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Drywall Manufacturers Accused Of Constructing Price-Fixing Facade

Posted  February 19, 2013

Eight of the largest drywall manufacturers in the United States are facing three antitrust complaints that allege price fixing and other anticompetitive coordination have harmed homebuilders and other direct purchasers of drywall.

Defendants include CertainTeed Corp., Georgia-Pacific LLC, USG Corp., United States Gypsum Co., New NGC, Inc., LaFarge North America Inc., American Gypsum Co. LLC, TIN Inc. and PABCO Building Products, LLC.

Sierra Drywall Systems Inc. was the first to file a class action complaint in Illinois against the drywall manufacturers.  Sierra installs drywall for commercial and residential construction projects and argues it was negatively affected by two different anticompetitive actions.  Sierra’s action was moved to the U.S. District Court for the Eastern District of Pennsylvania after both Janicki Drywall of Erie Pennsylvania and New Deal Lumber & Millwork Company Inc. of Philadelphia launched two additional cases against the defendants.

According to the complaint in Sierra Drywall Systems, Inc. v. CertainTeed Corp., the eight drywall manufacturers coordinated their prices, including in September and October 2011, when they each announced they would raise prices 35 to 37 percent.  News media at the time reported that drywall makers were blaming the poor economy for price hikes.

Sierra alleges that not only did the drywall manufacturers coordinate increasing their prices, they also eliminated job quotes, the decades-long industry practice of negotiating a flat rate for all drywall needed during the duration of a construction project.  According to Sierra, job quotes guaranteed customers the best price because several companies could make competing offers.

“Any one Defendant seeking to eliminate these competitive price terms by itself would have been met with opposition and likely defections from customers.  Only through coordination was the reversal and elimination of this long-standing practice possible,” Sierra alleges in the complaint.

A second round of price increases increased the drywall prices by 25 to 35 percent for 2013.

Tagged in: Antitrust Litigation, Price Fixing,