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Zipper Kings Can’t Budge Antitrust Class Action

PHILADELPHIA (CN) - An antitrust class action accusing some of the world's largest zipper-makers of a decades-long international price-fixing conspiracy will move forward, a federal judge ruled.

Apparel companies claim that the conspiracy resulted in artificially high prices for ubiquitous "fasteners," including zippers, buttons and hooks.

The European Commission in September 2007 announced a roughly $458 million fine against manufacturers "for operating cartels on the markets for fasteners and attaching machines."

Thirty-five plaintiffs subsequently filed suits in four U.S. District Courts, before the suits were consolidated into a single class action with Pennsylvania's Eastern District in May 2010.

An inspection of any pants zipper will likely reveal the same three letters: YKK.

But the apparel companies say Tokyo-based YKK Corp. did not achieve dominance in the fastener industry through natural market forces.

YKK conspired with a select group of international companies to "allocate customers and markets; fix prices, including minimum, average and target prices; monitor price increases; and coordinate price increases" for "zippers, snap fasteners, jeans buttons, hooks and eyes, clamping locks, clip fasteners and rivets" used in the apparel, textile, footwear and luggage industries, according to the May 2010 class action.

YKK, Georgia-based Scovill Fasteners and a German group of companies called the Prym Group "entered into anticompetitive agreements with respect to the sale of fasteners and their related attaching machines," according to the suit.

A slew of meetings between different combinations of defendants took place from the mid-1970s until approximately 2003, the clothiers claim.

The meetings concerned "the maintenance or improvement of current price levels," "allocation of customers," "marketing strategies," a "worldwide minimum price provision" and "cooperation on global accounts," according to the suit.

High-level YKK and Prym executives "agreed on minimum prices for fasteners" at a December 2000 meeting, the suit says.

"Specific prices were set for certain individual countries and a separate minimum price was set for the rest of the world, which included the United States," the complaint states.

It says senior management for YKK, Scovill and Prym began meeting in so-called "work circles" under the auspices of a German trade association in 1991 to discuss strategies to manipulate competition.

The alleged co-conspirators had claimed the class action is time-barred, but U.S. District Judge R. Barclay Surrick denied their joint motion to dismiss on Friday.

Surrick said the plaintiffs, who want equitable tolling, have adequately demonstrated that the defendants took steps to conceal their alleged anticompetitive acts and obstruct the plaintiffs' fact-finding process.

The plaintiffs want to toll the statute of limitations until Sept. 19, 2007 - the date the European Commission announced the massive fine.

Plaintiffs have adequately shown that the defendants took steps to conceal discovery of their wrongdoing, but a definitive ruling on plaintiffs' request for equitable tolling would be premature at this stage in the litigation, according to Surrick's 32-page ruling.

The defendants claim public reports and newspaper articles confirmed that a European Commission investigation was underway as early as 2001, and that the commission had raided one of the defendant's facilities.

Surrick noted that he could still deny equitable tolling once a factual inquiry determines "plaintiffs' exposure to these articles, the circulation of various publications, and the likelihood that a reasonable plaintiff would have read such documents."

The defendants also claimed there was insufficient proof of wrongdoing in the American marketplace and of a conspiracy between defendants.

Surrick disagreed, finding that the apparel companies have sufficiently alleged both a "unity of purpose" among the defendants and a deleterious impact on the market for fasteners in the United States.

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