Seattle, WA: A group of farmers recently filed a national class-action lawsuit against Premier Chemicals LLC, Sumitomo Corporation of America, and YAS, Inc for allegedly conspiring to fix prices of magnesium oxide – a compound widely used in farming and in animal feed -- that forced farmers and ranchers to overpay millions of dollars.
Filed on October 18, 2010, the suit claims Delaware-based Premier Chemicals, New York-based Sumitomo Corp, and New Jersey-based YAS, Inc routinely met to control the price of magnesium oxide.
Magnesium oxide is used in two forms: Caustic magnesium oxide, typically combined with animal feed given to cattle and sheep, and dead-burned magnesium oxide, which is blended with fertilizers to increase nutrients in farming soil.
According to the complaint, the defendants routinely discussed portioning the market for the chemical product. For example, at a face-to-face meeting in a Tulsa, OK Holiday Inn hotel in 2004, Sumitomo discussed expanding its market with YAS and a Premier broker. According to court records, the Premier broker told the attendees he was worried about jeopardizing his relationship with Premier. A Sumitomo executive allegedly acknowledged that the meeting was routine, following a pattern of daily conversations with Premier to fix the price of caustic magnesium oxide and dead-burned magnesium oxide.
The complaint also states that all three companies justified price increases on the basis of short supplies, and increased energy and freight costs. However, the complaint shows that Sumitomo was only using half of its entire capacity on a major barge route to Tulsa in 2004 in order to protect its price-fixing arrangement with Premier.
Attorneys believe that Sumitomo, which at that time focused solely on the distribution of dead-burned magnesium oxide, had the capacity, opportunity, and interest to enter into the caustic magnesium oxide market, but chose not to, knowing it would upset its pricing agreement with Premier.
Attorneys argue that Sumitomo's decision underscores the illegal and anti-competitive relationship the company had with Premier.
The U.S. and China are the world's leading producers of caustic and dead-burned magnesium oxide. In 2000, Premier controlled the majority of the domestic market for caustic magnesium oxide and purchased dead-burned magnesium oxide from Chinese suppliers. When Premier started to see its market share shrink due to increased competition from China, the company began talks with other leading chemical suppliers, including Sumitomo and YAS, to set the price of caustic and dead-burned magnesium oxide in the US, the lawsuit charges.
The suit accuses the defendants of violating state and federal trade laws by entering into an agreement that artificially restrained commerce and manipulated prices of magnesium oxide. Attorneys are asking the court to provide relief to indirect purchasers of magnesium oxide, and request that these companies stop engaging in anti-competitive practices.
The proposed class action seeks to represent all U.S. purchasers, such as farmers and ranchers, of magnesium oxide or products containing magnesium oxide that were manufactured or distributed by Premier Chemicals LLC, Sumitomo Corporation of America, or YAS, Inc after January 1, 2004.
