According to Packaging Dive and other media reports, containerboard producers are being hit with a class-action antitrust lawsuit accusing them of creating a “cartel” and engaging in price collusion to boost profits at the expense of customers, as first reported by Bloomberg Law.
On Tuesday, July 29 Artuso Pastry Foods Corp. filed the complaint in federal court in Illinois against entities including Cascades, Georgia-Pacific, Graphic Packaging International, Greif, International Paper, Packaging Corporation of America, Pratt Industries and SmurfitWestrock over a series of seven price increases from November 2020 until now.
Artuso Pastry is requesting that plaintiffs receive treble damages, an amount three times the damages eventually awarded by the court. It also seeks injunctive relief, in which a court orders violating parties to stop taking a particular action, and attorneys’ fees.
Major containerboard producers have faced a price collusion class action lawsuits before. In one example, Minnesota-based cleaning products company Kleen Products in 2010 brought a suit against several containerboard producers, also in the United States District Court for the Northern District of Illinois, on accusations of conspiring to increase prices and reduce output from 2004 to 2010. That case resulted in multiple containerboard companies, including Packaging Corporation of America and International Paper, settling via multimillion-dollar payments, although Georgia-Pacific and West- Rock went to court. Many of the defendants in the Kleen Products case are also named in the new lawsuit.
In the current nearly 50-page filing, Artuso Pastry said current containerboard producers and their predecessors have engaged in anticompetitive behavior and price fixing for more than 85 years. It says in the last five years, defendants engaged in “numerous unprecedented and unjustified price increases, often implemented at the exact same time and for the exact same increase.” This “conspiracy” resulted in customers paying higher prices for containerboard than would have existed in a competitive market, according to the filing.
This lawsuit stems from Mount Vernon, New York-based Artuso Pastry purchasing containerboard products from WestRock, now Smurfit Westrock, and paying “an artificially high price,” according to the complaint. The plaintiff claims that containerboard prices were relatively stable throughout the 2010s, but have jumped dramatically over the last five years — 33% from November 2020 to September 2022. The lawsuit alleges that no changes occurred to economic conditions such as input costs or demand “that could plausibly account for the magnitude of the price increases” that the producers implemented.
Reasons that producers have cited for the hikes include increased input costs for raw materials, transportation, energy and labor. Some industry observers have questioned the timing of containerboard price hikes during the last two years, citing weak demand and a global oversupply.
Part of the problem is the amount of industry consolidation that has occurred over the last few decades, the lawsuit says, citing that just a handful of companies now control the vast majority of market share, 85 percent, for containerboard products.
https://boardconvertingnews.com/lawsuit-accuses-containerboard-producers-of-price-fixing/
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