PUBLIC

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

________________________________________________ 

DOCKET NO. 9351

________________________________________________ 

In the Matter of

McWANE, INC.,

 a corporation, and 

 STAR PIPE PRODUCTS, LTD.,

 a limited partnership,

 

 

Respondents. 

________________________________________________ 

INITIAL DECISION

________________________________________________ 

 D. Michael Chappell

 Chief Administrative Law Judge 

Date: May 8, 2013 

05 09 2013
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TABLE OF CONTENTS

I. INTRODUCTION .................................................................................................1

A. Summary of the Complaint and Answer ........................................................1

B. Procedural History..........................................................................................6

C. Evidence .........................................................................................................7

D. Summary of Initial Decision...........................................................................9

II. FINDINGS OF FACT .........................................................................................10

A. Background...................................................................................................10

1. Jurisdiction...........................................................................................10

2. Key terms.............................................................................................11

3. Fittings industry participants ...............................................................12

a. McWane, Inc..................................................................................12

i. Company basics.................................................................12

ii. Key employees...................................................................12

b. Sigma Corporation.........................................................................16

i. Company basics.................................................................16

ii. Key employees...................................................................17

iii. Sigma email distribution lists............................................21

c. Star Pipe Products Ltd. ..................................................................22

i. Company basics.................................................................22

ii. Key employees...................................................................23

d. Other fittings suppliers and pipe suppliers ....................................26

i. American Cast Iron Pipe Company ...................................26

ii. Backman Foundry..............................................................27

iii. Griffin Pipe Products.........................................................28

iv. Metalfit, Inc. ......................................................................28

v. NAPAC, Inc.......................................................................29

vi. NACIP ...............................................................................29

vii. Serampore Industries Private.............................................30

viii. United States Pipe and Foundry Company, LLC ..............30

ix. Electrosteel USA, LLC......................................................31

e. Domestic foundries........................................................................31

i. EBAA Iron, Inc..................................................................31

ii. EJ .......................................................................................32

iii. Frazier & Frazier Industries...............................................32

iv. Glidewell Foundry.............................................................33

v. Mabry Castings..................................................................33

f. Distributors....................................................................................33

i. HD Supply .........................................................................33

ii. Ferguson Enterprises .........................................................34
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iii. WinWholesale....................................................................35

iv. Hajoca Corporation............................................................35

v. The Distribution Group (TDG)..........................................36

vi. E.J. Prescott, Inc. ...............................................................37

vii. Groeniger & Company ......................................................38

viii. Illinois Meter, Inc. .............................................................38

ix. C.I. Thornburg Company, Inc............................................39

x. Utility Equipment Company..............................................39

xi. Dana Kepner Company......................................................39

4. Industry background ............................................................................40

a. Fittings basics ................................................................................40

i. Applications.......................................................................40

ii. Shapes, sizes, and configurations ......................................41

iii. Manufacturing....................................................................43

iv. Related waterworks products.............................................44

b. Fitting sales....................................................................................44

i. Fittings as commodity products.........................................44

ii. Demand inelasticity ...........................................................45

iii. Bidding process .................................................................45

iv. Specifications.....................................................................46

v. Material takeoffs................................................................46

vi. Submittals..........................................................................46

vii. The sale..............................................................................47

viii. Shipping.............................................................................47

c. Domestic and open specifications .................................................47

d. Market Structure ............................................................................48

i. Suppliers............................................................................48

ii. End Users...........................................................................50

iii. Distributors........................................................................50

e. How Prices Are Set........................................................................56

i. List Prices and multipliers.................................................56

ii. Project Pricing and other discounts ...................................57

iii. Rebates...............................................................................59

iv. Freight terms......................................................................59

v. Payment terms ...................................................................60

vi. Effects of Project Pricing...................................................60

5. Economic background .........................................................................61

B. Relevant Market............................................................................................63

1. Relevant product markets....................................................................63

a. Fittings for use in open specification projects...............................63

i. Functional interchangeability with other products............63

ii. Price constraints of other products ....................................64

iii. Cluster of Fittings of 24 inches or less in diameter ...........65
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b. Fittings for use in domestic-only specification 

projects...........................................................................................67

i. Domestic-only requirements other than ARRA ................67

ii. Requirements of ARRA.....................................................68

iii. Waivers of ARRA’s Buy American requirement..............68

iv. Price correlation between Domestic and non-domestic 

Fittings...............................................................................71

2. Relevant geographic market ................................................................71

C. Competitive environment .............................................................................72

1. Market characteristics..........................................................................72

a. Pricing interdependence.................................................................72

b. Price transparency..........................................................................72

i. List and multiplier prices...................................................72

ii. Project Pricing ...................................................................73

iii. Gathering competitive information....................................74

2. Competitive Environment prior to January 2008 ................................75

D. January and February 2008 Pricing Events..................................................78

1. January 11, 2008 Customer Letter.......................................................78

a. Background....................................................................................78

b. McWane’s January 11, 2008 Customer Letter ..............................86

2. Sigma’s reaction to McWane’s January 11, 2008

Customer Letter ...................................................................................90

3. Star’s reaction to McWane’s January 11, 2008 

Customer Letter ...................................................................................94

E. DIFRA ........................................................................................................100

1. Background........................................................................................100

2. The data reported through DIFRA.....................................................104

3. Uses for aggregated tons-shipped data ..............................................105

a. Generally......................................................................................105

b. Sigma ...........................................................................................106

c. Star...............................................................................................108

d. McWane.......................................................................................109

F. May and June Pricing Events .....................................................................111

1. Sigma notifies its customers of a price increase on 

April 24, 2008, to be effective May 19, 2008....................................111

2. Star’s and McWane’s reaction to Sigma’s 

April 24, 2008 Customer Letter.........................................................113

3. Star’s and Sigma’s reaction to McWane’s 

May 7, 2008 Customer Letter............................................................117

4. Star’s submittal of its tons-shipped data to DIFRA’s 

accountants ........................................................................................118
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5. McWane’s receipt of DIFRA aggregated tons-shipped 

report and McWane’s transmittal of June 17, 2008 

Customer Letter .................................................................................120

6. Star’s and Sigma’s reactions to McWane’s June 17, 

2008 Customer Letter ........................................................................121

G. Competitive Environment in 2008..............................................................122

1. Facts related to alleged curtailment of Project Pricing......................122

a. Expert opinion .............................................................................122

b. McWane.......................................................................................122

d. Star...............................................................................................126

e. Sigma ...........................................................................................130

2. Alleged “monitoring” and “cheating” documents.............................131

3. Economic data ...................................................................................137

a. Background..................................................................................137

b. Expert analysis.............................................................................138

c. Other financial evidence ..............................................................141

i. McWane...........................................................................141

ii. Star...................................................................................145

iii. Sigma ...............................................................................146

H. McWane’s Spring 2009 List Price Changes...............................................147

I. Monopoly Power ........................................................................................151

1. Percentage of the Fittings market that is Domestic 

Fittings...............................................................................................151

2. The impact of ARRA on the Domestics Fittings 

Market................................................................................................152

3. Market share in the Domestic Fittings market...................................154

4. Barriers to entry .................................................................................154

a. Barriers for new entrants .............................................................154

b. Star did not face the same barriers as new entrants.....................155

c. Domestic foundries, pipe suppliers, and other 

suppliers are not potential entrants..............................................156

5. Ability to control prices.....................................................................158

6. Entry by Star into the Domestic Fittings market ...............................161

a. Star’s announcement to enter the Domestic 

Fittings market.............................................................................161

b. Star’s contracts with domestic foundries.....................................161

c. Star’s acquisition of patterns to make Domestic 

Fittings.........................................................................................164

d. Star’s sales of Domestic Fittings .................................................165

J. McWane’s Full Support Program...............................................................166

1. McWane’s Views on Star’s Entry into the Domestic 

Fittings market...................................................................................166

2. McWane’s strategic responses to Star...............................................169
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3. McWane’s 2009 revisions to its corporate rebate 

programs............................................................................................171

4. McWane’s September 22, 2009 Letter to Distributors 

regarding Full Support Program........................................................172

5. McWane’s communications to Distributors regarding 

the Full Support Program...................................................................173

6. Full Support Program as it relates to Hajoca .....................................176

a. Hajoca elected not to participate in the Full 

Support Program..........................................................................176

b. McWane did not accept new orders for Domestic 

Fittings from Hajoca ....................................................................178

c. McWane withheld Hajoca’s rebate..............................................181

d. Hajoca continued to purchase from Star......................................181

7. Full Support Program as it relates to HD Supply ..............................182

a. Communications between McWane and HD 

Supply in advance of the Full Support Program..........................182

b. Impact of Full Support Program on HD Supply..........................183

c. HD Supply’s views on and purchases from Star .........................185

8. Full Support Program as it relates to Ferguson .................................185

a. Impact of Full Support Program on Ferguson .............................185

b. Ferguson’s views on and purchases from Star ............................187

9. Full Support Program as it relates to U.S. Pipe .................................188

a. U.S. Pipe’s purchasing history and reaction to 

ARRA ..........................................................................................188

b. Impact of Full Support Program on U.S. Pipe.............................190

c. U.S Pipe’s views on and purchases from Star.............................191

10. Full Support Program as it relates to Groeniger................................192

a. Impact of Full Support Program on Groeniger............................192

b. Groeniger’s views on and purchases from Star...........................193

11. Full Support Program as it relates to WinWater................................194

12. Full Support Program as it relates to TDG ........................................196

a. TDG Vendor Committee negotiations on rebates .......................196

b. Various TDG members’ views and purchases from 

Star...............................................................................................197

13. Full Support Program as it relates to Illinois Meter ..........................198

a. Impact of Full Support Program on Illinois Meter......................198

b. Illinois Meter’s views on and purchases from Star .....................198

14. Serampore Industries Private decides not to enter the 

Domestic Fittings market...................................................................199

15. Impact of McWane’s Full Support Program on Star.........................201

a. Star’s perception of McWane’s Full Support

Program........................................................................................201

b. Star did not generate enough sales to purchase its 

own foundry.................................................................................203
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c. Star considered purchasing a dedicated foundry 

for Domestic Fittings production.................................................204

d. Star’s costs of contracting with other foundries..........................205

K. McWane and Sigma Enter into a Master Distribution Agreement......................206

1. Sigma’s initial reaction to ARRA......................................................206

2. Sigma’s initial discussions with McWane.........................................207

3. McWane’s initial response to Sigma .................................................208

4. Sigma’s efforts to enter the Domestic Fittings market ......................210

5. Sigma’s financial position in 2009 ....................................................214

6. Renewed negotiations between McWane and Sigma........................217

7. McWane and Sigma enter into the MDA ..........................................224

8. Sigma stopped its efforts to enter the Domestic 

Fittings market...................................................................................225

9. Pricing requirements of the MDA .....................................................226

10. The MDA limited the Distributors to whom Sigma 

could resell McWane Domestic Fittings............................................227

11. Sigma implemented McWane’s Full Support Program.....................229

12. Sigma was not permitted to sell to U.S. Pipe ....................................230

13. Sigma’s intent to block Star through the MDA.................................231

14. McWane’s intent to block Star through the MDA.............................232

15. Benefits of the MDA .........................................................................232

16. The MDA did not increase output or expand the 

market for Domestic Fittings.............................................................234

17. The scope of the MDA ......................................................................234

III. ANALYSIS .........................................................................................................235

A. Jurisdiction..................................................................................................235

B. Burden of Proof and Statutory Framework ................................................235

C. The Relevant Market ..................................................................................238

1. Background........................................................................................239

a. Fittings.........................................................................................239

b. Market Participants......................................................................240

i. Suppliers..........................................................................240

ii. End Users.........................................................................241

iii. Distributors......................................................................241

c. Bidding Process...........................................................................241

d. Open Specifications v. Domestic-only 

Specifications...............................................................................242

e. Economic Backdrop.....................................................................242

2. Relevant product markets..................................................................243

a. General legal standards................................................................243

b. Fittings for use on open specification jobs..................................244

i. Fittings 24” and smaller are an appropriate cluster .........244
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ii. No widely used substitutes for ductile iron pipe 

Fittings.............................................................................246

c. Fittings for use with domestic-only specification

jobs...............................................................................................248

i. No reasonable substitutes for Domestic Fittings 

in domestic-only specifications .......................................248

ii. Fittings sold into domestic-only specifications are 

priced differently than Fittings sold into open

specifications ...................................................................251

3. Geographic market.............................................................................252

D. Count One: Alleged Conspiracy with Sigma and Star to 

Stabilize and Raise Fittings Prices..............................................................254

1. Overview............................................................................................254

a. Conspiracy law ............................................................................254

b. Complaint Counsel’s conspiracy theory......................................256

c. Oligopoly .....................................................................................257

2. Alleged agreement to curtail Project Pricing 

(Complaint Counsel’s “episode one”) ...............................................260

a. Summary of Facts........................................................................261

i. Fittings Pricing.................................................................261

(a) Published pricing .................................................261

(b) Project Pricing .....................................................262

ii. Economic conditions in 2007 ..........................................263

iii. McWane’s pricing strategy for 2008 ...............................264

iv. McWane’s January 11, 2008 Customer Letter ................268

v. Sigma’s reaction after McWane’s January 11, 2008 

Customer Letter ...............................................................269

vi. Star’s reaction after McWane’s January 11, 2008 

Customer Letter ...............................................................272

b. Analysis .......................................................................................275

i. Introduction......................................................................275

ii. Parallel pricing related conduct .......................................276

(a) Parallel “intentions” or “steps” regarding 

Project Pricing .....................................................278

(b) Parallel conduct by McWane, Sigma, and Star 

in curtailing Project Pricing.................................280

(c) McWane’s Pricing Protection Log ......................280

(d) “Observations” of McWane curtailing Project 

Pricing..................................................................282

(e) Evidence regarding Star and Sigma curtailing 

Project Pricing .....................................................283

iii. “Plus” factors...................................................................286

(a) Motive..................................................................288

(b) Actions contrary to interest..................................291
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(c) A “written plan for conspiracy”...........................294

(d) DIFRA as a “plus” factor.....................................301

(e) “Monitoring” of the market for “cheating” .........304

(f) “Complaints” about “cheating” ...........................309

(g) Inter-firm communications..................................314

c. Summary and conclusion as to asserted agreement

to curtail Project Pricing ..............................................................317

3. Alleged agreement by McWane to increase prices 

only if Sigma and Star submit DIFRA tons-shipped 

data (Complaint Counsel’s “episode two”) .......................................321

a. Background – Sigma’s “big, bold” price increase.......................322

b. McWane’s May 7, 2008 Customer Letter ...................................323

c. Sigma’s and Star’s interpretation of McWane’s 

May 7, 2008 Customer Letter......................................................327

d. McWane’s June 17, 2008 Customer Letter .................................329

4. Spring 2009 telephone conversation between 

Mr. McCutcheon of Star and Mr. Tatman of 

McWane (Complaint Counsel’s “episode three”) .............................332

a. Timing of the spring 2009 telephone conversation 

in relation to alleged conspiracy..................................................332

b. Asserted “agreement to adhere” to McWane’s list

prices............................................................................................334

5. Economic evidence............................................................................338

a. Complaint Counsel’s economic evidence....................................339

b. Respondent’s economic evidence................................................342

i. Published prices...............................................................343

ii. Invoice prices...................................................................344

c. Dr. Schumann’s rebuttal ..............................................................345

d. Summary and conclusion as to economic evidence ....................349

6. Conclusion based on totality of the evidence ....................................350

E. Count Two: Alleged Conspiracy to Exchange 

Competitively Sensitive Sales Information in Restraint 

of Trade.......................................................................................................352

1. The DIFRA tons-shipped reporting agreement .................................353

2. Applicable standard for determining unreasonable 

restraint ..............................................................................................354

3. Anticompetitive effects......................................................................355

a. Facilitating practice theory ..........................................................355

b. Nature of information exchanged ................................................357

i. Time frame of the data.....................................................357

ii. Specificity of the DIFRA tons-shipped data....................357

(a) DIFRA data generally..........................................357
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(b) Market share information as “facilitating” price 

coordination .........................................................359

iii. Publicly available data.....................................................361

iv. Meetings concerning the data ..........................................362

4. Conclusion .........................................................................................362

F. Count Three: Alleged Invitation to Collude ...............................................363

1. Overview of relevant legal authorities...............................................363

2. January 11, 2008 Customer Letter.....................................................365

3. May 7, 2008 Customer Letter............................................................368

4. Conclusion .........................................................................................369

G. Counts Six and Seven: Alleged Monopolization and 

Attempted Monopolization of the Domestic Fittings Market.....................369

1. Overview............................................................................................369

2. Monopoly power in the relevant market............................................371

a. Relevant market...........................................................................371

b. Monopoly power or the dangerous probability of 

achieving monopoly power..........................................................371

i. Market share in a market with high barriers....................371

(a) Market share ........................................................372

(b) Barriers to entry and expansion ...........................375

ii. Ability to control prices or exclude competitors .............378

(a) Ability to control prices.......................................378

(b) Ability to exclude competitors.............................381

3. Willful maintenance of monopoly power..........................................383

a. Summary of the facts...................................................................385

i. Development of McWane’s Full Support Program.........385

ii. Communication of McWane’s Full Support Program to 

Distributors......................................................................387

iii. Enforcement of McWane’s Full Support Program..........389

iv. Impact of McWane’s Full Support Program on 

Distributors’ purchases from Star....................................390

(a) HD Supply ...........................................................390

(b) Ferguson ..............................................................392

(c) U.S. Pipe ..............................................................394

(d) Groeniger.............................................................395

(e) WinWholesale......................................................396

(f) Illinois Meter .......................................................396

v. Impact of McWane’s Full Support Program on SIP’s 

evaluation of whether to enter the Domestic Fittings 

market ..............................................................................397

vi. Impact of McWane’s Full Support Program on Star’s 

entry into the Domestic Fittings market ..........................398

b. Exclusionary Conduct Law..........................................................400
xi

c. The Full Support Program was an all-or-nothing 

policy imposed upon Distributors................................................402

d. The Full Support Program foreclosed Star from a 

substantial share of the market ....................................................407

e. The Full Support Program impaired Star’s ability 

to compete effectively..................................................................410

f. Other issues affecting Star’s ability to compete ..........................411

g. Proffered procompetitive justifications .......................................414

4. Intent..................................................................................................416

5. Dangerous probability of achieving monopoly power ......................418

6. Conclusion .........................................................................................419

H. Count Four: Alleged Restraint of Trade in the Domestic 

Fittings Market............................................................................................419

1. Overview............................................................................................419

2. Elements of restraint of trade.............................................................420

3. Whether Sigma was a potential competitor.......................................422

a. Desire and intent..........................................................................422

b. Capability.....................................................................................423

i. Sigma’s background and experience in the prospective 

business............................................................................424

ii. Sigma’s affirmative acts to enter the Domestic 

Fittings market.................................................................425

iii. Sigma’s ability to finance entry into the Domestic 

Fittings market.................................................................426

iv. Sigma’s steps to form contracts.......................................427

c. Summary......................................................................................428

4. Whether the MDA unreasonably restrained trade .............................429

a. Legal standards governing rule of reason inquiries.....................429

b. Nature of the restraint ..................................................................430

i. History of the restraint and reasons why it was 

imposed............................................................................431

ii. Availability of reasonable, less restrictive 

alternatives.......................................................................433

iii. Summary of competitive impact......................................435

c. Procompetitive justifications.......................................................435

5. Conclusion .........................................................................................437

I. Count Five: Alleged Conspiracy to Monopolize the 

Domestic Fittings........................................................................................437

1. Overview............................................................................................437

2. Elements of conspiracy to monopolize..............................................438

3. Concerted action ................................................................................439

4. Specific intent ....................................................................................440
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5. Overt acts in furtherance of the conspiracy .......................................443

6. Conclusion .........................................................................................445

J. Remedy.......................................................................................................445

1. Applicable legal standards.................................................................445

2. Specific provisions.............................................................................447

IV. SUMMARY OF CONCLUSIONS OF LAW..................................................449

ORDER...........................................................................................................................458
I. INTRODUCTION

This is the Initial Decision on an administrative complaint issued by the Federal Trade 

Commission (“FTC” or “Commission”) charging that Respondent McWane, Inc. 

(“Respondent” or “McWane”) engaged in collusive and exclusionary conduct in violation of 

Section 5 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45. 

As explained herein, McWane is a manufacturer of ductile (easily molded) iron pipe 

fittings. Pipe fittings are used in water distribution systems for the installation of valves, water

meters, and hydrants and to change the flow of water. Three companies – McWane, Sigma 

Corporation (“Sigma”), and Star Pipe Products, Ltd. (“Star”) – account for the overwhelming 

majority of ductile iron pipe fittings sales in the United States. The Complaint alleges that 

these three companies entered into an agreement beginning in 2008 to fix, raise, and stabilize 

the prices for ductile iron pipe fittings. The Complaint also alleges that McWane, the largest of 

the three suppliers, has a monopoly in the market for ductile iron pipe fittings made in the 

United States and that McWane illegally sought to maintain its monopoly after Sigma and Star 

tried to enter the market in 2009. Respondent denies these allegations, as explained below.

A. Summary of the Complaint and Answer

The Commission issued an administrative complaint against Respondent McWane on 

January 4, 2012 (“Complaint”). The Complaint also named Star as a Respondent. However, 

by Order dated February 23, 2012, the Commission withdrew the matter from adjudication as 

to Star for the purpose of considering a proposed consent agreement. The Commission issued 

its Decision and Order withdrawing the matter from adjudication as to Star and accepting an 

executed consent decree with Star on May 8, 2012. Also on the same date that it issued this 

Complaint, the Commission issued a proposed complaint and consent order against Sigma. 

Final approval of the Sigma consent order was granted on February 27, 2012. In re Sigma 

Corp., Decision and Order, Docket No. C-4347 (Feb. 27, 2012).

The Complaint in this case alleges seven separate counts of unfair competition in 

violation of Section 5 of the FTC Act, which Complaint Counsel refers to as the First through 

Seventh Violations (hereafter, “Counts”), including agreements in restraint of trade, invitation 
2

to collude, exclusionary conduct, and monopolization. These Counts are further described 

below.

Counts One, Two and Three

The first three Counts are based upon Respondent’s alleged conduct in: (i) announcing 

certain pricing changes in 2008, which were allegedly followed shortly thereafter by 

substantially similar announcements by its competitors; and (ii) participating, with certain of its 

competitors, in the collection, aggregation and dissemination of certain sales related 

information. As to these violations, the Complaint alleges that “beginning in January 2008,” 

McWane conspired with its competitors Sigma and Star (collectively, the “Suppliers”) to raise 

and stabilize prices at which small and medium diameter pipe fittings (24 inches and under) 

(hereafter “Fittings”), were sold in the United States. Complaint ¶¶ 2, 21, 22, 29. Specifically, 

the Complaint alleges that on January 11, 2008, and again on June 17, 2008, McWane 

“publicly announced” price increases, which were followed by Sigma and Star, and that such 

price increases were “the result of a combination and conspiracy among” McWane, Sigma, and 

Star. Complaint ¶¶ 31-34.

The Complaint further alleges that, prior to McWane’s announced price increases in 

January 2008, McWane had a plan to “trade its support for higher prices in exchange for” 

Sigma and Star’s changing their “business methods” to “reduce the risk” of their local sales 

personnel selling Fittings “at prices lower than published levels”; that McWane communicated 

the terms of its plan to Sigma and Star, including through a letter to its distributor customers 

(“Distributors”), with the intent to conspire with Sigma and Star to restrain price competition; 

and that Sigma and Star “manifested their understanding and acceptance of McWane’s offer by 

publicly taking steps to limit their discounting from published price levels in order to induce 

McWane to support higher price levels.” Complaint ¶ 32 a.-c. The Complaint also alleges, 

with respect to the June 2008 price increase, that prior to McWane’s announcement, McWane 

“planned to trade its support for higher prices in exchange for information from Sigma and Star 

documenting the volume of their monthly sales” of Fittings through the Ductile Iron Fittings 

Research Association (“DIFRA”); that “McWane communicated the terms of its plan to Sigma 

and Star” through a letter to its Distributor customers, with the intent to conspire with Sigma 
3

and Star; and that Sigma and Star “manifested their understanding and acceptance of 

McWane’s offer by initiating their participation in the DIFRA” data reporting system in order 

to induce McWane to raise prices; and that McWane “then led a price increase, and Sigma and 

Star followed.” Complaint ¶¶ 34 a.-d. 

The Complaint next alleges that through DIFRA, the Suppliers “submitted a report of 

their previous month’s sales” to an accounting firm that aggregated and distributed the data 

submissions to the Suppliers, that the reporting system facilitated collusion by enabling each of 

them “to monitor its own market share and, indirectly, the output levels of its rivals,” and that 

the reporting system had no legitimate procompetitive efficiencies outweighing its 

anticompetitive effects in facilitating collusion. Complaint ¶¶ 35-36. The Complaint also 

alleges that the foregoing acts and practices “have the purpose, capacity, tendency and effect of 

(i) fixing, maintaining and raising prices” of Fittings and “(ii) facilitating collusion” in the 

relevant Fittings market. Complaint ¶ 37.

Based on the foregoing, the Complaint charges conspiracy to restrain price competition 

in the relevant Fittings market (Count One); conspiracy to exchange competitively sensitive 

sales information (Count Two); and invitation to collude (Count Three).

Counts Four, Five, Six, and Seven

In addition to a relevant Fittings market, Complaint ¶ 21, the Complaint alleges a 

narrower relevant market comprised of domestically produced small and medium diameter 

Fittings for use in projects specified as domestic only (the “Domestic Fittings” market). 

Complaint ¶ 22. The Complaint alleges that, at the time of the passage of the American 

Recovery and Reinvestment Act in February 2009 (“ARRA”), which allocated federal funds 

for waterworks projects so long as the projects used domestically produced materials, including 

Fittings, Complaint ¶ 3, McWane had monopoly power in the Domestic Fittings market, as the 

sole supplier of a full line of domestically produced Fittings in the most commonly used size 

ranges. Complaint ¶¶ 4, 39-40. 

The violations charged in Counts Four and Five arise in connection with a 2009 Master 

Distribution Agreement (“MDA”) between McWane and Sigma. The Complaint alleges that 
4

prior to the MDA, Sigma took steps to evaluate entry into the market for the production of

Domestic Fittings; that McWane perceived that Sigma was preparing to enter the Domestic 

Fittings market; and that McWane sought to eliminate the risk of competition from Sigma by 

inducing Sigma to be a distributor of McWane’s Domestic Fittings, rather than a competitor. 

Complaint ¶¶ 47-48. Pursuant to the MDA, as alleged in the Complaint, McWane and Sigma 

agreed that McWane would be Sigma’s exclusive source for Domestic Fittings; that Sigma 

would resell Domestic Fittings at or very near McWane’s published prices; and that Sigma 

would resell McWane’s Domestic Fittings to Distributors only on the condition that the 

Distributor agreed to purchase Domestic Fittings exclusively from McWane or Sigma. 

Complaint ¶¶ 49-51. Thus, the Complaint alleges, the MDA was intended to, and did, serve to 

transfer a share of McWane’s sales and monopoly profits in Domestic Fittings to Sigma in 

exchange for Sigma’s commitment to abandon its plans to enter into the relevant Domestic 

Fittings market. Complaint ¶ 54. In addition, the Complaint charges that, through the MDA, 

McWane and Sigma conspired to exclude competitors from the Domestic Fittings market. 

Complaint ¶ 55. 

Based on the foregoing, the Complaint charges that the MDA was an agreement in 

restraint of trade (Count Four) and a conspiracy between McWane and Sigma to monopolize 

the Domestic Fittings market (Count Five). Complaint ¶¶ 67-68.

Counts Six and Seven allege unlawful exclusionary acts and practices toward Star. 

Complaint ¶¶ 69-70. The Complaint alleges that Star announced its intent to enter into the 

relevant Domestic Fittings market in June 2009 and that McWane responded by adopting 

certain policies intended to impede and delay Star’s entry. Complaint ¶¶ 56-57. Specifically, 

the Complaint alleges that McWane “threatened” Distributors with delayed or diminished 

access to McWane’s Domestic Fittings and the loss of accrued rebates, if such Distributors 

purchased from Star; and that a “similar distribution policy” was provided for under McWane’s

MDA with Sigma. Complaint ¶ 57.

The Complaint alleges that the foregoing policies were intended to, and did, compel the 

majority of Distributors to deal with McWane and Sigma on an exclusive or nearly exclusive 

basis for Domestic Fittings, and to foreclose Star from a substantial volume of sales 
5

opportunities with Distributors. Complaint ¶¶ 58-59. Further, the Complaint alleges that, by 

foreclosing Star from a substantial volume of sales opportunities with Distributors, McWane’s 

policies tended to minimize and delay Star’s ability to compete and constrain prices in the 

Domestic Fittings market. Complaint ¶ 60.

The Complaint concludes that McWane’s alleged exclusionary acts constitute willful 

practices to acquire, enhance, or maintain McWane’s alleged monopoly power in the relevant 

Domestic Fittings market (Count Six), and were specifically intended to monopolize the 

Domestic Fittings market (Count Seven). Complaint ¶¶ 69-70.

Respondent’s Answer

Respondent filed its Answer to the Complaint on February 2, 2012. Respondent denies 

that it conspired to raise and stabilize Fittings prices, Answer ¶¶ 29, 32, and specifically denies 

each of the Complaint’s allegations detailing the alleged conspiracy, including that the January 

and June 2008 alleged price increases were the result of a conspiracy, that McWane “planned to 

trade its support for higher prices in exchange for” Sigma and Star “reducing the risk” of 

pricing below published prices and participating in DIFRA; that McWane communicated any 

such plan to Sigma and Star, or that the actions of Sigma and Star were “manifestations of 

assent” to McWane’s “offer” or “plan.” Answer ¶¶ 32, 34. 

Respondent further denies that the data collected and distributed through DIFRA was 

sales data, but was only aggregated shipment tonnage. Answer ¶ 35. Respondent also denies 

that the aggregated tons-shipped data allowed it to monitor the output of its rivals or that the 

data facilitated coordination. Answer ¶ 36. In addition, Respondent denies that it “invited” its 

competitors to “collude,” as alleged in the Complaint. Answer ¶ 66. 

Respondent further denies that there is a relevant market consisting of Domestic Fittings 

and that Respondent has monopoly power in that market. Answer ¶¶ 21, 39. In addition, 

Respondent denies that Respondent eliminated Sigma as a potential entrant to the Domestic 

Fittings market. Answer ¶¶ 47-55. Respondent also denies that Respondent excluded Star 

from the Domestic Fittings market through exclusive dealing. Answer ¶¶ 56-63.
6

As affirmative defenses, Respondent asserts that the Complaint fails to state a claim 

upon which relief can be granted; the alleged conduct is procompetitive and benefits 

consumers; and the causes of action alleged in the Complaint are barred by mootness because 

ARRA expired more than a year ago, DIFRA ceased operations more than three years ago, and 

the MDA terminated more than a year ago.

B. Procedural History

On June 1, 2012, Respondent filed with the Commission a Motion for Summary 

Decision on all seven alleged violations. On the same date, Complaint Counsel also filed with 

the Commission a Motion for Partial Summary Decision on its conspiracy claim related to an 

alleged telephone conversation between an executive of Star and an executive of McWane in 

April 2009.1 The Commission, on August 9, 2012, issued an Opinion and Order denying both 

motions. In re McWane, Inc., Docket 9351, 2012 FTC LEXIS 155 (Sept. 14, 2012). 

The administrative trial in the instant case began on September 4, 2012 and concluded 

on November 2, 2012. By Order dated November 7, 2012, the hearing record was closed. 

Over 2,000 exhibits were admitted into evidence, 53 witnesses testified, either live or by 

deposition, and there are 6,045 pages of trial transcript. The parties’ proposed findings of fact, 

replies to proposed findings of fact, post trial briefs, and reply briefs total 3,052 pages.

Rule 3.51(a) of the Commission’s Rules of Practice states that “[t]he Administrative 

Law Judge shall file an initial decision within 70 days after the filing of the last filed initial or 

reply proposed findings of fact, conclusions of law and order . . . .” 16 C.F.R. § 3.51(a). The 

parties filed concurrent post trial briefs and proposed findings of fact on December 14, 2012. 

The parties filed replies to the other’s proposed findings and briefs on January 18, 2013. 

Pursuant to Commission Rule 3.41(b)(6), closing arguments were held on January 24, 2013. 

On March 28, 2013, pursuant to Commission Rule 3.51(a) and based upon a finding of good 

cause, an order was issued extending the 70-day period for the filing of the initial decision in 

 1 The Commission, in 2009, amended its Rules of Practice to require that motions to dismiss the Complaint filed 

before the evidentiary hearing and motions for summary decision shall be directly referred back to the 

Commission, who issued the Complaint, rather than to the Administrative Law Judge assigned to adjudicate the 

Complaint, and “shall be ruled on by the Commission unless the Commission in its discretion refers the motion to 

the Administrative Law Judge.” 16 C.F.R. § 3.22(a). 
7

this case by an additional 30 days. See Rule 3.51(a) (“The Administrative Law Judge may 

extend any of these time periods by up to 30 days for good cause.”). This Initial Decision is 

filed in accordance with Commission Rule 3.51(a).

C. Evidence

This Initial Decision is based on a consideration of the whole record relevant to the 

issues, including the exhibits properly admitted into evidence, deposition transcripts, and the 

transcripts of testimony at trial, and addresses the material issues of fact and law. The briefs 

and proposed findings of fact and conclusions of law, and the replies thereto, submitted by the 

parties were thoroughly reviewed. Proposed findings of fact submitted by the parties, but not 

included in this Initial Decision were rejected, either because they were not supported by the 

evidence or because they were not dispositive or material to the determination of the allegations 

of the Complaint or the defenses thereto. The Commission has held that Administrative Law 

Judges are not required to discuss the testimony of each witness or all exhibits that are 

presented during the administrative adjudication. In re Amrep Corp., No. 9018, 102 F.T.C. 

1362, 1670, 1983 FTC LEXIS 17, *566-67 (Nov. 2, 1983). Further, administrative 

adjudicators are “not required to make subordinate findings on every collateral contention 

advanced, but only upon those issues of fact, law, or discretion which are ‘material.’” 

Minneapolis & St. Louis Ry. Co. v. United States, 361 U.S. 173, 193-94 (1959). Accord 

Stauffer Labs., Inc. v. FTC, 343 F.2d 75, 89 (9th Cir. 1965). See also Borek Motor Sales, Inc. 

v. National Labor Relations Bd., 425 F.2d 677, 681 (7th Cir. 1970) (holding that it is adequate 

for the Board to indicate that it had considered each of the company’s exceptions, even if only 

some of the exceptions were discussed, and stating that “[m]ore than that is not demanded by 

the [Administrative Procedure Act] and would place a severe burden upon the agency”). 

Under Commission Rule 3.51(c)(1), “[a]n initial decision shall be based on a 

consideration of the whole record relevant to the issues decided, and shall be supported by 

reliable and probative evidence.” 16 C.F.R. § 3.51(c)(1); see In re Chicago Bridge & Iron Co., 

No. 9300, 138 F.T.C. 1024, 1027 n.4, 2005 FTC LEXIS 215, at *3 n.4 (Jan. 6, 2005). Under 

the Administrative Procedure Act (“APA”), an Administrative Law Judge may not issue an 

order “except on consideration of the whole record or those parts thereof cited by a party and 
8

supported by and in accordance with the reliable, probative, and substantial evidence.” 

5 U.S.C. § 556(d). All findings of fact in this Initial Decision are supported by reliable, 

probative, and substantial evidence. Citations to specific numbered findings of fact in this 

Initial Decision are designated by “F.”2 

Pursuant to Commission Rule 3.45(b), several orders were issued in this case granting 

in camera treatment to material, after finding, in accordance with the Rule, that its public 

disclosure would likely result in a clearly defined, serious injury to the entity requesting in 

camera treatment. 16 C.F.R. § 3.45(b). In addition, when the parties sought to elicit testimony 

at trial that revealed information that had been granted in camera treatment, the hearing went 

into an in camera session.

