A proposed class action lawsuit filed in New York claims the leading manufacturers of sodium hydroxide, commonly known as caustic soda or lye, have artificially inflated the prices of the substance since October 2015.
A proposed class action lawsuit filed in New York claims the leading manufacturers of sodium hydroxide, commonly known as caustic soda or lye, have artificially inflated the prices of the substance since October 2015. Citing alleged violations of federal antitrust law, the lawsuit claims the defendants – Olin Corporation, Occidental Petroleum Corporation, Westlake Chemical Corporation, Shin-Etsu Chemical Co., Ltd., Formosa Plastics Corporation, and several of their respective subsidiaries – have, through an illegal cartel, caused direct purchasers of caustic soda to pay more than they would have paid absent the manufacturers’ anticompetitive activities.
Caustic soda, according to the case, is a common substance used in a variety of industries, including paper, chemical production, soaps, aluminum, food processing, water treatment, textiles, mineral oils, recycling, and pharmaceuticals.
The lawsuit argues that caustic soda prices, which have allegedly risen more than 50 percent since 2015, do not reflect true market conditions and can only be a result of anticompetitive actions on the defendants’ part.
The timeline in the suit begins in the fourth quarter of 2015 when the defendants, in response to poor market conditions, allegedly agreed to coordinate price increases for caustic soda despite “sluggish demand, stable or declining costs, and excess capacity.” The manufacturers, which the case notes control 90 percent of the domestic supply of caustic soda, allegedly attributed the rising prices to a lack of supply and even went so far as to refuse customers in order to preserve the façade. To further justify the price increases, the defendants then cut down on hundreds of thousands of tons of capacity, the suit alleges, in part by limiting production through plant shutdowns and selling supply abroad rather than competing domestically.
“Defendants’ customers have been led by the supply-restricting Defendants to believe that Caustic Soda supply was ‘tight’ and product ‘scarce’ or otherwise limited,” the complaint reads. “This conduct helps the Defendants not only to effectuate their relentless price increases but also to increase their profits while policing their agreements on supply and pricing, despite excess capacity and relatively stable demand and costs.”
The suit claims the defendants accomplished their alleged conspiracy by engaging in secret communications with one another and sharing commercially sensitive information, including details about their strategy, supply, capacity, and pricing, in order to manipulate the caustic soda market to their benefit.
According to the suit, the defendants’ alleged conduct has harmed purchasers of caustic soda by causing them to pay a higher price than they would have paid in a fair market.