Are PVC pipe and conduit manufacturers fixing prices and overcharging customers by coordinating actions via an industry newsletter?
The question is at the heart of an antitrust lawsuit filed by George Bavolak, an electrical contractor who owns Metropolitan Energy Service Inc., which provides residential and commercial electrical services in Minnesota.
The lawsuit, filed Aug. 23 in U.S. District Court in Chicago, 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), whose PetroChem Wire publishes a PVC & Pipe Weekly report.
The OPIS report includes pipe price data and manufacturer commentary that the 64-page lawsuit says shows specific forward-pricing intentions and apparent invitations to coordinate pricing.
Three of the 11 defendants immediately denied the allegations.
Bavolak filed the proposed class-action lawsuit against OPIS and Atkore Inc., Cantex Inc., Diamond Plastics Corp., Ipex USA LLC, JM Eagle, National Pipe and Plastics Inc., Otter Tail Corp., Prime Conduit Inc., Southern Pipe Inc. and Westlake Corp.
OPIS allegedly conspired with the defendants by facilitating the exchange of confidential, proprietary and competitively sensitive data. The defendants then colluded to exploit the economic crisis during COVID-19 by artificially maintaining the historically high pricing brought by the pandemic, the lawsuit says.
The law firm Lockridge, Grindal, Nauen PLLP is representing Bavolak and any other contractors, home builders or municipalities that become plaintiff parties to the case.
"Prices for PVC municipal water pipe and electrical conduit have been historically high for the last several years. End purchasers such as municipalities and contractors have been shouldering the burden of these high prices, paying more for the PVC pipes they need to complete critical infrastructure and electrical projects," the law firm says in an online overview of the case.
Spokespersons for OPIS, Pineville, N.C.-based Ipex and Fergus Falls, Minn.-based Otter Tail said those companies would investigate or fight the allegations.
"We cannot comment on the court filings but know that Ipex is taking these allegations very seriously," Ipex Communications Director Andrea Arch said in an email. "Ipex has launched an internal investigation to review the matter further. For more than 50 years, Ipex has built a reputation with a customer-first culture that brings transparency, accountability and integrity to all of our projects and customer relationships. We are continuing to focus on providing our customers with excellent service and support."
A year ago, Ipex announced plans to invest $200 million into its Pineville site to boost capacity and create a technological flagship that will be one of the most advanced plastics facilities in the manufacturing industry.
With $1.68 billion in annual sales, Ipex is the fifth largest pipe, profile and tubing extruder in North America, according to Plastics News' latest ranking.
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."
Otter Tail is a diversified company with an electric utility, health services, food ingredient processing and more in addition to a plastics segment.
OPIS officials are planning their legal response. The Rockville, Md.-based company is a wholly owned subsidiary of News Corp., which is also the parent company of Dow Jones & Co.
"These complaints target a product that provides newsworthy information to a wide variety of subscribers. We believe these lawsuits are entirely without merit and we will vigorously fight these claims," a Dow Jones spokesperson said in an email.
News Corp. finalized its purchase of OPIS from IHS Markit for $1.15 billion in February 2022.
Spokespersons for Westlake and Cantex said company officials don't comment on pending litigation. The other defendants didn't respond to Plastics News questions.
The lawsuit points to several years of OPIS reporting, including these back-to-back updates:
• On June 21, the lawsuit says OPIS reported that "converters acknowledge they will need to try again to raise prices" and "put out prices letters with an increase of no more than 10 Blocks above the current market and all aim for the same implementation date. Then, if that increase is successful, to do it again."
In the same report, OPIS also stated converters were seeking "a single price increase that would take prices up by about 5 percent over the current market level, with another percent added to account the discount."
• The following week, on June 28, the lawsuit says OPIS reported that "all major converters raised prices with almost identical pricing in every region they served."
Or, as the lawsuit puts it, the defendants "accepted the invitation."
Cantex issued price sheets at $396.75 per 100 feet in the East and South Central regions, $431.25 in the North Central region, $402.50 in the Southwest region, and $425.50 in the Northwest region, the lawsuit says.
Then defendants Prime, National Pipe, Southern Pipe, Ipex and Atkore followed with similar price sheets for the regions they serve, the lawsuit says.
Overall, the defendants raised their prices for PVC municipal water pipes by about 500 percent between late 2019 and mid-2022 and their prices for PVC electrical conduit by about 500 percent from 63 cents per pound in late 2019 to $3.77 per pound in late 2021, the lawsuit says.
With the price increases imposed collectively, many customers wouldn't switch their purchases to another product, the lawsuit alleges.
"These PVC pipe price changes generated historic profits for the converter defendants, which motivated defendants to implement and maintain their conspiracy," the lawsuit adds.
Bavolak contends he indirectly purchased PVC produced by one or more defendants or their co-conspirators and that he suffered injury as a result of the defendants' alleged conduct.