Commission Rule 3.45(a) allows the Administrative Law Judge (“ALJ”) “to grant in 

camera treatment for information at the time it is offered into evidence subject to a later 

determination by the [administrative] law judge or the Commission that public disclosure is 

required in the interests of facilitating public understanding of their subsequent decisions.” In 

re Bristol-Myers Co., Nos. 8917-19, 90 F.T.C. 455, 457, 1977 FTC LEXIS 25, at *6 (Nov. 11, 

1977). As the Commission later reaffirmed in another leading case on in camera treatment, 

since “in some instances the ALJ or Commission cannot know that a certain piece of 

information may be critical to the public understanding of agency action until the Initial 

Decision or the Opinion of the Commission is issued, the Commission and the ALJs retain the 

power to reassess prior in camera rulings at the time of publication of decisions.” In re 

 2 References to the record are abbreviated as follows: 

CX – Complaint Counsel’s Exhibit

RX – Respondent’s Exhibit

JX – Joint Exhibit

Tr. – Transcript of testimony before the Administrative Law Judge

Dep. – Transcript of Deposition

IHT – Investigational Hearing Transcript

CCB – Complaint Counsel’s Post Trial Brief

CCRB – Complaint Counsel’s Post Trial Reply Brief

CCFF – Complaint Counsel’s Proposed Findings of Fact

CCRRFF – Complaint Counsel’s Reply to Respondent’s Proposed Findings of Fact

RB – Respondent’s Post Trial Brief

RRB – Respondent’s Reply Brief

RFF – Respondent’s Proposed Findings of Fact

RRCCFF – Respondent’s Reply to Complaint Counsel’s Proposed Findings of Fact
9

General Foods Corp., No. 9085, 95 F.T.C. 352, 356 n.7; 1980 FTC LEXIS 99, at *12 n.7 

(March 10, 1980). Thus, in instances where a document or trial testimony had been given in 

camera treatment, but the portion of the material cited to in this Initial Decision does not in fact 

require in camera treatment, such material is disclosed in the public version of this Initial 

Decision, pursuant to Commission Rule 3.45(a) (the ALJ “may disclose such in camera

material to the extent necessary for the proper disposition of the proceeding”). Where in 

camera information is used in this Initial Decision, it is indicated in bold font and braces (“{

}”) in the in camera version and is redacted from the public version of the Initial Decision, in 

accordance with Commission Rule 3.45(e).

D. Summary of Initial Decision

The preponderance of the evidence in the record, viewed as a whole, fails to 

demonstrate a conspiracy among McWane, Sigma, and Star to raise and stabilize prices in the 

Fittings market. Among other things, the evidence fails to prove that McWane had a “plan” to 

conspire with Sigma and Star; that McWane communicated to Sigma and Star an “offer” or 

“plan” to trade price increases in exchange for Sigma and Star reducing price discounting and

increasing price transparency through DIFRA; or that Sigma’s and Star’s actions with regard to 

price discounting or DIFRA constituted their “manifestations” of “assent” to McWane’s 

“offer.” Accordingly, Count One is dismissed. The dismissal of Count One is not, however, a 

finding that no price fixing conspiracy existed in the Fittings market, or that Complaint 

Counsel’s conspiracy theory is implausible. Rather, Count One is dismissed because the 

greater weight of the evidence failed to prove the alleged conspiracy. 

In addition, the evidence fails to show that McWane issued any “invitation to collude,” 

and therefore Count Three is dismissed. Count Two is also dismissed, because the evidence 

fails to prove that the tons-shipped data, collected, aggregated, and reported through DIFRA,

constitutes concerted action in restraint of trade. Specifically, the evidence fails to demonstrate 

that the aggregated tons-shipped data has the likely anticompetitive effect of “facilitating 

collusion.” 

The preponderance of the evidence in the record, viewed as a whole, demonstrates that 

Domestic Fittings is a relevant product market and that Respondent has monopoly power in the 
10

Domestic Fittings market. The preponderance of the evidence also shows that McWane 

announced and implemented an exclusionary policy to forestall Star’s entry into the Domestic 

Fittings market. In addition, the preponderance of the evidence shows that McWane entered 

into a Master Distribution Agreement with Sigma that unreasonably restrained trade in the 

Domestic Fittings market and that was designed to and did further exclude Star from the 

Domestic Fittings market.

Counts One, Two, and Three of the Complaint have not been proven by a 

preponderance of the evidence, and are dismissed. Counts Four, Five, Six, and Seven of the 

Complaint have been proven by a preponderance of the evidence. An appropriate remedial 

order is entered herewith.

II. FINDINGS OF FACT

A. Background

1. Jurisdiction

1. Respondent McWane, Inc. (“McWane”) is a corporation organized, existing and doing 

business under and by virtue of the laws of the State of Delaware, with its principal 

place of business located at 2900 Highway 280, Suite 300, Birmingham, Alabama 

35223. (Answer ¶ 8).

2. McWane manufactures, imports, markets, and sells products for the waterworks 

industry, including ductile (easily molded) iron pipe fittings that are 3” to 24” in 

diameter (“Fittings”)3

. (Joint Stipulations of Fact, JX0001 ¶ 1; Answer ¶ 8). 

3. At all times relevant herein, McWane has been, and is now, a corporation, as 

“corporation” is defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. 

§ 44. (Joint Stipulations of Law, JX0001 ¶ 1).

4. McWane’s acts and practices, including the acts and practices alleged herein, are in or 

affect commerce in the United States, as “commerce” is defined in Section 4 of the 

Federal Trade Commission Act, 15 U.S.C. § 44. (Answer ¶ 10 (McWane sells Fittings 

in interstate commerce)).

 3 Except where otherwise noted or where the context otherwise requires, and, as explained infra II.B., the term 

“Fittings” as used herein refers to ductile iron pipe fittings of 24 inches or less in diameter.
11

2. Key terms

5. Fittings are used in pressurized water distribution and treatment systems to join pipes, 

valves and hydrants, and to change, divide or direct the flow of water. (Joint 

Stipulations of Fact, JX0001 ¶ 6). 

6. Domestic Fittings are Fittings that are manufactured in the United States and sold into 

domestic-only specifications.

4

 (F. 347).

7. The American Recovery and Reinvestment Act of 2009, known as “ARRA,” enacted by 

Congress in February 2009 and signed into law by the President in early 2009, included 

stimulus funds for waterworks projects. (Joint Stipulations of Fact, JX0001 ¶ 19; 

Tatman, Tr. 610-611; Pais, Tr. 1732-1733; Thees, Tr. 3075). ARRA contained certain 

“Buy American” provisions applicable to Fittings. (Joint Stipulations of Fact, JX0001 

¶ 21). 

8. The Ductile Iron Fittings Research Association (“DIFRA”) was incorporated as a 

nonprofit corporation in Alabama on January 12, 2007. (CX 1480 at 007; Brakefield, 

Tr. 1220, 1227-1228). DIFRA’s four members were McWane; Sigma Corporation 

(“Sigma”); Star Pipe Products, Ltd. (“Star”) and United States Pipe and Foundry (“U.S. 

Pipe”). (Joint Stipulations of Fact, JX0001 ¶ 17; Brakefield, Tr. 1227-1228). 

9. The American Water Works Association (“AWWA”) is a waterworks industry trade 

association. (CX 2537 (McCutcheon, IHT (Vol. 1) at 29-30)). The AWWA establishes 

certain standards for the production of fittings for use in the United States; all fittings 

have to comply with AWWA standards. (Minamyer, Tr. 3136-3137; Tatman, Tr. 878; 

CX 2522 (Agarwal, Dep. at 37); CX 2508 (Kuhrts Dep. at 30-31), in camera. The 

AWWA hosts an annual convention and trade show that is widely attended by suppliers, 

distributors, municipalities, contractors, and engineers. Industry participants (almost 

500 exhibitors) exhibit their products at booths, and there are technical sessions as well. 

(Pais, Tr. 1899-1901).

10. “End Users” of Fittings are typically municipalities, regional water authorities, and the 

contractors they engage to construct waterworks projects. (Joint Stipulations of Fact, 

JX0001 ¶ 12; Saha, Tr. 1156; CX 2502 (Prescott, Dep. at 14); CX 2489 (Morrison, IHT 

at 29); McCutcheon, Tr. 2257; Rybacki, Tr. 3487).

11. Wholesale waterworks distributors (“Distributors”) purchase Fittings from suppliers and 

resell them to End Users. (Webb, Tr. 2707, 2726-2727; Thees, Tr. 3051, 3082).

12. Ductile iron foundries (“foundries”) are businesses that produce castings pursuant to 

purchase orders for producers of Fittings and other iron products. (CX 2505 (Frazier, 

Dep. at 23, 26-27); CX 2507 (Glidewell, Dep. at 21, 138); RX 658 (Keffer, Dep. at 14); 

RX 657 (Teske, Dep. at 22).

 4 Except where otherwise noted or where the context otherwise requires, the term “Domestic Fittings” as used 

herein refers to Domestic Fittings sold into domestic-only specifications.
12

3. Fittings industry participants

a. McWane, Inc.

i. Company basics

13. Fittings are a small segment of McWane’s business, representing about 5% of 

McWane’s overall business. (Tatman, Tr. 218-219; RX 642 (Page, Dep. at 42)).

14. McWane estimates that it manufactures approximately 2,000 fittings. (RX 637 (Jansen, 

Dep. at 87)).

15. McWane has manufactured Fittings in the United States in two locations: its Union 

Foundry Company in Anniston, Alabama, and its Tyler Pipe & Foundry Co. South Plant

in Tyler, Texas. (Tatman, Tr. 209, 212-214, 301-302).

16. McWane started producing Fittings at a foundry in China, Tyler Xian Xian (“TXX”) in 

2005. (Tatman, Tr. 210-212).

17. In a 2007 corporate reorganization, McWane consolidated all its fittings business, both 

domestically and in China, into a single division, “Tyler/Union.” (Tatman, Tr. 209-

214). 

18. Faced with high inventory levels and insufficient demand for Domestic Fittings, 

McWane closed its foundry in Tyler, Texas, in November 2008. (Tatman, Tr. 210-

212).

19. In 2009, McWane did not manufacture any Fittings larger than 30 inches in diameter at

Union Foundry. Clow Water, a division of McWane, made 36 inch fittings, and 

McWane sourced 42 inches to 48 inches fittings externally. (Tatman, Tr. 591-592).

ii. Key employees

Richard (Rick) Tatman

20. Richard Tatman joined McWane in May 2006 as the General Manager of McWane’s 

Tyler Pipe division. (Tatman, Tr. 208-209).

21. Following a 2007 reorganization of McWane’s fittings business, Mr. Tatman became 

Vice President and General Manager in charge of McWane’s Tyler/Union division. 

(Tatman, Tr. 212-214).

22. In approximately July or August 2007 when the McWane reorganization was complete, 

Mr. Tatman reported to Mr. Thomas Walton and Mr. Leon McCullough. (CX 2484 

(Tatman, Dep. at 10); Tatman, Tr. 216-217). Since Mr. Walton’s departure from 
13

McWane in 2009, Mr. Tatman has reported directly to Mr. McCullough. (CX 2483 

(Tatman, IHT at 10)).

23. Since the 2007 McWane reorganization, Mr. Tatman has had day-to-day responsibilities 

for the Fittings Division at McWane. (CX 2479 (McCullough, Dep. at 17)).

24. Since the 2007 McWane reorganization, Mr. Tatman shared responsibility for pricing 

and strategy with other McWane employees, including Mr. McCullough and Mr. Jerry 

Jansen. (Tatman, Tr. 218-219, 253-254, 306).

25. Because Fittings represent a small portion of McWane’s business, Mr. Tatman did not 

normally discuss Fittings pricing with Mr. G. Ruffner Page. (Tatman, Tr. 218-219).

26. Mr. Tatman has ultimate responsibility for the pricing of Fittings sold through the 

Fittings Division, including the authority to issue new list prices. McWane’s letters to 

customers were drafted and reviewed by Mr. Tatman and Mr. Jansen. (CX 2479 

(McCullough, Dep. at 21, 23); Tatman, Tr. 218-219, 254, 306.

27. During the 2008 through 2009 time period, Mr. Tatman, with input from McWane’s 

national sales manager, Mr. Jansen, also developed the sales strategy at McWane. 

(CX 2479 (McCullough, Dep. at 18); CX 2477 (Jansen, Dep. at 154-155)).

Leon McCullough

28. Leon McCullough is an executive Vice President of McWane in charge of its valve and 

hydrant group, as well as the waterworks Fittings Division. (CX 2479 (McCullough, 

Dep. at 8, 15-17); Tatman, Tr. 217).

29. Mr. McCullough has worked for McWane since 1973, and has been in his current 

position for 12 to 15 years. Mr. McCullough acquired responsibility for the Fittings 

Division of McWane in 2007. (CX 2479 (McCullough, Dep. at 8, 16)).

30. Mr. McCullough does not have day-to-day responsibilities on the operational side of 

McWane’s Fittings Division, but provides strategic direction for the division. (CX 2479 

(McCullough, Dep. at 17)).

31. Mr. Tatman reports to Mr. McCullough, who reports directly to Mr. Page. (CX 2479 

(McCullough, Dep. at 18-19)).

Jerry Jansen

32. Jerry Jansen is the national sales manager for Tyler/Union. Mr. Jansen has worked for 

various McWane subsidiaries since 1979, and has been the national sales manager for 

Tyler/Union since August 2004. (CX 2477 (Jansen, Dep. at 10-11); Tatman, Tr. 219 

(describing Mr. Jansen as having a long history in the fittings industry)).
14

33. Mr. Jansen reports to Mr. Tatman. (CX 2477 (Jansen, Dep. at 12)).

34. Mr. Jansen’s responsibilities include managing the Tyler/Union’s sales team, as well as 

providing market reports and recommendations for market actions to his superiors. 

(CX 2477 (Jansen, Dep. at 11)). Mr. Jansen also provides input on any new sales 

strategy, and is responsible for implementing those policies. (CX 2477 (Jansen, Dep. at 

154-155)).

Vincent Napoli

35. Vincent Napoli is a pricing coordinator at McWane. He has held that position since it 

was first created in January 2008. (CX 2480 (Napoli, Dep. at 9-10, 35)).

36. Mr. Napoli has worked for McWane since 1991 in a variety of positions, including as 

an inside sales manager, a national sales manager, a quality manager, a position in 

accounting, and as a pricing manager. (CX 2480 (Napoli, Dep. at 9-10)).

37. As quality manager, Mr. Napoli was responsible for all aspects of quality control, 

including internal audits, day-to-day quality supervision, inspection, and shipping 

inspections. Mr. Napoli continues to use his technical expertise in Fittings to answer 

field personnel questions relating to interpreting specifications, product usage, product 

applications, and product quality. (CX 2480 (Napoli, Dep. at 32-33, 50-51)).

38. As pricing manager, Mr. Napoli has responsibility for approving Project Pricing 

(F. 428) for discounts of up to a couple of percentage points, and keeping track of 

annual bids and Project Pricing. (CX 2480 (Napoli, Dep. at 44-45, 47, 49-50).

G. Ruffner Page

39. G. Ruffner Page is the President and Chief Executive Officer (“CEO”) of McWane. 

Mr. Page became the President and CEO of McWane in 1999. Previously, Mr. Page 

worked for McWane’s venture fund and bank, beginning in 1986. (CX 2482 (Page, 

Dep. at 11-14); Tatman, Tr. 218).

40. Mr. Page’s primary responsibilities as the CEO of McWane are to oversee the McWane 

family’s interests, and to provide top-level strategy, such as how to allocate capital, 

whether to build new plants, or whether to make any acquisitions or diversify any 

acquisitions. (CX 2482 (Page, Dep. at 14-15)).

41. Generally, Mr. Page is not actively involved in McWane’s day-to-day Fittings business 

and can go weeks without speaking to Mr. McCullough, and “never” talks to 

Mr. Tatman except at general manager meetings. (CX 2482 (Page, Dep. at 44-46); 

Tatman, Tr. 218-219).
15

David Green (former employee)

42. David Green was the Executive Vice President of McWane’s soil pipe utility division, 

with responsibility for the Tyler Pipe, Union, Bibby, and AB&I subsidiaries, along with 

rubber couplings. Mr. Green was in charge of McWane’s Fittings business until he was 

dismissed by Mr. Page in 2007. (Tatman, Tr. 210-212; CX 2118 at 001).

Charles F. Nowlin

43. Charles F. Nowlin is the senior Vice President and Chief Financial Officer of McWane, 

and has been at the company since 1980. (CX 2481 (Nowlin, Dep. at 7); Tatman, Tr. 

215). Mr. Nowlin oversees all financial reporting for McWane, including “blue books,” 

income statements, balance sheets, and sales and gross profit analyses. (CX 2481 

(Nowlin, Dep. at 8-9, 15)).

Thomas Walton (former employee)

44. Thomas Walton began working at a division of McWane, Inc. as a management trainee 

in 1991. Mr. Walton was promoted throughout McWane’s valve and hydrants business 

until becoming Vice President and General Manager of McWane’s M&H and Kennedy 

Valve divisions in 2001. In late 2007, Mr. Walton was promoted to Senior Vice 

President, where he gained responsibilities for McWane’s Fittings Division for the first 

time. (CX 2485 (Walton Dep. at 8-9, 17-18)).

45. As Senior Vice President overseeing the Fittings Division, Mr. Walton had ultimate 

responsibility for operations and sales, and participated in strategic decisions. 

Mr. Walton reported directly to Mr. McCullough, and Mr. Tatman reported directly to 

Mr. Walton. (CX 2485 (Walton Dep. at 18-19)).

John Springer

46. In the 2008 through 2009 time period, John Springer was the controller for Tyler Pipe 

and Tyler/Union, and was responsible for publishing McWane’s “blue books.” 

(Tatman, Tr. 818).

47. Blue books are prepared by McWane’s controller’s office, are provided to

Mr. McCullough and other executives within the company, and are important financial

documents used in running the waterworks business. (Tatman, Tr. 497-498, 844-845, in 

camera).

Laura Alvey

48. Laura Alvey is an Administrative Assistant at McWane. (Tatman, Tr. 208).

49. Ms. Alvey was in McWane’s sales department from 1995 until 2001. In 2001, she was 

promoted to her current position, Administrative Assistant for the general manager, 
16 

Mr. Tatman, and Mr. Jansen. (RX 636 (Alvey, Dep. at 7); CX 2476 (Alvey, Dep. at 7-

8, 10)).

50. Ms. Alvey’s responsibilities include compiling the Tyler/Union Monthly Sales Reports, 

the Weekly Highlight Report, the Weekly Competitive Feedback Report (including the 

Domestic Activity Report), the DIWF [Fittings] report, and the Nondomestic versus 

Domestic Report, and the DIWF Nondomestic Pricing by the month for Mr. Tatman 

and Mr. Jansen. (CX 2476 (Alvey, Dep. at 10-13)).

b. Sigma Corporation 

i. Company basics

51. Since about 1985, Sigma Corporation (“Sigma”) has imported and sold Fittings and 

other waterworks products in the United States. (Joint Stipulations of Fact, JX0001 ¶ 2; 

Pais, Tr. 1722-1723). Sigma’s headquarters are in Cream Ridge, New Jersey. 

(Rybacki, Tr. 1090). 

52. Fittings are Sigma’s main product line, and comprised approximately 40% of Sigma’s 

business in the 2008 through 2009 time period. (Rybacki, Tr. 1090-1091; Pais, Tr. 

1731 (in 2008 and 2009, Fittings were Sigma’s largest-selling product, accounting for 

40 to 45% of revenues)). Sigma currently sells approximately 3,000 distinct Fittings 

items (or SKUs). (Pais, Tr. 1723). 

53. In 2007, 2008 and 2009, Sigma’s net sales were { } million, 

respectively. (CX 2026 at 066, in camera). Sigma has approximately 250 to 260 

employees. (Pais, Tr. 1722). 

54. On October 10, 2007, the Frontenac Group purchased a 60% ownership interest of 

Sigma. (Pais, Tr. 1725; Rybacki, Tr. 1084; CX 2523 (Bhattacharji, Dep. at 8)). 

55. Walter Florence is a Frontenac managing director and a member of Sigma’s board of 

directors. (CX 2523 (Bhattacharji, Dep. at 152, 197-198)). 

56. Sigma imports Fittings from China, India, and Mexico. (CX 2524 (Box, Dep. at 16); 

Pais, Tr. 1731-1732 (all Fittings Sigma sold in 2008 were manufactured by its “virtual 

manufacturing” partners in China, India and Mexico)).

57. Sigma has used a “virtual manufacturing” model for over twenty years. (CX 2530 

(Rona, Dep. at 211-212)). While Sigma is responsible for the technical know-how that 

goes into producing its Fittings, the Fittings are actually made overseas at foundries in 

China, Mexico and India. Sigma handles administration, engineering, drawings, 

inspection, testing, quality control, and transportation, and has engineering groups in 

China and India. (Rybacki, Tr. 1092, 1094; see also Pais, Tr. 1732; Rona, Tr. 1466-

1467). 
17

58. Sigma has sourced a small portion of its Fittings from McWane. (Pais, Tr. 1731).

59. Sigma’s original equipment manufacturer (“OEM”) business involves the sale of 

products to original equipment manufacturers (as opposed to Distributors), including 

pipe, valve, and hydrant manufacturers and other Fittings suppliers. Sigma’s OEM 

business sells some products unrelated to waterworks, as well as parts used for 

assembly of waterworks valves and hydrants, and both industry standard and 

proprietary Fittings to companies in the waterworks industry. (Rona, Tr. 1440-1441; 

Rybacki, Tr. 1094-1095; Brakefield, Tr. 1215).

60. Sigma’s OEM business in 2008 had approximately $50 million in sales to customers 

such as McWane, U.S. Pipe, American Cast Iron Pipe Company, Griffin Pipe Products

Co., and Star. (Rona, Tr. 1440-1442). Sigma’s OEM business accounted for 

approximately 10% of its sales of Fittings. (Rona, Tr. 1442; CX 2530 (Rona, Dep. at 

24-25)).

61. Sigma has approximately 23 territory sales managers across the United States and 

approximately 25 inside customer service personnel supporting the sales force. 

(Rybacki, Tr. 1089-1090).

62. Sigma has five regional managers, who manage the outside Fittings sales force: Al 

Richardson (southwest), Dave Pietryga (midwest), Greg Fox (southeast), Mike 

Walsh (northeast and Eastern Canada), and Chris King (northwest). (Rybacki, Tr. 

1090, 1093).

63. Beginning in September 2009, Sigma began selling Domestic Fittings that it sourced 

from McWane. (CX 0803 at 001-002). 

ii. Key employees

Victor Pais

64. Victor Jerome Pais was one of the founders of Sigma in 1985. (Pais, Tr. 1721-1722; 

Rybacki, Tr. 1085). Mr. Pais worked for Star before the founding of Sigma. (Rybacki, 

Tr. 1117-1118; Pais, Tr. 1860-1862).

65. Mr. Pais currently owns approximately 6% to 7% of Sigma. In 2008, Mr. Pais’

ownership share in Sigma was 1 to 2 percentage points higher. (Pais, Tr. 1726; 

Rybacki, Tr. 1085). Prior to Frontenac’s purchase of Sigma in 2007, Mr. Pais held an 

18% share. (CX 2527 (Pais, IHT at 19-20)).

66. Mr. Pais is a current member of Sigma’s board and was also a member in 2008 and 

2009. (Pais, Tr. 1725).

67. In the 2008 and 2009 time period, Mr. Pais was the President and CEO of Sigma. 

(Rybacki, Tr. 1085; Pais, Tr. 1723). Mr. Pais stepped down as President and CEO of 
18

Sigma in January 2010. (Pais, Tr. 1725). Mr. Pais remains an employee of Sigma. 

(Pais, Tr. 1721).

68. Mr. Pais’ responsibilities in 2008 and 2009 included growing Sigma, monitoring profits 

and costs, helping the supply chain, and setting strategy relating to growth and 

profitability, including pricing strategy. (Pais, Tr. 1724-1725; CX 2528 (Pais, Dep. at 

192-193)).

69. Mr. Pais was actively involved in Sigma’s Fittings pricing strategy and would discuss 

pricing strategy with Mr. Lawrence Rybacki and others at Sigma. (CX 2528 (Pais, Dep. 

at 193-194)).

Siddarth Bhattacharji

70. Siddarth Bhattacharji was a founder of Sigma. Mr. Bhattacharji worked for Star before 

the founding of Sigma. (Rybacki, Tr. 1117-1118; Pais, Tr. 1860-1862).

71. In 2007, Mr. Bhattacharji became Executive Vice President of Sigma following 

Frontenac’s acquisition of interest in Sigma. Mr. Bhattacharji had been vice president 

of Sigma from its founding in 1985. (CX 2523 (Bhattacharji, Dep. at 8-11)).

72. During 2008 and 2009, as Executive Vice President of Sigma, Mr. Bhattacharji was 

responsible for engineering and supply chain. (CX 2523 (Bhattacharji, Dep. at 8-9); 

Rybacki, Tr. 1087).

73. Mr. Bhattacharji is a shareholder of Sigma, owning less than 10% of the company, and 

is the Secretary of the Sigma board of directors. (CX 2523 (Bhattacharji, Dep. at 9-10, 

23)).

Lawrence (Larry) Rybacki

74. Larry Rybacki is the President of Sigma and has held that position since approximately 

August 2011. Prior to becoming President of Sigma, Mr. Rybacki was Sigma’s Vice 

President of sales for 21 years. (Rybacki, Tr. 1082-1083).

75. Mr. Rybacki owns about 3.5% of Sigma’s shares. (Rybacki, Tr. 1085).

76. In the 2008 through 2009 time period, Mr. Rybacki was vice president of sales for 

Sigma, responsible for Fittings sales to Distributors (as distinct from OEM customers), 

all of Sigma’s warehouses, regional managers, and outside salespeople reported to him. 

(Rybacki, Tr. 1086; Rona, Tr. 1453-1454).

77. Mr. Rybacki had authority over Sigma’s pricing decisions, with input from Mr. Pais and 

Mr. Bhattacharji. (Brakefield, Tr. 1332; Rybacki, Tr. 1096; CX 2530 (Rona, Dep. at 

198)).
19

78. Mr. Rybacki and Mr. Pais would be responsible for drafting list price and price 

multiplier change letters to customers, which would be sent to customers by regional 

managers under Mr. Rybacki’s signature. (Rybacki, Tr. 1099-1100).

79. It was Mr. Rybacki’s practice, before sending out a price increase letter, to share a draft 

with Sigma’s top 20 managers to get their feedback. (Rybacki, Tr. 3489-3491).

80. Sigma’s regional managers sometimes discuss Project Pricing (F. 428) with 

Mr. Rybacki. (Rybacki, Tr. 3527-3528).

Mitchell Rona

81. Mitchell Rona has worked for Sigma since September 1988. Mr. Rona is also a 

shareholder of Sigma. (CX 2523 (Bhattacharji, Dep. at 9-10); Rona, Tr. 1438). 

82. Mr. Rona was a Sigma sales representative and regional manager from 1988 to 1998. 

From about 1999 through July 2011, Mr. Rona was Sigma’s OEM business manager, 

reporting to Mr. Pais. (Rona, Tr. 1439-1440). Mr. Rona was not involved in setting 

prices for Fittings at Sigma and did not have authority or responsibility for sales into the 

distribution channel. (Rona, Tr. 1453-1454, 1627-1628).

83. In July 2011, Mr. Rona was promoted to Sigma’s Vice President of operations. (Rona, 

Tr. 1438). Mr. Rona currently reports to Sigma’s CEO, Jim McGivern. As Vice 

President of operations, Mr. Rona oversees Sigma’s engineering and IT departments, 

manages global supplier relationships, controls inventory and supply chain, and runs 

Sigma’s OEM business. (Rona, Tr. 1438-1439).

84. Mr. Rona worked on the Sigma Domestic Production (“SDP”) team, along with Stuart 

Box, Gopi Ramanathan, Victor Pais and Siddarth Bhattacharji. (CX 2530 (Rona, Dep. 

at 40-41)). 

85. Mr. Rona was significantly involved in the Master Distribution Agreement negotiations 

between Sigma and McWane (F. 1540) as the Sigma contact point for negotiations. His 

level of involvement diminished somewhat following execution of a letter of intent for 

the MDA, but he continued to play a liaison role interacting with McWane, even after 

the MDA was signed and went into the operation phase. (Rona, Tr. 1562-1571; 

CX 1436 at 001-003).

Jim McGivern

86. Jim McGivern succeeded Mr. Pais as CEO of Sigma. Mr. McGivern was selected by 

Frontenac, first joined Sigma in July 2009, and gradually took over aspects of the 

business. (Pais, Tr. 1723-1724, 1772-1773). By June 2010, Mr. McGivern was acting 

as CEO of Sigma. (Rybacki, Tr. 3490-3491).
20

Tommy Brakefield

87. Tommy Eugene Brakefield was the national sales manager at Sigma from November 

2003 through December 2011. (Brakefield, Tr. 1214).

88. Although Mr. Brakefield’s title did not change, his responsibilities evolved over time. 

In 2005, Mr. Brakefield’s responsibilities shifted predominantly to consulting for 

Sigma’s OEM business rather than dealing with Sigma’s distribution business. From 

about 2005 to 2008, Mr. Brakefield’s role at Sigma was as an OEM consultant with 

Mr. Rona, with a focus on non-Distributor OEM Fittings customers. (Brakefield, Tr. 

1214-1216).

89. From 2008 to December 2011, Mr. Brakefield took on a special projects role for Sigma, 

taking on projects for Mr. Rybacki, Mr. Pais, Mr. Bhattacharji, or Mr. McGivern, while 

reporting to Larry Rybacki, the Vice President of sales. (Brakefield, Tr. 1214, 1216-

1217).

90. Mr. Brakefield was Vice President of sales and marketing at U.S. Pipe before his 

employment at Sigma. (Brakefield, Tr. 1219-1220; CX 2496 (Brakefield, Dep. (Vol. 2) 

at 9-10)).

91. In 2005, Mr. Pais approached Mr. Brakefield and asked if he knew anything about how 

to start a trade association. This was Mr. Brakefield’s first involvement in 

conversations about forming a trade association that later became known as DIFRA.

(Brakefield, Tr. 1220).

92. Mr. Brakefield became involved with organizing DIFRA on Sigma’s behalf. 

(Brakefield, Tr. 1220-1221; Rybacki, Tr. 3546-3547). He became DIFRA’s President 

in January 2007, and was the first and only President of DIFRA. (Brakefield, Tr. 1221-

1222, 1227).

93. Mr. Brakefield is currently a Fittings consultant for McWane’s pipe division under Jeff 

Otterstedt and Dennis Charko, and the executive director of the National Association of 

Pipe Fabricators. (Brakefield, Tr. 1212-1213).

Stuart Box

94. Stuart Jackson Box was Sigma’s OEM operations manager from May 2007, when he 

started with the company, until July 2011. (CX 2524 (Box, Dep. at 8)). As OEM 

operations manager, Mr. Box reported to Mitchell Rona and had responsibility for 

customizing Fittings for Sigma OEM customers. (CX 2524 (Box, Dep. at 11, 12)). 

Mr. Box was promoted to Sigma’s director of engineering in July 2011. (CX 2524 

(Box, Dep. at 7-8)).
21

95. Prior to joining Sigma, Mr. Box held positions as plant manager and manufacturing 

manager at foundries for Mueller Water Company, the parent of U.S. Pipe. (CX 2524 

(Box, Dep. at 9-10)).

96. Mr. Box was involved in Sigma’s decision to explore the feasibility of production of 

Domestic Fittings, and in carrying out that evaluation through the SDP project. 

(CX 2524 (Box, Dep. at 20-22)).

97. Mr. Box was not involved in negotiating the MDA, but was aware that MDA 

negotiations were ongoing while he evaluated SDP. (CX 2524 (Box, Dep. at 62-63)).

98. Mr. Box was responsible for making sure that the Fittings Sigma received from 

McWane met specification. (CX 2524 (Box, Dep. at 67-68)).

Other Sigma Employees

99. George Liu (Liuguang) is Sigma’s production manager for China. (Pais, Tr. 1853). 

100. Yin Baohai is the owner of Sigma’s primary Fittings supplier in China, which Sigma 

refers to as “A1,” and Yin Zhenhao is his son. (Pais, Tr. 1881-1882; CX 2118 at 001). 

101. Iona Shenoy is an executive secretary at Sigma. (Rybacki, Tr. 3494).

iii. Sigma email distribution lists

102. Sigma’s M20 email distribution list was a distribution list for Sigma’s approximately 

top 20 managers. (Pais, Tr. 1750; Rybacki, Tr. 3490). Mr. Brakefield was a member of 

the M20 email distribution list. (Brakefield, Tr. 1218).

103. Sigma’s RM6 email distribution list included Sigma’s regional managers and Mr. Rona. 

(Brakefield, Tr. 1218-1219).

104. Sigma’s M11 email distribution group is comprised of approximately 11 or 12 Sigma 

managers, including regional managers, and senior managers such as Mr. Pais, 

Mr. Bhattacharji, Mr. McGivern, Mr. Rybacki, and Mr. Brakefield. (Pais, Tr. 1837-

1838; Brakefield, Tr. 1219).

105. Sigma’s M3 email distribution list included Mr. Bhattacharji, Mr. Pais and 

Mr. Rybacki, and then Mr. McGivern when he joined Sigma. (CX 2527 (Pais, IHT at 

14)).

106. Sigma’s OEM5 email distribution list included Mr. Pais, Mr. Bhattacharji, Mr. Rybacki, 

Mr. Brakefield, and Mr. Rona. (Rona, Tr. 1491).

107. Sigma’s SIGALL distribution list included the entire Sigma team. (Pais, Tr. 1790).
22

c. Star Pipe Products Ltd.

i. Company basics

108. Star Pipe Products Ltd. (“Star”) imports and sells Fittings and other waterworks 

products. (Joint Stipulations of Fact, JX 0001 ¶ 3; Answer ¶ 11; Minamyer, Tr. 3131-

3132).

109. Star was founded in 1981, and it has sold Fittings since approximately 1985. (RX 694 

(Bhutada, Dep. at 6, 7)). Star’s current annual revenues are approximately $135 

million. (McCutcheon, Tr. 2250). Star has approximately 300 employees. 

(McCutcheon, Tr. 2249).

110. In 2007 and 2008, Star’s waterworks division sold Fittings, joint restraints, municipal 

construction castings, nuts and bolts, flanges, flange packs, and accessories. 

(Minamyer, Tr. 3129-3131; McCutcheon, Tr. 2249).

111. In 2007 and 2008, Star’s main product was Fittings, and accounted for approximately 

50% of Star’s annual revenues. (Minamyer, Tr. 3132-3133; McCutcheon, Tr. 2250).

112. Beginning in 2009, Star has contracted with foundries in the United States to 

manufacture Domestic Fittings. (Joint Stipulations of Fact, JX0001 ¶ 4).

113. Star has a controlling interest in Chinese foundries that manufacture Fittings for Star 

and imports Fittings manufactured at five foundries in China. ((McCutcheon, Tr. 2251-

2252; RX 694 (Bhutada, Dep. at 8)). Star does not own the foundries in China.

(CX 2539 (McCutcheon, Dep. at 8); RX 694 (Bhutada, Dep. at 8)).

114. Star does not have any joint ventures with, or ownership interests in, any of the 

foundries in the United States that produce Fittings on Star’s behalf. (McCutcheon, Tr. 

2251-2252).

115. Prior to 2009, Star did not sell Domestic Fittings and had not considered selling 

Domestic Fittings. It sold only imported Fittings. (CX 2533 (Bhargava, Dep. at 11); 

see also McCutcheon, Tr. 2267; Minamyer, Tr. 3136).

116. Star is responsible for quality assurance and quality control in Fittings production at 

both the domestic and foreign foundries from which it obtains Fittings. Quality 

assurance involves establishing the production processes at the foundry necessary to 

assure the quality of the product. (Bhargava, Tr. 2924-2926, 2936; CX 2533 (Bhargava, 

Dep. at 13)). Quality control involves conducting routine reviews, after production, to 

determine that the product meets the specifications. (Bhargava, Tr. 2924; CX 2533

(Bhargava, Dep. at 14)).

