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Price-Fixing Alleged in Titanium Dioxide

BALTIMORE (CN) - DuPont conspired with Huntsman and three other companies to fix the price of titanium dioxide, a primary element in white paint, in a declining market, a paint company says in a federal antitrust class action. Haley Paint Co. says defendants produce the entire U.S. output, and 70 percent of the chemical worldwide.

"As a result of abysmal industry conditions in 2001, defendants were motivated to reach, and did reach, an agreement or understanding in or about early 2002 to increase prices and improve margins in the industry," the complaint states.

"These increases were announced and implemented despite flat demand, decreasing raw material costs, and excess capacity in the industry."

Haley Paint sued EI Dupont De Nemours and Co., Huntsman International, Kronos Worldwide, Millennium Inorganic Chemicals and The National Titanium Dioxide Company Limited dba Cristal. All of the defendants are Delaware corporations except for Saudi Arabia-based Cristal.

U.S. demand had declined so much that Millennium idled one of its U.S. plants that year, the complaint states. By the end of 2001, titanium dioxide prices were at their lowest level since 1991. Those "abysmal conditions" led to the conspiracy, according to the complaint.

"Immediately following a meeting of the Titanium Dioxide Manufacturers Association in Finland on or about January 24, 2002, Defendants announced Titanium Dioxide price increases for all grades worldwide, including a five cent per pound increase in the U.S. to be effective March 1, 2002. Plaintiff alleges that prior to these price increases, Defendants communicated with each other directly (bi-laterally and/or multi-laterally) and indirectly (such as through industry analysts, consultants or others) and reached an understanding or agreement to increase industry prices. Defendants' price-fixing agreement or understanding was reached in secret, so Plaintiff does not know the precise circumstances surrounding its formation. Plaintiff further alleges that this understanding or agreement was maintained and fostered throughout the Class Period by means of other communications, which led to numerous additional price increases, and relatively stable customer positions and market shares. Defendants' communications were conducted in secrecy," according to the complaint. (Parentheses in complaint.)

Since 2002 the companies have sold millions of tons of titanium dioxide in the United States, a dry chemical powder that also is used to give whiteness to cosmetics, toothpaste, salad dressings, cheese and other products, according to the complaint. It says nearly 5 million tons were sold worldwide in 2007, generating $10 billion in revenue for the defendants.

Titanium dioxide "is by far the world's most widely used pigment for providing whiteness, brightness, and opacity (it hides or masks other colors) to many products, particularly paints and other coatings," according to the complaint.

Coatings, plastics and paper industries make up 90 percent of the customer base for the chemical.

In addition to fixing prices, Haley says, the defendants blocked new suppliers from entering the market, divvied up customers and arranged market shares "by refusing to bid (or intentionally bidding high) for the business of certain customers being served by other defendants." (Parentheses in complaint.)

The class claims the defendants exchanged information and monitored each other through trade magazines, their Web sites and other media outlets, and discussed their plans at conferences and trade shows.

"The mutually beneficial nature of the business relations between defendants provided not only the opportunity to conspire, but also a financial incentive to do so," according to the complaint.

In 2005 defendants announced price increases every quarter, Haley says.

"Defendants' 2007-2008 price increases and energy surcharges also occurred in spite of declining demand in the United States for titanium dioxide due to recessionary economic conditions, including declining demand in the paint and construction industries," according to the complaint.

The class seeks treble damages, alleging fraudulent concealment and antitrust violations. It is represented by Paul Sandler with Shapiro Sher Guinot & Sandler of Baltimore and Solomon Cera with Gold Bennett Cera & Sidener of San Francisco.

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