Indirect Purchasers’ Claims Undermined In Mineral Price-Fixing Litigation

Judge Dickinson R. Debevoise of the U.S. District Court for the District of New Jersey has dismissed class action claims of price fixing brought by indirect purchasers against several magnesium oxide companies in the case of In re Magnesium Oxide Antitrust Litigation.

The court also ruled, however, that the price fixing claims brought by the direct purchaser plaintiffs, Orangeburg Milling Company, Inc., Bar Ale, Inc., and Air Krete, Inc., could move forward. 

Both indirect and direct purchasers alleged that the defendants, Premier Chemicals, LLC, Sumitomo Corporation of America and YAS, Inc., engaged in a conspiracy to fix prices and allocate shares of the domestic magnesium oxide market from January 2002 to the present.  Magnesium oxide is used to manufacture many products including fertilizer, animal feed and pharmaceuticals. 

The direct purchasers filed their initial class action complaint in October 2010 alleging antitrust violations under both the Clayton and Sherman Acts.  The indirect purchaser consumers filed a similar suit a month later.

Judge Debevoise dismissed both the indirect and direct purchasers’ claims on the grounds they were not timely under the four-year statute of limitations, but ruled that the plaintiffs could toll the statute with evidence that the defendants fraudulently concealed the alleged conspiracy.   Both classes filed amended complaints.

The court was satisfied with the direct purchasers’ amended complaint, which alleged that misrepresentations by the defendants caused the plaintiffs to believe that price increases were due to normal competitive market forces. 

The court dismissed the indirect purchasers’ amended complaint because they bought their products at local mills and never dealt directly with defendants.  The amended complaint failed to show that the indirect purchasers were aware of the price increase.  In addition, the products purchased contained too small an amount of magnesium oxide for any alleged price fixing to have a foreseeable effect on the price.