117. In the 2007 through 2009 time period, Star’s waterworks division had an outside sales 

force of approximately 22 sales representatives (territory managers) and approximately 
23

six division managers, who supervised the territory managers. (Minamyer, Tr. 3129-

3132, 3178; McCutcheon, Tr. 2253).

118. In 2008, Star had an inside sales force of approximately 15 people. (McCutcheon, Tr. 

2253-2254; Minamyer, Tr. 3132). Star’s inside sales force oversees customer service, 

including checking inventory, fielding inquiries, and arranging shipping. (McCutcheon, 

Tr. 2253-2254).

119. Star has around 10 distribution centers throughout the United States where it stocks 

product in order to provide faster delivery times to its customers. (McCutcheon, Tr. 

2264-2265); CX 2535 (Bhutada, Dep. at 10)).

ii. Key employees

120. Star’s management team consists of three key people – Ramesh Bhutada, Daniel 

McCutcheon, and Navin Bhargava. Most of Star’s major decisions are made by 

consensus of these three people. (Bhargava, Tr. 2926-2927).

Daniel McCutcheon

121. Daniel Ward McCutcheon has been employed by Star since approximately 1995. 

(CX 2537 (McCutcheon, IHT (Vol. 1) at 6); McCutcheon, Tr. 2247).

122. Mr. McCutcheon is currently the President of Star, and has held that position since the 

beginning of 2012. (McCutcheon, Tr. 2246-2247; CX 2539 (McCutcheon, Dep. at 6)).

123. Before becoming Star’s President, Mr. McCutcheon was the Vice President of sales and 

operations at Star for 14 years, reporting to Ramesh Bhutada. (McCutcheon, Tr. 2247; 

CX 2537 (McCutcheon, IHT (Vol. 1) at 6)). In that position, Mr. McCutcheon was 

responsible for all sales, marketing, sales strategies, operations, and the distribution 

center operations. Mr. McCutcheon also had responsibility for the sales of Fittings in 

that position. (CX 2537 (McCutcheon, IHT (Vol. 1) at 7)). Mr. McCutcheon managed 

the sales department and Star’s distribution centers. Star’s outside and inside sales 

forces reported up to Mr. McCutcheon. (McCutcheon, Tr. 2254).

124. In 2008 and 2009, Mr. McCutcheon and Ramesh Bhutada together were responsible for 

setting Star’s pricing strategy. (McCutcheon, Tr. 2252; CX 2538 (McCutcheon, IHT 

(Vol. 2) at 398)).

Matthew Minamyer (former employee)

125. Matthew Patrick Minamyer is currently the national sales manager for the Piping 

Products Division of Sigma (which includes Sigma’s Fittings business), and he has held 

that position since July 2009. (Minamyer, Tr. 3127-3128; CX 2525 (Minamyer, IHT at 

5)).
24

126. From approximately 2004 until he joined Sigma in July 2009, Mr. Minamyer was Star’s 

national sales manager, with responsibility for managing Star’s sales force, interfacing 

with customers, and increasing Star’s sales. (McCutcheon, Tr. 2254; Minamyer, Tr. 

3128; CX 2525 (Minamyer, IHT at 5-6)).

127. From approximately 1999 through 2005, Mr. Minamyer was a territory manager 

(December 1999 through mid-2000) and a division manager (mid-2000 through mid2004) at Star. (Minamyer, Tr. 3128-3129; CX 2525 (Minamyer, IHT at 6-7); CX 2526 

(Minamyer, Dep. at 9-10)).

128. As Star’s national sales manager in 2007 and 2008, Mr. Minamyer reported to Daniel

McCutcheon. (Minamyer, Tr. 3130; CX 2526 (Minamyer, Dep. at 11-12)). 

129. When Mr. Minamyer was the national sales manager for Star’s waterworks division, 

only the waterworks division sales force reported to him. (Minamyer, Tr. 3131-3132). 

Mr. Minamyer had six division managers reporting to him, covering five territories 

within the United States and one in Canada. (Minamyer, Tr. 3130).

130. When Mr. Minamyer was national sales manager at Star (F. 128), Mr. Minamyer and 

Mr. McCutcheon were in charge of setting and changing Star’s list prices and 

multipliers and approving multiplier letters to customers. (Minamyer, Tr. 3139, 3142; 

CX 2526 (Minamyer, Dep. at 99-100).

Ramesh Bhutada

131. Ramesh Bhutada was the President and CEO of Star from 1981 until approximately 

November 2011. Since November 2011, Mr. Bhutada has been CEO of Star. (CX 2534 

(Bhutada, IHT at 6); CX 2535 (Bhutada, Dep. at 5)).

132. In 2008 and 2009, Mr. Bhutada was responsible, together with Mr. McCutcheon, for 

setting Star’s pricing strategy. (McCutcheon, Tr. 2252; CX 2538 (McCutcheon, IHT 

(Vol. 2) at 398)).

Navin Bhargava

133. From 2003 to the present, Navin Bhargava has been a Vice President and, later, an 

Executive Vice President of Star, with responsibility for sourcing, inventory, 

engineering, quality control, and new product development. (Bhargava, Tr. 2917-2919, 

2921; CX 2533 (Bhargava, Dep. at 7-8)).

134. Mr. Bhargava began at Star as a product manager in 1994, responsible for inventory 

planning and sourcing foundries for manufacturing. (Bhargava, Tr. 2918).

135. Mr. Bhargava was Star’s purchasing manager from 1996 to 1998. In this role, 

Mr. Bhargava was also responsible for sourcing and supervising foundries that 

manufactured Star’s products. (Bhargava, Tr. 2918-2920).
25

136. Mr. Bhargava was Star’s director of manufacturing in 1998 until approximately 2003. 

His responsibilities in this role related to expanding Star’s manufacturing, which was 

manufacturing in South America, Korea, China, and India at that time. (Bhargava, Tr. 

2920).

137. Mr. Bhargava became a Vice President of Star in approximately 2003. He became 

Executive Vice President in approximately 2011. (Bhargava, Tr. 2917, 2921).

138. Mr. Bhargava’s responsibilities included supervision of Star’s entry into Domestic 

Fittings manufacturing. (Bhargava, Tr. 2921). Mr. Bhargava was responsible for 

locating appropriate domestic third-party foundries for Fittings production, developing 

tooling for those foundries, setting up quality control procedures, and assessing the 

manufacturing capacities of domestic foundries. (Bhargava, Tr. 2925-2926).

139. Mr. Bhargava’s quality control responsibilities involve establishing and conducting 

testing and reporting at Star’s third-party foundries. (Bhargava, Tr. 2924).

140. Mr. Bhargava has had responsibilities related to Star’s foundry operations in China, 

including aspects of opening a foundry such as: assessing the capabilities of a thirdparty foundry, establishing manufacturing processes for foundries, developing and 

approving product patterns, testing, and troubleshooting inventory and customer 

service. (Bhargava, Tr. 2921-2923).

Leroy H. Leider, Jr.

141. Leroy H. Leider, Jr. is a general sales manager for Star. Mr. Leider has been employed 

by Star since approximately 2004. (CX 2536 (Leider, Dep. at 9-11)).

142. Mr. Leider was a territory manager for Star for approximately four years, from 2004 

until 2008. (CX 2536 (Leider, Dep. at 11)).

143. In 2008 and 2009, Mr. Leider was a division manager for the northwestern United 

States, including Washington, Oregon, Montana, Idaho, Utah, New Mexico, Colorado, 

Wyoming, North Dakota, South Dakota, Minnesota, and Wisconsin. (CX 2536 (Leider, 

Dep. at 11, 13)).

144. Mr. Leider became a general sales manager in 2009. (CX 2536 (Leider, Dep. at 13)). 

As general sales manager, Mr. Leider has responsibility for supervising the division 

managers in much of the eastern United States. (CX 2536 (Leider, Dep. at 13, 16)).

145. As division manager, Mr. Leider reported to Matt Minamyer. (CX 2536 (Leider, Dep. 

at 17)). As division manager and as general sales manager, Mr. Leider has not had 

authority for setting Star’s list prices or establishing Star’s published multipliers for 

fittings. (CX 2536 (Leider, Dep. at 22)).
26

Michael Berry

146. Michael Berry has been a general sales manager for Star since 2009. (CX 2532 (Berry, 

Dep. at 12)).

147. Mr. Berry was first employed as a territory manager by Star in approximately 2004. As 

a territory manager, Berry was a sales person for Star. (CX 2532 (Berry, Dep. at 10)). 

From approximately 2005 to 2009, Mr. Berry was a division manager for Star, with 

responsibility for Star’s western division, which included portions of the United States 

including west of Arizona and Utah. As division manager, Mr. Berry had responsibility 

for supervising the territory mangers in the western United States. (CX 2532 (Berry, 

Dep. at 13-15)).

148. John Ristine, John Lemoine, and Kris Kadai are territory managers for Star and reported 

to Mr. Berry in his capacity as division manager. (CX 2532 (Berry, Dep. at 13-14)).

149. As division manager, Mr. Berry did not have responsibility for setting price lists or 

published multipliers for Star. (RX 691 (Berry, Dep. at 18)). As division manager, 

Mr. Berry sometimes exercised authority to approve Project Pricing (F. 428), but that 

authority was sometimes exercised directly by either Mr. McCutcheon or 

Mr. Minamyer. (CX 2532 (Berry, Dep. at 22)).

Other Star Employees

150. Pawan Sharda has been a Senior Financial Analyst at Star since 2007. He has worked 

at Star since 2004. (CX 2540 (Sharda, Dep. at 6-7)). 

151. Kirthi Jain was an accounting manager at Star in 2008. (McCutcheon, Tr. 2500, in 

camera). 

152. Narendra Zamwar was a product development manager at Star in 2011, responsible for 

working with the independent foundries with which Star contracted for the production 

of Domestic Fittings. (Bhargava, Tr. 2943, in camera). 

153. Pam Garey was the inside sales manager at Star in 2008. (Minamyer, Tr. 3159-3160).

d. Other fittings suppliers and pipe suppliers

i. American Cast Iron Pipe Company

154. American Cast Iron Pipe Company (“ACIPCO”) is a domestic manufacturer and seller 

of ductile iron pipe, fabricated pipe, spiral weld steel pipe, steel pipe, fire hydrants, gate 

valves and Fittings, with a foundry in Birmingham, Alabama. (CX 2486 (Burns, Dep. 

at 13)).
27

155. ACIPCO currently manufactures fittings in the United States ranging from 30” to 64” in 

diameter. ACIPCO exited the manufacture of Fittings under 30” in diameter in 2006. 

(CX 1897 at 002; CX 2486 (Burns, Dep. at 15, 17, 23-28); CX 2521 (Agarwal, IHT at 

19-20)).

156. ACIPCO sells fittings as an ancillary product line; ACIPCO has focused its 

improvements and investments on ductile iron pipe production over the years. 

(CX 2486 (Burns, Dep. at 41-42, 49-51)).

157. In 2009, 2010, and 2011, ACIPCO’s fittings sales accounted for less than 5% of its 

overall revenue. (CX 2486 (Burns, Dep. at 16-17)).

158. As an OEM supplier of pipe systems, ACIPCO purchases Fittings from Sigma to sell as 

part of its packaged sales of pipes and Fittings. (Pais, Tr. 1980-1981; CX 1092 at 005).

159. Jerry Neal Burns has been the division sales manager for the ductile iron pipe division 

of ACIPCO for the last 22 years. His responsibilities include the promotion and sales of 

ductile iron pipe and spiral weld steel pipe in the United States. (CX 2486 (Burns, Dep. 

at 6-7)).

160. Michael Hays has been the director of supply chain management for ACIPCO for the 

last six years. (CX 2487 (Hays, Dep. at 7-8)).

ii. Backman Foundry

161. Backman Foundry, located in Provo, Utah, is a foundry that has been in operation since 

1938. Backman Foundry employs 32 people. (RX 648 (Backman, Dep. at 9, 12)).

162. Backman Foundry manufactures Fittings, which comprise approximately 20% to 25% 

of Backman Foundry’s business, or approximately $3 million in sales annually. 

(CX 2488 (Backman, Dep. at 14, 18)). Backman Foundry manufactures customized 

Fittings, niche products that do not compete with McWane or other large Fittings 

suppliers who sell “standard off-the-shelf, the bread-and-butter [Fittings].” (CX 2488 

(Backman, Dep. at 16-17)). Due to the high degree of customization of its Fittings, 

Backman Foundry produces products on a purchase-order-by-purchase-order basis. 

(CX 2488 (Backman, Dep. at 33)).

163. Alan Backman is the President, CEO, and primary owner of Backman Foundry. 

Mr. Backman has had supervisory responsibility for everything that goes on at the 

foundry for 17 years. (CX 2488 (Backman, Dep. at 11)). Mr. Backman’s 

responsibilities are to oversee operations of the entire facility on a global, long-term 

basis. Mr. Backman also deals with customers and keeps “an eye on day-to-day 

operations to some degree.” (CX 2488 (Backman, Dep. at 48)).
28

iii. Griffin Pipe Products

164. Griffin Pipe Products Co. (“Griffin”) is a domestic manufacturer of ductile iron pipes 

and has been in operation since the 1960s. Griffin also resells Fittings as part of 

packaged sales of pipes and Fittings. (CX 2508 (Kurhts, Dep. at 9-11)).

165. At some point prior to 2002 or 2003, Griffin manufactured Domestic Fittings. 

However, Griffin no longer possesses the equipment or expertise necessary to

manufacture Fittings in the United States, has not considered re-entering the Domestic 

Fittings market, and has not studied what the associated costs of reentry would be. 

(CX 2508 (Kurhts, Dep. at 18-20, 48-50, 73-74), in camera).

166. Griffin continues to resell Fittings because some customers prefer to purchase their 

Fittings and ductile iron pipes from a single source. However, Griffin has attempted to 

reduce its Fittings sales over the last few years because Griffin loses sales when it 

cannot supply 100% of all Fittings to a particular job. (CX 2508 (Kurhts, Dep. at 42-

45), in camera).

167. Griffin purchases the Fittings that it sells from four main sources, McWane, Star, 

Sigma, and Metalfit, Inc. (CX 2508 (Kurhts, Dep. at 20-21, 24-27), in camera).

168. Douglas Kuhrts became the national customer service manager at Griffin. Before that, 

Mr. Kuhrts was the customer service manager for Griffin’s west region for ten years. 

Mr. Kurhts has been with Griffin for 12 years. (CX 2508 (Kurhts, Dep. at 6-7)).

iv. Metalfit, Inc.

169. Metalfit, Inc. (“Metalfit”) is a foundry in Monterrey, Mexico and a manufacturer of 

flanged fittings from 3” to 48” in diameter and mechanical joint fittings from 4” to 48” 

in diameter. Metalfit supplies fittings under the Metalfit brand name, and as private 

label products for ACIPCO, U.S. Pipe, Griffin, and Sigma. (CX 2518 (Meyer, Dep. at

16-23)).

170. In addition to fittings, Metalfit produces municipal castings for the Mexican market and 

non-waterworks products including valve bodies, butterfly valves, ball valves, plug 

valves, and pump parts. (CX 2518 (Meyer, Dep. at 21)).

171. Metalfit exports approximately 98% of its fittings to the United States. (CX 2518 

(Meyer, Dep. at 20-21)).

172. All of the fittings sold under the Metalfit brand name are sold through Distributors. 

(CX 2518 (Meyer, Dep. at 23-24)).

173. In 2011, approximately 70% of Metalfit’s sales were of Fittings. Over the last five 

years, Fittings sales have generally been less than 70%. (CX 2518 (Meyer, Dep. at 21-

22, 108-109)).
29

174. Mark L. Meyer has been an owner and Vice President of Metalfit since 2004. As Vice 

President of Metalfit, Mr. Meyer is responsible for sales, marketing, customer 

development, new product development, strategic planning, government affairs and all 

non-manufacturing aspects of the business. (CX 2518 (Meyer, Dep. at 9-12)).

175. Mr. Meyer and his partners built the Metalfit foundry in 1991 and began operations in 

1994. In 2000, Mr. Meyer and his partners sold the foundry to Griffin Pipe Products, 

but they purchased it back in July 2004, and continue to operate the foundry today. 

(CX 2518 (Meyer, Dep. at 9-11)).

v. NAPAC, Inc.

176. NAPAC, Inc. (“NAPAC”) is a Fittings supplier with close to a full product line of nonDomestic Fittings. (CX 2500 (Swalley, Dep. at 135); CX 2526 (Minamyer, Dep. at 

14)).

177. NAPAC has three distribution centers, in Massachusetts, Florida, and California. 

(CX 2500 (Swalley, Dep. at 137)).

vi. NACIP

178. In 2010, North American Cast Iron Products (“NACIP”) began selling Fittings in the 

United States that it imports from India and China. (Saha, Tr. 1152-1153, 1163, 1173-

1176). NACIP’s corporate headquarters is in New Jersey, and its distribution centers 

are in New Jersey, Norfolk, Virginia; Covington, Georgia; and Houston, Texas. (Saha, 

Tr. 1153-1154).

179. NACIP sells Fittings to Distributors. (Saha, Tr. 1153-1154). NACIP currently sells 

Fittings to approximately 50 separate Distributor branches, primarily third tier and

independent distributors. (Saha, Tr. 1167-1168, 1171).

180. The volume of NACIP’s Fittings sales is “[i]nsignificant” in comparison to McWane. 

(Saha, Tr. 1164, 1167-1168 (estimating NACIP’s sales to be less than 5% of the overall 

Fittings distribution network in the United States); CX 2519 (Saha, Dep. at 26)).

181. NACIP Fittings sales are primarily in the eastern and southern parts of the United 

States. NACIP has no current plans to expand its Fittings sales to other geographical 

areas. (Saha, Tr. 1163-1164).

182. Suvobrata Saha is the President and part-owner of NACIP, and has worked in the 

Fittings industry since 1983. Mr. Saha’s responsibilities at NACIP include sales 

planning, purchasing, and finance. (Saha, Tr. 1152-1157).

183. Mr. Saha serves as the joint managing director of Carnation Industries, Limited, a 

foundry that produces Fittings in China and India for NACIP. (Saha, Tr. 1155-1156).
30

184. Previously in his career, Mr. Saha worked as an eastern United States regional sales 

manager for Star. (Saha, Tr. 1157-1158).

185. In 1996, Mr. Saha started a waterworks company called Pipeline Components, Inc. 

(“PCI”), of which he was Vice President and part owner. (Saha, Tr. 1158). In 2005, 

Mr. Saha sold PCI to Sigma, at which time Sigma closed down all three of PCI’s 

locations. The agreement by which Sigma purchased PCI included a 3-year noncompete clause binding Mr. Saha. During that time period, Mr. Saha was not permitted 

to be in the Fittings business. (Saha, Tr. 1161-1162).

vii. Serampore Industries Private

186. Serampore Industries Private (“SIP” or “Serampore”) supplies Fittings in the United 

States that it imports from China, India and Mexico. (CX 2522 (Agarwal, Dep. at 6, 

22), in camera).

187. SIP began selling Fittings in the United States in 2003 or 2004, and currently sells to 

approximately 50 to 60 Distributors in approximately 35 states. (CX 2522 (Agarwal, 

Dep. at 29, 38), in camera). 

188. SIP offers a full line of Fittings up to 48” in diameter. (RX 681 (Agarwal, Dep. at 30); 

CX 2521 (Agarwal, IHT at 64-65)).

189. Bharat Agarwal has been SIP’s Vice President for business development since 

approximately 2007. In that position, Mr. Agarwal is responsible for finding new 

business opportunities, including new products and markets, and growing sales. 

(CX 2522 (Agarwal, Dep. at 6-7); RX 681 (Agarwal, Dep. at 9-10)).

viii. United States Pipe and Foundry Company, LLC

190. United States Pipe and Foundry Company, LLC (“U.S. Pipe”), headquartered in 

Birmingham, Alabama, currently manufactures ductile iron pipe. In the 2005 through 

2012 time period, U.S. Pipe manufactured ductile iron pipe at two plants in Bessemer, 

Alabama, and a plant in Union City, California. (Morton, Tr. 2809).

191. U.S. Pipe sells complete waterworks systems that include its ductile iron pipe packaged 

together with related products, including Fittings and accessories. (Morton, Tr. 2809-

2812).

192. Until April 2006, U.S. Pipe manufactured Domestic Fittings from 4” to 64” in diameter 

at its Chattanooga, Tennessee facility. U.S. Pipe stopped manufacturing Fittings in 

April 2006, and has since sold the Chattanooga facility. (Morton, Tr. 2810).

193. U.S. Pipe currently purchases non-Domestic Fittings primarily from Sigma, with Star as 

a secondary supplier, and Domestic Fittings from McWane and Star. U.S. Pipe sells the 
31

Fittings that it purchases as a part of a bundled package of Fittings and ductile iron pipe. 

(Morton, Tr. 2810, 2819-2820).

194. Thomas Morton was U.S. Pipe’s Vice President of purchasing from 2005 until August 

14, 2012. As Vice President of purchasing, Mr. Morton typically had final authority 

over all purchasing decisions at U.S. Pipe, including which vendors U.S. Pipe used. 

(Morton, Tr. 2807-2808).

195. Gary Crawford has been U.S. Pipe’s sales director since 2010. From 1978 to 1989, 

Mr. Crawford was a sales representative for various geographic regions in the United 

States, selling U.S. Pipe products, including Fittings. From 1989 to 1994, Mr. Crawford 

was the Assistant Eastern Regional Sales Manager. From 1994 to December 2003, 

Mr. Crawford was the Eastern Regional Sales Manager. From December 2003 through 

2010, Mr. Crawford was the Vice President of sales. (CX 2541 (Crawford, Dep. at 6-

9)).

ix. Electrosteel USA, LLC

196. In 2009, Electrosteel USA, LLC (“Electrosteel”) began selling 4” to 24” Fittings in the 

United States that were manufactured in India. (CX 2500 (Swalley, Dep. at 8-10, 12-

13)). 

197. Of approximately 75 Distributor branches in the southeastern United States, Electrosteel 

currently sells to only 7 to 10 branches. Those 7 to 10 branches purchase approximately 

10% of their Fittings needs from Electrosteel. (CX 2500 (Swalley, Dep. at 152-153)).

198. Electrosteel estimates its own market share in the southeast as one percent after two and 

a half years. (CX 2500 (Swalley, Dep. at 33, 131)).

199. Robert Daniel Swalley has been the business development manager at Electrosteel since 

August 2007, when he first began working for Electrosteel. (RX 659 (Swalley, Dep. at 

5)).

e. Domestic foundries

200. Foundries sell to (or are owned by) Fittings suppliers, not Distributors or End Users. 

(CX 2505 (Frazier, Dep. at 68-69); CX 2507 (Glidewell, Dep. at 122-123); CX 2517 

(Hall, Dep. at 148-150)).

i. EBAA Iron, Inc.

201. EBAA Iron, Inc. (“EBAA”), originally Earl Bradley and Associates, is a domestic joint 

restraint manufacturer with two domestic iron foundries in Texas and one in Georgia. 

(RX 658 (Keffer, Dep. at 7-8)).

202. EBAA does not produce any Fittings. (CX 2499 (Keffer, Dep. at 9)).
32

203. Jim Keffer is the sales division President for EBAA, where he has worked for 35 years. 

(RX 658 (Keffer, Dep. at 4-6)).

ii. EJ

204. EJ is the successor company to East Jordan Ironworks, a domestic foundry that began 

making gray iron municipal products in the 1920s, including: fire hydrants, gate valves, 

construction castings, municipal manhole frames and covers, and gray iron water main 

fittings. (RX 657 (Teske, Dep. at 8)).

205. EJ does not currently make Fittings, and has never made Fittings. (CX 2498 (Teske, 

Dep. at 12)).

206. EJ does currently resell McWane Fittings to a few clients in the Midwest which 

accounts for less than 1% of EJ’s overall sales. (CX 2498 (Teske, Dep. at 33-34, 39-

40)).

207. Thomas Michael Teske has been at East Jordan Ironworks, now EJ, since 1976, and is 

currently the company’s Vice President and General Manager, responsible for EJ 

Canada, EJ USA, Inc., and EJ America Latina. (RX 657 (Teske, Dep. at 5-6)).

iii. Frazier & Frazier Industries

208. Frazier & Frazier Industries (“Frazier & Frazier”) is a domestic foundry that was 

founded in 1972. Frazier & Frazier produces castings for Domestic Fittings for 

suppliers like McWane and Star. (RX 664 (Frazier, Dep. at 6-8, 14, 19-20)).

209. Frazier & Frazier produces unfinished Domestic Fittings; the castings that Frazier & 

Frazier makes for Fittings still require finishing, such as bolts, fasteners, and paint. 

(CX 2505 (Frazier, Dep. at 71-72)).

210. Frazier & Frazier typically produces castings for Domestic Fittings through metal 

patterns that are sometimes provided to Frazier & Frazier by its customers. (CX 2505 

(Frazier, Dep. at 24-25) (noting that Frazier & Frazier may still incur expenses to set up 

the new pattern, including adapting the pattern to the foundry’s flask and sampling)).

211. Charles W. Frazier, Jr. has been Frazier & Frazier’s President and Chief Operating 

Officer since 2000. Mr. Frazier has been involved in the foundry business all of his life. 

(RX 664 (Frazier, Dep. at 5-6)).

212. VJ Gupta is the sales manager at Frazier & Frazier. (RX 665 (Gupta, Dep. at 6)).

213. Lee Ann Ewing has been the secretary and treasurer at Frazier & Frazier since 

approximately 2001, and has been employed by Frazier & Frazier since 1978. 
33

Ms. Ewing oversees Frazier & Frazier’s accounting functions, including billing, bill 

payment, and profit and loss statement preparation. (RX 706 (Ewing, Dep. at 4-5)).

iv. Glidewell Foundry

214. Glidewell Foundry (“Glidewell”) makes ductile iron castings for a wide variety of 

industries, including the waterworks industry. (RX 666 (Glidewell, Dep. at 13-14)).

215. Approximately 50% of Glidewell’s total castings sales are for waterworks industry 

customers and products, including Star, McWane, ACIPCO, and valve manufacturers. 

(RX 666 (Glidewell, Dep. at 14-15)).

216. Glidewell began making Domestic Fittings castings in 2009, and sold Domestic Fittings 

castings to Star in 2010. (RX 666 (Glidewell, Dep. at 16, 54); CX 2507 (Glidewell, 

Dep. at 95-96)).

217. Since 2009, Glidewell has cast only large-diameter Domestic Fittings of 30” to 48” in 

diameter. Glidewell has never had the equipment necessary to efficiently make 

Domestic Fittings castings smaller than 30”. (CX 2507 (Glidewell, Dep. at 63)).

218. David Glidewell has worked in the foundry business since 1974, and has been the 

President and CEO of Glidewell Foundry since 1991. (RX 666 (Glidewell, Dep. at 8-

10)). Mr. Glidewell oversees Glidewell’s operations and handles all quoting and 

estimating for the company, including reviewing all requests for quotes. (RX 666 

(Glidewell, Dep. at 11-12)).

v. Mabry Castings

219. Mabry Castings (“Mabry”) manufactures castings for Domestic Fittings. (RX 676 

(Hall, Dep. at 18-19)).

220. In 2009, Mabry began producing Domestic Fittings castings for Star. (CX 1581; RX

676 (Hall, Dep. at 67-68)). Mabry currently makes mechanical joint bend Domestic 

Fittings that are 8” in diameter and larger for Star. (RX 676 (Hall, Dep. at 19)).

221. Eddie N. Hall, Jr. is the sales manager at the Mabry foundry in Beaumont, Texas, where 

he has worked for over 29 years. As sales manager, Mr. Hall provides quotes to 

Domestic Fittings castings customers. Before 2011, Mr. Hall was Mabry’s plant 

operations manager. (RX 676 (Hall, Dep. at 5, 7-12, 17, 18)).

f. Distributors

i. HD Supply

222. HD Supply is the largest waterworks Distributor in terms of sales in the United States. 

(Joint Stipulations of Fact, JX0001 ¶ 24). HD Supply sells all waterworks products, 
34

including polyvinyl chloride (“PVC”) plastic pipe, ductile iron pipe, valves, hydrants, 

brass items, appurtenances, and Fittings. (Webb, Tr. 2706).

223. HD Supply is a national Distributor with 235 branches in major metropolitan areas in 44 

states. Each branch stocks Fittings and other products for HD Supply’s customers. 

(Webb, Tr. 2698-2699).

224. Jerry L. Webb was President and CEO of HD Supply’s Waterworks Division from 2007 

through December 2011. (Webb, Tr. 2694-2695). Mr. Webb reports to Joe DeAngelo, 

who is the CEO for all of HD Supply, and also gives monthly updates to the board on 

performance, long range forecasting, initiatives and sales. Mr. Webb’s direct reports 

are the HD Supply waterworks division’s president, the chief financial officer, the chief 

information officer, the vice president of market development, and the strategic 

business development director. (Webb, Tr. 2695-2696). Prior to December 2011, HD 

Supply’s six waterworks regional vice presidents (including one vice president of fire 

protection) reported to Mr. Webb. (Webb, Tr. 2696-2697).

225. As CEO of the HD Supply Waterworks division, Mr. Webb is responsible for strategic 

growth, new markets, market and product initiatives, and vendor relations. (Webb, Tr. 

2696-2697; CX 2514 (Webb, Dep. at 9-10)). Mr. Webb exerts final authority over 

which Fittings suppliers HD Supply selects. (Webb, Tr. 2746).

226. Rob Hixon and Don Taylor were employees of HD Supply in 2008. (CX 2536 (Leider, 

Dep. at 83)).

ii. Ferguson Enterprises

227. Ferguson Enterprises (“Ferguson”) is the second largest waterworks Distributor in terms 

of sales in the United States. (Joint Stipulations of Fact, JX0001 ¶ 25). Ferguson serves 

the water and wastewater industry, supplying primarily pipe, valves, and fittings to 

contractors and municipalities. (CX 2503 (Thees, IHT at 15)). Ferguson has an 

approximately 25% market share nationwide. (Tatman, Tr. 952-953; Thees, Tr. 3059).

228. Ferguson is a national Distributor with approximately 167 branches throughout the 

country that distribute waterworks products, including Fittings. (Thees, Tr. 3042, 3045-

3046).

229. Ferguson employs a sales force of over 300 outside sales people and 250 inside sales 

people. (Thees, Tr. 3060).

230. Ferguson and HD Supply are McWane’s two largest Fittings customers. (Tatman, Tr. 

953; Thees, Tr. 3042).

231. William Taylor Thees, Jr. is the Vice President of waterworks at Ferguson, where he 

has worked for the last 22 years. (Thees, Tr. 3032-3033). Before becoming Vice 

President in August 2009, Mr. Thees held a series of positions at Ferguson, including 
35

branch manager, district manager, and business group owner of Ferguson’s waterworks 

group, with responsibilities similar to his Vice President responsibilities. (Thees, Tr. 

3034-3035).

232. As Vice President of Ferguson’s waterworks division, Mr. Thees has profit and loss and 

strategy development responsibilities for the waterworks group. These responsibilities 

include deciding what initiatives to pursue or ways to grow the waterworks group, and 

deciding whether to acquire or open new Ferguson branches. (Thees, Tr. 3039).

233. Mr. Thees regularly interacts with his district managers, gathering intelligence in order 

to understand relationships with suppliers, the relative sales volumes of each district, 

and potential growth areas. (Thees, Tr. 3040-3041).

234. Mr. Thees often has the final authority in the selection of waterworks suppliers, 

including Fittings suppliers, though he discusses waterworks decisions with other 

Ferguson divisions when the supplier sells non-waterworks products to Ferguson as 

well. (Thees, Tr. 3041-3042).

235. Mr. Thees participates in negotiating rebates with Ferguson’s waterworks suppliers. 

The corporate rebate department takes the lead when it is a corporate rebate, and the 

local or regional office takes the lead on regional rebates. (Thees, Tr. 3041).

iii. WinWholesale

236. WinWholesale, which does business as WinWater Works (“WinWater”), is the third 

largest waterworks Distributor in the United States with 43 local companies or branches 

in 22 states. (CX 2162 at 001; CX 2546 (Gibbs, Dep. at 11, 15-16)). WinWater sells 

waterworks products, including Fittings, to End Users. (CX 2546 (Gibbs, Dep. at 7-8)).

237. In 2008, WinWholesale purchased approximately $9.5 million in Fittings. In 2009, 

WinWholesale purchased approximately $8.7 million in Fittings. In 2010, 

WinWholesale purchased approximately $9.0 million in Fittings. In 2011, 

WinWholesale purchased approximately $9.0 million in Fittings. (CX 2546 (Gibbs, 

Dep. at 12)).

238. Eddie Gibbs has been the Vice President of vendor relations for WinWholesale since 

2005. (CX 2546 (Gibbs, Dep. at 7-8)). As the Vice President of vendor relations, 

Mr. Gibb’s responsibilities include negotiating programs for all of WinWholesale’s 

products, including Fittings, with vendors, gaining access to vendor lines, and dealing 

with disputes with local companies (branches) and vendors. (CX 2546 (Gibbs, Dep. at 

7)).

iv. Hajoca Corporation

239. Hajoca Corporation (“Hajoca”) distributes plumbing, heating, and industrial products. 

(Pitts, Tr. 3291-3292). Hajoca sells waterworks products including flanged pipes and 
36

fittings, saddles, valves, and Fittings. (Pitts, Tr. 3297).

240. Hajoca has 351 locations. Approximately nine of these locations sell waterworks 

products. Three branches sell waterworks exclusively: Tulsa, Oklahoma; Salt Lake 

City, Utah; and Olathe, Kansas. Lansdale, Pennsylvania also sells waterworks products. 

(Pitts, Tr. 3296-3297).

241. Compared to Ferguson and HD Supply, Hajoca’s presence in the waterworks 

distribution business, with three dedicated waterworks locations, is very small. (Pitts, 

Tr. 3299-3300).

242. Roy Lee Pitts has been the director of vendor relations at Hajoca for the last fifteen 

years. (Pitts, Tr. 3292). As director of vendor relations, Mr. Pitts negotiates programs 

with Hajoca’s vendors, supervises Hajoca’s supplier rebate programs, and represents 

Hajoca at industry events. Mr. Pitts’ responsibilities include waterworks. (Pitts, Tr. 

3293-3294).

243. Mr. Pitts regularly communicates with waterworks suppliers about Hajoca’s waterworks 

purchasing goals. (Pitts, Tr. 3294). Mr. Pitts advises individual Hajoca branches about 

supplier corporate rebate programs, cash discounts, and shipping terms, and the branch 

managers of those branches make final decisions on which products to purchase. (Pitts, 

Tr. 3295-3296).

v. The Distribution Group (TDG)

244. The Distribution Group, also known as “TDG,” is a group of distributors that 

collectively negotiates with suppliers, which TDG refers to as vendors, on behalf of the 

32 independent Distributors that make up the membership of TDG. (CX 2494 (R. 

Fairbanks, Dep. at 10); Sheley, Tr. 3380; Minamyer, Tr. 3188). 

245. TDG pools its members’ buying power together to jointly earn rebates based on group 

purchases from vendors. (CX 2494 (R. Fairbanks, Dep. at 10); Minamyer, Tr. 3188). 

The purpose of TDG is to increase the negotiating power of individual Distributors who 

would otherwise not receive terms as favorable to them as the terms that suppliers 

extend to larger Distributors like HD Supply. (Sheley, Tr. 3394-3395).

246. TDG collectively negotiates for freight terms, payment terms, rebate programs, and 

extended purchasing agreements with 68 suppliers for various products, including 

Fittings. (Sheley, Tr. 3378-3379; CX 2494 (R. Fairbanks, Dep. at 11)).

247. TDG negotiates rebate terms, but not product prices, with vendors. Individual members 

negotiate price with their suppliers. (CX 2494 (R. Fairbanks, Dep. at 21), in camera; 

Sheley, Tr. 3393). 
37

248. Vendors pay earned rebates to TDG and TDG then distributes those rebates back to the 

member Distributors in proportion to their purchases. (CX 2494 (R. Fairbanks, Dep. at 

21, 57-58), in camera; Sheley, Tr. 3379-3380).

