US Steel Defeats Price-Fixing Suit

A Modesto tomato canner failed to produce sufficient evidence that it was the victim of a price-fixing conspiracy by U.S. Steel to control the price and market allocation of tin cans, a federal appeals court held Tuesday.

Although “echoes of price-fixing permeate the appeal,” Stanislaus Food Products Co. failed to establish specific facts supporting a market allocation conspiracy among the nation’s leading tin manufacturers, the 9th U.S. Court of Appeals said.

Stanislaus argued that it paid artificially high prices for tin cans as a result of an illegal market allocation agreement among can makers.

The market allocation claim “relies on a shaky economic theory, as the purported arrangement would not be rational in light of the circumstances” wrote Judge Margaret McKeown.

Stanislaus buys its tin cans exclusively from Silgan, one of three major American tin can makers. Silgan, in turn, buys tin mill products from multiple suppliers, including U.S. Steel Corp., according to the court.

U.S. Steel is a joint venture with POSCO America Steel Corp.  As part of the venture U.S. Steel and POSCO America supply hot band steel, a component in tin mill products.  The price is set by a six-person management team, including three appointees from each company.

Stanislaus claimed that U.S. Steel agreed to leave the market and eliminate discounts to Silgan to give POSCO monopolistic price controls for tin mill products.

The trial court dismissed a separate conspiracy to monopolize claim, leaving only the market allocation conspiracy claim.

The appeals court held that Stanislaus failed to provide “specific evidence” of the linchpin of the allocation claim – that U.S. Steel agreed to exit the market.

Case:  Stanislaus Food Products v. USS-POSCO, No. 13-15475

 

 

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