A Chicago federal appeals panel has upheld a lower court ruling that boarded up a class action antitrust suit against two containerboard companies, which alleged they conspired to fix prices. Judges again found the companies were not colluding, but rather making parallel moves in reaction to the market.
The Dec. 7 ruling from a three-judge panel of the U.S. Seventh Circuit Court of Appeals was authored by Seventh Circuit Chief Judge Diane Wood, with agreement from Circuit Judge Ilana Rovner and Senior Judge William Bauer.
“The defendants were engaged in self‐interested but lawful oligopolistic behavior during the relevant period. This appeal concerns the ﬁne line between agreement and tacit collusion, or, put another way, conscious parallelism,” Wood wrote.
A suit was brought in 2010 by several businesses that buy containerboard, which is generally used to make corrugated cardboard boxes. The plaintiff businesses were: Kleen Products; RHE Hatco; Ferraro Foods; MTM Packaging Solutions of Texas; R.P.R. Enterprises; Chandler Packaging; and Mighty Pac.
Original defendants were several containerboard manufacturers, including Packaging Corporation of America; International Paper; Norampac Industries; Cascades Inc.; Weyerhaeuser Company; Temple-Inland; Georgia Pacific; and WestRock.
Plaintiffs charged defendants with breaching the U.S. Sherman Antitrust Act by conspiring to jack up containerboard prices between February 2004 and November 2010, which involved raising prices in "lockstep" and cutting back production.
All defendants except Georgia-Pacific, based in Atlanta, Ga. and WestRock, based in Norcross, Ga., settled the suit.
Chicago Federal District Judge Harry Leinenweber threw out the remainder of the case in 2017, on grounds there was no evidence Georgia-Pacific and WestRock did wrong, finding their actions were consistent with permissible competition..
"After six years of extensive discovery, more than a hundred depositions, and millions of documents produced in discovery, the statements that Plaintiffs were able to gather simply are not incriminating," Leinenweber concluded.
Plaintiffs appealed, but received the same response from the Seventh Circuit.
“Purchasers here attempt to carry their burden by emphasizing the timing of the price increase attempts, which they describe as ‘lockstep.’ They urge us to draw the inference that such tight congruence of price movements could not have occurred unless the competitors had an inside scoop.
“But a close look at the record reveals that the Purchasers overstate how coordinated these hikes actually were,” said Judge Wood.
Wood pointed out when some manufacturers raised prices, others did not follow suit until more than one month later. Even when increases were quickly copied, Wood saw nothing suspicious.
“If it is in a company’s self‐interest to imitate a price leader’s increase, why wait to enjoy the beneﬁt?” Wood asked.
Going further, Wood pointed out 40 percent of price hikes did not hold and were rescinded. In addition, no evidence was given the companies tried to discipline fellow companies that did not hew the alleged cartel’s line, Wood said.
Plaintiffs have been represented by numerous law firms, including: Lockridge Grindal Nauen, of Minneapolis; Kellogg, Hansen, Todd, Figel & Frederick, of Washington, D.C.; Saveri & Saveri, of San Francisco; and Freed, Kanner, London & Millen, of suburban Bannockburn.
WestRock is defended by the Chicago firm of Winston & Strawn.
Georgia-Pacific has been defended by: Wilkinson, Walsh & Eskovitz, Shearman & Sterling, Quinn, Emanuel, Urquhart & Sullivan, and Hogan Lovells, all of Washington, D.C.; and Figliulo & Silverman, of Chicago.