249. TDG’s Vendor Committee reviews proposals from vendors and selects the vendors with 

whom TDG will have rebate programs. (CX 2494 (R. Fairbanks, Dep. at 12); Sheley, 

Tr. 3379-3380). The Vendor Committee consists of nine members, each with an equal 

vote. (CX 2494 (R. Fairbanks, Dep. at 12-14)). Members of the Vendor Committee 

include, Dennis Sheley, Illinois Meter Company; Curtis Porter, Utility Supply 

Company; Michael Coryn, Utility Equipment Company; Jenks Hayes, Hayes Pipe & 

Supply; Peter Prescott, E.J. Prescott Company; Wayne Johnson, Dana Kepner 

Company; Dennis Johnson, Atlas Utility; Hod Fowler, H.D. Fowler Company; and Jeff 

Konen, Consolidated Supply Company. (CX 2494 (R. Fairbanks, Dep. at 13)).

250. Currently, TDG has contracts with 72 different waterworks vendors. (Sheley, Tr. 3396-

3397). TDG members must purchase certain percentages of their purchases from TDG 

vendors, but members are not required to purchase products from any specific vendor 

just because the vendor has a rebate program with TDG. (CX 2494 (R. Fairbanks, Dep. 

at 33); Sheley, Tr. 3395-3396).

251. Richard Frank Fairbanks II is the President of TDG. (CX 2494 (R. Fairbanks, Dep. at 

10)). His primary responsibilities are to manage relationships between members and 

vendors, to facilitate negotiations between members and vendors, to manage the 

numbers of purchases and rebates, and to oversee the purchasing goals and 

commitments. (CX 2494 (R. Fairbanks, Dep. at 58-59, 61)). 

252. Mr. Fairbanks has relationships with Larry Rybacki at Sigma, Dan McCutcheon at Star, 

and Rick Tatman and Jerry Jansen at Tyler/Union. (CX 2494 (R. Fairbanks, Dep. at 65-

66)). Previously Mr. Fairbanks had relationships with Victor Pais at Sigma and Matt 

Minamyer at Star. (CX 2494 (R. Fairbanks, Dep. at 65-66)).

vi. E.J. Prescott, Inc.

253. E.J. Prescott, Inc. (“E.J. Prescott”) is a waterworks Distributor headquartered in 

Gardiner, Maine. (CX 2501 (Prescott, IHT at 7-9)). E.J. Prescott has 27 branches 

located throughout Maine, New Hampshire, Rhode Island, Vermont, Massachusetts, 

Connecticut, Indiana, Ohio, and New York. (CX 2502 (Prescott, Dep. at 9); CX 2501 

(Prescott, IHT at 8)).

254. Right before the passage of ARRA, 20% of E.J. Prescott customers were “[a] hundred 

percent domestic.” (CX 2501 (Prescott, IHT at 41)). E.J. Prescott’s fitting inventory in 

2012 was 50% domestic and 50% imported. (CX 2502 (Prescott, Dep. at 11)).

255. E.J. Prescott purchases ductile iron pipe fittings from McWane, Sigma, Star, and SIP. 

(CX 2502 (Prescott, Dep. at 15, 20)).

256. E.J. Prescott is a member of TDG. (RX 661 (Prescott, Dep. at 40)).
38

257. Peter Prescott has been the CEO of E.J. Prescott for ten years. (CX 2502 (Prescott, 

Dep. at 6-7)). From 1978 until he became CEO, Mr. Prescott was the President of E.J. 

Prescott. (CX 2502 (Prescott, Dep. at 7)).

vii. Groeniger & Company

258. Groeniger & Company (“Groeniger”) was a waterworks Distributor that had 14 

branches before it had to close five branches due to the economy. (CX 2509 

(Groeniger, IHT at 24)). Ferguson purchased Groeniger in 2011. (CX 2510 

(Groeniger, Dep. at 125)).

259. Groeniger was a member of TDG. (CX 2510 (Groeniger, Dep. at 58-59)).

260. Groeniger purchased Fittings from McWane, Sigma, and Star. (CX 2510 (Groeniger, 

Dep. at 44)).

261. Michael Groeniger was the President of Groeniger from 1984 to 2011, when Groeniger

was purchased by Ferguson. (CX 2509 (Groeniger, IHT at 7); CX 2510 (Groeniger, 

Dep. at 125)). Mr. Groeniger became the Chairman of the Board in 1988 or 1989. 

(CX 2509 (Groeniger, IHT at 7)). Mr. Groeniger’s responsibilities as President were to 

oversee the entire company; which he did by visiting his branches to make sure things 

were running well. (CX 2509 (Groeniger, IHT at 7-8)).

viii. Illinois Meter, Inc.

262. Illinois Meter, Inc. (“Illinois Meter”) is a Distributor of waterworks, utility, sewer, and 

gas products, including Fittings. (Sheley, Tr. 3376-3378). Illinois Meter purchases 

Fittings from McWane and Star. (CX 2516 (Sheley, Dep. at 11, 133)).

263. Illinois Meter is a member of TDG. (Sheley, Tr. 3378). Illinois Meter has five 

branches, located in Missouri and Illinois. (Sheley, Tr. 3382).

264. In 2008, approximately 35% of Illinois Meter’s Fittings sales consisted of Domestic 

Fittings. (Sheley, Tr. 3433, in camera).

265. Dennis James Sheley is the President and owner of Illinois Meter, and has been the 

owner of Illinois Meter for the last 28 years. (Sheley, Tr. 3375-3376).

266. Mr. Sheley’s responsibilities at Illinois Meter include: visiting with customers, 

overseeing purchasing and sales decisions, and ultimate authority on the selection of 

waterworks suppliers, including Fittings suppliers. (Sheley, Tr. 3376-3378).

267. Mr. Sheley is also the Chairman of the Board of TDG, and one of nine equal voting 

members of TDG’s Vendor Selection Committee. (Sheley, Tr. 3379).
39

ix. C.I. Thornburg Company, Inc.

268. C.I. Thornburg Company, Inc. (“C.I. Thornburg”) is a waterworks Distributor, and is a 

member of TDG. (CX 1362 at 002; CX 2489 (Morrison, IHT at 6-8)).

269. C.I. Thornburg has grown from one branch in 1973 to five branches in West Virginia, 

Kentucky, and Tennessee. (CX 2489 (Morrison, IHT at 19)).

270. C.I. Thornburg purchases 85% of their imported Fittings from Sigma, 10% from Star 

and 5% from Tyler. (CX 2489 (Morrison, IHT at 60)).

271. Edward Morrison Jr. is the President of C.I. Thornburg and has been since 1991. 

(CX 2489 (Morrison, IHT at 6)). Mr. Morrison’s role as president includes overseeing 

administrative functions, serving on various industry boards, vendor relations, helping 

with pricing and contractor sales, and municipal sales. (CX 2490 (Morrison, Dep. at 

15)). 

x. Utility Equipment Company

272. Utility Equipment Company (“UECO”) is a Distributor that sells all materials related to 

underground water, sewer, and storm water retention and detention systems. (CX 2544 

(Coryn, Dep. at 8)).

273. UECO has seven branches located in Iowa, Nebraska, and Illinois. (CX 2544 (Coryn, 

Dep. at 8-9)). UECO is a member of TDG. (CX 1362 at 002; RX 703 (Coryn, Dep. at 

47-48)).

274. Michael R. Coryn is the President of UECO, which is a family company, and has been 

for 17 years. (CX 2544 (Coryn, Dep. at 6)). Mr. Coryn’s responsibilities as President 

include making all major business decisions and involvement in purchasing and 

inventory decisions and sales. (CX 2543 (Coryn, IHT at 8-9); CX 2544 (Coryn, Dep. at 

7)).

xi. Dana Kepner Company

275. Dana Kepner Company (“Dana Kepner”) is a Distributor that sells waterworks 

products, including Fittings, to End Users. (CX 2492 (Johnson, Dep. at 9, 39, 79)).

276. Dana Kepner has 15 branches in Montana, Wyoming, Colorado, Texas, Arizona, and 

Nevada. (CX 2492 (Johnson, Dep. at 9)). Dana Kepner is a member of TDG. 

(CX 1362 at 001).

277. Wayne Edward Johnson is President and part owner of Dana Kepner. Mr. Johnson has 

been President since 1994 and has worked for the company since 1991. (CX 2492 

(Johnson, Dep. at 6)). Mr. Johnson’s responsibility as President of Dana Kepner is 
40

“[t]he overall supervision of the company,” including overseeing the purchasing of 

Fittings. (CX 2492 (Johnson, Dep. at 7-8)).

4. Industry background

a. Fittings basics

i. Applications 

278. Fittings are used in pressurized water distribution and treatment systems to join pipes, 

valves and hydrants, and to change, divide or direct the flow of water. (Joint 

Stipulations of Fact, JX0001 ¶ 6; Tatman, Tr. 219-220; CX 2494 (R. Fairbanks, Dep. at 

79); CX 2502 (Prescott, Dep. at 51); CX 2489 (Morrison, IHT at 40); Thees, Tr. 3052-

3053).

279. Pressurized pipe applications, which include all potable water lines and some sewer 

lines, almost always use Fittings. (Webb, Tr. 2710-2711). Pressurized applications are 

those applications where the flow is not caused by gravity, and include pressurized 

water, pressurized reclaimed water, pump stations, treatment plants, and pressurized 

force main sewers. (Thees, Tr. 3053). 

280. All water lines are pressurized and some sewer lines are pressurized. (Thees, Tr. 3053).

281. Fittings are rarely used in gravity pipe lines; plastic fittings are more prevalent in those 

applications. (Webb, Tr. 2711-2712; CX 2489 (Morrison, IHT at 40)).

282. Fittings are used for both “line” (i.e., underground) and “plant” waterworks projects. 

(Webb, Tr. 2710).

283. “Plant” work refers to waterworks projects for water treatment plants, pumping stations, 

or wastewater treatment plants, which process water so that it can be consumed and 

process sewage so that it is clean when it is dumped. (CX 2502 (Prescott, Dep. at 48-

49); Webb, Tr. 2710; Tatman, Tr. 227-228). Plant work often involves the use of 

Fittings in systems that are indoors. (CX 2480 (Napoli, Dep. at 19-20)).

284. Plant work generally uses the largest sized fittings; uses many different, uncommonly 

used configurations; and has special coating and painting requirements. (Pais, Tr. 1913-

1914).

285. “Line” work refers to waterworks projects related to pipes that are located under the 

street in order to move water from water supply facilities to neighborhoods, or from 

neighborhoods to sewage facilities. (CX 2502 (Prescott, Dep. at 48); Webb, Tr. 2710). 

In comparison to plant work, “underground” distribution network waterworks projects 

use more predictable configurations and numbers of Fittings. (Pais, Tr. 1913; CX 2480 

(Napoli, Dep. at 19-20)).
41

ii. Shapes, sizes, and configurations

286. There are several thousand unique configurations of Fittings in different shapes, sizes 

and coatings. (Joint Stipulations of Fact, JX0001 ¶ 8). Each unique configuration has 

its own identifier and is a unique item or stock-keeping unit (“SKU”). (Tatman, Tr. 

463; CX 2500 (Swalley, Dep. at 104-105)).

287. Fittings come in several shapes, including elbows, reducers and “T’s.” (Tatman, Tr. 

220-221).

288. Typically, ductile iron pipe fittings range in size from two or three inches to 48 inches. 

(CX 2521 (Agarwal, IHT at 64-65), in camera; CX 2491 (Johnson, IHT at 19-20); 

CX 2525 (Minamyer, IHT at 95-96); CX 2483 (Tatman, IHT at 23)).

289. Two to twelve inch Fittings, or “small-diameter” Fittings, are predominately used for 

housing subdivisions and private contracting work. (Brakefield, Tr. 1279-1280; 

CX 1479; CX 2477 (Jansen, Dep. at 89)).

290. Fittings 24” in diameter and below make up around 90% of the overall market for 

ductile iron pipe fittings. (See CX 1895 at 001, 005, in camera; RX 127 at 002; 

CX 2502 (Prescott, Dep. at 76-77); CX 2510 (Groeniger, Dep. at 160-161); CX 2492 

(Johnson, Dep. at 71); CX 2504 (Thees, Dep. at 135); CX 2502 (Prescott, Dep. at 76-

77).

291. Fittings 24” in diameter or smaller are commonly used in underground water 

distribution networks. (Brakefield, Tr. 1279-1281; CX 1479; Pais, Tr. 1913). 

292. Fittings above 24” in diameter, or “large-diameter” fittings, are predominately used for 

public works jobs for large treatment plants or for moving water through large 

transmission lines. (Brakefield, Tr. 1281; CX 1479; CX 2477 (Jansen, Dep. at 90)).

293. There are several different types of Fittings “end configurations,” including “flanged,” 

“mechanical joint,” and “push-on.” (Webb, Tr. 2712-2713; Thees, Tr. 3052-3055).

294. “Flanged” Fittings are flat faced Fittings that connect to a flanged ductile iron pipe with 

nuts and bolts and a flat rubber gasket sandwiched between the two flanges that 

provides a sealed joint. (Thees, Tr. 3054; Webb, Tr. 2713). Flanged fittings do not 

require an external restraint, and bolt directly onto a pipe. (CX 2480 (Napoli, Dep. at 

22-23)).

295. Flanged Fittings are typically used in above-ground applications, such as plants and lift 

stations. (Webb, Tr. 2713; Tatman, Tr. 227-228; Thees, Tr. 3054; CX 2502 (Prescott, 

Dep. at 18); CX 2480 (Napoli, Dep. at 22-23); CX 2477 (Jansen, Dep. at 78- 80).

296. “Mechanical joint” (“MJ”) Fittings do not employ nuts and bolts to connect to the 

ductile iron pipe, but use a gland that compresses the Fitting gasket against the ductile 

iron pipe as pressure flows through the system and an external restraint that secures the 
42

pipe to the fitting. (Tatman, Tr. 228; Webb, Tr. 2713; Thees, Tr. 3054-3055; CX 2480 

(Napoli, Dep. at 22-23)).

297. MJ Fittings are typically used for non-plant, underground applications. (Tatman, Tr. 

228; Webb, Tr. 2713; CX 2502 (Prescott, Dep. at 50); CX 2522 (Agarwal, Dep. at 84), 

in camera).

298. “Push-on” Fittings are Fittings that connect only by being pushed on to the pipe. 

(Webb, Tr. 2713).

299. Push-on Fittings are used in underground applications. (Webb, Tr. 2713-2714; 

CX 2522 (Agarwal, Dep. at 84), in camera ).

300. There are “full-body” and “short-body” Fittings. (Webb, Tr. 2712). Short-body 

Fittings are smaller and have thinner walls than full-body Fittings. Full-body Fittings 

are used less often than short-body Fittings. (Webb, Tr. 2712-2713; CX 2477 (Jansen, 

Dep. at 83)).

301. Full-body Fittings are commonly referred to as C110 Fittings. (CX 2510 (Groeniger, 

Dep. at 159-160)). A C110 Fitting is a longer, thicker, and heavier Fitting used in 

approximately 10% of Fittings jobs. C110 is a type of AWWA specification. 

(McCutcheon, Tr. 2292; CX 2477 (Jansen, Dep. at 83)).

302. Short-body Fittings are commonly referred to as C153 Fittings. A C153 Fitting is 

thinner and lighter than a C110 Fitting. C153 is a type of AWWA specification. 

(McCutcheon, Tr. 2292; CX 2477 (Jansen, Dep. at 83-84)).

303. C110 and C153 Fittings are pressure rated up to 350 pounds per square inch (“PSI’). 

(Thees, Tr. 3053).

304. Suppliers generally line flanged Fittings with cement, but can also line them with 

polyethylene or epoxy to prevent corrosion. (Thees, Tr. 3055; CX 2509 (Groeniger, 

IHT at 42); CX 2491 (Johnson, IHT at 18)).

305. Of the many configurations of Fittings, a small number of Fittings cover a large 

percentage of the volume of Fittings sold in the market. (Tatman, Tr. 225).

306. Approximately 80% of the demand for Fittings may be serviced with approximately 100 

or fewer commonly used sizes and configurations of Fittings. These Fittings are 

commonly referred to in the industry as “A” or “B” Fittings. (Joint Stipulations of Fact, 

JX0001 ¶ 9; CX 0120 at 10; Tatman, Tr. 225; Bhargava, Tr. 3010-3011, in camera; 

CX 2522 (Agarwal, Dep. at 73), in camera).

307. “A” and “B” Fittings are generally relatively fast-moving Fittings items that require 

approximately 120 patterns to make, and are primarily 4” in diameter to 12” in 

diameter. (Bhargava, Tr. 3010-3011, in camera; CX 2477 (Jansen, Dep. at 91); Webb, 
43

Tr. 2720-2722; Thees, Tr. 3057-3058; CX 2533 (Bhargava, Dep. at 62), in camera; 

CX 2522 (Agarwal, Dep. at 73), in camera).

308. “C” and “D” Fittings are very low volume items (e.g., items for which McWane sells 50 

or fewer per year), and are relatively expensive to manufacture. (Tatman, Tr. 225-226; 

see McCutcheon, Tr. 2292-2293; CX 2533 (Bhargava, Dep. at 62), in camera).

309. “Oddball” Fittings are Fittings that are not routinely used on every project and are 

Fittings that End Users might request once a year or every five years. Distributors 

generally prefer not to stock Oddball Fittings. (Webb, Tr. 2721-2722; CX 2513 (Webb, 

IHT at 160); Thees, Tr. 3057-3058).

iii. Manufacturing

310. Generally, a Fitting is manufactured through the following steps: melting scrap metal in 

a cupola; transferring the molten metal to a casting area via a transfer ladle; fitting cores 

into molds so that the molded fitting is hollow; pouring the molten iron; shaking the 

casting out of the mold; machining off gates and risers, and creating bolt holes; 

cleaning; preparing for cement lining; painting; packaging; and shipping. (Brakefield, 

Tr. 1412-1414; Rona, Tr. 1488).

311. “Patterns” are molds made of aluminum, stainless steel, or wood. Manufacturers use 

patterns to make impressions in sand for pouring molten iron that takes the shape of the 

pattern. (CX 2522 (Agarwal, Dep. at 74), in camera).

312. Disamatic (“DISA”) molding lines are automated and represent the most efficient and 

economical manufacturing process for small diameter Fittings. DISA is a brand of 

fittings molding equipment. (Tatman, Tr. 435, 447; Rona, Tr. 1489).

313. McWane’s DISA automated molding unit for Fittings castings in Anniston, Alabama 

cost $20 million, and can produce fittings up to 8” in diameter. (Tatman, Tr. 435). 

314. “Cope and drag” is a type of molding process for Fittings production. Cope and drag 

patterns are molds where the Fitting casting is produced in halves that are put together. 

(Rona, Tr. 1509-1510). The foundry pours molten iron into the cope and drag pattern to 

produce a Fitting. A foundry cannot produce a casting that is larger than the heights of 

the cope and drag put together. (CX 2505 (Frazier, Dep. at 55-56)).

315. “Lost foam” is another Fittings production method, and involves placing styrofoam 

replicas of Fittings in casting sand. Molten metal is then poured into the sand, and the 

metal replaces the styrofoam. (Rona, Tr. 1510).

316. A flask is a steel vessel that holds a Fittings pattern during the manufacture of a Fitting. 

(Rona, Tr. 1511, 1549-1550; CX 0282 at 008, 011).
44

iv. Related waterworks products

317. The primary products used in most waterworks projects are ductile iron pipe and PVC 

pipe. Other waterworks products include the following: high density polyethylene 

pressurized pipe; drainage pipe; concrete pipe; gate valves; fire hydrants; butterfly 

valves; service brass; marking tape; water meters; joint restraints; glands; and 

mechanical joint and flanged Fittings. (Thees, Tr. 3050-3051; see also Sheley, Tr. 

3386; CX 2477 (Jansen, Dep. at 63-64)).

318. “Glands” are made of ductile iron, and are used to create a seal between a pipe and a 

mechanical joint Fitting. (Tatman, Tr. 458-461; CX 1653 at 004; CX 2477 (Jansen, 

Dep. at 67)).

319. “Joint restraints,” like glands, are made of ductile iron and also create a seal between a 

pipe and a fitting. In addition, a joint restraint is bolted on to both the pipe and the 

fitting in order to keep the pipe from blowing out of the fitting when the pipe is under 

pressure. (Tatman, Tr. 460-461; CX 2477 (Jansen, Dep. at 66-67)). 

320. “Accessories” include various products associated with Fittings, such as bolts, nuts, 

gaskets, and flanges. (McCutcheon, Tr. 2255). Glands are considered to be a Fitting 

accessory. (Tatman, Tr. 461). McWane sometimes sells Fittings with accessories. 

Fittings alone and Fittings with accessories have different price points and SKUs 

associated with them. (Tatman, Tr. 462-463).

321. “Municipal castings” is a category that consists of products such as manhole covers and 

drainage grates. (CX 2539 (McCutcheon, Dep. at 8), in camera; CX 2543 (Coryn, IHT 

at 21-22)).

b. Fitting sales

i. Fittings as commodity products

322. Fittings are commodity products produced to American Water Works Association 

(“AWWA”) standards and specifications. (Joint Stipulations of Fact, JX0001 ¶ 7; 

Answer ¶ 27(a); Rybacki, Tr. 1114; CX 2477 (Jansen, Dep. at 18)).

323. Any Fitting that meets an AWWA specification is functionally interchangeable with 

any other Fitting that meets the same specification. (Tatman, Tr. 878-879 (referring to 

Domestic versus imported Fittings: “They’re exact one for one. . . . There’s no 

difference in how you apply or use the product.”); Pais, Tr. 1922-1923 (“[T]he product 

is interchangeable. It’s a common product. Yes, we like to believe our quality is better, 

our service is better, but at the end of the day, that really doesn’t translate into a 

premium.”); CX 2477 (Jansen, Dep. 141); Rybacki, Tr. 3572).

324. Fittings produced by Sigma, McWane and Star that meet the same AWWA 

specifications are interchangeable with each other. (CX 2477 (Jansen, Dep. at 86)).
45

ii. Demand inelasticity

325. Demand for Fittings is largely driven by housing-related infrastructure construction and 

by construction of wastewater treatment plants, which in turn are driven by such factors 

as the rate of housing growth, and the age and condition of existing systems. (Joint 

Stipulations of Fact, JX0001 ¶ 11; CX 2480 (Napoli, Dep. at 20-21)).

326. Fittings typically comprise 5% or less of the total cost of a typical waterworks project. 

(Joint Stipulations of Fact, JX0001 ¶ 10; Tatman, Tr. 220-221; CX 2477 (Jansen, Dep. 

at 61)). Fittings account for only 1.5% to 2% of the cost of the materials in a typical 

line job. (CX 2538 (McCutcheon, IHT (Vol. 2) at 344-345), in camera).

327. The price of Fittings is not a major factor in determining whether a Distributor wins a 

bid. (CX 2489 (Morrison, IHT at 37-38)). The price of the pipe (either PVC or ductile

iron) is the primary factor when pricing a bundle of goods. (CX 2489 (Morrison, IHT at 

37)).

328. End User demand for Fittings is not impacted by the price of Fittings. (CX 2477 

(Jansen, Dep. at 81-82) (testifying that he has not observed the demand of Fittings being 

affected by the price of Fittings); see also Webb, Tr. 2723 (testifying that he has “never 

seen a correlation with any of our product lines up or down that impacted the demand 

side.”); Thees, Tr. 3058 (“Q. When the price of fittings go down, do your sales of 

fittings go up? A. No. Q. And when the price of fittings go up, do your sales of fittings 

go down? A. No.”); see also CX 2538 (McCutcheon, IHT (Vol. 2) at 344), in camera; 

(testifying that a 10% increase in price of Fittings would not prompt an End User to 

forego the purchase of Fittings because the Fittings are a small portion of the total cost 

of the project to the End User)). 

iii. Bidding process

329. Some municipalities stock inventory and when they buy inventory they put out a list 

and purchase by line items. (CX 2502 (Prescott, Dep. at 16)).

330. Some municipalities put up for bid an annual contract for specific items, such as 

Fittings, hydrants, valves, PVC pipe or ductile iron pipe. (CX 2480 (Napoli, Dep. at 37-

41) (describing the annual contract bidding process for some municipal governments 

and municipal water authorities)). Whoever is the low bidder on the contract holds the 

price for that item and supplies the item to the municipality for the year. (CX 2509 

(Groeniger, IHT at 46)). 

331. Most waterworks projects are individual projects subject to a bidding process. 

(CX 2516 (Sheley, Dep. at 108-109), in camera; CX 2504 (Thees, Dep. at 139)).
46

iv. Specifications

332. The Fittings bidding process on an individual waterworks project typically begins with 

an End User completing a specification and publicly or privately requesting bids from 

contractors. (Thees, Tr. 3065-3066).

333. When a municipality or regional water authority undertakes a waterworks project, it 

will generally issue specifications for all of the pipes, valves, hydrants, Fittings, and 

related waterworks equipment needed for the project, and seek bids from contractors for 

its completion. (CX 2546 (Gibbs, Dep. at 61-62); CX 2504 (Thees, Dep. at 138-140) 

(Once a project is “put on a bid list,” the contractor begins “soliciting bids from 

suppliers for the various components that make up that project.”)).

334. Either project consulting engineers or municipal water districts (or both) write Fittings 

specifications. (Minamyer, Tr. 3136).

335. Once contractors receive the specification, they solicit bids and other assistance from 

Distributors that can supply the various products for that project. (CX 2504 (Thees, 

Dep. at 139)).

v. Material takeoffs

336. A contractor may request a “material takeoff” from a Distributor when the contractor 

wants to submit a bid for the project. (CX 2502 (Prescott, Dep. at 96).

337. A “material takeoff” is a process whereby a Distributor’s sales personnel look at a 

project’s blueprints and gather a list of materials that the End User will need to build the 

project. After performing a material takeoff, the Distributor provides the bidding 

contractor with a quotation for all of the waterworks products needed to complete the 

project. (Thees, Tr. 3037, 3066-3067).

338. Distributors typically do not specify the manufacturer of the Fittings when providing a 

material takeoff. (Thees, Tr. 3048 (“[I]t’s not out of the realm of possibility that fittings 

may be specified by brand, but that is not as common as what you would see on . . . 

valves, hydrants and service brass.”); CX 2492 (Johnson, Dep. at 82) (“Q. Do you ever 

see a supplier’s name for fittings? A. Very seldom if at all.”)).

vi. Submittals

339. A “submittal” is a packet of information provided by a Distributor to an End User after 

the Distributor has been selected that identifies the types of products and brands that are 

being supplied. The End User will review the submittal to make sure it conforms to the 

specifications. (Thees, Tr. 3066-3069; CX 2489 (Morrison, IHT at 38)). Distributors 

supply whatever brand was listed on the submittal documents. (See CX 2489 

(Morrison, IHT at 38)).
47

vii. The sale

340. After a contractor wins its bid, it contacts the Distributor to discuss scheduling and to 

submit either a verbal or written purchase order. (Thees, Tr. 3069-3070). After it 

places the purchase order, the contractor will call to request that the Distributor release 

product, and the Distributor will supply product to the waterworks project either from 

its stock, or via a direct purchase order from the Distributor to a supplier who will 

deliver the product to the project site. (Thees, Tr. 3069-3070).

341. Because Fittings are a commodity, price and relationship are the dispositive factors in 

making a Fittings sale. (Minamyer, Tr. 3135).

342. According to Mr. Jansen of McWane, price was becoming more important than 

relationship and Distributors’ customers were becoming more price sensitive. 

(CX 2477 (Jansen, Dep. at 143-144)).

343. Typically, the Fittings supplier with the lower price wins the job. (CX 2480 (Napoli, 

Dep. at 60)).

viii. Shipping

344. There is generally a time lag between the date of the Fittings bid and order to the date of 

shipment or delivery. The time period between order and delivery varies depending on 

the market. Delivery can take place any time from immediately to as long as 1 year, but 

typically is between two or three weeks to two months. (CX 2502 (Prescott, Dep. at 

16); CX 2504 (Thees, Dep. at 93); CX 2522 (Agarwal, Dep. at 89), in camera). 

345. The prices reflected in Fittings invoice data typically reflects market pricing of 30 to 60 

days prior to the invoice. (CX 1181 at 003).

c. Domestic and open specifications

346. End Users and/or their consulting engineers who write the specifications determine 

whether a job requires Fittings that are manufactured domestically in the United States. 

(Answer ¶ 19; Webb, Tr. 2732-2733).

347. A “Domestic” or “domestic-only” specification or project requires Fittings 

manufactured in the United States to be used for that waterworks project, either because 

of End User preference or because it is required by municipal, state, or federal law. 

(Joint Stipulations of Fact, JX0001 ¶ 13; Tatman, Tr. 236, 273; McCutcheon, Tr. 2265-

2266). 

348. The Commonwealth of Pennsylvania, federal government projects, Air Force bases, and 

some municipalities around the country require Domestic Fittings, even without the Buy 

American provisions in ARRA. (McCutcheon, Tr. 2267-2268; CX 2523 (Bhattacharji, 
48

Dep. at 127); CX 2531 (Rybacki, Dep. at 270-272); Rona, Tr. 1520-1521; Webb, Tr. 

2732-2733; RX 637 (Jansen, Dep. at 99-100)). 

349. Projects that do not require that Domestic Fittings be used – i.e., that allow Fittings 

manufactured anywhere in the world – are referred to as “open specification” projects. 

(Tatman, Tr. 273-274; McCutcheon, Tr. 2266).

350. Domestically manufactured Fittings can be used in open specification projects, but 

imported Fittings cannot be used in domestic-only projects. (CX 2516 (Sheley, Dep. at 

155-156), in camera; CX 2501 (Prescott, IHT at 41); Thees, Tr. 3056, 3078; Webb, Tr. 

2717-2718; CX 2510 (Groeniger, Dep. at 171)).

351. At various times, McWane has referred to the mix of imported and domestically 

manufactured Fittings that it supplies to open specification projects as “blended” or 

“non-Domestic” Fittings. (Tatman, Tr. 273-274 (discussing RX410, 2008 blended and 

domestic multiplier maps); CX 2440 at 002 (“Non-Domestic” multiplier map); Tatman, 

Tr. 320-321 (discussing CX 2440)). 

352. Waterworks jobs that require Domestic Fittings generally will also require domestically 

manufactured restraints, glands, and other accessories. (Tatman, Tr. 463).

d. Market Structure 

i. Suppliers

353. McWane, Sigma, and Star each sell Fittings, joint restraints, castings, and accessories. 

(McCutcheon, Tr. 2254-2255; CX 2528 (Pais, Dep. at 7-8); CX 2442-A at 001; Tatman, 

Tr. 319, 1009-1010).

354. In 2008 and 2009, and “historically for a number of years,” McWane’s primary 

competitors in the Fittings market in the United States were Sigma and Star. (Tatman, 

Tr. 245; CX 2480 (Napoli, Dep. at 59-60); Pais, Tr. 1904, 2005-2006; CX 2536 (Leider, 

Dep. at 18)).

355. Over 90% of all Fittings sold in the United States are sold by three suppliers, McWane, 

Sigma, and Star. (Tatman, Tr. 240-242, 559-560 (estimating 2008 through 2009 

combined market share of 90% to 92%, including Fittings above 24” in diameter); Pais, 

Tr. 1981-1982 (estimating combined market share of 91% or 92%); McCutcheon, Tr. 

2256 (estimating combined market share between 90% and 95%); CX 1163 at 006 

(August 4, 2008 Pais email describing McWane, Sigma, and Star as the three suppliers 

of AWWA fittings, with McWane holding a 45% market share, Sigma holding about 

30% and Star holding about 20%)).
49 

356. McWane, Sigma, and Star had the following shares of United States Fittings sales, by 

tonnage, for the years 2007 through 2011: 

2007 2008 2009 2010 2011 

McWane { }% { }% { }% { }% { }%

Sigma { }% { }% { }% { }% { }%

Star { }% { }% { }% { }% { }%

(CX 2260-A (Schumann Rep. at 18 tbl. 1), in camera). 

357. McWane and Star had the following shares of United States Domestic Fittings sales, by 

tonnage, for the years 2010 and 2011: 

2010 2011 

McWane { }% { }%

Star { }% { }%

(CX 2260-A (Schumann Rep. at 19 tbl. 2), in camera).

358. Suppliers Metalfit, SIP, NAPAC, NACIP, Electrosteel and ACIPCO constitute the share 

of the United States Fittings market not belonging to McWane, Star and Sigma. 

(CX 2260-A (Schumann Rep. at 18); McCutcheon, Tr. 2255-2256 (estimating 

combined market share of these companies at 5% to 10% of Fittings sales (in tons)). 

359. As described in a 2009 McWane budget planning document, McWane’s “primary 

competitors” in Fittings are Sigma and Star, with SIP and NAPAC as “[s]econd tier” 

competitors. (RX 618 at 004 (noting that Electrosteel was a potential entrant in 2009)).

360. Pricing decisions of companies such as ACIPCO, NAPAC, and Metalfit do not affect 

the ability of McWane, Sigma, and Star to implement a price increase. (CX 2538 

(McCutcheon, IHT (Vol. 2) at 394), in camera).

361. Sigma and Star have larger shares in the market for large fittings (over 24” in diameter), 

in which McWane is not as significant a competitor. (Schumann, Tr. at 4111 (“only 

about 5 percent of the large fittings were produced by McWane in 2008 . . . .”); 

CX 2531 (Rybacki, Dep. at 198) (large fittings “was [Sigma’s] strong point and Star’s 

strong point as well . . . .”); Pais, Tr. 1915 (McWane “never had a plant work specialty” 

and “[f]or a long time they did not even produce most of the fittings used in plant work, 

such as the larger ones”)).

362. The Fittings Market is an oligopoly. (F. 353-361; Schumann, Tr. 5796-5797; CX 2260-

A (Schumann Rep. at 25). 
50

ii. End Users

363. Municipalities typically outsource large waterworks projects to contractors. (CX 2489 

(Morrison, IHT at 31) (“Typically a municipality is not going to have enough people on 

the payroll to be able to do a major project.”)).

364. The relationship between Distributors and contractors is very important, although this 

has deteriorated due to the economic decline in the United States and pricing pressure. 

Contractors typically deal with a limited number of waterworks Distributors and tend to 

use some Distributors more than others. (CX 2477 (Jansen, Dep. at 18-19); CX 2480 

(Napoli, Dep. at 15); CX 2489 (Morrison, IHT at 22-23) (explaining that 75% to 80% of 

C.I. Thornburg’s contractor customers are giving 80% to 90% of their business to 

them); CX 2501 (Prescott, IHT at 30, 32) (some contractor customers give all of their 

business to one Distributor)).

365. Contractors typically look to work with Distributors with whom they have relationships 

and that are close geographically. (See CX 2489 (Morrison, IHT at 10); CX 2480 

(Napoli, Dep. at 13-15); CX 2477 (Jansen, Dep. at 18-19)). 

366. End Users may shift their business to a different Distributor if a Distributor fails to 

provide them with all the goods they require. (CX 2501 (Prescott, IHT at 58); CX 2489 

(Morrison, IHT at 29); CX 2489 (Morrison, IHT at 75) (It would be “devastating” to a 

Distributor if it could not supply Fittings on a project: “I’m choosing the word 

‘devastating.’ I mean, it would not be good to not be able to supply fittings.”)).

iii. Distributors

Generally

367. McWane, Sigma, Star, and others sell Fittings directly to Distributors, which then resell 

the Fittings to End Users. (Joint Stipulations of Fact, JX0001 ¶ 14; Tatman, Tr. 251-

252 (99% of McWane’s sales of ductile iron pipe fittings are through Distributors, 

rather than direct to contractors); McCutcheon, Tr. 2256-2257).

368. Distributors generally obtain quotes for specific projects from more than one Fittings 

supplier, in order to negotiate lower net prices. (RX 643 (Tatman, IHT at 77-78)).

