, Haley Paint Co. claims that the defendants then all announced price increases for all grades worldwide, having communicated with each other directly and indirectly, and reached an agreement or understanding on prices in secret.

The plaintiff then alleges that this understanding or agreement was fostered and maintained throughout the class period, which led to numerous other price increases and relatively stable customer positions and market shares.

In addition to fixing prices, Haley says that the defendants blocked access to new suppliers entering the market, shared up customers and arranged market share “by refusing to bid or intentionally bidding high for the business of certain customers being served by other defendants Ð the parantheses in the complaint filed.

Haley Paint also claims that in 2007-2008, the companies still put forward price increases and energy surcharges, despite the declining demand for pigment in the USA in the paint and construction industries.

The class action is seeking treble damages, alleging fraudulent concealment and anti-trust violations.

Haley Paint Co. is represented by Shapiro Sher Guinot & Sandler of Baltimore, and Gold Bennett Cera & Sidener of San Francisco. Gold Bennett Cera & Sidener is currently involved with other anti-trust class actions, involving ethylene propylene diene monomer synthetic rubber and parcel tanker freight rates, amongst others.

Haley Paint Co. is the largest independent paint dealer in the Philadelphia market, with manufacturing facilities in Conshoocken, Pennsylvania.

Comment: industry impact

This class action comes as little surprise particularly considering the litigious US environment. In the boom times of 2007-2008 TiO2 producers struggled for profitability and the industry has had a trend of increasing prices since.

Leading pigment producers have increased their TiO2 prices in unison for some time as one method to readdresses waning profits, but more often than not the rises do not stick.

North American customers are refusing to accept the most recent of prices increases with the pigment still in the $2,350-2,500/tonne range.

Just going by the filed suit, it might be very difficult for Haley Paint Co.’s attorneys to prove that the industry’s top producers were colluding to force up prices. One would imagine that hard evidence would need to be presented to justify such a claim.

On the other hand, unison price increases in the industry have been regular, obvious and notably similar in terms of increase and location of the increase in the world. Generally, they were released either hours or days apart.

For example, IM’s article TiO2 price bandwagon grows (20 July 2009) carried the subtitle: Kronos, Tronox, & Huntsman all increase TiO2 prices on the back of DuPont’s mark-up.

While there was no suggestion that this was pre-discussed industry action, the subtitle summed up the prevailing trend over the past year at the time.

As Haley Paint Co. may find it is one thing to accuse, but an entirely different challenge to prove. What the court filing has done, however, is put the actions of TiO2 producers in the spotlight once again after a fairly quiet 2009.