Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: New trial denied in Pacific Steel's $330M rebar manufacturing case, (Sep 30, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

Twelve-day trial after "complicated legal questions and more than four years of highly contested litigation involving multiple rounds of motions to dismiss and extensive summary judgment litigation" supported verdict of $330 million in trebled damages.

A federal district court judge in Oakland has denied motions for a new trial after a jury awarded the Pacific Steel Group (PSG) more than $110 million in damages (trebled to more than $330 million). PSG had sued alleging violations of Section 1 and 2 of the Sherman Act for injuries suffered as a result of collusion between PSG’s competitor Commercial Metals Company (CMC) and its supplier, Danieli Corporation, to block it from the market in California. From the evidence adduced by Pacific Steel at trial, the jury could reasonably have reached its verdict. The court also approved the uncontested attorney fees award of more than $20 million, and partially granted the motions to seal "commercially sensitive and confidential business information" of non-parties that were in some of the documents filed with the court during the nearly five years of litigation (Pacific Steel Group v. Commercial Metals Co., No. 4:20-cv-07683-HSG (N.D. Cal. Sept. 29, 2025)).

Background. The Danieli Corporation (Danieli Corp) is a United States affiliate of Danieli & C. Officine Meccaniche S.p.A. (Danieli Group), an Italy-based engineering conglomerate that has historically specialized in designing and building steel mills. The Danieli Group has developed a technology for manufacturing steel into reinforcement bars used to strengthen concrete structures (rebar) that combines the processes of melting scrap steel, casting the molten steel, and then rolling it into rebar; this technology is known as MI.DA®, which stands for "Micromill Danieli." The MI.DA® process is energy and ecologically efficient because as a continuous process, it eliminates the need to reheat the steel after it has cooled down from an individual component process; moreover, the process occurs in a relatively small and specialized production facility instead of a large traditional steel mill.

PSG had been negotiating with Danieli Corp to build a MI.DA® to enable PSG to manufacture its own rebar products instead of having bear the costs of transporting the rebar from more distant mills. Before the final contract was actually consummated, however, Danieli Corp entered into a contract to build a MI.DA® rebar mill for CMC. The agreement between Danieli Corp and CMC included a geographical exclusivity provision to CMC for a MI.DA® rebar mill within a 400-mile radius of an existing CMC-owned facility (later increased to 500 miles). Upon signing the contract with CMC, Danieli Corp terminated its negotiations with PSG.

A complaint asserting antitrust and other claims was filed by CMC in 2020 against CMC and its related entities, and against Danieli Group. The initial complaint was dismissed. The amended complaint, which addressed the issues noted in the dismissal order, extensively mentioned Danieli Corp as a participant in the alleged antitrust violation but did not name it as a defendant.

Following a jury trial, PSG was awarded more than $330 million in damages after trebling the damages awarded in the verdict. CMC moved for judgment as a matter of law and for new trial.

Relevant market. The judge found that CMC failed to show that PSG's claimed relevant market was unreasonable as a matter of law. The fact that historically, most of the rebar used in the geographic market was from sources beyond the 500-mile radius did not invalidate the relevancy of the geographic market because rebar is an inherently heavy product and therefore costly to transport. PSG's expert opined that CMC's production costs were high, and that bringing in rebar from distant producers was inefficient; the jury's acceptance of that analysis was not unreasonable. The expert's analysis also demonstrated that the market was undersupplied and subject to supracompetitive pricing, thereby enabling outside suppliers to profit from selling rebar in the region.

Anticompetitive harm. The court ruled that "PSG introduced indirect evidence of anticompetitive harm that is adequate to support the jury's finding." The jury accepted PSG's expert's analysis that showed a 90 percent market share for CMC to refute CMC's contention that its market share was only 30 percent. The market had many barriers to entry, including the availability of a scrap iron supply, and also the high cost of and extended time period for building a rebar mill; the 500-mile exclusivity radius was yet another barrier to market entry, inasmuch as PSG was not the only market competitor foreclosed from using MI.DA® technology under the CMC-Danieli Corp agreement.

PSG's expert also showed that CMC had the market power to reduce output in order to charge supracompetitive prices; this was supported by a showing that CMC had earlier increased its prices by 39 percent after acquiring a new mill.

Having shown that CMC possessed market power, PSG also demonstrated additional harm to competition. This included the fact that MI.DA® mills could cut rebar to customer specification more efficiently and accurately, and that Danieli Corp had constructed MI.DA® mills in other localities without any exclusivity provisions. The court rejected CMC's argument that PSG was required to prove competitive harm by direct evidence.

Injury and causation. The judge ruled that PSG's evidence of injury and causation was sufficient for the jury's finding. Although the contract negotiations had not yet come to a contractual agreement, PSG had done much in the way of preparation, including but not limited to engineering studies, plans, arrangements with potential investors, and preparation of the approvals for the proposed MI.DA® mill under the California Environmental Quality Act [Cal. Pub. Res. Code §§ 21000 et seq.]. PSG was ready, willing, and able to purchase a MI.DA® mill until Danieli Corp terminated the negotiations upon entering into the exclusive agreement with CMC.

The Case is No. 4:20-cv-07683-HSG.

Judge: Gilliam, H.

Attorneys: Christopher C. Wheeler (Farella Braun & Martel LLP) for Pacific Steel Group. Steven Bizar (Dechert, LLP) for Commercial Metals Co.

Companies: Pacific Steel Group; Commercial Metals Co.

Cases: Antitrust CaliforniaNews