369. In 2008, Illinois Meter played Fittings suppliers off one another in order to try and 

negotiate better prices. (Sheley, Tr. 3444-3445).

370. Distributors sell pipe, valves, hydrants, and other waterworks products, appurtenances, 

and accessories, in addition to Fittings. (Webb, Tr. 2706; Thees, Tr. 3050-3051; RX 

705 (Gibbs, Dep. at 10-13); RX 675 (Sheley, Dep. at 11); RX 650 (Morrison, Dep. at 

18-19); RX 661 (Prescott, Dep. at 8-9)).
51

371. Fittings typically comprise a relatively small portion of a Distributor’s business. 

(Thees, Tr. 3111; RX 705 (Gibbs, Dep. at 12-13); RX 672 (Webb, IHT at 42); RX 652 

(Johnson, Dep. at 9-10); RX 661 (Prescott, Dep. at 10-11); RX 703 (Coryn, Dep. at 11-

12); RX 669 (Groeniger, Dep. at 13)).

372. The relationship between Fittings suppliers and Distributors is important to the success 

in selling Fittings because Fittings are a commodity product. (CX 2477 (Jansen, Dep. at 

18-19); CX 2480 (Napoli, Dep. at 13-15)).

373. Sigma and Star sell almost all of their Fittings to Distributors. (Rybacki, Tr. 1094-

1095; CX 2531 (Rybacki, Dep. at 290); CX 2527 (Pais, IHT at 38-39); CX 2534 

(Bhutada, IHT at 9), in camera; McCutcheon, Tr. 2256-2257, 2260, 2263; Minamyer, 

Tr. 3134; CX 2526 (Minamyer, Dep. at 110)).

374. All or virtually all of McWane’s sales of Fittings are to Distributors. (Joint Stipulations 

of Fact, JX0001 ¶ 15; Tatman, Tr. 252; CX 2477 (Jansen, Dep. at 17)).

Numbers and market share of Distributors

375. There are at least 630 separate waterworks Distributors in the United States. Most of 

these Distributor customers are small, local companies with just one or a few 

distribution yards. There are a few regional waterworks Distributors, with multiple 

branches, and two national waterworks Distributors. Collectively, all of these 

customers make up thousands of branch locations throughout the United States. 

(CX 2564 (McWane sales data); CX 2504 (Thees, Dep. at 14-15); Saha, Tr. 1170 

(noting 3,000 to 4,000 branches nationwide)).

376. Regional waterworks Distributors with multiple branches serving specific regions of the 

country include E.J. Prescott, Groeniger & Company, C.I. Thornburg Company, and 

Illinois Meter Company. (F. 253, 258, 262-263, 268-269).

377. HD Supply and Ferguson are the two largest Fittings Distributors and each has a 

national presence. (McCutcheon, Tr. 2261; Thees, Tr. 3045). Together, HD Supply 

and Ferguson have about 50% of the Fittings distribution market share in the United 

States. (F. 378-379).

378. HD Supply’s Fittings distribution market share is approximately 28% to 35%. 

(McCutcheon, Tr. 2261; Webb, Tr. 2703-2704). HD Supply carries as much as 

$174,000,000 in inventory at any given time. (RX 673 (Webb, Dep. at 48)). 

379. Ferguson is the second largest waterworks Distributor in terms of sales in the United 

States, with a share of the overall waterworks distribution market of approximately 

25%. (Joint Stipulations of Fact, JX0001 ¶ 25; RX 663 (Thees, Dep. at 15); Thees, Tr. 

3045-3046).

380. McWane sells its Fittings to about 250 to 300 Distributors that have approximately 

1200 total branches. (CX 2477 (Jansen, Dep. at 139-140)).
52

Distributors’ relationships with End Users

381. It is beneficial for End Users to purchase waterworks products from Distributors rather 

than directly from suppliers because Distributors bundle waterworks products together, 

provide a single point of contact for all products, find alternate supply sources when 

needed, and have local relationships and local specification knowledge. (Thees, Tr. 

3058-3059; CX 2510 (Groeniger, Dep. at 202); CX 2504 (Thees, Dep. at 145-146); 

CX 2480 (Napoli, Dep. at 29-31)).

382. End Users typically source all of their waterworks for a particular project from a single 

Distributor, as a “one stop shop,” because doing so allows them to access service, 

payment and delivery from a single source, rather than duplicating administrative effort 

with various sources. (Webb, Tr. 2723, 2707; Thees, Tr., 3060; CX 2489 (Morrison, 

IHT at 31-32); CX 2501 (Prescott, IHT at 25); Sheley, Tr. 3388; CX 2537 

(McCutcheon, IHT (Vol. 1) at 73-74), in camera; CX 2544 (Coryn, Dep. at 102); 

CX 2510 (Groeniger, Dep. at 202); CX 2516 (Sheley, Dep. at 127-128), in camera; 

CX 2513 (Webb, IHT at 135-136); CX 2502 (Prescott, Dep. at 81); CX 2480 (Napoli, 

Dep. at 30)).

383. Most waterworks distribution business is conducted on a bid-by-bid basis. Infrequently, 

Distributors will sometimes enter into contracts for up to one year with a municipality. 

(Thees, Tr. 3052). These up to one year contracts require Distributors to supply specific 

items at an agreed upon price for a customer, primarily municipalities. (CX 2509 

(Groeniger, IHT at 46)).

384. Most End Users deal primarily with two or three Distributors, rather than fielding bids 

from a broader array of Distributors, in order to receive the best service and price. 

(Webb, Tr. 2725-2726; Sheley, Tr. 3392). 

385. The vast majority of Ferguson’s and HD Supply’s customers are repeat customers. 

(Thees, Tr. 3064-3065; Webb, Tr. 2726).

386. Distributors compete with each other on the basis of price, service, and relationship 

with the End User. (Sheley, Tr. 3390-3391; Thees, Tr. 3062; CX 2502 (Prescott, Dep. 

at 12-13) (“price gets involved, but if it was just price a small company like this we 

would have a hard time surviving”); CX 2489 (Morrison, IHT at 37) (along with price, 

“there’s no doubt service is a factor and your personal relationship . . .”)).

387. End Users demand a high level of service such as timely delivery, trouble-shooting 

during the job, and competitive pricing. (Thees, Tr. 3061; Webb, Tr. 2723-2726 

(Distributor’s ability to “provide on time deliveries, 95% order fill rates, zero errors” is 

the most important factor to End User Fittings customers in selecting a Distributor, 

followed by price and relationship); CX 2502 (Prescott, Dep. at 12)).
53

Local nature of distribution business

388. A Distributor’s service area is generally 50 to 200 miles from its branch location, 

depending on population, geography, and driving patterns. Branch service areas tend to 

be smaller in more densely populated areas. (CX 2502 (Prescott, Dep. at 58); Webb, Tr. 

2701-2702; Thees, Tr. 3044; Sheley, Tr. 3382; CX 2501 (Prescott, IHT at 9-10); 

CX 2489 (Morrison, IHT at 9); CX 2509 (Groeniger, IHT at 28-31)).

389. Distributors primarily service waterworks projects in their own service area but may 

also serve another area, when a customer has a project outside the service area. 

(CX 2502 (Prescott, Dep. at 59); Sheley, Tr. 3383).

390. Generally, it is difficult for an out-of-area Distributor to compete with the logistics and 

service of a local branch, local sales people, and locally stocked product. Delivery is 

also more expensive for out-of-area Distributors. (Webb, Tr. 2700-2701; Sheley, Tr. 

3382).

Distributors’ relationships with Fittings suppliers

391. Distributors consider price, service, relationship, financial stability, warranty, and 

product quality when selecting a Fittings supplier. (Thees, Tr. 3082-3083; Webb, Tr. 

2746-2747; CX 2489 (Morrison, IHT at 61)).

392. Distributors generally purchase Fittings from at least two different suppliers. 

(McCutcheon, Tr. 2258-2259; Webb, Tr. 2746 (HD Supply purchases imported Fittings 

from McWane, Sigma, and Star); Thees, Tr. 3082 (Ferguson purchases imported 

Fittings from McWane, Sigma, and Star); but see Sheley, Tr. 3406 (Illinois Meter 

purchases Domestic Fittings from McWane only).

393. Distributors generally can obtain better pricing on Fittings when they have the option of 

purchasing Fittings from multiple suppliers. (Sheley, Tr. 3444-3445; CX 2489 

(Morrison, IHT at 61-63); CX 2513 (Webb, IHT at 172)).

394. A Distributor generally will purchase Fittings from another Distributor only as a last 

resort when it is required to service a customer. Purchasing from competitors is more 

expensive and not routine. (Webb, Tr. 2726-2727; Thees, Tr. 3065).

Distributor pricing

395. Higher Fittings prices are helpful to Distributors from a revenue standpoint, but are not 

helpful from a profit margin standpoint. Generally, higher dollars obtained from higher 

prices can be advantageous for a Distributor. (RX 672 (Webb, IHT at 144-146)).

396. Some Distributors may prefer higher market prices for Fittings because decreases in 

Fittings prices decreases the value of their inventory. (Rybacki, Tr. 1110-1111; 

Minameyer, Tr. 3246).
54

397. The senior managers of some Distributors will pressure suppliers to take price 

increases, but lower pricing is preferred by those at the branch level. (Minameyer, Tr. 

3246-3247). 

398. Distributors pass along to customers increases in wholesale prices of Fittings; and when 

wholesale prices go down, the competitive forces of the market will demand that such 

reductions also be passed on to End Users. (CX 2489 (Morrison, IHT at 98-99); 

CX 2513 (Webb, IHT at 144-145)).

399. Distributors make higher profit margins on sales of valves, hydrants, and Fittings, than 

on sales of pipe. (Sheley, Tr. 3387; CX 2503 (Thees, IHT at 22); CX 2489 (Morrison, 

IHT at 32)).

Distributor benefits to Fittings suppliers

400. For McWane, Distributor benefits include offering better sales coverage than McWane 

would have with its sales force alone; Distributors have more local influence and more 

local knowledge of projects in their market area; Distributors carry local inventory;

Distributors offer one-stop shopping for all needed waterworks products for the End 

User; Distributors help McWane’s products be included in specifications; and 

Distributors streamline McWane’s account receivables by taking the risk of nonpayment from contractors. (CX 2477 (Jansen, Dep. at 139-141, 144-145); CX 2480 

(Napoli, Dep. at 29-31)).

401. McWane views Distributors as being “critical to [its] success.” (CX 2477 (Jansen, Dep. 

at 139-141, 144-145, 150); CX 0169 at 003; CX 2480 (Napoli, Dep. at 29-31)).

402. Distributors are critical to Star. (CX 2537 (McCutcheon, IHT (Vol. 1) at 41-46), in 

camera (listing efficiencies Distributors provide to suppliers and describing the cost to 

replicate these efficiencies as “astronomical”); CX 2534 (Bhutada, IHT at 9-15), in 

camera (Distributors perform a variety of functions at a local level that would be 

prohibitively expensive for Star to perform)). 

403. Distributors’ carrying Fittings inventory frees up the suppliers’ working capital; and it 

provides much faster delivery service from the Distributors’ local branches to End 

Users than a Fittings supplier could achieve by selling directly to End Users. (Webb, 

Tr. 2728-2730; Thees, Tr. 3059-3060; CX 2534 (Bhutada, IHT at 10, 19-20), in 

camera; CX 2510 (Groeniger, Dep. at 202); CX 2516 (Sheley, Dep. at 127-128), in 

camera; CX 2504 (Thees, Dep. at 145-146); CX 2494 (R. Fairbanks, Dep. at 95-96) 

(“Distributors are stocking distributors, and so there’s just a wide variety of fittings that 

can be on a project. And so the advantage is, is that, one is it could be in stock, and two 

is it can be almost immediate deliveries due to stock. And also deliveries, because there 

might be other products going out on the job site.”); Sheley, Tr. 3398 (“A manufacturer 

can’t reasonably service a small municipality or a small contractor. There has to be 

local inventory, local delivery, a local contact person, if you will. It would be . . . 

uneconomical for every party involved . . . .”); CX 2477 (Jansen, Dep. at 145)).
55

404. Providing inventory within a close proximity to the waterworks projects that the 

Distributor is servicing can help prevent expensive work delays if a Fitting is missing or 

malfunctioning. (CX 2502 (Prescott, Dep. at 79); CX 2489 (Morrison, IHT at 55); 

CX 2509 (Groeniger, IHT at 26-28)).

405. Distributors maintain an inventory and aggregate small orders and shipments from 

contractors, which typically purchase small numbers of Fittings for individual projects. 

(CX 2502 (Prescott, Dep. at 81); Sheley, Tr. 3387; CX 2534 (Bhutada, IHT at 19), in 

camera).

406. Distributors provide local freight for deliveries from the Distributor’s warehouse to the 

contractor’s job site. (CX 2534 (Bhutada, IHT at 10), in camera).

407. Contractors often purchase on credit, and Distributors carry the resulting credit risk. 

Suppliers avoid credit costs by dealing through Distributors. (CX 2534 (Bhutada, IHT 

at 12-13), in camera; Webb, Tr. 2729; CX 2502 (Prescott, Dep. at 81); McCutcheon, Tr. 

2260; CX 0169 at 003 (January 2010 McWane Sales Managers Conference Call 

minutes noting benefits of distribution to include Distributors “carry[ing] the paper and 

inventory and once in a great while do spec work”)).

408. Distributors employ sales personnel dedicated to identifying business opportunities and 

servicing End Users, saving suppliers from having to employ their own large, 

nationwide sales forces. (CX 2480 (Napoli, Dep. at 31); McCutcheon, Tr. 2260-2261; 

Webb, Tr. 2728; CX 2534 (Bhutada, IHT at 12-13, 19-20), in camera; CX 2544 (Coryn, 

Dep. at 103); CX 2546 (Gibbs, Dep. at 65-66); CX 2502 (Prescott, Dep. at 46); 

CX 2516 (Sheley, Dep. at 127-128), in camera; CX 2504 (Thees, Dep. at 145-146)).

409. Distributors support End Users through technical assistance and training regarding 

waterworks jobs, and by packaging up the discrete waterworks components and making 

sure that all pieces that the customer needs have the correct characteristics and arrive on 

time. In addition, End Users pay Distributors directly, rather than paying individual 

suppliers, and provide a higher level of service than a supplier would, including smallvolume deliveries and 24-hour service. (Sheley, Tr. 3399-3401).

410. Distributors handle returns of products from the contractor. (CX 2534 (Bhutada, IHT at 

11, 20), in camera; Webb, Tr. 2729-2730).

411. Distributors manage the extension of credit, invoicing, and collection, which saves 

suppliers the costs and risks of these functions. (CX 2544 (Coryn, Dep. at 102-103); 

CX 2510 (Groeniger, Dep. at 202); CX 2516 (Sheley, Dep. at 127-128), in camera; 

CX 2504 (Thees, Dep. at 145-146); CX 2494 (R. Fairbanks, Dep. at 96); CX 2502 

(Prescott, Dep. at 81)).

412. Distributors have local knowledge of what is required in each specific market that they 

are servicing. (CX 2489 (Morrison, IHT at 55); CX 2480 (Napoli, Dep. at 30).
56

e. How Prices Are Set

i. List Prices and multipliers 

413. Published Fittings prices have two components: a nationwide list (or catalog) price, and 

a regional “multiplier” that reduces the list price. (Tatman, Tr. 277; Rybacki, Tr. 1096-

1097; CX 2535 (Bhutada, Dep. at 102); Webb, Tr. 2770-2771). 

414. The “published price” or “standard price” for a given Fittings item in a given state is the 

list price multiplied by the then-applicable multiplier for that state. For example, if a 

Fitting has a $1,000 list price, and the Texas multiplier is .28, the published price for 

that individual Fitting in Texas will be $1,000 x .28, or $280. (Tatman, Tr. 277; 

Rybacki, Tr. 1096-1097; CX 2535 (Bhutada, Dep. at 102); Webb, Tr. 2770-2771).

415. McWane publishes its list price for its Fittings on the Tyler/Union website. (RX 644 

(Tatman, Dep. at 15)).

416. Historically, Fittings suppliers have published list price increases once per year, or once 

every couple of years. (Tatman, Tr. 256-257).

417. List price changes usually occur during the first quarter of a calendar year. (Sheley, Tr. 

3421-3422, 3436-3437).

418. Virtually no Fittings customer pays list price for Fittings. (RX 639 (McCullough, Dep. 

at 170); McCutcheon, Tr. 2269; Rybacki, Tr. 1096-1097).

419. Multipliers are published discounts off a Fittings supplier’s published list price. (RX 

639 (McCullough, Dep. at 170-171); RX 644 (Tatman, Dep. at 15)).

420. Multipliers vary from state to state based upon the prevailing competitive environment 

in each state. (Tatman, Tr. 277; CX 2526 (Minamyer, Dep. at 102)).

421. Distributors prefer that Fittings suppliers like McWane, Sigma, and Star have identical 

list prices because it is easier for Distributors to compare the suppliers’ multipliers and 

discounts to determine net prices when the suppliers’ published list prices are the same. 

(Tatman, Tr. 257-258; McCutcheon, Tr. 2527-2528, 2271; RX 694 (Bhutada, Dep. at 

101-102)).

422. Multiplier changes are cheaper to implement than list price changes, because the cost of 

printing and distributing new list pricing booklets to customers can cost tens of 

thousands of dollars. (Tatman, Tr. 255-257; RX 644 (Tatman, Dep. at 43-46); Rybacki, 

Tr. 3542).

423. Fittings suppliers typically announce multiplier changes to their customers by letter. 

(Sheley, Tr. 3437).
57

424. McWane typically announces increases in published prices four weeks before the 

increase goes into effect. (Tatman, Tr. 325). Customers normally want four weeks’ 

notice, three weeks is “on the verge” of acceptable notice, and two weeks is too little 

notice. (Tatman, Tr. 519).

425. Typically, the highest price at which a Fitting can be sold is the published multiplier. 

(Tatman, Tr. 258).

426. Although not normally the case, on occasion, McWane sells Fittings at a price higher 

than the published multiplier; for example, if there is a special add-on, such as a special 

coating or added piece, or if there is special handling, such as a rush order. (Tatman, 

Tr. 443-444, 448).

427. The primary factor driving McWane’s pricing decisions is the competitive price level in 

the marketplace. A secondary factor is that the pricing level must be above a minimum 

margin that allows McWane to make money. (Tatman, Tr. 289-290).

ii. Project Pricing and other discounts

428. “Job prices,” “special prices,” or “project prices” are discounts off the published 

multiplier. (RX 643 (Tatman, IHT at 37-38); McCutcheon, Tr. 2271-2272 (collectively, 

“Project Pricing”)).

429. Historically, Project Pricing has been the standard practice in the Fittings market. (RX 

639 (McCullough, Dep. at 189-190); RX 638 (McCullough, IHT at 220); Rybacki, Tr. 

1101-1108).

430. In addition to its published multipliers, McWane has historically offered its customers a 

variety of further price reductions for Fittings, including special, project or job-pricing 

discounts off the published multipliers, as well as other price concessions including 

freight concessions, cash discounts, extended payment terms, cash-backs, corporate 

rebates, and branch rebates. (Tatman, Tr. 257-260; see F, 441, 443-456).

431. Project Pricing generally takes the form of a price multiplier that is lower than the 

published multiplier and may be negotiated for an entire project or job, or on a one-time 

basis for a single order. (CX 2535 (Bhutada, Dep. at 105-106)).

432. Approximately 90 to 95% of Star’s net realized prices to the customer have some type 

of discount variable to them. (McCutcheon, Tr. 2509-2510). 

433. Star further offers a discount called a “buy plan,” which is “a negotiated price” with a 

Distributor that constitutes that Distributor’s “everyday” purchase price and is not 

necessarily attached to a project. (McCutcheon, Tr. 2274).
58

434. A sales person will often convey a job price verbally to a customer, but then may also 

provide the customer with a copy of a written proposal or quotation. (Sheley, Tr. 3437; 

RX 698 (McCutcheon, Dep. at 57)).

435. Project Pricing is not published and is therefore less transparent than the published list 

prices and multipliers. (Tatman, Tr. 266-268, 927 (describing responding to Project 

Pricing as “shooting in the dark”)).

436. If Star was offering a Project Price for a particular project, it would not want its 

competitors to know what Project Price it was offering, for the fear that the competitors 

would price lower than Star to try to take the project. (Minamyer, Tr. 3145). 

437. At times, McWane, Sigma, and Star have provided additional discounts and price

concessions to Distributors, separate from Project Pricing, in the form of rebates, 

reductions in freight charges, and/or extensions of credit or payment terms. The 

foregoing concessions are part of the “total deal.” (Joint Stipulations of Fact, JX0001 

¶ 16; Minamyer, Tr. 3266-3267).

438. Once the various forms of price discounts are combined, including Project Pricing, 

corporate rebates, branch rebates, cash discounts and freight terms, are taken into 

account, a Fittings supplier’s “net price is all over the map.” (RX 694 (Bhutada, Dep. at 

17-18)). 

439. Even if a sale is made at the published price, the net price may be lower based upon 

other concessions, such as rebates, timely payment discounts, or freight allowances. 

(Tatman, Tr. 257-260; RX 644 (Tatman, Dep. at 15-17)).

440. Project Pricing is generally negotiated in relation to a specific job and is a reaction to 

the competitive environment. Price concessions such as rebates and payment terms are 

generally not negotiated on a job-by-job basis, but rather on an annual basis. 

Negotiation of the multiplier is the big factor, because other terms such as payment 

terms and rebates are already set. (Minamyer, Tr. 3143-3144; RX 644 (Tatman, Dep. at 

27); Webb, Tr. 2774; see also F. 443-449).

441. Fittings suppliers may agree to lower freight costs, or provide a discount in exchange 

for timely payment, as part of arriving at a final transaction price. Competing suppliers 

try to hide these terms from one another. As Mr. Tatman of McWane stated: “Because 

of rebates or we agreed to take his payment terms to 90 days or we agreed to lower his 

freight terms or we said if you pay us on time, rather than taking a 2 percent cash 

discount, we’ll give you 5. There’s all sorts of mechanisms for driving price. And the 

reason why that’s there is, quite frankly, we’re all trying to hide from our competitors 

what we’re doing.” (Tatman, Tr. 1017-1019, in camera; see also Minamyer, Tr. 3266-

3267).

442. Price competition among Fittings suppliers takes place principally through Project

Pricing, and to a lesser extent, through other price concessions such as rebates, 
59

reductions in freight charges, and/or extensions of credit or payment terms. (F. 428-

441, 443-456).

iii. Rebates

443. A “rebate” is a percentage discount on all purchases by a Distributor from a supplier 

during a specific time period, typically for a year. (Minamyer, Tr. 3143; RX 655 

(Brakefield, Dep. (Vol. 2) at 28-29); Tatman, Tr. 297-298; CX 2480 (Napoli, Dep. at 

102-103)).

444. A “corporate rebate” is a percentage discount based on all purchases by all branches of 

a Distributor. A corporate rebate is generally negotiated between the supplier and the 

corporate headquarters of a Distributor. (CX 2535 (Bhutada, Dep. at 107-108), in 

camera). 

445. A “branch rebate” is a percentage discount based on purchases by an individual branch 

of a Distributor. (CX 2535 (Bhutada, Dep. at 109), in camera; Tatman, Tr. 298-299).

446. McWane offers one-year to three-year corporate rebate agreements to its largest 

Distributor customers that are based on the Distributors’ total purchases of Fittings and 

other products manufactured by McWane, such as ductile iron pipes, hydrants, and 

valves. (Tatman, Tr. 297-298).

447. The value of rebates to Distributors on Fittings can be greater than the Distributors’ net 

profits from the sales of Fittings. (CX 2534 (Bhutada, IHT at 57-58)).

448. Gross sales figures in McWane’s financial reports are netted out of rebates. If a sale is 

for $100 and there is a $15 rebate, the sale will be booked for $85. (CX 2481 (Nowlin, 

Dep. at 22-23, 111-112)).

449. Distributors look at rebates differently than Project Pricing because rebates do not apply 

to a specific job that a Distributor is bidding, and are instead usually applied on an 

annual basis. (Webb, Tr. 2774).

iv. Freight terms

450. Each supplier has standard freight terms pursuant to which it will pay for shipping of 

Fittings to Distributors and may also negotiate separate agreements with Distributors 

whereby the supplier will pay for freight outside of the standard terms for a specific 

project. (Tatman, Tr. 303-304; CX 2531 (Rybacki, Dep. at 24); CX 2535 (Bhutada, 

Dep. at 110)).

451. McWane’s standard freight term is “full freight allowed,” or free shipping, for all 

purchases of at least 5,000 pounds of McWane products, including Fittings. (Tatman, 

Tr. 303-304). McWane sometimes offers shipping “discounts” to customers, by

providing free shipping for quantities less than 5,000 pounds. (Tatman, Tr. 304).
60

v. Payment terms

452. Payment terms are discounts that suppliers provide to Distributors for payment within a 

fixed amount of time. (Minamyer, Tr. 3143; Tatman, Tr. 304-305).

453. A “cash discount” is a discount that a supplier extends to an individual purchase by a 

Distributor if payment is made within a certain period of time, e.g., 2% off if payment is 

made within 60 days. Generally, the terms of a cash discount are negotiated between 

the supplier and a Distributor at the start of the fiscal year. (CX 2535 (Bhutada, Dep. at 

109), in camera).

454. The majority of McWane’s customers are subject to McWane’s standard payment 

terms, which provide a 2% discount for payment by the 15th of the month following the 

order. Most Distributor customers pay within McWane’s standard payment terms. 

(Tatman, Tr. 304-305; CX 2479 (McCullough, Dep. at 174-175)).

455. McWane has offered longer payment terms – up to 90 days – to some customers, as 

well as discounts of up to 6% for on time payments. (Tatman, Tr. 305).

456. Star also extends cash discounts for paying within Star’s payment terms. Star extends 

such cash discounts to 95% or more of its customers. (CX 2535 (Bhutada, Dep. at 109-

110), in camera).

vi. Effects of Project Pricing

457. Project Pricing lowers the prevailing transaction price in a given geographic area. This 

happens when one supplier offers a Project Price, and the other suppliers seek to match 

or beat it, or when as other Distributors in the region learn of the Project Price, 

Distributors demand the same discount, so as to be competitive on their bids to the End 

User for the same job. (Rybacki, Tr. 1107-1108; CX 2484 (Tatman, Dep. at 27); 

CX 2480 (Napoli, Dep. at 84-85)).

458. Mr. Tatman defines pricing “instability” as occurring when Project Pricing in a region 

results in average invoice prices 10% or more below published pricing. (Tatman, Tr. 

283-284, 332-333).

459. Project Pricing can bring down the market price because if a supplier offers a special 

price to one Distributor, then the supplier needs to be prepared to offer that special price 

to all Distributors bidding on that project. Those Distributors then expect that lower 

price in later projects, and the spiral of declining prices can lead to zero gross margin. 

(CX 2480 (Napoli, Dep. at 46-47)).

460. Project Pricing can cause price erosion and thereby contributes to a lower “bottom line” 

for suppliers. To the extent that Project Pricing causes price erosion and lower profits, 

Project Pricing is not good for a supplier’s long-term health, and therefore, suppliers 
61

would prefer not to offer Project Pricing. (Rybacki, Tr. 1105, 1107-1108; CX 2531 

(Rybacki, Dep. at 221, 224); see also CX 2480 (Napoli, Dep. at 46, 83-85); CX 2485 

(Walton, Dep. at 31-34)).

461. Project Pricing is inconsistent with consistent and disciplined pricing. (Rybacki, Tr. 

3523).

5. Economic background

462. A few decades ago, most Fittings used in waterworks projects in the United States were 

manufactured in the United States. Full line Fittings manufacturers included U.S. Pipe, 

Griffin, and ACIPCO. (Tatman, Tr. 1046-1047; RX 644 (Tatman, Dep. at 191); RX 

675 (Sheley, Dep. at 57)).

463. Beginning in the mid-1980s, importers began to successfully convert End Users’ 

specifications for domestically produced Fittings to open specifications, which 

permitted the use of both domestic and imported Fittings. (RX 644 (Tatman, Dep. 192-

93); RX 694 (Bhutada, Dep. 12-13)). This process accelerated during the 1990s and 

2000s, with non-domestic Fittings comprising the vast majority of the Fittings market 

by 2005. (Tatman, Tr. 879). 

464. During the past 15 to 20 years, Domestic Fittings sales in the United States have 

declined, while non-domestic Fittings sales have increased. (RX 675 (Sheley, Dep. 53-

54); RX 646 (Burns, Dep. at 20-21); Normann, Tr. 4836-4837).

465. Over the past 25 years, Sigma’s non-domestic fittings sales in the United States have 

steadily grown. (Pais, Tr. 1977-1978; RX 687 (Pais, Dep. at 9-10)).

466. Since Star started selling Fittings in the United States in 1985, Star’s non-domestic sales 

have steadily grown. (RX 694 (Bhutada, Dep. at 6-7); McCutcheon, Tr. 2578, 2584-

2585.

467. Non-domestic Fittings have accounted for the majority of sales of Fittings in the United 

States in the last five years. (Joint Stipulations of Fact, JX0001 ¶ 5).

468. In the 1990s and early 2000s, Fittings manufactured in countries such as China, India, 

Korea and Mexico were far less expensive than Fittings produced in the United States, 

because production costs in those countries are lower. (Tatman, Tr. 275, 879; RX 642 

(Page, Dep. at 112); RX 646 (Burns, Dep. at 20-21); RX 658 (Keffer, Dep. at 58); RX 

672 (Webb, IHT at 71-73)). 

469. In 2003, McWane filed a complaint before the International Trade Commission (“ITC”) 

to challenge dumping by Fittings importers, seeking to have tariffs imposed on nondomestically produced fittings. (RX 730 at 009, 011).
62

470. In December 2003, the ITC determined that Fittings from China were “being imported 

into the United States in such increased quantities or under such conditions as to cause 

market disruption” to domestic Fittings producers. (RX 730 at 009).

471. In December 2003, the ITC found that imported Fittings manufactured in China were 

materially injuring the domestic Fittings producers in the United States, but the 

President declined to impose the recommended tariff. (RX 730 at 011, 023-026; RX 

642 (Page, Dep. at 18-19)). 

472. U.S. Pipe, Griffin, and ACIPCO either dramatically reduced or exited domestic Fittings 

production in the face of cheap imports from China, Korea, India, Mexico, and Brazil. 

(Tatman, Tr. 275; RX 730; RX 646 (Burns, Dep. at 25-28); RX 643 (Tatman, IHT at 

47-51); RX 701 (Morton, Dep. at 10)). ACIPCO continues to make Fittings in the 

United States ranging from 30 in diameter” to 64” in diameter. (CX 1897 at 003; 

CX 2486 (Burns, Dep. at 15, 17, 23-28); CX 2521 (Agarwal, IHT at 19-20)).

473. ACIPCO exited the manufacture of Fittings under 30” in diameter in 2006. (CX 1897 

at 002; CX 2486 (Burns, Dep. at 15, 17, 23-28); CX 2521 (Agarwal, IHT at 19-20)).

474. U.S. Pipe ceased domestic production of Fittings at its Chattanooga, Tennessee 

manufacturing facility in 2006 because it concluded that it could not justify the 

continued operation of the plant given the low volumes of domestic fittings being sold. 

(Morton, Tr. 2863-2864; RX 701 (Morton, Dep. at 10)).

475. Griffin ceased domestic production of Fittings several years ago. (Tatman, Tr. 198; RX 

643 (Tatman, IHT at 47); CX 2508 (Kurhts, Dep. at 18-20)).

476. By late 2007, McWane was “the last guy standing producing fittings domestically” in 

the under 30-inch diameter segment of the Fittings market. (RX 643 (Tatman, IHT at 

47)).

477. In the fall of 2008, McWane closed its Domestic Fittings manufacturing facility in 

Tyler, Texas, in part because of cheaper imports, which caused underutilization of 

McWane fittings plants and unsustainable production levels. (Tatman, Tr. 963-968

(“I’ve got high inventory levels and I don’t have enough demand, domestic only, to 

keep up with production. And if I start substituting domestic product with my import 

sales, I have to wrap a dollar bill around it. And if I did that, then I don’t know what to 

do with the plant I just opened in China that’s got to produce tons and has to sell 

something there also.”); RX 643 (Tatman, IHT at 46-51)). 

478. Prior to closing its Tyler South Foundry, both of McWane’s United States plants were 

“throttled down as low as you could throttle them. . . . we can’t keep two plants limping 

along, not meeting our inventory objectives and bleeding millions of dollars a year in 

idle plant.” (Tatman, Tr. 964-965; RX 616). 
63

479. Roughly two hundred employees lost their jobs as a result of the Tyler South plant 

closure in 2008. (Tatman, Tr. 968). 

B. Relevant Market

1. Relevant product markets

a. Fittings for use in open specification projects

480. Based on the findings below, ductile iron pipe fittings of 24 inches or less in diameter 

for use in open specification applications, whether manufactured within or outside the 

United States, for use in projects within the United States constitute a relevant product 

market (the “Fittings market”). (F. 481-516; see also CX 2260-A (Schumann Rep. at 

13-14, 16-17); Schumann, Tr. 3769-3770, 3788-3789).

i. Functional interchangeability with other products

481. The principal potential substitute for Fittings is polyvinyl chloride (PVC) plastic 

fittings. (Minamyer, Tr. 3133). In some applications, a ductile iron pipe fitting is used 

on PVC pipe, but a PVC fitting cannot be used on ductile iron pipe. (Tatman, Tr. 249-

250; CX 2501 (Prescott, IHT at 36) (pressure rated PVC fittings are not used with 

ductile iron pipe); CX 2538 (McCutcheon, IHT (Vol. 2) at 343) (PVC fittings are rarely 

used on ductile iron pipe); CX 2480 (Napoli, Dep. at 27) (PVC not a substitute for 

Fittings)).

482. PVC fittings are more expensive than Fittings. (CX 2538 (McCutcheon, IHT (Vol. 2) at 

340); Webb, Tr. 2715).

483. PVC fittings do not have as high of a pressure rating as Fittings. (CX 2521 (Agarwal, 

IHT at 54-55) (“[T]hey [PVC fittings] do not hold up the pressure”); CX 2489 

(Morrison, IHT at 41) (“The pressure rating on the plastic water fitting is a little less. 

It’s a 200-pound max rating, whereas a ductile waterworks fitting is 250-pound max. 

So, depending on the pressure, it’s going to exclude the PVC fitting.”); CX 2480 

(Napoli, Dep. at 27-28) (“I don’t recall ever seeing a PVC fitting even attempt to be 

used by an engineer.”)).

484. PVC fittings are susceptible to fracture. (See CX 2480 (Napoli, Dep. at 27-28) (“No 

one, to my knowledge, has come up with a good plastic substitute for the strength of 

ductile iron.”)).

485. PVC fittings are limited in size to 12” and below. (Webb, Tr. 2714-2715 (PVC fittings 

are “just not made in the sizes and configurations that mechanical joint fittings are.”); 

CX 2491 (Johnson, IHT at 44-45); CX 2525 (Minamyer, IHT at 95-96); CX 2489 

(Morrison, IHT at 42) (PVC pressure-rated fittings are only a potential substitute for 

small diameter applications: “2-inch, maybe 3-inch, but anything above that, 99 percent 

would be a ductile iron waterworks fitting over a PVC fitting.”)).
64

486. Certain markets do not allow PVC fittings to be used. (CX 2501 (Prescott, IHT at 33-

34); CX 2515 (Sheley, IHT at 65)).

487. PVC fittings are harder to restrain and install. (CX 2543 (Coryn, IHT at 53); Webb, Tr. 

2715).

488. Other than the limited, rare use of PVC pressure-rated fittings, there are no other 

products that are substitutes for Fittings in pressurized applications. (CX 2489 

(Morrison, IHT at 41-42); CX 2538 (McCutcheon, IHT (Vol. 2) at 342-343); CX 2525 

(Minamyer, IHT at 95)).

489. Brass fittings are typically threaded and do not come larger than 2” in diameter. (Thees, 

Tr. 3057-3058; Webb, Tr. 2720).

