The U.S. Department of Justice is investigating allegations of price fixing in the PVC pipe market.
Otter Tail Corp., a publicly traded company that owns PVC pipe makers Northern Pipe Products Inc. and Vinyltech Corp., disclosed the investigation in its latest quarterly report, filed on Nov. 7.
The Fergus Falls, Minn.-based company wrote that on Aug. 27, "the company received a grand jury subpoena issued by the U.S. District Court for the Northern District of California, from the U.S. Department of Justice ("DOJ") Antitrust Division."
"The subpoena calls for production of documents regarding the manufacturing, selling, and pricing of PVC pipe. The company is responding to the subpoena and intends to comply with its obligations under the subpoena," it said.
The DoJ investigation apparently has been happening simultaneously with civil cases filed by contractors alleging that PVC pipe and conduit manufacturers are fixing prices and overcharging customers by coordinating actions via an industry newsletter.
Plastics News first reported on the civil cases on Aug. 27. The initial lawsuit was filed on Aug. 23 in U.S. District Court in Chicago. It was brought by George Bavolak, an electrical contractor who owns Metropolitan Energy Service Inc., which provides residential and commercial electrical services in Minnesota.
Bavolak's lawsuit names 10 pipe and conduit producers — including many of the largest extruders in North America — as defendants along with the Oil Price Information Service (OPIS).
Pipe and conduit makers named in that suit include Atkore Inc., Cantex Inc., Diamond Plastics Corp., Ipex USA LLC, JM Eagle, National Pipe and Plastics Inc., Otter Tail, Prime Conduit Inc., Southern Pipe Inc. and Westlake Corp.
In PN's Sept. 11 follow-up story after the initial report, Otter Tail was among the companies that commented on the lawsuit.
Stephanie Hoff, Otter Tail director of communications, said in an email: "We deny these allegations against Otter Tail. We take seriously our commitment to conducting our business with integrity and in compliance with applicable laws and regulations. We will fight against these claims in court."
In the Nov. 7 quarterly report, Otter Tail noted that additional class action lawsuits have been filed since the Bavolak case. The other cases, filed on Sept. 3, Sept. 11 and Sept. 26, also seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys' fees.
Otter Tail wrote in the quarterly report: "At this time, we are unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any, arising from the class action complaints or the DOJ investigation. However, if an antitrust violation by the company is found, it could have a material impact on the company's financial condition, operating results, and liquidity."
"The company believes that there are factual and legal defenses to the allegations in the complaints and intends to defend itself accordingly," it continued.
Companies named in the class action suits collectively control about 90 percent of the wholesale market for PVC municipal water pipe and 95 percent of the wholesale market for PVC electrical conduit in the United States.
The class action suit alleges that they conspired to fix prices for PVC municipal water pipe and PVC electrical conduit in part by signaling pricing moves in OPIS's PVC & Pipe Weekly report.