Sources: Cohen Milstein Sellers & Toll, San Francisco; CP staff
San Diego-based rebar fabricator and installer Pacific Steel Group (PSG) seeks damages and injunctive relief in a suit alleging federal antitrust and California business practices law violations by Commercial Metals Co. (CMC), Irving, Texas, and its principal plant builder, Danieli Corp., Cranberry Township, Pa. The suit details the efficiency of vertical integration in rebar production, fabrication and installation, especially in light of micro mill technology from Danieli, which has built low-cost production lines for market-leading CMC in Texas and Oklahoma. PSG counsel alleges that CMC:
- In tandem with peer producer and fabricator Gerdau Reinforcing Steel, responded to PSG’s 2014 launch by bidding on construction projects below cost to try to starve the upstart of revenues and drive it from the California market;
- Priced its fabrication and installation services for the purpose of injuring PSG and destroying competition in violation of California statutes;
- Conspired to prevent PSG from building a Danieli micro mill for production of its own rebar;
- Enlisted Danieli for construction of a Mesa, Ariz. mill and secured an agreement under which the production line specialist would refrain for a nearly six-year period from building a similar facility within 500 miles of Rancho Cucamonga, Calif.—site of a Gerdau operation CMC acquired in late 2018 as part of a major Gerdau SA mill and fabrication shop transaction.
- Conferred with Danieli representatives on deploying solar power technology—explored in PSG micro mill negotiations and friendly to infrastructure project suppliers bound by recent, carbon-wise California procurement guidelines—for the new Mesa operation.
“Commercial Metals Company fears competition from Pacific Steel Group and has resorted to blatant anticompetitive measures to maintain its monopoly position and reap inflated profits. The antitrust laws insist that Pacific Steel Group be allowed to engage in competition in a free marketplace for the benefit of the many commercial construction projects in California and neighboring states that use rebar,” says Daniel Small, a partner with Cohen Milstein Sellers & Toll, CMC counsel.
The CMC and Danieli tactics, adds PSG CEO Eric Benson, were clear: “To prevent PSG from entering the rebar manufacturing market and providing construction customers a high-quality, lower-cost alternative. We look forward to proving our claims in court and ending these monopolistic practices, so that customers can benefit from the resulting competition.”
The suit was filed in U.S. District Court for the Northern District of California, naming as defendants CMC and two subsidiaries, plus Danieli.