490. Steel fittings are not used underground because the steel fitting would rust. (Thees, Tr. 

3057, 3058; CX 2538 (McCutcheon, IHT (Vol. 2) at 343)).

491. Cast iron or gray iron fittings are an older fittings technology that use a different iron 

component than ductile iron fittings and are not as easily molded. Distributors receive 

only a negligible demand for these products from End Users. (Webb, Tr. 2719; Thees, 

Tr. 3056; CX 2513 (Webb, IHT at 59-60); CX 2498 (Teske, Dep. at 68-69); CX 2501 

(Prescott, IHT at 37)).

492. There are no widely used functional substitutes for Fittings. (F. 482-491; Answer ¶ 23; 

Saha, Tr. 1177-1178 (other types of fittings are not interchangeable with ductile iron 

Fittings)).

ii. Price constraints of other products

493. Fittings suppliers do not track prices of PVC fittings or take them into account when 

setting prices of Fittings. (Tatman, Tr. 250-251; CX 2477 (Jansen, Dep. at 69-70, 77, 

94); Minamyer, Tr. 3133-3134; CX 2538 (McCutcheon, IHT (Vol. 2) at 341); Saha, Tr. 

1177).

494. Fittings suppliers do not track the price of cast iron fittings when setting ductile iron 

Fittings prices. (CX 2477 (Jansen, Dep. at 94)).

495. Distributors do not seek to use prices of PVC fittings to negotiate prices of Fittings. 

(Webb, Tr. 2718; CX 2480 (Napoli, Dep. at 28); Saha, Tr. 1177).

496. The prices of PVC fittings have no bearing on the prices of Fittings. (Saha, Tr. 1177-

1178). If the price of ductile iron pipe fittings went up 5 to 10 percent from suppliers, 

Distributors would not switch to pressure-rated PVC fittings. (Webb, Tr. 2718-2719).
65

497. When the price of Fittings goes down, sales of Fittings do not go up. (Webb, Tr. 2723 

(“I’ve never seen a correlation with any of our product lines up or down that impacted 

the demand side.”); CX 2538 (McCutcheon, IHT (Vol. 2) at 344) (A 10% increase in 

price of Fittings would not prompt an End User to forego the purchase of Fittings 

because the Fittings are a small portion of the total cost of the project to the End User)).

iii. Cluster of Fittings of 24 inches or less in diameter

498. There are several thousand unique configurations of Fittings in different sizes, shapes 

and coatings. (Joint Stipulations of Fact, JX0001 ¶ 8).

499. Each Fitting must have a diameter appropriate for the pipe to which it is attached and a 

shape or design appropriate for its intended function. (Tatman, Tr. 220-221).

500. Fittings of different shapes and different diameters are not substitutes for one another. 

For example, a 6” 90-degree bend mechanical joint pipe fitting cannot substitute for an 

8” “T” fitting. (Schumann, Tr. 3790-3791).

501. The primary suppliers, customers, and Distributors of each Fitting are the same and the 

materials and other inputs used to produce the products are the same. (E.g., F. 2, 51, 

108, 310, 322-324; see also CX 2260-A (Schumann Rep. at 13); Schumann, Tr. 3791-

3792). 

502. Each size and shape of Fittings of 24” or less in diameter is made of the same material 

and by the same methods. F. 310; see also CX 2260-A (Schumann Rep. at 13).

503. Each size and shape of Fittings of 24” or less in diameter is sold and marketed together 

by the same suppliers, through the same distribution channels, to the same customers, 

for use in the same or similar projects. (F. 505-509; See also RX 712A (Normann Rep. 

at 23)).

504. All Fittings must comply with AWWA standards. (CX 2522 (Agarwal, Dep. at 37), in 

camera; McCutcheon, Tr. 2292). 

505. McWane, Sigma, and Star each supply a full line of Fittings of 24” or less in diameter. 

(Rybacki, Tr. 3572-3573; Tatman, Tr. 589; McCutcheon, Tr. 2254-2255; Joint 

Stipulations of Fact, JX0001, ¶¶ 1-3). 

506. Fittings prices are set as a package, through the announcement of price multipliers and 

the negotiation of Project Pricing multipliers and other pricing terms that apply across 

all of the different Fittings included in a given purchase. (See CX 2535 (Bhutada, Dep. 

at 102, 106); Tatman, Tr. 258-259, 277; Rybacki, Tr. 1096-1097, 1103-1104; Webb, Tr. 

2770-2771; CX 1147 at 001).

507. Distributors purchase Fittings from suppliers, and then further incorporate the Fittings 

into a bundle with other waterworks products for resale to End Users. (CX 2502 
66 

(Prescott, Dep. at 15); CX 2490 (Morrison, Dep. at 66); CX 2504 (Thees, Dep. at 114, 

149); CX 2503 (Thees, IHT at 71)). 

508. Virtually all Fittings are sold through waterworks Distributors. F. 373-374. 

509. The typical End Users of all Fittings are municipalities, regional water authorities, and 

the contractors they engage to construct waterworks projects. F. 10. 

510. Fittings up to 12” in diameter are typically used for residential work, and Fittings 14” to 

24” in diameter are typically used by municipalities or plants with long transmission 

lines. (Brakefield, Tr. 1279-1281; CX 1479). 

511. Fittings over 24” in diameter are considered to be a large diameter and are a more 

unusual size for the industry. (CX 2538 (McCutcheon, IHT (Vol. 2) at 322)). They are 

used for large treatment plants or large transmission lines. (Brakefield, Tr. 1281; 

CX 1479). 

512. ACIPCO currently manufactures Domestic Fittings ranging only from 30” in diameter 

to 64” in diameter. ACIPCO exited the manufacture of Fittings under 30” in diameter 

in 2006. (CX 1897 at 002; CX 2486 (Burns, Dep. at 15, 23-28)). ACIPCO does not 

have any interest in extending its product scope to include small and medium diameter 

Fittings. (CX 2486 (Burns, Dep. at 15, 30)). 

513. For 2008, in the market consisting of ductile iron pipe fittings with diameters greater 

than 24” (i.e., 30” and above), ACIPCO’s share of United States sales was 

approximately around 40%. (See CX 1895 at 001, 005, in camera (ACIPCO data 

showing 2008 sales of { } tons); CX 2486 (Burns, Dep. at 159-160) (describing 

CX 1895); RX-127 at 002 (DIFRA data showing the other suppliers’ combined 2008 

sales of fittings greater than 24” in diameter to be { } tons). 

514. McWane’s internal documents grouped Fittings into categories of 24” or less and 24” or 

greater. (RX 632 at 028-029 (Tyler/Union Waterworks Fittings Financial Statements 

containing fittings sales and gross profit analysis by three size ranges: 3” to 12”, 14” to 

24”, and 30” and up); CX 0622 at 008-010 (Tyler/Union 2009 Sales Meeting 

presentation, separating out market share by size categories of 3” to 12” diameter, 14” 

to 24” diameter, and > 24” diameter)).

515. Historically, the waterworks industry has differentiated Fittings of 3” in diameter to 24” 

in diameter from Fittings of 30” or greater diameter. (CX 2533 (Bhargava, Dep. at 43), 

in camera).

516. The January 2009 DIFRA Schedule of Ductile Iron Waterworks Fittings (Trade Tons 

Shipped) Comparison For the Years Ended 2007 and 2008 analyzed shipments by three 

size ranges: 2” to 12”, 14” to 24”, and over 24”. (CX 1339 at 003).
67

b. Fittings for use in domestic-only specification projects 

517. In form and functionality, non-domestic and Domestic Fittings are completely 

interchangeable. (Tatman, Tr. 878-879 (“There’s no difference in how you apply [or] 

use the product.”); McCutcheon, Tr. 2528 (“For the most part, the fittings are 

interchangeable. ... we all provide an interchangeable fitting.”); Webb, Tr. 2730-2731 

(“Q. Is there a difference between domestic fittings and import fittings? A. In 

functionality, no.”); RX 694 (Bhutada, Dep. at 14); RX 659 (Swalley, Dep. at 63); RX 

669 (Groeniger, Dep. at 36); RX 650 (Morrison, Dep. at 57-58); RX 661 (Prescott, Dep. 

at 29); RX 646 (Burns, Dep. at 147); RX 701 (Morton, Dep. at 13-14); RX 675 (Sheley, 

Dep. at 51-52)).

518. Based on the findings below, ductile iron pipe fittings of 24” and smaller in diameter 

that are made in the United States, that are sold for use on jobs with domestic-only 

specifications (“Domestic Fittings”) constitute a relevant product market (the 

“Domestic Fittings market”). (F. 519-550; see also CX 2260-A (Schumann Rep. at 15-

16); Schumann, Tr. 3769-3770, 3789-3791). 

i. Domestic-only requirements other than ARRA

519. At times, some waterworks projects require that only Domestic Fittings be used because 

of either End User preference or because it is required by municipal, state, or federal 

law (“Domestic-only projects”). (Joint Stipulations of Fact, JX0001 ¶ 13).

520. The Commonwealth of Pennsylvania requires the use of Domestic Fittings. (CX 2523

(Bhattacharji, Dep. at 127-128) (Pennsylvania has a Buy American law); CX 2531 

(Rybacki, Dep. at 270-272); RX 637 (Jansen, Dep. at 99-100) (attributing 

Pennsylvania’s Domestic Fittings requirements to the Pennsylvania Steel Act)).

521. New Jersey has a Buy American law. (CX 2523 (Bhattacharji, Dep. at 127-128); N.J. 

Stat. § 52:33-3 (requiring that “[e]very contract for the construction, alteration or repair 

of any public work in this state shall contain a provision that in the performance of the 

work the contractor and all subcontractors shall use only domestic materials in the 

performance of the work”)).

522. Some federal government projects and air force bases require Domestic Fittings, even 

without the Buy American provisions (F. 526) in ARRA. (McCutcheon, Tr. 2267; 

Tatman, Tr. 449).

523. Some municipalities require the use of domestically-manufactured products as a matter 

of preference or as a matter of law. If a particular municipality has a preference or law 

that says that only Domestic Fittings can be used, the specification will state that the 

Fittings need to be “domestic only.” (Webb, Tr. 2732-2733; McCutcheon, Tr. 2267; 

CX 2537 (McCutcheon, IHT (Vol. 1) at 84, 90-91), in camera; Thees, Tr. 3068).
68

ii. Requirements of ARRA

524. The American Recovery and Reinvestment Act of 2009, known as “ARRA,” allocated 

more than $6 billion to water infrastructure products. (Joint Stipulations of Fact, 

JX0001 ¶¶ 19, 20).

525. Waterworks projects receiving ARRA funds were required to be “under contract or 

construction within 12 months of the date of enactment of this Act.” (American 

Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115 (codified as 

amended in scattered sections of 6, 19, 26, 42, and 47 U.S.C. (2006 Supp. III))).

526. ARRA contained certain Buy American provisions applicable to Fittings. (Joint 

Stipulations of Fact, JX0001 ¶ 21). ARRA’s Buy American provisions required that all 

ARRA-funded projects use products made in the United States. (Brakefield, Tr. 1401; 

Sheley, Tr. 3402; Morton, Tr. 2816).

527. Domestic Fittings were required and used on ARRA-funded projects. (CX 2513 

(Webb, IHT at 95); CX 2501 (Prescott, IHT at 66-67)).

528. Star looked into the possibility of whether Star could satisfy the ARRA Buy American 

requirement with Fittings produced in Mexico or Korea, but concluded in early 2009 

that Fittings produced in Mexico or Korea would not satisfy ARRA’s Buy American 

requirement. (McCutcheon, Tr. 2277, 2279; Bhargava, Tr. 2927-2928; RX 694 

(Bhutada, Dep. at 39); CX 2537 (McCutcheon, IHT (Vol. 1) at 102-103), in camera).

529. Sigma also considered the possibility that Fittings manufactured in Korea or Mexico 

might satisfy the Buy American requirement of ARRA, but concluded that such Fittings 

would not be ARRA-compliant. (CX 0214 at 004; CX 1998 at 003; Pais, Tr. 1738-

1739).

iii. Waivers of ARRA’s Buy American requirement

530. The United States Environmental Protection Agency (“EPA”) was the sole authority for 

granting or approving waivers of ARRA’s Buy American requirement for any ARRAfunded waterworks project. (Respondent’s Supplemental Response to Complaint 

Counsel’s Requests for Admission, July 16, 2012 (“Supp. Response to RFA”) at ¶ 2).

531. ARRA contains three types of waivers or exceptions to the Buy American requirement 

for ARRA-funded waterworks projects (also referred to by the EPA as “Regional 

Project Waivers” or “Regional Waivers”): public interest; insufficient and not 

reasonably available quantities; and cost. (American Recovery and Reinvestment Act 

of 2009, Pub. L. No. 111-5 §1605(b), 123 Stat. 115 (codified as amended in scattered 

sections of 6, 19, 26, 42, and 47 U.S.C. (2006 Supp. III))). 

532. The EPA granted three public interest waivers of ARRA’s Buy American provision for 

Fittings, which allowed three local municipalities to purchase imported Fittings for use 
69

on ARRA-funded waterworks projects. (CX 1592 (waiver for City of Lewiston, ME 

and the Auburn, Maine Water District for purchase of 33 imported Fittings); CX 1590 

(waiver for Lowell, MA for purchase of an imported 30” diameter pipe tee fitting); 

CX 1591 (waiver for Richland, WA for purchase of an imported 42” by 24” AWWA 

C153 cement lined mechanical joint reducer tee fitting)).

533. The EPA did not issue any Regional Waivers for Fittings under the authority of Section 

1605(b)(3), which allows for waivers due to overall cost increases of more than 25 

percent. (Clean Water and Drinking Water State Revolving Funds: ARRA 

Implementation, http://water.epa.gov/grants_funding/eparecovery/index.cfm (listing 

waivers)).

534. McWane informed its customers in an April 8, 2009 letter that an exception from 

ARRA’s Buy American requirements related to the cost impact of a project would only 

be available if domestic sourcing would increase the cost of an entire project (as 

opposed to the cost of a given component) by at least 25%: “[T]he exception does not 

apply if the cost of the pipe or valves for a project will be 25% greater than foreign 

products; rather the use of U.S. made pipe or valves must increase the cost of the entire 

project by more than 25%.” (CX 1886 (emphasis in original); CX 2498 (Teske, Dep. at 

57) (discussing CX 1886)).

535. On August 10, 2009, the EPA granted a revised de minimis waiver from the 

requirements of ARRA Section 1605(a) for any incidental components that comprise a 

total of no more than five percent of the total cost of the materials used in and 

incorporated into a project. (RX 195; see also RX 155 (original de minimis waiver)). 

Those using this waiver did not have to apply for the waiver and be granted such a 

waiver, but they were required to retain documentation as to these incidental items in 

their project files, and to “summarize in reports to the State the types and/or categories 

of items to which this waiver is applied, the total cost of incidental components covered 

by the waiver for each type or category, and the calculations by which they determined 

the total cost of materials used in and incorporated into the project.” (RX 195). The 

Federal Register Notice setting out the revised de minimis waiver described incidental 

goods as “‘nuts and bolts’-type components whose origins cannot readily be identified 

prior to procurement.” (RX 195).

536. Fittings typically comprise five (5) percent or less of the total cost of a typical 

waterworks project. (Joint Stipulations of Fact, JX0001 ¶ 10). 

537. With few exceptions, non-Domestic Fittings were not used on ARRA-funded projects. 

(CX 2501 (Prescott, IHT at 66) (“Q. Did you ever get a waiver or try to get a waiver to 

allow the use of imported fittings on stimulus projects? A. To my knowledge, no.”); 

CX 2510 (Groeniger, Dep. at 173), in camera (“Q. So you never used a de minimis 

waiver for fittings? A. Not that I can recall.”); CX 2489 (Morrison, IHT at 51) (there 

were no waivers or exemptions that allowed the use of imported Fittings on Domesticonly ARRA-funded projects); CX 2489 (Morrison, IHT at 51)).
70

538. McWane did not sell any imported Fittings for use in any ARRA-funded waterworks 

projects. (Supp. Response to RFA at ¶ 5 (admitting that McWane possesses no firsthand knowledge of the use of an imported Fitting in an ARRA-funded waterworks 

project under a de minimis waiver)).

539. To the extent that Sigma’s imported Fittings were used on any ARRA-funded 

waterworks projects, the quantities were few and the circumstances limited. (Pais, Tr. 

1742-1744; CX 2523 (Bhattacharji, Dep. at 222-223) (de minimis waivers on ARRA 

projects were “few and far between”)).

540. Star did not sell any imported Fittings for use in any ARRA-funded waterworks projects 

under either a public interest waiver or a de minimis waiver. (CX 2535 (Bhutada, Dep. 

at 43-44)).

541. Ferguson does not know of any instance in which Ferguson used the de minimis waiver 

to use an imported Fitting in a domestic-only waterworks project. (Thees, Tr. 3081). 

Ferguson believed that the de minimis waiver did not apply to Fittings because the 

waiver only applied to products where the country of origin for such products was not 

readily identifiable, such as nuts and bolts, not Fittings. (Thees, Tr. 3078-3080) 

(Fitting’s country of origin is readily identifiable because suppliers stamp this 

information on the side of the Fitting).

542. HD Supply believed that the EPA’s de minimis waiver did not apply to Fittings based 

on information gathered from End Users. (Webb, Tr. 2740-2742). HD Supply never 

sold an imported Fitting to any customer for use on an ARRA-funded waterworks 

project, and its President is unaware of any instance where any Distributor supplied 

imported Fittings into an ARRA-funded waterworks project under any circumstances. 

(Webb, Tr. 2742-2744; CX 2514 (Webb, Dep. at 66-67)).

543. SIP worked with End Users to apply for two or three waivers for specific ARRA-funded 

projects, but was unsuccessful in obtaining a single waiver. (CX 2522 (Agarwal, Dep. 

at 92-93), in camera). SIP is unaware of any sales of its imported Fittings that were 

used for ARRA-funded projects. (CX 2522 (Agarwal, Dep. at 92), in camera).

544. Illinois Meter is unaware of anyone using imported Fittings as a substitute for Domestic 

Fittings on any ARRA-funded waterworks projects. (Sheley, Tr. 3405-3406).

545. Metalfit is unaware of any project for which Metalfit, a Mexican manufacturer, 

provided imported Fittings for use on an ARRA-funded waterworks project. (CX 2518 

(Meyer, Dep. at 66, 71-72, 133-134)).

546. Electrosteel does not know of any instance in which a customer used an imported 

Fitting for an ARRA-funded waterworks project, or any instance in which a customer 

received a waiver of ARRA’s Buy American requirement for a Fittings purchase. 

(CX 2500 (Swalley, Dep. at 62-63, 159)).
71

iv. Price correlation between Domestic and non-domestic 

Fittings

547. Domestic Fittings are sold at substantially higher prices than non-domestic Fittings. 

F. 1075-1076. 

548. Due to the price differential between Fittings sold into open and domestic 

specifications, McWane does not provide quotes for Domestic Fittings to be used for 

open specification. (CX 2477 (Jansen, Dep. at 96)).

549. Regardless of price, a Distributor will not purchase an imported Fitting if the End 

User’s specification calls for a Domestic Fitting. (See Webb, Tr. 2716-2718; Thees, Tr. 

3056; CX 2516 (Sheley, Dep. at 156); Saha, Tr. 1173-1174).

550. Some End Users who specify Domestic Fittings because of preference are aware of, but 

not sensitive to, the price differential between Domestic Fittings and import Fittings. 

(CX 2489 (Morrison, IHT at 46) (“Well, they’re aware of [the price differential], but in 

the overall cost of a project, the cost of your fittings is minimal. Now, they may be 

twice as much, but if you’re doing a million-dollar project and you’re paying $10,000 

more for the fittings, that’s negligible in some people’s eyes.”); CX 2527 (Pais, IHT at 

36-37) (engineers deciding whether to have a domestic-only specification are not 

sensitive to prices of Fittings)).

2. Relevant geographic market 

551. Fittings suppliers ship their products nationally from multiple locations. (Rybacki, Tr. 

1089-1092 (Sigma has five main warehouses, some satellite warehouses, and 

distribution centers in Florida, California, Washington, and Arizona); McCutcheon, Tr. 

at 2264 (Star has 13 distribution centers in North America in order to “stock product 

closer to [customers] for better delivery times”); RX 637 (Jansen, Dep. at 144-145); CX 

2483 (Tatman IHT at 60-61) (McWane has distribution centers in Texas, Alabama, 

California, Oregon, and Illinois, enabling one to two day delivery to 95 percent of the 

country)).

552. From the perspective of a local Distributor, the Fittings of one manufacturer/supplier 

are interchangeable with those of another manufacturer/supplier located elsewhere in 

the United States. (CX 2477 (Jansen, Dep. at 86) (Fittings produced by Sigma, 

McWane and Star that meet the same AWWA specifications are interchangeable with 

each other)).

553. Both Complaint Counsel’s and Respondent’s expert witnesses opined that the 

geographic market is no larger than the United States; however, it may be smaller than 

the whole United States, as there may be separate regional markets. (RX 712A 

(Normann Report at 30-31); Schumann, Tr. 3794-3795).

554. The relevant geographic market in this case is the United States. F. 551-553.
72

C. Competitive environment

1. Market characteristics

a. Pricing interdependence

555. McWane is an industry leader with respect to pricing, and other suppliers try to follow 

McWane as best they can. (Pais, Tr. 1920; 1923-1924).

556. Historically, when McWane announces new list prices, Sigma and Star generally follow

with substantially matching list prices. (Tatman, Tr. 257, 336-337; McCutcheon, Tr. 

2269; Rybacki, Tr. 1098). Sigma and Star generally also try to match new multipliers 

published by McWane. (Minamyer, Tr. 3138-3142; McCutcheon, Tr. 1098, 2270; 

Rybacki, Tr. 3576-3577).

557. Any published price increase by one supplier that is not adopted by the other suppliers 

will not be accepted in the market and will not be sustained. As Mr. McCutcheon of 

Star explained: “[I]f you’re the highest-priced fitting in a commodity market, you’re not 

going to sell a lot of fittings.” (McCutcheon, Tr. 2425; Pais, Tr. 1936-1937; Rybacki, 

Tr. 1113-1114; see also Tatman, Tr. 1070 (if not adopted by the other suppliers, a 

published price increase “isn’t going to work because, number one, you’re going to 

have to sit there, it’s your published multipliers for at least three months while your 

competitors pick you clean job-pricing and it will be at least three months or more until 

you know where you’re at . . .”)). 

558. McWane, Sigma, and Star generally received and read each other’s letters to customers 

announcing price changes. These letters were typically provided to a supplier by its 

Distributor customers, and then circulated internally at the supplier. (CX 2450 at 002; 

Tatman, Tr. 306-307; Minamyer, Tr. 3148; Rybacki, Tr. 3487; Pais, Tr. 2058-2060; 

CX 2526 (Minamyer, Dep. at 125-126); CX 2531 (Rybacki, Dep. 205-206)). 

559. McWane, Sigma, and Star consider each other’s customer letters, along with other 

relevant information, when making their own pricing decisions. (Tatman, Tr. 287; 

CX 2526 (Minamyer, Dep. at 126-127); Rybacki, Tr. 1108-1109).

b. Price transparency

i. List and multiplier prices

560. All major Fittings suppliers publish their list prices in price books or catalogues that are 

widely disseminated to all of their customers. Suppliers also post their list prices on 

their public websites. (Tatman, Tr. 255-256; Rybacki, Tr. 1097-1096, 1099; Minamyer, 

Tr. 3137-3138; CX 2535 (Bhutada, Dep. at 100)).
73

561. Any changes in multipliers are widely disseminated through pricing letters that are 

transmitted via fax or email to Distributors, either on an individual state or region basis, 

or, in the case of the large national Distributors, via “multiplier maps” that identify local 

multipliers for each state across the United States. (Tatman, Tr. 262-263, 305, 322; 

CX 2440; RX 410 (sample McWane multiplier map); Rybacki, Tr. 1100; McCutcheon, 

Tr. 2270).

ii. Project Pricing 

562. For a specific project, Distributors commonly seek bids from multiple Fittings 

suppliers. (RX 650 (Morrison, Dep. at 68); RX 703 (Coryn, Dep. at 36)). 

563. Suppliers do not want their competitors to know when a Project Price is being offered, 

for fear that their competitors will offer a lower price and take the project. (Minamyer, 

Tr. 3145). 

564. Suppliers do not want their competitors to know about freight terms, payment terms, 

cash discount or rebates being provided to a Distributor. (Tatman, Tr. 1017-1019, in 

camera, (“There’s all sorts of mechanisms for driving price. And the reason why that’s 

there is, quite frankly, we’re all trying to hide from our competitors what we’re 

doing.”); RX 396). 

565. Suppliers attempt to learn from their Distributor customers the amount a competitor has 

bid; however, the supplier may not trust information provided by the Distributor 

because the Distributor has a financial incentive to “trick” the supplier into offering a 

lower price. As Mr. Tatman explained with the following example:

[The contractor] goes to now multiple distributors saying, What’s your 

price? What’s your price? And he’s probably getting the best price, and 

then he’s probably calling a second time and a third time, saying, Oh, 

you’re close, but I need an extra 3 percent, I need an extra 4 percent. The 

distributor now, because he’s making no money selling to the contractor 

anymore, he’s going back to the supplier, and he calls me up and he says, 

Hey, look, I’ve got this job. It’s got 20 tons of fittings on it. It’s 12” 

product. What’s your best price? I’ll give him a price. He’s going to 

come up to Star. He’s going to call Sigma. He’s going to call Metalfit. 

He’s going to call Serampore. He’s going to call NACIP. He’s going to 

call Electrosteel. He’s going to get a number from them. And then he’s 

going to come back and he’s going to call me again. Maybe he wants to 

buy from Tyler/Union, but, you know, maybe my price is equal, but he’s 

going to try. Well, [the distributor would say] “I’d like to give you that 

job, but you’re off by 5 percent. You’ve got to give me a little bit 

more.[”] And then we cough it up again. And that’s why I’m saying by 

auction. I’m not aware of what the other person is bidding except for the 

information that I’m getting from my customer, the distributor. And you 

will see in this case we don’t believe what the distributor is telling us 
74

because he has a personal and a financial incentive to trick me into 

giving a lower price.

(Tatman, Tr. 266-267; see also F. 434 (Project Prices are often conveyed 

verbally). 

566. Project Pricing in the “auction” environment described in F. 565 results in losing 

“visibility” as to where the true competitive price level is, or as Mr. Tatman said, 

bidding in this environment is “shooting in the dark.” (Tatman, Tr. 267-268, 342, 926-

927).

567. McWane prefers to have greater visibility into where the true competitive market level 

is, i.e., the actual purchase and sale prices, so it can know what it’s “shooting at.” As 

Mr. Tatman stated: “If I can see it, I can shoot it.” (Tatman, Tr. 332, 361, 376-377).

568. Project Pricing was a significant part of Star’s competitive strategy, because it was the 

smallest competitor in the market and it needed to Project Price to remain competitively

viable. Project Pricing helped Star grow its market share. (McCutcheon, Tr. 2387; RX 

685 (Minamyer, Dep. 26-27)).

569. Sigma perceived Star to be very aggressive in its pricing and believed that Star had 

taken prices to a depressed level at which it was hard to compete. (Rybacki, Tr. 1136-

1137).

570. Mr. Pais of Sigma was of the opinion “that Star was most aggressive in their pricing 

under this special pricing or job or whatever it’s called.” (Pais, Tr. 1937).

iii. Gathering competitive information

571. In 2008, one way that McWane obtained competitive information was through its sales 

force, including through weekly narrative reports, submitted by the sales force, which 

reported information learned in the field. These “competitive feedback reports” were 

submitted to, and reviewed by, Mr. Jansen and Mr. Tatman. (RX 598; Tatman, Tr. 330, 

333-334, 915-916, 919-920).

572. Sigma learns about what its competitors are charging for Fittings “[t]hrough the 

marketplace, through my salespeople, through my regional managers and through my 

customers.” (Rybacki, Tr. 1108).

573. Although they reviewed and considered each other’s customer letters, McWane, Sigma, 

and Star, did not necessarily trust that the pricing announced in a competitor’s letter, 

especially multipliers, would actually be used by that competitor in the market, and they

preferred to rely on competitive input received from customers, rather than competitors. 

(Tatman, Tr. 306-307, 415-416, 899-901; Rybacki, Tr. 1108-1109, 3559-3660; 

Minamyer, Tr. 3240-3242; McCutcheon, Tr. 2507-2509). 
75

574. McWane knows that its competitors receive McWane’s customer letters. (Tatman, Tr. 

377, 1067 (“My competitors are going to pick up this letter through normal competitive 

channels”)).

575. When Mr. Minamyer of Star would read McWane’s pricing letters, he would consider 

whether the letters contained signals to Star. (CX 2525 (Minamyer, IHT at 77)).

576. Mr. Tatman received a copy of Sigma’s December 20, 2007 Customer Letter (F. 615) 

and read it, in part, as “bashing” McWane. (Tatman, Tr. 351-352; CX 0627 at 001, 

012).

577. Mr. Rybacki of Sigma reads McWane and Star letters carefully to determine their 

intentions, and he expects his competitors to do the same with Sigma letters. (CX 2531 

(Rybacki, Dep. at 205-206)).

578. Customer letters served to communicate to competitors, as well as customers. (F. 571-

577). 

2. Competitive Environment prior to January 2008

579. Demand for Fittings is largely driven by housing-related infrastructure construction and 

by construction of wastewater treatment plants, which in turn are driven by such factors 

as the rate of housing growth, and the age and condition of existing systems. (Joint 

Stipulations of Fact, JX0001 ¶ 11).

580. The collapse of the housing market in 2007 through 2008 had a particularly adverse 

impact on the waterworks industry, which depends on new housing starts to drive 

demand. (Tatman, Tr. 271-272; McCutcheon, Tr. 2654, in camera; RX 675 (Sheley, 

Dep. at 58); Rybacki, Tr. 3664, in camera).

581. During 2007, with the economic decline, the Fittings industry experienced a period of 

declining demand, increased price competition resulting in price erosion, and increased 

costs. (RX 690 (Rybacki, Dep. at 66-67); Tatman Tr. 263-265; CX 2457).

582. Beginning in 2007, demand for Fittings was falling because of the economic downturn 

and decreased demand for new housing. Business continued to drop off, particularly by 

the summer of 2008, when the economic crisis really hit “full steam.” (Tatman, Tr. 

269-272; Rybacki, Tr. 1105; McCutcheon, Tr. 2654, in camera).

583. With the economic decline, the Fittings market became more price competitive, as 

Distributors demanded discounts off published multipliers in order to compete for the 

limited number of jobs available with Contractors. (Tatman, Tr. 263-265; see also 

CX 2477 (Jansen, Dep. at 248-249) (the use of Project Pricing increased in or around 

August 2006 as the market started to decline)).
76

584. The price erosion in the Fittings market occurred not in published list prices or 

multipliers, but in the effective or “actual” multipliers. (CX 1138 at 001; Pais, Tr. 

2079). The effective multiplier is the average weighted multiplier at which Fittings 

products are sold in a given area and includes Project Pricing but not other discounts 

such as rebates. (Tatman, Tr. 329, 393-395).

585. Historically, McWane’s two United States plants had a higher cost of production than 

its Chinese plant and the overseas plants of its competitors. (Tatman, Tr. 431-432).

586. In 2007, the costs of doing business overseas, particularly in China, increased due to the 

withdrawal of the China export rebate, strengthening of the Chinese currency, increases 

in the costs of labor, raw materials, such as pig iron and scrap iron, commodity price 

increases, and energy price increases affecting freight and fuel. (RX 687 (Pais, Dep. at 

39-40); McCutcheon, Tr. 2515-2516; Tatman, Tr. 870-875; Rybacki, Tr. 1113).

587. Prior to January 2008, the cost of producing Fittings in China was lower than the cost of 

domestic production, although with China costs increasing, domestic production of 

small diameter “A” items on a high speed Disamatic (“DISA”) line was competitive 

with Fittings produced in China. (RX 642 (Page, Dep. at 111-112)).

588. On November 29, 2007, McWane’s CFO, Mr. Nowlin, transmitted to Mr. Walton a 

model Mr. Nowlin prepared, called a “sensitivity analysis.” The model looked at cost 

variables in China such as the Chinese currency, the Chinese Value Added Tax 

(“VAT”), and Chinese cost of inflation, and concluded that if the Chinese currency 

heats up and strengthens, that would not be good for McWane, because McWane 

produces in China, but that this would hurt importers a lot more than McWane. 

(CX 2481 (Nowlin, Dep. at 107-109); CX 2143).

589. In a December 22, 2007 internal email to Mr. McCullough and Mr. Walton, Mr. Tatman 

described “accelerated inflation in China compared to Domestic cost,” (CX 1702), and 

in an internal email three days later to Mr. McCullough, Mr. Jansen, and Mr. Walton, 

Mr. Tatman again stated that “China inflation [is] out pacing domestic costs.” 

(CX 2327).

590. Rather than scaling back production and reducing inventory in the face of declining 

demand, the then-manager of McWane’s Fittings business, David Green, increased 

production to spread fixed costs over a higher production volume, thereby creating the 

appearance of reducing manufacturing costs in the short term. (RX 642 (Page, Dep. at 

165-167)).

591. When Mr. Tatman assumed responsibility for the management of McWane’s Fittings 

business unit after Mr. Green’s departure at the end of 2007, McWane had “runaway 

inventory levels” in the face of declining demand. Mr. Tatman stated: “When I took 

over that facility or those operations, we had inventory levels that were three times 

normal. Every yard was full of fittings as far as the eyes could see. We had fittings 
77

sitting out in grass yards. We had just had more inventory than we could handle, and 

the marketplace was going down.” (Tatman, Tr. 214-215).

592. In 2007, McWane had excess inventory, creating “pressure on volume.” Pressure on 

volume refers to a smaller market, declining volume, and the need to increase volume.

(Tatman, Tr. 346-347 (“the market place is tanking . . . I need volume. My competitors 

need volume. Everybody needs volume.”)). 

593. Mr. Tatman’s main concern in late 2007 was to increase McWane’s sales volume in 

order to reduce excess inventory. Increasing volume was needed to justify keeping 

McWane’s foundries open. Mr. Tatman was more concerned about volume than price. 

(Tatman, Tr. 215-216). 

594. McWane had lost market share from 2006 through 2007. (CX 0622 at 003; see also 

Tatman, Tr. 262-264, 342 (McWane was losing share year over year)).

595. By late 2007, Sigma and Star each had Fittings sales forces that were approximately 

twice as large as McWane’s sales force of 8 to 10 persons. Mr. Tatman believed that 

McWane was losing share because McWane’s smaller sales force inhibited its ability to 

detect and respond to Project Prices being offered in the field. Due to this lack of 

visibility, McWane was getting “beat at the pricing game.” (Tatman, Tr. 262-264, 342 

(McWane was losing share year over year, due to others price undercutting); 269-270, 

281-283, 285-286, 1025, in camera). 

596. Mr. Tatman believed that salespeople for Sigma and Star were “better than ours . . . . I 

think they had more boots on the ground. I think they had better people at that point in 

time. And it is my understanding that their people were on an incentive-based [pay 

scale], which made them more aggressive probably than our salespeople, who were on 

fixed salaries.” (Tatman, Tr. 285).

597. Net pricing for McWane in 2007 was not keeping up with cost inflation. (CX 0627 at 

001). As Mr. Tatman explained: 

Inflation is 10 percent. We’re only getting 5 percent in price because 

everybody needs volume and they’re beating the crap out of one another. 

So if you’re looking there, we did not recover . . . inflation in 2007 

because we gave up more in price than what inflation was or we didn’t 

recover enough in price to offset inflation because of pressure on 

volume. Everybody is trying to get volume at this point.

(Tatman, Tr. 346).
78

D. January and February 2008 Pricing Events 

1. January 11, 2008 Customer Letter

a. Background

598. In a letter to its customers on October 5, 2007, McWane, citing rising costs, especially 

for off-shore operations, announced a multiplier increase to be effective November 5, 

2007, as follows: 

Blended Utility Fitting and Accessory Orders: +0.020

Domestic Utility Fitting and Accessory Orders: +0.010

(RX 401).

