Dow Chemical Settles PU Price-fixing Case
Dow Chemical has agreed to pay $835 million to settle a long-running lawsuit alleging that it – along with other manufacturers – had conspired to keep prices for polyurethane feedstocks artificially high.
The US chemical giant was one of five major producers of MDI, TDI and polyester polyols implicated in the case initially brought in 2004 by polyurethane foam producers who said they had been overcharged since 1999.
Three of the four other urethanes manufacturers – Bayer, BASF and Huntsman –settled out of court, accepting and paying fines in the range of $35-55 million. LyondellBasell was exempted from paying because at the time it was operating under Chapter 11 bankruptcy protection.
Dow was the lone hold-out. Subsequently, in a 2013 trial, a Kansas district court slapped the Midland, Michigan-based group with a fine of $400 million.
In a post-trial motion, Dow sought to have the charges dismissed and eventually filed a petition in the US Supreme Court, arguing that the judgement violated class action law in multiple ways, particularly with respect to two rulings authored by Justice Antonin Scalia.
Explaining its reasons for deciding to settle now, Dow said it believed it had less chance of winning its petition in the Supreme Court, due to “growing political uncertainties” following the death of Justice Antonin Scalia in mid-February of this year.
A political battle meanwhile has erupted in the US over the timetable for appointment of a successor to the business-friendly justice.
“While Dow is settling this case, it continues to strongly believe that it was not part of any conspiracy and the judgement was fundamentally flawed as a matter of class action law,” the chemical producer said in a statement.
The fine as originally proposed was tripled under antitrust law to $1.2 billion, and then reduced to $1.06 billion plus interest. The final payment of $835 million represented a compromise.
In paying up, Dow noted that the US Department of Justice had closed its own investigation in 2007 without taking or proposing any action against it.