In In the Matter of McWane Inc, and Star Pipe Products Ltd., Federal Trade Commission Administrative Judge D. Michael Chappell dismissed a price-fixing conspiracy claim in FTC’s law suit against McWane Inc., holding that McWane did not conspire with two other competitors — Star Pipe Products Ltd. and Sigma Corp. — to fix prices on small and medium diameter ductile iron pipe fittings. These fittings are sold in the U.S. and are used in municipal water distribution systems. In its complaint, FTC alleged that McWane took certain actions to keep Star from entering the domestic fittings market after the American Recovery and Reinvestment Act (the stimulus) was passed in 2009. The FTC also claimed that a McWane and Sigma’s 2009 distribution deal where Sigma agreed to use McWane as its exclusive source for domestic fittings, was intended to convince Sigma not to enter the domestic market in exchange for a share of McWane’s profits.
In dismissing FTC’s price-fixing conspiracy claim, the court held that the preponderance of evidence did not show a conspiracy among McWane, Star, and Sigma. The court pointed out that this claim is dismissed because the greater weight of the evidence failed to prove the alleged conspiracy, and not because “no price conspiracy existed” in the market or that the “conspiracy theory is implausible.” In the same order, the judge also shot down FTC’s allegations that McWane conspired with the others to exchange “competitively sensitive information.
The judge, however, did rule in favor of the FTC on claims pertaining to a “narrower relevant market” for domestically produced ductile iron pipe fittings used in projects specified as “domestic only.” The court held that McWane had monopoly power over the domestic fittings market and had “implemented an exclusionary policy to forestall Star’s entry” into that market.