599. The McWane October 5, 2007 letter to customers further noted that the then-current list 

price would be retained and that it “is our intention to address future price actions with 

adjustments to invoice multiplier levels” rather than through list price changes. (RX 

401). 

600. On October 11, 2007, Star followed McWane by announcing in a letter to its customers 

that it was raising its multiplier on Fittings and accessories by +0.02, effective 

November 5, 2007, and that Star was retaining its then-current list prices. (RX 402).

601. In an internal email dated October 19, 2007 Mr. Pais of Sigma noted a prior meeting 

with Mr. Page of McWane. According to the email, the discussion included “changes 

that [Mr. Page] has initiated to respond to the weak market conditions” which were 

“publicly known in the AWWA industry,” including that Mr. Green had been removed 

as part of a restructuring at McWane “to be more efficient and manage their overall 

capacity more effectively” and that Mr. Green would be replaced by Mr. Tatman. In a 

subsequent internal email by Mr. Pais regarding his September 2007 meeting with Mr. 

Page, Mr. Pais stated his believe that Mr. Page was “disappointed at our failure to get a 

better landscape.” (CX 2118 at 001-002).

602. On October 23, 2007, Sigma announced in a letter to its customers that, due to a 

difficult market and increased costs, it would be implementing a price increase for 

Fittings, accessories and municipal castings, in “the next few months,” with the first 

increase being a multiplier increase on Fittings of “two or three” points, effective 

November 5, 2007, and the second being a list price increase for all Sigma’s products, 

to be effective January 2, 2008, which would be “a minimum of 6%.” (RX 015).

603. On November 30, 2007, Star announced in a letter to its customers that Star would be 

publishing a new price list, effective January 1, 2008, although Star did not state a 

percentage increase. (CX 0627 at 013).
79

604. On or about December 3, 2007, Mr. Page, of McWane and Mr. Pais of Sigma met in 

Birmingham, Alabama. (Pais, Tr. 1886-1887; CX 2482 (Page, Dep. 107-108); see also

CX 2037; CX 2038).

605. Mr. Page, although President and CEO of McWane, was not responsible for 

determining Fittings pricing, although he inquired about pricing or considered price 

increases, every couple of years. Mr. Pais testified they discussed Sigma potentially 

supplying McWane with metric sized fittings that were needed for international markets 

and that McWane did not have. (Pais, Tr. 1886-1887; CX 2037).

606. Mr. Pais of Sigma believed that he had developed a good relationship with Mr. Page of 

McWane. (Pais, Tr. 1871-1872; CX 2538 (McCutcheon, IHT (Vol. 2) at 229) (In 

conversation with Mr. McCutcheon of Star, Mr. Pais suggested he was friendly with 

Mr. Page of McWane)).

607. Mr. Page of McWane described his relationship with Mr. Pais of Sigma as follows:

Different. Victor really seems to be a kind of – or seemed to be desirous 

of being really entrepreneurial and an idea guy, I guess would be a good 

way to say it. And – and, periodically, off and on it would go in spurts 

where he would think he would have some good ideas. He would want 

to get together and discuss those ideas about joint ventures, selling his 

company to us, us doing business together in the Middle East. Usually, 

it involved his ideas, McWane money, and him making money on it. So 

we didn’t do any of them.

(RX 642 (Page Dep. p. 30); see RX 642 (Page Dep. p. 116-17 (“Victor [Pais] was very 

repetitive in his – in his focus and requests. Many, many times he would call or e-mail 

and talk about this. And, then I would say ‘Well, we’re not interested in that’ or ‘Yeah, 

give me more information on that.’ And he would say, ‘In response to your feedback, 

here’s – here’s an opportunity.’ So, it was all exploratory. None of these things 

existed. They were all opportunities in Victor’s mind that once again, with his 

relationships and – McWane’s business, that there might be something for us to do 

together that would be successful”; see also RX 642 (Page Dep. p. 275 (“[A]s we’ve 

seen a number of things, Victor lives in LaLa Land. He lives an illusion that he thinks 

he is running around getting things done, and he just has an oversized pair of pants

on.”)).

608. Mr. Page and Mr. Pais testified that their December 3, 2007 meeting concerned 

international opportunities for McWane. In addition, Mr. Pais mentioned in this 

meeting forming an industry association, which was one of what Mr. Page called Mr. 

Pais’ “many . . . ideas” but Mr. Page testified he had had nothing to say on the topic 

because he did not know any facts on the matter. Mr. Pais and Mr. Page denied 

discussing domestic Fittings; prices being charged in the market place; pricing 

discipline; McWane’s or Sigma’s costs; or ways they could work together in the 

marketplace in this regard. (Pais, Tr. 1886-1887; RX 642 (Page, Dep. 80-82)). 
80

609. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to McWane’s 

office for two minutes at 2:04 p.m. on December 19, 2007. (CX 1621-A at 124, in 

camera; Rybacki, Tr. 3617, in camera).

610. Calls from a cell phone issued to Mr. Rybacki of Sigma were placed to a cell phone 

issued to Mr. McCutcheon of Star at 1:46 p.m., 2:20 p.m., 2:39 p.m., and 2:55 p.m. on 

December 19, 2007 for one minute each. Calls were placed from a cell phone issued to 

Mr. McCutcheon to a cell phone issued to Mr. Rybacki at 3:33 p.m. and 4:09 p.m. on 

December 19, 2007. Another call was placed from a cell phone issued to Mr. Rybacki

to a cell phone issued to Mr. McCutcheon for two minutes at 5:03 p.m. on December 

19, 2007. (CX 1621-A at 124, in camera; McCutcheon, Tr. 2474, in camera; Rybacki, 

Tr. 3616-3618, in camera).

611. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to McWane’s 

office at 2:16 p.m. on December 20, 2007, which lasted 12 minutes. (CX 1621-A at 

125, in camera; Rybacki, Tr. 3622-3623, in camera).

612. Mr. Rybacki testified he did not recall having a telephone conversation with Mr. 

Tatman on the dates set forth in F. 610-611, but that one call to Mr. Tatman might have 

been to welcome Mr. Tatman to the industry. (Rybacki, Tr. 3625-3626).

613. Mr. Rybacki’s responsibilities for Sigma in 2008 and 2009 did not require him to 

communicate with anyone at Star or McWane. (Rybacki, Tr. 1087-1089).

614. During the relevant period, Mr. Rybacki of Sigma had a personal friend and former 

colleague, named Tom Frank, who worked at McWane, and with whom he periodically 

spoke. (Rybacki, Tr. 3610, 3650-365; RX 467).

615. On December 20, 2007, Sigma issued a letter to its customers delaying implementation 

of Sigma’s Fittings list price increase (previously scheduled for January 2, 2008), 

explaining in part:

Unfortunately for you and us one of our competitors in the Fitting

Industry has not announced a New List Price increase for 2008 despite 

the fact that they are subject to the same cost pressures as the rest of us. 

As a result the New List Price Sheet as it pertains to Fittings only will be 

delayed for the time being. It is our sincere hope that the delay will be 

short term and that this Price Increase which is healthy for all of us will 

be implemented in the very near future.

(CX 2455 at 001 (emphasis in original); Rybacki, Tr. 1114-1116).

616. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to a cell phone 

issued to Mr. McCutcheon of Star for 22 minutes at 9:37 a.m. on December 21, 2007. 

(CX 1621-A at 112, in camera; McCutcheon, Tr. 2476, in camera).
81

617. On December 22, 2007, Mr. Tatman sent an internal email to Mr. McCullough, with a 

copy to Mr. Walton, with the subject line “DIWF List Price Change.” The email stated 

as follows:

Leon, I just wanted to put something on your radar in case it comes up 

before we have a chance to speak. 

Sigma recently posted a new List Price effective Jan 2nd and they’ve 

been pulsing sources trying to see if Tyler/Union will follow. 

Like the last one, the % increases vary greatly by item with no apparent 

pattern. 

Star previously announce[d] their intent to publish a new LP effective 

Jan 2nd and now they’ve just posted a letter stating the effective date has 

been changed to Feb 4th. Unlike Sigma Star has yet to post any actual 

LP numbers. I believe they are waiting to see what Tyler/Union will do 

before actually posting numbers or printing books. 

As you may recall, our Nov multiplier increase announcement stated that 

our intent was to manage any future required market pricing with 

multiplier adjustments rather than LP changes. 

Given both the change in the Tyler/Union leadership structure and the 

accelerated inflation in China compared to Domestic cost, I believe 

we’re in a unique position to help drive stability and rational pricing with 

the proper communication and actions. 

I have a concept that I believe will work if properly executed. There are 

some additional data points to review, but I should be in a position to 

discuss with you in detail during the sales meeting or potentially before 

if needed. I don’t believe with our silence and Star’s push 

announcement that Sigma will hold to their Jan 2nd effective date so we 

have some time to get it right. Enjoy the holiday.

(CX 1702).

618. Mr. Tatman explained price “stability” and its effects as follows: 

[I]f the published multiplier is a .25, and on a weighted average of all the 

jobs that we sell over a period of time I see that where we’re selling at is 

on average 10 percent below where we’re published at, . . . we’re 

starting to get in the unstable environment, which means there’s a very 

high variation between where we’re publishing at and where we’re 

actually selling at . . . [This is] on average – that’s not on a given job. 
82

That’s on everything that you’re selling in a market region over a period 

of time[. I]f the weighted average is more than a 10 percent discount off

of published multipliers, then . . . I’m going to have a tough time finding 

out where the true competitive price is because there’s too big of a 

spread.

(Tatman, Tr. 284 (see also F. 567 (“If I can’t see it I can’t shoot it”)).

619. In late December, Star revised its November 30, 2007 list price change announcement 

(F. 603) to change the effective date of the price change to February 4, 2008. (CX 0627 

at 0014).

620. On December 25, 2007, Mr. Tatman sent a McWane internal email to Mr. McCullough, 

with a copy to Mr. Jansen and Mr. Walton, attaching a PowerPoint file titled, “Draft 

Presentation for 1Q 2008 DIWF LP Review.ppt.” The email referred to the draft 

presentation as “a concept we might want to discuss in regards to our pricing strategy 

for utility fittings.” Mr. Tatman’s email continued: 

This is a draft presentation as there’s additional analysis required before 

a final recommendation could be made.

Our past attempts to drive stable pricing haven’t been too successful. 

However, our new leadership structure coupled with China inflation out 

pacing domestic costs may provide a unique opportunity for success 

provided our strategy and execution is correct.

Please let me know if this concept is something you want me to scope 

further.

(CX 2327).

621. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to a cell phone 

issued to Mr. Tatman of McWane for three minutes at 10:15 a.m. on December 27, 

2007. (CX 1621-A at 113, in camera; Tatman, Tr. 367; Rybacki, Tr. 3624-3626, in 

camera).

622. A call from a cell phone issued to Mr. Tatman of McWane was placed to a cell phone 

issued to Mr. Rybacki of Sigma for six minutes at 12:11 p.m. on December 27, 2007. 

(CX 1621-A at 113, in camera; Tatman, Tr. 367-368; Rybacki, Tr. 3626, in camera).

623. Mr. Tatman testified that he did not recall speaking with Mr. Rybacki on December 27, 

2007, or what they might have spoken about. (Tatman, Tr. 367-368).

624. Mr. Rybacki testified that he had “no clue” what he and Mr. Tatman might have spoken 

about on December 27, 2007. (Rybacki, Tr. 3626).
83

625. Mr. Tatman prepared a set of 14 PowerPoint slides, which comprise CX 0627, for 

purposes of a McWane internal discussion among himself, Mr. Walton, and Mr. 

McCullough regarding how to competitively react to what was going on in the 

marketplace. (Tatman, Tr. 345-346).

626. The 14 slides comprising CX 0627 were: a summary of the then-current competitive 

environment (CX 0627 at 001); a graphed comparison of Sigma’s new price list to 

McWane’s existing price list, (CX 0627 at 002); data regarding cost increases in China 

(CX 0627 at 003); a slide titled “Desired Message to the Market & Competitors” (CX 

0627 at 004); a slide assessing inflation data against announced price increases 

(CX0627 at 005); two draft customer letters (CX0627 at 006-007); a slide titled “back 

up reference material” (CX 0627 at 008); McWane’s last published national multiplier 

map for “blended” Fittings (CX 0627 at 009); and copies of customer letters sent by 

McWane, Sigma, and Star in the October and November 2007 time period. (CX 0627 

at 010-014).

627. Mr. Tatman prepared a spreadsheet in connection with determining Fittings price 

multipliers for January 2008, which comprises CX 1664. The analysis set forth, for 

every state, and for both blended and domestic Fittings, McWane’s then-effective 

multiplier (i.e., the multiplier at which Fittings were actually selling in the marketplace, 

F. 584) current published multiplier, and a proposed multiplier; and identified whether 

or not the proposed multiplier was an increase over the effective multiplier. The 

spreadsheet also contains Mr. Tatman’s analysis of the financial impact of those 

multiplier changes. (CX 1664; Tatman, Tr. 329, 885). 

628. Mr. Tatman analyzed Sigma’s list prices, obtained from Sigma’s website, by entering 

them into a spreadsheet and applied them to the mix of products and volume McWane 

would likely sell. (Tatman, Tr. 348).

629. Based on his analysis, Mr. Tatman determined that the weighted average of Sigma’s 

announced list price increase amounted to a 25% increase. (Tatman, Tr. 348).

630. Mr. Tatman believed that if McWane followed Sigma’s 25% increase, McWane would 

lose more visibility into where the competitive level was. The “competitive level” 

refers to the price level at which the actual market is selling, i.e., the actual net price 

level in the marketplace. (Tatman, Tr. 348, 379 (“So if I’m offering a published price 

of $20, where is the actual net price in the marketplace? Is it $15? Is it $14? Is it $10. 

I’m trying to figure out where competitors are taking business away from me”, what are 

they doing with twelve different price mechanisms going on. Job pricing is one of 

twelve ways to sneak price out of there. I’m just trying to figure out where they’re at. 

And wherever they are at, wherever the customers are truly buying at, I call that the 

competitive level, sir”)).

631. Mr. Tatman recommended to his bosses that McWane not follow Sigma’s proposed 

25% list price increase, but instead publish an average multiplier increase of 
84

approximately 8% over McWane’s effective multipliers. (Tatman, Tr. 215-216, 

340,354-359).

632. Mr. Tatman’s pricing strategy for McWane was designed to reduce the “wiggle room 

that they had from a financial standpoint so that I could see what was going on.” 

(Tatman, Tr. 361) (“If I can see it, I can shoot it.”)). 

633. Mr. Tatman’s pricing strategy for McWane was designed to put financial pressure on its 

competitors. As Mr. Tatman explained, reduced “wiggle room” affects the amount of 

discounting the competitor can do because if it “is making 50 percent profit on 

something, he’s got a lot of things he can do. If he’s making 20 percent profit on 

something, he doesn’t have near the amount of flexibility.” (Tatman, Tr. 361). 

634. Mr. Tatman’s concept was to narrow the range between the published price and actual 

prices and thereby give his competitors less “headroom,” within which Star and Sigma 

could maneuver to undercut McWane on price. (Tatman, Tr. 346-349).

635. Mr. Tatman’s objective was to stabilize market pricing by compressing the spread 

between published pricing and actual pricing, so as to achieve greater pricing 

transparency. (Tatman, Tr. 1072).

636. McWane’s strategy was designed to serve its goal of increasing volume and gaining 

market share. (Tatman, Tr. 521-522).

637. A McWane internal document, CX 0627 at 001, titled “Current Competitive 

Environment” read as follows: 

General:

 Net pricing in 2007 lagged inflation due to pressure on volume

 The July LP increase wasn’t fully realized by Sigma/Star due to 

lower multipliers and allowing specific accounts to continue buying 

off prior LP

 Continued inflation out of China is increasing pressure for netting 

real price

Tyler/Union:

 Oct 5th: Announcement stated that any future price actions would be 

handled with multiplier changes rather than by publishing new List 

Price books.

 Due to Domestic Mfg our average inflation is well below Sigma and 

Star’s

Sigma:

 Oct 23rd: Announce a minimum LP increase of 6% for Jan 2nd

 Mid Dec: Posted new LP files on their website (16% to 46%) 

increase ~ 25% on average
85

 Dec 20th: Delayed their effective date while bashing Tyler/Union 

for not following

Star:

 Nov 30th: List Price increase announced for Jan 2nd effective date

 Late Dec: Revised effective date to Feb 4th

 No actual values or % changed have yet to be announced or posted

(CX 0627 at 001 (emphasis in original)).

638. A McWane internal document, CX 0627 at 004, titled “Desired Message to the Market 

& Competitors” read as follows:

 Tyler/Union will be consistent and follow through with what 

we’ve formally communicated.

 T/U will encourage/drive both price stability and transparency.

 T/U will adjust multipliers as required to remain competitive 

within any given market area. (Consistent Job Pricing will be met with 

general market actions)

 For 2008, we will support net price increases but will do so in 

stepped or staged increments. A prerequisite for supporting the 

next increment of price is reasonable stability and transparency 

at the prior level.

Due to their now more desperate need for price, I believe that 

Sigma and Star will mimic and verbally follow any program we 

publish. However the keys to actual success are:

1. T/U being consistent with what we say for an extended 

period (> 3 months)

2. Sigma & Star’s mgt pulling price authority away from 

front line sales and customer service personnel to add 

discipline to the process

3. Support from our major customers to abandon the current 

process of branches calling multiple suppliers to auction 

for price. ( We’ll need face to face meetings)

4. The Big 3 not allowing 3rd tier suppliers like Serampore to 

disrupt the process

(CX 0627 at 004 (emphasis in original)).
86

639. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to a cell phone 

issued to Mr. Tatman of McWane for three minutes at 11:03 a.m. on January 3, 2008. 

Mr. Rybacki acknowledged that it appeared from telephone records that he spoke to Mr. 

Tatman for a couple of minutes on January 3, 2008 but testified he had no idea what 

they talked about. Mr. Tatman also testified he had no recollection of what was 

discussed. (CX 1621-A at 114, in camera; Tatman, Tr. 369-370; Rybacki, Tr. 3627, in 

camera).

640. A call from a cell phone issued to Mr. Tatman of McWane was placed to a cell phone 

issued to Mr. Rybacki of Sigma for nine minutes at 4:30 p.m. on January 4, 2008. Mr. 

Rybacki and Mr. Tatman testified they did not remember or know what they discussed. 

(CX 1621-A at 115, in camera; Tatman, Tr. 370, in camera; Rybacki, Tr. 3627-3628, in 

camera).

641. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to a cell phone 

issued to Mr. McCutcheon of Star for 26 minutes at 5:47 p.m. on January 9, 2008. 

(CX 1621-A at 116, in camera; Rybacki, Tr. 3628-3629, in camera).

642. Mr. Tatman spoke with Mr. Rybacki “a couple of times” but he did not know what they 

discussed. (Tatman Tr. 364). 

643. Mr. Tatman was unable to remember those calls, and did not know what was discussed. 

(Tatman, Tr. 367-370 (“Q. But you don’t know what you and Mr. Rybacki might have 

talked about on December 27? A. I don’t know if he said, ‘Merry Christmas. Welcome 

to the rat race.’ I have no clue.”)).

644. One of the calls from Mr. Rybacki may have been to welcome Mr. Tatman to the 

industry. Otherwise, Mr. Rybacki could not recall what was discussed. (Rybacki, Tr. 

3626-3628, in camera (“Q. Do you know what you and Mr. Tatman spoke about for six 

minutes on the afternoon of December 27? A. Not a clue.”; “Q. And what did you and 

Mr. Tatman talk about for a couple of minutes on January 3? A. I have no idea.”; “Q. 

And what did you and Mr. Tatman talk about for nine minutes on the afternoon of 

January 4, 2008? A. I have no idea. None.”); Rybacki, Tr. 1088-1089).

b. McWane’s January 11, 2008 Customer Letter

645. On January 11, 2008, McWane announced in a letter to its customers, the following:

Dear Valued Customer,

Due to continued rising costs, especially within our off-shore operations, 

we find it necessary to increase pricing on Utility Fittings and 

Accessories.

As per our prior letter of October 5, 2007, we will adjust pricing by 

increasing multipliers while retaining our current List Price, LP-5072. 
87

Letters stating the new region specific multipliers will be mailed January 

18, 2008. The increase will be 10% to 12% above the current prevailing 

multiplier levels on Blended Fittings and Accessories and 3% to 5% on 

Domestic Fittings effective February 18, 2008.

To help our distribution customers better manage their inventory 

valuations and compete on a more level playing field, it is our intention 

going forward to sell all products only off the newly published 

multipliers. We will continue to monitor the competitive environment 

and adjust regional multipliers as required to provide you with 

competitive pricing.

All annual municipal bid contracts will be honored per the terms of the 

contract. Jobs quoted prior to this announcement will be honored 

through March 1, 2008, with acceptable documentation provided to your 

local Tyler/Union sales representative.

If the current inflationary trends continue as forecasted, we anticipate the 

need to announce another multiplier increase within the next six months. 

However, we will only do so as conditions require.

We thank you for your business and as always we remain committed to 

providing you with quality products and service at competitive prices.

Sincerely,

/s/

Jerry Jansen

National Sales Manager

(CX 1178).

646. The January 11, 2008 Customer Letter was the result of Mr. Tatman’s internal McWane 

discussions with Mr. McCullough and Mr. Walton. (Tatman, Tr. 371).

647. McWane knew internally that in order to meet its objectives of increasing volume and 

share, it would have to Project Price. Mr. Tatman hoped that by declaring a purported 

intent to stop Project Pricing, McWane might lull (or “head fake,” as Mr. Tatman called 

it) Star and Sigma into temporarily reducing their Project Pricing, leaving McWane to 

price however it deemed appropriate, and thereby gain a competitive advantage. 

(Tatman, Tr. 893-894).

648. Mr. Tatman wrote the January 11, 2008 Customer Letter. (CX 2477 (Jansen, Dep. at 

254-255)).

649. Regarding the date of March 1, 2008, stated in CX 1178 (F. 645) as the last date prior 

quotes would be honored, Mr. Tatman explained:
88

[W]e would honor old job pricing as long as you got your orders in by 

March 1 because you -- some of that pricing is twelve months old. 

There’s a long time between when you quote it and then the time you 

actually sell at, so what we were trying to do is get customers on our new 

pricing and flush out the old pricing that could be twelve months old 

there. So what we said is we’ve given you any sort of incremental job 

price in the past, could be 12 months ago, could be 18 months ago. You 

have until March 1 to enter that order. We’ll honor that price. But after 

March 1, we want to requote that business. 

(Tatman, Tr. 419-420). 

650. In an email transmitting the January 11, 2008 Customer Letter to Mr. Webb and others 

at HD Supply, Mr. Tatman explained the key points, as follows:

• The % change is significantly lower than the List Price change Sigma 

posted on their website which appears to be in the range of ~25% on 

average

• We are going to maintain our List Price Book and make the 

adjustment with multipliers

• The lower % for Domestic Product reflects both lower cost inflation 

in the US compared to China and our desire to support Domestic 

Specifications

• Distributors are ultimately better served with adherence to published 

pricing as instability and the corresponding price erosion only 

reduces your profitability

(CX 2172).

651. McWane communicated its new region-specific multipliers, effective February 18, 

2008, in letters to customers dated January 18, 2008. (Tatman, Tr. 389-390, 411-412; 

e.g., CX 0896 at 001; CX 1672 at 001; RX 608; CX 0035 at 001, 003).

652. The multipliers that Mr. Tatman proposed in CX 1664, Mr. Tatman’s spreadsheet which

he prepared in connection with his recommendations for multiplier changes in 

December 2007 (F. 627), were used in the final multiplier map announced by McWane 

on January 18, 2008. (Tatman, Tr. 1054-1055; compare CX 1664 with CX 0035 at 

003).

653. The non-domestic Fittings multipliers announced in McWane’s January 18, 2008 

customer letters were below the then-current effective multipliers in eight states: New 

Hampshire, New Jersey, Delaware, Maryland, Virginia, Arkansas, South Dakota, and 

Idaho. (Tatman, Tr. 403-404; CX 1664 (“final regional multipliers” worksheet)).
89

654. The non-domestic Fittings multipliers announced in McWane’s January 18, 2008 

customer letters were above the then-current effective multipliers in at least 40 states or 

territories: Connecticut (3.6% increase), New York (10.5% increase), Rhode Island 

(10.7% increase), Massachusetts (20.8% increase), Vermont (19.2% increase), 

Pennsylvania (8.8% increase), West Virginia (11.9% increase), Ohio (16% increase), 

Indiana (13.3% increase), Kentucky (3.7% increase), Alabama (7.4% increase), Georgia 

(15.3% increase), North Carolina (7.7% increase), South Carolina (9.5% increase), 

Florida (5.5% increase), Tennessee (2.7% increase), Mississippi (6.7% increase), 

Louisiana (3.0% increase), Oklahoma (16.2% increase), Missouri (7.6% increase), 

Kansas (13.1% increase), Nebraska (13.4% increase), Michigan (6.5% increase), 

Minnesota (6.1% increase), North Dakota (11.9% increase), Iowa (5% increase), Illinois 

(1-80 north) (13.3% increase), Wisconsin (6.9% increase), Arizona (5.8% increase), 

New Mexico (7.2% increase), Texas (8.2% increase), Utah (33.3% increase), Wyoming 

(9.9% increase), Colorado (8.6% increase), Montana (8.6% increase), Washington 

(35.5% increase), Oregon (31% increase), California (10.7% increase), Nevada (9.3% 

increase); Puerto Rico (12.5% increase). (CX 1664 (“final regional multipliers” 

worksheet); Tatman, Tr. 405-406 (walking through calculation for 35.5% increase in 

Washington)).

655. McWane’s January 2008 multiplier adjustment, vis a vis the previous published 

multipliers, resulted in reductions in 28 states and no change in another 8 states. 

(Tatman, Tr. 885; CX 1664; see also Normann, Tr. 4778).

656. In late 2007, Mr. Jansen of McWane approached Vincent Napoli, whose position as an 

accountant with McWane was being eliminated, about taking a newly created position, 

eventually called “pricing coordinator” and/or “pricing manager.” Mr. Napoli’s 

responsibilities in 2008 were to assist Mr. Jansen with handling product claims, and 

keeping track of, and verifying, individual job pricing on submitted orders, as 

middleman between the salespeople and the order entry people. Mr. Napoli also had 

limited authority to approve pricing adjustments, in the range of one to three discount 

points off the multiplier. As Mr. Napoli stated: “There’s nothing wrong with [giving a 

discount] except you sure want to know what -- when it’s happening, or you like to 

know before it happens, because they [the sales persons] don’t know what the 

ramifications are as far as profitability.” Unusual pricing requests or requests for 

approval outside Mr. Napoli’s limited approval authority went to Mr. Jansen for 

approval. (RX 640 (Napoli, Dep. 35-36, 43-44, 46, 49-50); Tatman, Tr. 931, 1007).

657. Once Mr. Napoli became the pricing coordinator for McWane, the local sales agents 

were instructed to “run [discounts] through” him and forms were designed for this 

purpose. According to Mr. Napoli, not all sales agents complied with the system. (RX 

640 (Napoli, Dep. 47-48); see also CX 2485 (Walton, Dep. 12-122) (“I think there was 

a move to go to a more centralized decision-making structure for pricing instead of 

having individual salespeople make decisions in individual markets . . . I would say 

they probably had to ask for approval from somebody.”)). 
90

658. Mr. Walton of McWane was a proponent of making pricing decisions at a centralized 

location, so as to get a national view of what was happening. As he explained: 

[I]f we have a salesperson in California making a pricing decision, it 

may not be in our best interest for what -- how that affects Texas or 

Missouri or Florida or New York, . . . [O]ftentimes when somebody 

makes a local decision here, it has effects in other places that may or 

may not be in our best interest.

(CX 2485 (Walton, Dep. 32)).

659. Mr. McCutcheon of Star received a copy of McWane’s Friday, January 11, 2008 letter 

from a customer on or about Monday, January 14, 2008, and forwarded the letter to Mr. 

Minamyer. Sigma executives received a copy of the letter on or about January 14, 

2008, from one of its sales agents. (CX 0038; McCutcheon, Tr. 2505-2507; Rybacki, 

Tr. 3557-3558; CX 1291; Minamyer, Tr. 3156).

660. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to a cell phone 

issued to Mr. McCutcheon of Star on January 15, 2008 for two minutes. A call was 

placed from Mr. Rybacki’s cell phone to Star’s general 800 number on January 16, 

2008 for ten minutes. A call was placed from a cell phone issued to Mr. Rybacki to a

cell phone issued to Mr. McCutcheon on January 24, 2008 for nine minutes. Neither 

Mr. McCutcheon nor Mr. Rybacki recalled any details about these calls, or even 

whether any communication between them actually took place. (CX 1621-A at 108, 

117, in camera; McCutcheon 2475-76, in camera; Rybacki, Tr. 3629-3632).

2. Sigma’s reaction to McWane’s January 11, 2008 Customer 

Letter

661. After receiving McWane’s January 2008 pricing letter, the letter was reviewed and 

discussed among the regional managers and the sales team at Sigma. Mr. Rybacki 

consulted with Mr. Fox and others to discuss what McWane was doing with multipliers 

and to address how to respond. (Rybacki, Tr. 3692-3695).

662. Sigma did not receive McWane’s January 11, 2008 Customer Letter from anyone at 

McWane. (Pais, Tr. 2058-2059; McCutcheon, Tr. 2506-2507).

663. On January 24, 2008, Mr. Pais of Sigma sent an internal email to “M20.” The email 

group “M20” consists of Sigma’s top managers. The email attached a spreadsheet 

analysis identifying Sigma’s fittings sales in each territory in December 2007 and each 

multiplier level, and McWane’s new multiplier, in order to determine if McWane’s new 

multipliers “present a real improvement over” Sigma’s “actual current” multiplier 

levels. Mr. Pais noted that the analysis showed the spread of multiplier levels and also 

computed the weighted average multiplier for each territory. According to Mr. Pais, the 

analysis showed that most of Sigma’s selling prices were at “very, very low 

multipliers.” Mr. Pais concluded based on the analysis that when comparing “apples to 
91

apples” McWane’s new multipliers did not provide much improvement in many areas, 

reasonable improvement in some areas, only marginal or no improvement in many 

territories, and a lowering in some territories. (CX 1145; see also Rybacki, Tr. 3695 

(analysis showed that some multipliers were lower than Sigma’s at that time); 

Brakefield, Tr. 1218). 

664. In the January 24, 2008 Sigma internal email referred to in F. 663, Mr. Pais continued:

It’s likely that [McWane] did wish to make a definite effort to improve 

the multiplier levels -- but, may have based their choices for the NEW 

multipliers on the actual documented competitive pricing that they are 

known to procure proof for, from the customers. Unfortunately, the 

illogical pricing approach used by Star -- and hence SIGMA -- for ‘Plant 

quotes’ with lower ‘special’ multipliers may have biased [McWane’s] 

decisions in pegging the NEW multipliers at where they are. Though 

Tyler is beginning to pay attention to PW jobs too, they just don’t 

understand why PW jobs need to be given LOWER pricing -- when in 

fact, for Soil Pipe, Tyler and CP are known to offer HIGHER prices, 

since they feel the Distributors don’t commit their resources to stock and 

usually order direct job-site shipments!

I HAVE URGED LARRY TO INITIATE A NEW COMMITTED AND 

SERIOUS EFFORT TO NORMALIZE ALL PRICING FOR FITTINGS 

-- AT SAME LEVELS -- PW AS WELL AS OTHER ORDERS, TO 

ELIMINATE THE CONFUSION WE ARE CREATING WITH 

CUSTOMERS AND COMPETITORS, LEADING TO LOWER 

OVERALL PRICING LEVELS.

Though Tyler’s NEW multipliers are discouraging, this is both a lesson 

and an opportunity [for] Sigma and Star to develop a patient and 

disciplined Marketing approach and demonstrate to [McWane] that we 

are capable of being part of a stable and profitability conscious industry. 

This is the ‘leadership capital’ we created when we acquired PCI and 

reduced the supply base to just 3 -- but, so far, we have NOT been astute 

enough to derive any returns from this capital!

Let’s get-it-done in 08 . . .

(CX 1145 at 001-002 (emphasis in original)).

665. “PW” as used in Sigma’s January 24, 2008 internal email referred to in F. 664, means 

“plant work,” such as water treatment plant work. Plant work generally uses the largest 

size fittings and a lot of different, very uncommonly used configurations. (Pais, Tr. 

1912-1913; Rybacki, Tr. 1129).
92

666. Historically, Sigma charged different prices for plant work fittings than for the smaller 

fittings used in the underground, housing subdivision-related, business. (Pais, Tr. 1913-

1915). 

667. Sigma’s smaller fittings were generally sold into Distributor inventory and managed by 

Distributors, because the configurations and volume used were relatively predictable. 

Over the years, however, for financial reasons, Distributors reduced fittings purchased 

for stock. When Distributors submitted a single list for all requirements, without 

stocking for inventory, they were confused by the dual pricing system and were 

demanding that discounted prices apply to all requirements. (Pais, Tr. 1913-1915; see 

also CX 2528 (Pais, Dep. at 263-267) (Sigma sought to turn back the practice of special 

pricing, which had spread from the plant work segment into stocking orders); RX 687 

(Pais, Dep. at 82-83)). 

668. Through his January 24, 2008 email (F. 663-664) Mr. Pais wanted to encourage 

Sigma’s sales force to minimize the practice of plant quotes with lower special 

multipliers because, if too aggressive, such special pricing causes a vicious cycle of 

price erosion and keeps prices at a depressed level, which hurts Sigma and its 

competitors. (Pais, Tr. 1920-1922). As Mr. Pais explained: 

Our sales -- like any salesperson, they hate to lose any order. They 

somehow think that there is only that order that they’re chasing, and 

there may not be another one coming the next day. And as a result, they 

get all anxious, . . . if they feel that from their regular good customers 

they’re losing business . . . . So in that -- in that anxiety, if they just 

lower prices too aggressively, then they could prompt the competitors 

also to react and start a vicious cycle. So this is all in attempt to make 

them aware one of the way of how to be a smarter salesperson by not 

giving into too many requests for discounts.

(Pais, Tr. 1921-1922; see also Pais, Tr. 1920 (“So because we were indulging in this 

practice which was not smart anymore, not relevant, we felt this was forcing our other 

competitors to keep the price at a depressed level and hurting us and perhaps 

themselves, too.”)).

669. Mr. Rybacki interpreted Mr. Pais’ January 24, 2008 email to be asking the sales team to 

pull back on job pricing. Mr. Rybacki did not disagree with Mr. Pais that Sigma needed 

to pull back. (Rybacki, Tr. 1129-1130).

670. Mr. Rybacki interpreted McWane’s pricing changes to “squeeze . . . the multipliers 

[making] it very difficult for [Sigma] to make very much margin.” (Rybacki, Tr. 1131). 

671. Mr. Pais had “always suggested” that Sigma firm up or eliminate Project Pricing, in 

order to be more profitable and consistent in its pricing approach. (Rybacki, Tr. 3545). 
93

672. Sigma was always trying to curtail Project Pricing, including in 2008. Since Mr. 

Rybacki joined Sigma in 1990, Project Pricing was an “ongoing battle within Sigma, 

within the industry.” Sigma was trying to be more consistent and disciplined in pricing 

“every year, every day to today” and were “always trying to curtail project pricing.” 

Project Pricing is inconsistent with consistent and disciplined pricing. (Rybacki, Tr. 

3523-3524, 3545).

673. Sigma knew that it could not eliminate Project Pricing. (Rybacki, Tr. 1130; Pais, Tr. 

2139-2140 (“[W]e were not trying to eliminate a special pricing, we were trying to 

minimize it . . . .”); Pais, Tr. 1921 (“[E]liminating the practice is wishful thinking. I 

was just trying to have them minimize it.”)).

