23 August 2013 09:39 [Source: ICB]
The firms will pay out a total of $78.5m to settle charges of price fixing in the US. Suits vs Kronos and Cristal are ongoing
US-based pigment producer DuPont has proposed paying $72m (€54m) to settle allegations that it fixed prices for titanium dioxide (TiO2), while Huntsman has proposed paying $6.5m to settle the class-action lawsuit, according to court documents.
Haley Paint, the lead plaintiff in the lawsuit, has requested that the US District Court's Maryland District accept the settlements, which the court still needs to approve.
US producers may have been painted into a corner
Huntsman said much the same, denying any wrongdoing in regard to TiO2 pricing. "We have settled to avoid the expense of continuing with protracted and expensive litigation. Settling will allow our management to be less distracted by the litigation and more focused on our business," the company said in a statement.
Under the settlements, both Huntsman and DuPont denied allegations that they conspired to fix prices. They agreed to settle the case to avoid the expense and inconvenience of litigation.
The lawsuit remains pending against the other two defendants, Kronos and Millennium Inorganic Chemicals, which is owned by Cristal Global. The trial is scheduled to start on 9 September.
The lawsuit was initially filed in February 2010 by Haley Paint in the district court for Maryland.
Haley accused the four producers of fixing TiO2 prices, starting from 1 February 2003.
A fifth TiO2 producer, Tronox, was not named in the lawsuit because, at the time, it was operating under Chapter 11 bankruptcy protection. Tronox has since emerged from bankruptcy protection.
Regardless, Haley still alleged that Tronox co-operated with the other producers.
Altogether, Tronox and the other producers control about 70% of global production capacity, Haley said in its lawsuit. The companies controlled all capacity in North America and nearly all capacity in western Europe.
Such command of the market helped the companies fix prices, Haley alleged.
The producers were also helped by the high cost of entering the TiO2 market, Haley alleged. A new plant costs $450m-500m and requires three to five years to build.
Haley alleged that the TiO2 industry had many characteristics that made it conducive to price fixing, such as a small number of producers and a product that is similar regardless of who makes it.
In addition, many customers buy TiO2, Haley said. The pigment is a product that makes up a small portion of their costs, and it does not have a practical substitute, Haley alleged.
During the time specified in the lawsuit, Haley accused the producers of raising prices in spite of flat demand, lower costs and excess capacity.
Haley alleged that the TiO2 producers coordinated their price increases through announcements and during industry meetings.
As a result, customers paid higher prices for TiO2 than they would have paid in a competitive market, Haley alleged.
A judge granted the lawsuit class-action status late in 2012.
Given the number of TiO2 customers, the number of companies that could join the lawsuit is huge, according to court documents. At least 700 TiO2 buyers were affected by the alleged price fixing, Haley alleged.
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