Antitrust Law Daily Wrap Up, TOP STORY—S.D. Tex.: Steel distributor’s boycott claims against competitors can proceed to jury, (Mar 24, 2014)

By Linda O’Brien, J.D., LL.M.

The federal district court in Houston has determined that a defunct small steel distributor presented legally sufficient evidence for a finder of fact to reasonably conclude that competitor steel distributors engaged in a conspiracy with steel producers to boycott the small distributor. The small distributor also showed the existence of antitrust damages and that it suffered an antitrust injury. Accordingly, the defendants’ motion for directed verdict was denied (MM Steel v. Reliance Steel & Aluminum Co., March 21, 2014, Hoyt, K.).

MM Steel, a small steel distributor, filed suit against competing steel distributors, Reliance Steel & Aluminum, Chapel Steel Corp., and American Alloy Steel, alleging that the companies conspired to withhold business from MM Steel. Specifically, the defendants, along with steel producers JSW Steel and Nucor Corporation, launched an organized group boycott not to sell steel plate to MM Steel. As a result of the alleged boycott, MM Steel ultimately ceased operations. At the close of the evidence of the jury trial, the defendants moved for a directed verdict.

The court found that MM Steel properly alleged and showed that the defendants’ group boycott, if proved, amounted to a per se violation of Section 1 of the Sherman Act. There are three factors to consider when determining whether group boycott allegations can proceed under the per se rule of antitrust liability: (1) the boycotting firms possessed a dominant position in the relevant market; (2) the boycott cut off access to a necessary element for the boycotted firm to compete; and (3) plausible arguments exist concerning procompetitive justifications for the boycotting firms’ conduct.

In this case, the type of group boycott alleged was similar to those previously found by the courts to have manifestly anticompetitive effects. Moreover, MM Steel presented sufficient evidence where a factfinder could reasonably conclude that Reliance, Chapel, and American Alloy conspired to persuade, induce or coerce certain steel producers not to sell steel plate to MM Steel. MM Steel also demonstrated the existence of antitrust damages and that it suffered an antitrust injury. Therefore, the court concluded that the case should be submitted to the jury.

The case is No. 4:12-CV-1227.

Attorneys: Bryce Lee Callahan (Yetter Coleman LLP) for MM Steel, LP. Karl S. Stern (Vinson & Elkins) for Reliance Steel & Aluminum Co. and Chapel Steel Corp. Christopher Paul Hanslik (Boyar & Miller PC) and Anne M. Rodgers (Fulbright & Jaworski LLP) for American Alloy Steel, Inc.

Companies: MM Steel, LP; Reliance Steel & Aluminum Co.; Chapel Steel Corp.; American Alloy Steel, Inc.; JSW Steel (USA) Inc.; Nucor Corp.

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