Chemicals maker Formosa reaches 'icebreaker' settlement in price-fixing lawsuit (updated)

Formosa Plastics

15/08/2023 19:32

* 
      Deal includes cooperation pact in ongoing antitrust
litigation
    

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      Lawsuit over "caustic soda" used in detergents, pharma,
other
industries
    

  
 (Updates with comment)
    By Mike Scarcella
       Aug 15 (Reuters) - The U.S. subsidiary of Formosa
Plastics Corp  1301.TW  has agreed to pay $7.5 million and to
cooperate with plaintiffs to settle an antitrust lawsuit
alleging the company and others curbed the supply of a widely
used chemical in a scheme to inflate prices.
    The preliminary settlement with the U.S. unit of the
Taiwan-based company was disclosed on Monday by so-called direct
purchasers of sodium hydroxide, or caustic soda. It is the first
deal reached in the litigation, which has been underway in
federal court in Rochester, New York, since 2019.
    Caustic soda, sold as a solid or liquid, is used in soaps
and detergents, food processing, textiles, pharmaceuticals and
other industries, the plaintiffs said in their lawsuit. Large
direct purchasers of the chemical, including New York-based
wholesale chemical distributor Amrex Chemical Co Inc and
Pennsylvania-based Main Pool and Chemical Co Inc, allege a
years-long conspiracy to fix caustic soda prices, beginning in
2015.
    The plaintiffs' lawyers said in a filing on Monday that the
lawsuit followed their lengthy investigation of sales, pricing
and distribution practices in the caustic soda industry.
    Formosa's settlement includes a cooperation provision to
help the plaintiffs with ongoing litigation against non-settling
defendants. Those defendants include U.S. chemical maker Olin
Corp  OLN.N , Houston-based Occidental Petroleum's  OXY.N 
OxyChem and Shintech Inc, a subsidiary of Japan's Shin-Etsu
Chemical  4063.T .
    The lawsuit said Missouri-based Olin is the largest global
producer of a certain type of caustic soda. Olin reported
revenue of more than $9.3 billion last year.
    A spokesperson for OxyChem on Tuesday said the allegations
in the complaint were "entirely without merit" and that the
company will "continue to vigorously defend itself."
    Representatives from Formosa, Olin and Shintech did not
immediately respond to requests for comment on Tuesday.
    Formosa has continued to deny liability and said it settled
to avoid the additional costs of more litigation. The other
defendant companies have denied any wrongdoing.
    The proposed deal requires approval by Chief U.S. District
Judge Elizabeth Wolford of the Western District of New York.
    Attorneys for the plaintiffs did not immediately respond to
a request for comment on Tuesday.
    So-called "icebreaker" settlements in antitrust litigation
are viewed as increasing the chances of future settlements.
    Wolford has not yet ruled on whether to allow the direct
purchasers to sue as a class. The judge has also not set a trial
date.
   
    The case is In re Caustic Soda Antitrust Litigation, U.S.
District Court, Western District of New York, No. 1:19-cv-00385-
EAW-MJR.
    For direct purchasers: Solomon Cera of Cera LLP; Robert
Kaplan of Kaplan Fox & Kilsheimer
    For Formosa: Alan Unger of Sidley Austin
    
    Read more:
    Formosa Plastics to pay nearly $3 mln to settle air
pollution charges


 (Reporting by Mike Scarcella)
 ((Mike.Scarcella@thomsonreuters.com;))