10 September 2013 21:07 [Source: ICIS news]
HOUSTON (ICIS)--Cristal has agreed to pay $50m (€38m) and Kronos $35m to settle a class-action lawsuit in the US that accused the companies of fixing prices for titanium dioxide (TiO2), according to court documents filed on Tuesday.
The two sides reached the settlement right before the case was scheduled to go to trial.
In reaching the settlements, Cristal and Kronos denied allegations that they conspired to fix prices. They agreed to settle the case to avoid the expense and inconvenience of litigation.
Kronos did not immediately respond to a request for comment. Cristal declined to comment.
Earlier, DuPont proposed paying $72m to settle the case, while Huntsman proposed paying $6.5m to settle the lawsuit.
In all, the four companies agreed to settle the lawsuit for $163.5m.
The settlement agreements of all four companies also received preliminary approval by the court on Tuesday. A hearing on final approval is scheduled for 25 November.
The lawsuit was initially filed in February 2010 by Haley Paint in US District Court, Maryland District. Haley was then joined by Isaac Industries and East Coast Colorants, which does business as Breen Color Concentrates.
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 it was operating under Chapter 11 bankruptcy protection at the time. Tronox has since emerged from bankruptcy protection.
Regardless, Haley still alleged that Tronox cooperated 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.
($1 = €0.75)
Follow Al on Twitter
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections