Fair competition is one of the main pillars of capitalism. It fuels creativity and innovation while keeping prices from being too high for consumers. This is why there are laws against competitors in an industry colluding together to keep prices higher in order to make larger profits. However, this is what Michigan company Dow Chemical was being accused of doing in a recent business litigation class-action lawsuit.
The chemical company was recently ordered by a federal court to pay a judgment of $1.2 billion resulting from a price-fixing case. Dow was recently attempting to reverse a verdict in which a jury concluded that the company conspired with competitors to fix the price of urethane. The original award was for $400 million which was granted in February. However, after the recent failed attempt to overturn the initial verdict, the presiding judge tripled the damages awarded.
Dow attempted to challenge the initial jury verdict by arguing that the plaintiffs accused the company of a conspiracy beginning in 1999 and lasting until 2003, however the plaintiffs were not able to prove the conspiracy existed before Nov. 2000. The lawsuit began in 2005 with accusations that the company conspired with Huntsman International LLC, Lyondell Chemical Co. and BASF SE. The alleged conspiracy centered around urethane-based products related to a variety of industries, including automotive, appliance and construction sectors.
If companies are not careful and aware of the laws regulating their industries, they may find themselves facing similar business litigation as the Michigan chemical company in this case. However, if a business does end up being brought to court, the company will want to come prepared with a well-crafted legal argument to defend itself against any allegations. This will require extensive knowledge of the law as well as court procedures.
Source: Bloomberg Law, " Dow Chemical Damages Hit $1.2 Billion in Urethane Case ," Andrew Harris and Dan Margolies, May 16, 2013