Aug 16, 2023
Chemicals maker Formosa reaches 'icebreaker' settlement in price
U.S. one dollar banknotes are seen in this illustration taken February 8, 2021. REUTERS/Dado Ruvic/Illustration Acquire Licensing Rights Aug 15 (Reuters) - The U.S. subsidiary of Formosa Plastics Corp
U.S. one dollar banknotes are seen in this illustration taken February 8, 2021. REUTERS/Dado Ruvic/Illustration Acquire Licensing Rights
Aug 15 (Reuters) - The U.S. subsidiary of Formosa Plastics Corp (1301.TW) has agreed to pay $7.5 million and to cooperate with plaintiffs to settle an antitrust lawsuit alleging the company and others curbed the supply of a widely used chemical in a scheme to inflate prices.
The preliminary settlement with the U.S. unit of the Taiwan-based company was disclosed on Monday by so-called direct purchasers of sodium hydroxide, or caustic soda. It is the first deal reached in the litigation, which has been underway in federal court in Rochester, New York, since 2019.
Caustic soda, sold as a solid or liquid, is used in soaps and detergents, food processing, textiles, pharmaceuticals and other industries, the plaintiffs said in their lawsuit. Large direct purchasers of the chemical, including New York-based wholesale chemical distributor Amrex Chemical Co Inc and Pennsylvania-based Main Pool and Chemical Co Inc, allege a years-long conspiracy to fix caustic soda prices, beginning in 2015.
The plaintiffs' lawyers said in a filing on Monday that the lawsuit followed their lengthy investigation of sales, pricing and distribution practices in the caustic soda industry.
Formosa's settlement includes a cooperation provision to help the plaintiffs with ongoing litigation against non-settling defendants. Those defendants include U.S. chemical maker Olin Corp (OLN.N), Houston-based Occidental Petroleum's (OXY.N) OxyChem and Shintech Inc, a subsidiary of Japan's Shin-Etsu Chemical (4063.T).
The lawsuit said Missouri-based Olin is the largest global producer of a certain type of caustic soda. Olin reported revenue of more than $9.3 billion last year.
A spokesperson for OxyChem on Tuesday said the allegations in the complaint were "entirely without merit" and that the company will "continue to vigorously defend itself."
Representatives from Formosa, Olin and Shintech did not immediately respond to requests for comment on Tuesday.
Formosa has continued to deny liability and said it settled to avoid the additional costs of more litigation. The other defendant companies have denied any wrongdoing.
The proposed deal requires approval by Chief U.S. District Judge Elizabeth Wolford of the Western District of New York.
Attorneys for the plaintiffs did not immediately respond to a request for comment on Tuesday.
So-called "icebreaker" settlements in antitrust litigation are viewed as increasing the chances of future settlements.
Wolford has not yet ruled on whether to allow the direct purchasers to sue as a class. The judge has also not set a trial date.
The case is In re Caustic Soda Antitrust Litigation, U.S. District Court, Western District of New York, No. 1:19-cv-00385- EAW-MJR.
For direct purchasers: Solomon Cera of Cera LLP; Robert Kaplan of Kaplan Fox & Kilsheimer
For Formosa: Alan Unger of Sidley Austin
Read more:
Formosa Plastics to pay nearly $3 mln to settle air pollution charges
Reporting by Mike Scarcella
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