674. On or about January 29, 2008, Sigma issued a letter to its customers, signed by Mr. 

Rybacki, as follows:

Dear Valued Customers,

As you are all aware, SIGMA Corporation was intending to put out a 

new list price sheet on January 2, 2008 which showed a significant 

increase in all our products due to the increased cost of raw materials, 

freight, personnel, etc. When one of our competitors chose not to have a 

list price increase but rather a multiplier increase, we decided to follow 

suit and on February 25th your new multipliers will be in effect for 

almost every territory. The key word is “almost” as a few of [the] 

territory multipliers are below what you currently receive from us and 

some are in fact well below.

It is our intent to raise prices in 2008, not because we arbitrarily feel like 

raising them but because every manufacturer in the Waterworks Industry 

that has Iron products needs one. Manufacturing needs a price increase, 

distribution needs a price increase, and with product links such as 

Ductile Iron Pipe and Valve & Hydrants you’ve already witnessed 

significant charges.

We think it’s unwise and irresponsible to lower multipliers and devalue 

your inventory, so your Regional Managers will send you new 

multipliers in the next few days as long as they exceed your current ones. 

We apologize for the confusion and lack of discipline our segment of the 

Industry has shown as we at SIGMA Corporation are committed to make 

this a more profitable business for all. Thanks for your support and 

understanding and we wish you success throughout 2008 and beyond.

(CX 1189).

675. In the January 29, 2008 letter to its customers, in apologizing for “the confusion and 

lack of discipline,” shown by Sigma’s “segment of the market,” Mr. Rybacki was 
94

referring to Sigma’s lack of consistency in pricing, which confuses customers as to what 

price they are expected to pay, and that being “disciplined” means trying to stick to 

published prices. (CX 1189; Rybacki, Tr. 3520-3522). 

676. Sigma’s January 29, 2008 customer letter did not announce any change in Sigma’s 

practice of quoting plant work with lower special multipliers, as referred to in Mr. Pais’ 

January 24, 2008 internal email. (F. 663-664, 674). 

677. Sigma did not follow all of McWane’s multipliers. Sigma’s changes followed some of 

McWane’s January 2008 multiplier changes, but Sigma did not follow those that would 

result in a multiplier lower than Sigma’s then-existing published multipliers. Sigma 

“could not afford to follow [McWane] down.” (CX 1189; Rybacki, Tr. 1126-1127; 

3694-3697).

678. On or about February 1, 2008, Sigma sent letters to its customers announcing new 

region-specific multipliers, effective February 18, 2008, pursuant to its January 29, 

2008 customer letter. The letters noted that “[a]ll municipal bids will be honored 

through the length of the contract,” and that “[j]obs quoted prior to this announcement 

will be honored through March 1, 2008.” (CX 0848 at 002; Minamyer, Tr. 3196).

3. Star’s reaction to McWane’s January 11, 2008 Customer Letter

679. Historically, Star followed McWane’s price increases. (Minamyer, Tr. 3185, 3243-

3244). 

680. It is normal procedure for Star that if McWane comes out with a price increase, Star 

wants to be ready to follow as quickly as possible. (CX 2538 (McCutcheon, IHT (Vol. 

2) at 424)).

681. Star received a copy of McWane’s January 11, 2008 Customer Letter from one of Star’s 

customers. (McCutcheon, Tr. 2506-2507).

682. Mr. Minamyer, of Star, read the statement in McWane’s January 11, 2008 letter to its 

customers that “it is our intention going forward to sell all products only off the newly 

published multipliers” (F. 645) to mean that McWane was telling its customers that they 

want to sell at the multiplier and stay there; in practice, no Project Pricing. Mr. 

Minamyer acknowledged that it was possible this was a communication to Sigma and 

Star as well. (CX 2525 (Minamyer, IHT at 71, 76-77)). 

683. Mr. McCutcheon of Star did not believe “for one second” that McWane would, in fact, 

stop Project Pricing, despite what was said in McWane’s January 11, 2008 Customer 

Letter. (McCutcheon, Tr. 2386-2387).

684. In time periods prior to McWane’s January 11, 2008 Customer Letter, Star’s National 

Sales Manager, Mr. Minamyer, had delegated some of the authority for Project Pricing 

to his division managers. In the period of time encompassing Mr. Minamyer’s January 
95

22, 2008 email (F. 686), Mr. McCutcheon had asked Mr. Minamyer to be more 

involved and diligent in the future with regard to the Project Pricing approval process 

than he had been in earlier periods, because Star was experiencing dramatic cost 

increases. (McCutcheon, Tr. 2393-2394, 2512; CX 2539 (McCutcheon, Dep. at 152)).

685. Mr. McCutcheon was “all over” Mr. Minamyer to stop delegating authority for Project 

Pricing and that he needed to “tighten up.” (CX 2538 (McCutcheon, IHT (Vol. 2) at 

424-425)).

686. On January 22, 2008, Mr. Minamyer sent an internal email to Star’s division managers

to advise them of Star’s plan for reacting to McWane’s pricing changes. (CX 0752 at 

001; Minamyer, Tr. 3159-3560 (e-mail was a plan to react to information from 

McWane)). The email stated:

To: All DM’s

The Tyler multiplier letters are hitting the streets. We need to be able to 

react quickly to be at the right prices.

I will be putting out some instructions on our plans to change state 

multipliers in the case that we don’t get much advance warning.

Our goal is to take a price increase and to stop project pricing.

For now here is the plan:

Once we know what a state or area’s multiplier is, if it goes up, we will 

change to that number. If it goes down, we will discuss it.

Later today we will E-mail the procedure for multiplier changes. It will 

be simple[.] (So that you all can understand it J)

We will not be project pricing unless we see firm documentation that 

there is a project price or a buy plan that is off of the state multiplier.

All project pricing has to go through me.

Tell your TM’s not to ask unless they have solid documentation. I have 

to be very strict on this as we will not be the ones to drag the market 

down.

You and your TM’s need to be able to tell your customers that we need 

written documentation with project names, dates, and pricing before we 

move off of the buy plan This is an effort to do the right thing for the 

industry.
96

Your TM’s need to start cleaning up their existing project pricing. 

The Tyler letter states that they will honor their existing project 

pricing only until March 1st. We will do the same. If we go past that 

it will cause disruptions and may result in the increases to be soft or not 

hold at all.

Start preparing yourselves and your TM’s to hold strong and get their 

projects ordered and shipped before March 1st.

Train them that this is what is best for the industry and that we need to be 

part of the effort to help our industry. We will not part of damaging the 

industry due to lack of discipline. We all need to be able to explain this 

to our customers and to take it to whatever level of management within 

that customer’s organization that is required.

I’m all good with you guys using me as the bad guy. (Stop snickering! J)

You need to know that we are strong in revenue and profit. We will 

have no problems weathering any price wars, even if they are prolonged. 

What we are doing is what is right for the industry. So, don’t think we 

need the price increases, as that is not the case. A price increase will be 

good for us on the short and long term profit situation but are not vital to 

our strength. The truth is that we would come out of a price war stronger 

than ever and with a bigger market share, but we don’t think the industry 

needs that right now.

Deal from strength and commitment and always take the high road when 

discussing the industry and our competitors. If we do this, we will 

emerge as the most solid partner in the industry.

Let me know if you have any questions as it is important that we manage 

this correctly. I know this will take major effort but that is where we 

need to be focused until the crazy pricing levels out. Make this your 

priority.

Thanks,

Matt

Matt Minamyer

National Sales Manager

(CX 0752 (emphasis in original)).

687. On February 23, 2008, Mr. Minamyer sent an email to Star’s division managers 

reminding them that they were to obtain documentation and justification before 
97

submitting a special pricing request for approval, known internally at Star as 

“pinks” (F. 874). The email stated in pertinent part:

As you know we are trying to manage the multiplier increase so we don’t 

let it slide back.

We all know that Sigma will be very slippery and manipulate it in many 

ways in many areas.

We all agreed to take the high road and get documentation and 

justification before sending any pinks to me.

“Per the salesman” is not and never has been justification. If you have 

been approving pinks with that as justification then you are just as 

responsible for price erosion as anyone.

. . .

If you can’t get some type of documentation from your customer then 

call me and we can do some more training as we are all in senior 

management positions and should be able to have that conversation with 

our customers. We agreed that if your branches asked for pricing and 

would not give us documentation then we would take it up their 

management chain. Are you doing that? . . . .

I have always been clear that we will always keep our customers at the 

right price but we need to be diligent at finding out the right price or 

shipping restrictions. . . .

Don’t send me any more pinks without proper justification and 

documentation. If I get called on the floor by our customers[’] Sr. 

Management for not taking the increase I will have data to show how we 

made our decision. So go get it and you can have your pricing.

Let’s not get lazy or scared of our customers. Let’s show maturity and 

do the right thing as mature business people.

(CX 0815). 

688. Mr. Minamyer knew that a price increase would not hold, or “stick,” if Star or any of its 

competitors undercut the price increase with Project Pricing. (Minamyer, Tr. 3258-

3259; see also CX 0525 (May 5, 2008 email from Star Western Division Manager 

Michael Berry noting with respect to upcoming price increase: “There is some 

flexibility [with pricing after a price increase] but here is the problem. The more 

flexible we are the less it holds and it won’t work. That said, if you document that the 

competition is not holding, then match and don’t lose the orders.”)).
98

689. In 2008, Star was facing rising production costs in China. If Star “took [the] price 

increase” and could limit Project Pricing, it would make more money. (McCutcheon, 

Tr. 2516-2518; Minamyer, Tr. 3246-3247).

690. Star’s plan in January 2008 was to stabilize its pricing; that is, to have more consistent 

pricing at the published multiplier. (Minamyer, Tr. 3170, 3173). 

691. Mr. Minamyer believed that all of the Fittings competitors would have to make an effort 

to stabilize Fittings prices for the effort to be successful. (Minamyer, Tr. 3174; 

CX 2526 (Minamyer, Dep. at 141-142)).

692. Star’s plan at the time Mr. Minamyer sent the January 22, 2008 internal email (F. 686) 

was to follow McWane’s new published multipliers. (CX 0752; Minamyer, Tr. 3243).

693. Star’s plan in 2008, when Mr. Minamyer sent the January 22, 2008 internal email 

referred to in F. 686, was to try to stop project pricing. Star was also hoping that 

McWane and Sigma would stop project pricing as well. However, if a customer told 

Star that its competitors were Project Pricing below Star, then Star planned to Project 

Price also. (CX 2526 (Minamyer, Dep. 119-120); Minamyer, Tr. 3259; see also CX 

2526 (Minamyer, Dep. at 168) (“If McWane did the same, that would be okay; if they 

didn’t, then we would have to follow their price down.”)). 

694. Star’s plan in 2008 was not to “stop” Project Pricing, but to require firm documentation 

that a competitor was Project Pricing before Star would Project Price itself. (CX 0752; 

Minamyer, Tr. 2517, 3243). 

695. The procedure of requiring documentation before Star gives a project price had been 

Star’s policy for at least ten years prior to January 2008 and Mr. Minamyer’s January 

22, 2008 email reflected a change in monitoring and managing Project Pricing. 

(McCutcheon, Tr. 2517-2519). 

696. The January 22, 2008 internal email (F. 686) made Mr. Minamyer the central authority 

for approving Star’s Project Pricing. (CX 0752 at 001; Minamyer, Tr. 3167-3168; 

CX 0034 at 001). 

697. Regarding the statement in Mr. Minamyer’s January 22, 2008 email (F. 686) that Star’s 

goal was to “take a price increase and to stop project pricing,” according to Mr. 

McCutcheon, it was neither “logical or reasonable” for Star to think that Project Pricing 

would actually stop. Stopping Project Pricing would “shut [Star] down.” However, 

because Star was facing dramatic cost increases, Mr. McCutcheon encouraged Mr. 

Minamyer to minimize Project Pricing by tightening up his sales force and being more 

involved in the Project Pricing process. (McCutcheon, Tr. 2393; CX 2538 

(McCutcheon, IHT (Vol. 2) 425-426)).
99

698. Mr. Minamyer’s language in his January 22, 2008 internal email to the Star division 

managers regarding “stopping” project pricing was unusual but telling them that Star 

needs to minimize Project Pricing, “is normal, happens every time there’s a [price] 

increase. There a new rash of emails concerning let’s do better this time, every time 

there’s a price increase. [Minamyer’s] language is too strong and it’s irrational, to me.” 

(CX 2538 (McCutcheon, IHT (Vol. 2) at 452); CX 2539 (McCutcheon, Dep. at 155)).

699. The phrase, “lack of discipline,” as used in Mr. Minamyer’s January 22, 2008 internal 

email, referred to pricing discipline, and controlling Project Pricing is a form of pricing 

discipline. (Minamyer, Tr. 3170).

700. Mr. Minamyer’s January 22, 2008 internal email to Star’s division managers was his 

attempt to minimize Project Pricing by Star’s sales force. (CX 0752 at 001; 

McCutcheon, Tr. 2390; CX 2538 (McCutcheon, IHT (Vol. 2) at 425)).

701. On January 29, 2008, Mr. Minamyer forwarded to Star’s division managers a copy of 

McWane’s new national blended Fittings multiplier map, effective February 18, 2008. 

(CX 0035 at 001, 003; Minamyer, Tr. 3184-3185).

702. On January 30, 2008, Bud Leider of Star sent an email to HD Supply, Star’s largest 

customer, stating that “Star is raising or matching all fitting numbers to match 

[McWane] effective Feb. 18th. . . . NO UTILITY PROJECT PRICING NATION 

WIDE.” (CX 1566 (emphasis in original); McCutcheon, Tr. 2409-2410; see also 

CX 2537 (McCutcheon, IHT (Vol. 1) at 56) (HD Supply is Star’s largest customer)). 

703. Mr. McCutcheon thought telling customers that Star was going to stop Project Pricing 

(F. 702, 704) was “bizarre.” (CX 2538 (McCutcheon, IHT (Vol. 2) at 452)). 

704. On February 2, 2008, Mr. Minamyer sent an email to distributor group TDG (F. 244) 

stating in pertinent part that Star’s “plan is to adjust multipliers to be on an even playing 

field on up front pricing with our competitors. We will adjust various multipliers across 

the country to be effective on 2-18-08, ship all existing special projects before March 

1st, and have no more project pricing after March 1st. Municipal contracts will be 

honored through the length of the contract. We will begin sending “Multiplier letters” 

to all of our customers beginning Monday, Feb. 4th . . . . We are working extremely 

hard to bring stability to the fitting market and we are asking for your support in this 

effort.” (CX 2300; Minamyer, Tr. 3188).

705. “Up-front pricing” in Mr. Minamyer’s February 2, 2008 email referred to the standard 

list price as adjusted by the published multiplier. (Minamyer, Tr. 3190).

706. When Mr. Minamyer wrote in his February 2, 2008 email that Star was “working

extremely hard to bring stability to the fitting market,” he was referring to price 

stability. (Minamyer, Tr. 3192).
100

707. On February 6, 2008, Star issued letters to its customers specifying the new multipliers 

that it would implement to match McWane’s multiplier changes, effective February 18, 

2008. (CX 2336 at 001; CX 0035 at 001-003; McCutcheon, Tr. 2408).

708. Star sought to convey the message that Star would no longer offer Project Pricing after 

March 1, 2008 to all of Star’s customers. (Minamyer, Tr. 3193; CX 2526 (Minamyer, 

Dep. at 156)).

709. Star wanted everybody, principally its customers, but also McWane and Sigma and 

other competitors, to know that Star was increasing its multipliers and curtailing Project 

Pricing. (CX 2526 (Minamyer, Dep. at 168-169)). 

E. DIFRA

1. Background

710. Mr. Pais of Sigma initiated the effort to form DIFRA in or around 2004. In 2005, Mr. 

Pais asked for Mr. Brakefield of Sigma to assist in forming a trade association. Mr. 

Pais sought the participation of various Fittings suppliers, including McWane and Star. 

(CX 1225 at 004; Pais, Tr. 1969-1970; Brakefield, Tr. 1220-1221; McCutcheon, Tr. 

2411).

711. The concept for DIFRA was modeled after industry groups formed by manufacturers of 

ductile iron pipe and cast iron soil pipe, such as DIPRA (the Ductile Iron Pipe Research 

Association) and CISPI (the Cast Iron Soil Pipe Institute). (Tatman, Tr. 469; Pais, Tr. 

1968-1969; CX 2527 (Pais, IHT at 57-58)).

712. Star initially declined to join DIFRA because Mr. McCutcheon did not see a benefit for 

Star and he was not comfortable trusting Star’s competitors. Over the course of 

approximately a year, Mr. Pais, Mr. Rybacki, and Mr. Brakefield of Sigma continued to 

ask Mr. McCutcheon if Star would join DIFRA, but he declined. Mr. McCutcheon 

eventually changed his mind and accepted after his colleagues at Star convinced him it 

would be nice to know what Star’s market share was, and he no longer saw any 

negative impact. (McCutcheon, Tr. 2412-2413; CX 2538 (McCutcheon, IHT (Vol. 2) at 

242-243), in camera).

713. Beginning in or before 2005, the DIFRA members engaged the law firm of Bradley 

Arant Rose & White LLP (“Bradley Arant”). DIFRA obtained legal advice from the 

Bradley Arant lawyers in connection with DIFRA, including with regard to the 

formation, organization, and activities of DIFRA and the formation of the tons-shipped 

data reporting system, discussed in more detail below. (See, e.g., F. 718, 726, 733-734, 

741-755). (CX 1473; Brakefield, Tr. 1229-1230, 1236-1237, 1244-1245, 1337-1338, 

1341, 1343, 1346-1347, 1350-1351, 1358, 1371-1373, RX 40, RX 43; RX 12; CX 1333; 

CX 1473; CX 0048; CX 1480; CX 0158; CX 1486; CX 1479; CX 1090; CX 0052; CX 

1081; RX 654 (Brakefield, Dep. at 13-17, 19)).
101

714. A formal meeting was held for DIFRA at the offices of Bradley Arant on March 18, 

2005 to explore the possibilities and issues involved in establishing a trade association 

relating to ductile fittings for the waterworks industry. In addition to the Bradley Arant 

lawyers, the Fittings suppliers that attended included McWane, Sigma, and Star. (CX 

1473). 

715. DIFRA was incorporated by David Green of McWane as an Alabama nonprofit 

corporation on January 12, 2007. (CX 1480 at 007; Brakefield, Tr. 1227, 1349 (DIFRA 

was incorporated in Alabama in January 2007)). At that time, DIFRA’s initial Board of 

Directors had seven members, consisting of two individuals each from McWane 

(Tatman, Leonard), Sigma (Brakefield, Pais), and Star (Bhutada, McCutcheon), and one 

from U.S. Pipe (Crawford). (CX 1480 at 006; Tatman, Tr. 616-617).

716. DIFRA’s articles of incorporation set forth various purposes for the organization, 

including, for example, “to promote the interests of the ductile iron fittings industry and 

to promulgate policies and conduct activities for the betterment of the ductile iron 

fittings industry, provided that all policies and activities of the association be consistent 

with applicable federal, state and local antitrust, trade regulation and other laws and 

regulations.” (CX 0158 at 002-003; Brakefield, Tr. 1229-1230). 

717. Mr. Brakefield, then National Sales Manager for Sigma (F. 87), became DIFRA’s 

president in January 2007, and was the first and only president of DIFRA. (Brakefield, 

Tr. 1221-1222, 1227). 

718. On January 8, 2007, DIFRA engaged the accounting firm, Sellers Richardson, of 

Birmingham, Alabama, as the association’s auditor. As part of its duties, Sellers 

Richardson would “compile on a monthly basis, the data submitted by the members 

reporting their respective sales of ductile iron fittings” in the form of tons shipped “and 

will prepare and issue to the members’ monthly reports” showing the aggregate tons of 

ductile iron fittings shipped (hereafter, “DIFRA data reporting system”). (CX 1333 at 

003, 005, and Exhibit A thereto; Brakefield, Tr. 1236-1238). 

719. The accounting firm retained by DIFRA, Sellers Richardson, was overseen by the 

Bradley Arant law firm. (Pais, Tr. 2109-2110). 

720. DIFRA had four members: McWane, Sigma, Star, and U.S. Pipe. (Joint Stipulations of 

Fact, JX0001 ¶ 17; Brakefield, Tr. 1227-1228, 1259-1260).

721. Although DIFRA had articles of incorporation and bylaws in 2007, DIFRA was largely 

dormant and the DIFRA data reporting system referred to in F. 713 and further 

described infra was not operational in 2007. (CX 1083 at 002; CX 1088 at 001 (DIFRA 

“stalled” in 2007); see F. 738).

722. Sigma decided to revive efforts to establish DIFRA after McWane’s CEO in charge of 

the Fittings business, Mr. Green (F. 42), was replaced and new management (Mr. 

Tatman, F. 21-22) was in place. (CX 1088 at 001).
102

723. On February 7, 2008, Mr. Tatman reported to his superiors at McWane that 

Mr. Rybacki of Sigma had called him that day and advised him that Sigma was 

interested in participating in a trade association for Fittings. Among other things, 

Mr. Tatman relayed that Mr. Rybacki told him that DIFRA should become active, that 

Sigma would support DIFRA, that Mr. Rybacki had discussed DIFRA with Star, and 

that Star would also consider participating. (CX 1284 at 001; Tatman, Tr. 466-467; 

Rybacki, Tr. 3536-3538). 

724. On February 7, 2008, Mr. Tatman emailed Mr. Brakefield stating: “It appears there is 

renewed interest in making another attempt to form an industry association for Fittings 

similar to DIPRA or CISPI. When you’re available, I’d like to get your inputs on what 

the potential next steps should be.” In the event “face to face meeting with 

[pro]spective members would be constructive,” Mr. Tatman provided his available dates 

and suggested possible locations, and further noted: “Of course we’ll need to make sure 

we have the appropriate legal representation available for any discussions.” (CX 1284 

at 002; Tatman, Tr. 466-467, 470-471; CX 1081 at 002-003; Brakefield, Tr. 1257).

725. The four DIFRA members held an organizational meeting on March 27, 2008 (“March 

27, 2008 DIRFA meeting”) in the Birmingham, Alabama offices of Bradley Arant. (CX 

1486 at 001).

726. The agenda for the meeting referred to in F. 725 included 20 items, one of which was to 

discuss the status of a data reporting system, including “frequency, dissemination, and 

form of reports based on reports input, and proper and improper utilization of the data.” 

(CX 1486 at 002; Brakefield, Tr. 1272).

727. In attendance at the March 27, 2008 DIFRA meeting were representatives of all four 

DIFRA members: Mr. Brakefield, Mr. Pais, Mr. Bhattacharji, and Mr. Rybacki of 

Sigma; Mr. McCutcheon of Star; Mr. Crawford or Mr. Murray of U.S. Pipe;

Mr. Tatman (and possibly Mr. Leonard and Mr. Walton) of McWane, and Mr. Herren, 

an attorney with the Bradley Arant firm. (Brakefield, Tr. 1270-1271 (listing attendees); 

Tatman, Tr. 475 (Mr. Tatman attended); McCutcheon, Tr. 2416; CX 1486 at 001; CX 

1477 at 001).

728. After the March 27, 2008 DIFRA meeting, Mr. Tatman had dinner alone with 

Mr. McCutcheon. (Tatman, Tr. 475; McCutcheon, Tr. 2418; RX 698 (McCutcheon, 

Dep. at 41)).

729. Mr. Tatman did not recall specifically what was discussed at the dinner referred to in 

F. 728, but he did not recall discussing Fittings at all. (Tatman, Tr. 475-476).

730. McWane’s policy was not to have pricing discussions with competitors. (Tatman, Tr. 

475-476).
103

731. Based on what transpired at the March 27, 2008 DIFRA meeting, it appeared that the 

association would move forward, and that the four members would report tons-shipped 

data for 2006, 2007, and January through March of 2008. (CX 1560 at 001; Tatman, 

Tr. 476-477; CX 2267 at 002).

732. On the morning of April 25, 2008, Mr. Tatman, Mr. Pais, Mr. Brakefield, and Mr. 

McCutcheon, along with DIFRA’s attorney, Mr. Long, held a conference call. 

(CX 0160 at 002; Tatman, Tr. 485-486; CX 1479 at 001; McCutcheon, Tr. 2418; 

Brakefield, Tr. 1276-1277).

733. On the April 25, 2008 conference call referred to in F. 732, the DIFRA members 

approved a tons-shipped reporting format, and it was further agreed that each member 

would submit its Fittings tons-shipped data to DIFRA’s accounting firm, Sellers 

Richardson, which would then aggregate the data and provide reports to the DIFRA 

members reflecting industry-wide tons-shipped by the 20th of the month. It was further 

agreed that the data would be submitted “no later than” May 15, 2008, and that going 

forward, members would report their prior months’ shipment data by the 15th of each 

month. (CX 0160 at 002; Tatman, Tr. 486-487; CX 1479 at 001; Brakefield, Tr. 1276-

1277; see also CX 1186 (Tatman May 23, 2008 email stating that: “Nearly four weeks 

ago all members agreed on a conference call to report by the 15th.”); Brakefield, Tr. 

1281-1282 (describing “consensus” on conference call as to May 15 submission of 

data); McCutcheon, Tr. 2417).

734. It was agreed during the April 25, 2008 conference call, referred to in F. 732, that the 

tons-shipped data that was to be submitted to the accounting firm Sellers Richardson by 

May 15, 2008 would include short-tons of Fittings shipped within the United States in 

the following six categories: 2”-12” Flanged; 2”-12” All Other; 14”-24” Flanged; 14”-

24” All Other; Greater than 24” Flanged; Greater than 24” All Other. Members’ initial 

submissions would include annual data for 2006, monthly data for 2007, and monthly 

data for January through April 2008. An April 25, 2008 email by Mr. Long to the 

DIFRA members summarized the results of the conference call. (CX 1479 at 001; 

CX 1329 at 009; CX 0160 at 002; McCutcheon, Tr. 2417).

735. On May 5, 2008, DIFRA’s attorney, Mr. Long, noted that he had not heard back from 

the DIFRA members in response to his summary of the agreements reached in the April 

25, 2008 conference call (F. 732) and asked the DIFRA members to confirm their 

concurrence with the reporting procedures and parameters he outlined in his April 25, 

2008 email (F. 734), so that reporting could begin by mid-May, 2008. McWane, Sigma,

and Star each replied that they concurred. McWane and Sigma replied on May 5, 2008 

and Star replied on May 7, 2008. (CX 0160 at 001; Tatman, Tr. 487; RX 0580).

736. The most recent DIFRA conference call took place on April 25, 2008. (Brakefield, Tr. 

1422; F. 732).

737. The most recent DIFRA meeting took place on March 27, 2008. (Brakefield, Tr. 1422; 

F. 725).
104

738. The first DIFRA tons-shipped report was issued by Sellers Richardson on June 17, 

2008. (CX 0052; Brakefield, Tr. 1395; RX 679 (Haley, Dep. at 24)).

739. The last DIFRA tons-shipped report was circulated in January 2009, for the month of 

December 2008. (Brakefield, Tr. 1228, 1400).

740. McWane did not submit tons-shipped data to DIFRA’s accountants after January 2009, 

and Star did not submit tons-shipped data to DIFRA’s accountants after December 

2008. (Brakefield, Tr. 1400, 1419-1420; CX 1339).

2. The data reported through DIFRA

741. The data collected and reported by Sellers Richardson for DIFRA was organized in 

categories of Fittings (2” to 12”, 14” to 24”, larger than 24” in diameter, and flanged 

versus non-flanged) that McWane used in its blue books, and that are common in the 

industry. (CX 0052; Tatman, Tr. 535-536).

742. DIFRA’s accountants, Sellers Richardson, collected and aggregated tons-shipped data 

across broad product size ranges containing thousands of different SKUs – all with 

unique physical attributes and pricing points – that mirrored major size groupings of 

pipe, and disseminated the aggregated totals to DIFRA members. (RX 113; Brakefield, 

Tr. 1396-1397).

743. The tons-shipped data gathered by DIFRA’s accountants, Sellers Richardson, did not 

distinguish between Domestic Fittings and non-domestic Fittings and did not indicate 

whether the tonnage was sold into open preference or domestic preference jobs. (Joint 

Stipulations of Fact, JX0001 ¶ 18).

744. The DIFRA accountants’ report did not break down the tons-shipped data by state. (RX 

694 (Bhutada, Dep. at 111-112)).

745. Neither DIFRA nor its accountants, Sellers Richardson , ever collected sales price data. 

(McCutcheon, Tr. 2561-2562; RX 679 (Haley, Dep. at 18)).

746. The DIFRA reports provided by Sellers Richardson did not include or reveal any sales 

prices. (Brakefield, Tr. 1352-1353; CX 0052 at 005; McCutcheon, Tr. 2562).

747. The DIFRA data reporting system did not report any dollar figures. (CX 0052 at 005; 

RX 054; McCutcheon, Tr. 2561-2562; Pais, Tr. 2109-2110).

748. No DIFRA member was permitted to review the tons-shipped data of any other 

member; the reports revealed only the aggregate total tons-shipped during the relevant 

reporting period. (RX 679 (Haley, Dep. at 22)).
105

749. The reporting format used by DIFRA’s accountants referred only to past tons-shipped, 

which would then be aggregated, before being disseminated by the independent 

accountants to the DIFRA members. (CX 1479).

750. A draft format for a DIFRA reporting document from January 2007, a year and a half 

before the first DIFRA report (CX 1333 at 007; CX 1467 at 005), contained a blank 

column where prices, in dollars, could be reported but the members never approved or 

used that form. (Brakefield, Tr. 1240-1241, 1251, 1352-1353; compare CX 0052 (June 

17, 2008 DIFRA report)). 

751. No DIFRA data was exchanged directly between the supplier members. (RX 694 

(Bhutada, Dep. at 26)).

752. The tons-shipped data upon which the DIFRA accountant reports were based 

represented sales that were made anywhere from a few weeks to a year before the date 

of shipment. Shipment of public works projects were particularly prone to delay, with 

an initial 60 to 120 day period after the sale in which the supplier had to wait for a 

notice to proceed. Thereafter, once the purchase order was received by the supplier it 

would take between eight and ten weeks to ship. Private jobs varied, but most were 

shipped within a month of the sale. (RX 654 (Brakefield, Dep. (Vol. 1) at 109-111, 

134)).

753. In a June 2008 McWane internal email exchange, Mr. McCullough expressed a concern 

to Mr. Tatman that the DIFRA reports may be inaccurate due to underreporting. Mr. 

Tatman agreed. (CX 1187).

754. The data provided by Sigma to DIFRA’s accountants, Sellers Richardson, for periods 

through May 2008 contained errors for every prior month it reported, which errors 

Sigma corrected by email to Sellers Richardson on June 30, 2008. The affected reports 

were revised and reissued by Sellers Richardson. (RX 086 at 001-002; RX 090; 

Brakefield, Tr. 1318, 1391-1394).

755. On November 11, 2008, Mr. Tatman advised Sellers Richardson that McWane had 

discovered an underreporting in McWane’s May 2008 data, and submitted corrected 

tonnage. (RX 113; Brakefield, Tr. 1396-1397).

3. Uses for aggregated tons-shipped data 

a. Generally

756. The DIFRA aggregated tons-shipped reports (F. 741-755), if accurate, allowed a 

member to figure out its own market share, as well as the total size of the industry. 

(RX 638 (McCullough, IHT at 209)).
106

757. One purpose of the DIFRA aggregated tons-shipped data reporting system was to help 

suppliers determine their market share. (Tatman, Tr. 558-559; CX 1712 at 001, in 

camera; McCutcheon, Tr. 2477-2479, in camera; CX 1088 at 003).

758. The DIFRA aggregated tons-shipped reports were not sufficiently detailed to enable a 

DIFRA member to determine the respective market shares of any other DIFRA 

member; or the timing or dollar amount of any sales. (RX 694 (Bhutada, Dep. at 28); 

RX 654 (Brakefield, Dep. (Vol. I) at 82-83); RX 638 (McCullough, IHT at 209); Joint 

Stipulations of Fact, JX0001 ¶18).

759. Having a better idea of its own market share helps a supplier to plan future business 

strategy, and determine if the strategy is on the right track. As Mr. Bhutada of Star 

stated: “[I]f market share is going down, then you know that you’re on the wrong path. 

If it is stable or going up, then you know that you’re on the right path.” (RX 694 

(Bhutada, Dep. at 20-21)).

760. Because different types of jobs use different types of Fittings sizes, (i.e., plant work use 

vs. subdivision use), the DIFRA tons-shipped data can help detect market trends, and 

thereby can help to plan production schedules and better manage supply chain. In other 

words, identification of how various market segments are moving helps in 

understanding the “product you need to be making and the size range you need to be 

dwelling on and having inventory to meet customers’ needs.” (RX 694 (Bhutada, Dep. 

at 21); Brakefield, Tr. 1305-1306; RX 687 (Pais, Dep. at 27-28, 126)).

b. Sigma

761. Sigma’s motivation for participating in the DIFRA aggregated tons-shipped reporting 

system included confirmation of Mr. Rybacki’s assessment of Sigma’s share of the 

Fittings market. (Rybacki, Tr. 3557).

762. In a June 19, 2008 email to Sigma’s “M20” management group, Mr. Pais of Sigma 

provided comments on the DIFRA data. He further described the establishment and 

benefits of DIFRA: 

This is a huge step by Sigma and Star, in being able to demonstrate our 

willingness and commitment to strengthen our industry and signal our 

willingness to grow in a responsible manner. Though most of the initial 

benefit is intangible such as increased trust and respect between 

members, it is also the first step f[or] more substantial economic benefits 

in the future.

(CX 1092 at 001).

763. In addition to confirming market share, Mr. Pais believed that having a view of the total 

market size would help Sigma, among other things, view what products were being sold 

most, and thereby better manage inventory and mitigate problems that arise from long-
107

lead times in obtaining Fittings from overseas. (Pais, Tr. 1971-1972, 1975-1976; RX 

687 (Pais, Dep. at 27-28, 126)).

764. Having DIFRA data available helped Sigma to prepare presentations for its bankers. 

(RX 694 (Bhutada, Dep. at 20)).

765. Having DIFRA data available helped Sigma make a decision whether or not to go into 

Domestic Fittings in 2009. (RX 694 (Bhutada, Dep. at 20)).

766. Mr. Bhattacharji, who was responsible for sourcing Fittings and managing Sigma’s 

supply chain, found the yearly aggregated DIFRA data useful. Knowing whether the 

market is growing, flat, or dropping helped Sigma determine its production needs for 

the following year. (CX 2523 (Bhattacharji, Dep. at 9, 259-264)).

767. On October 1, 2008, Mr. Pais directed Raju Kakani, Sigma’s IT Director, to prepare 

monthly reports of Sigma’s market share using DIFRA data. Mr. Kakani prepared such 

reports monthly under Mr. Brakefield’s supervision. (Brakefield, Tr. 1299, 1304-1305; 

CX 1848 at 001)

768. In a letter dated February 9, 2009 from Mr. Pais to Sigma’s lender, Ares Capital, under 

the heading, “Discuss competitive landscape, market share trends, pricing actions in 

marketplace and any other changes given the current environment,” Mr. Pais discussed 

the aggregated tons-shipped data produced by DIFRA. He stated his opinion that 

“monthly market size data produced by DIFRA” had the benefit of helping to “maintain 

the pricing discipline, as the market and market share data point to a relatively 

consistent and stable market pattern. It has helped us not to allow the sharp market 

decline to be mistaken as a ‘loss of market share,’ which mostly causes price reaction.” 

The foregoing statements represented Mr. Pais’ “very broad assessment as [Mr. Pais] 

saw it as one of” the intangible benefits of DIFRA that he communicated to Ares 

Capital in order to reassure the lender, which was concerned about recent declines in 

Sigma’s pricing and volume, that the DIFRA aggregated data will provide visibility into 

market demand and help prevent panic selling based on misinformation. (CX 0313 at 

004; Pais, Tr. 1983, 1993-1996). 

769. Mr. Pais further explained further his use of the phrases “maintain market discipline” 

and “price reaction” in the letter to Sigma’s lenders set forth in F. 768: “If the [DIFRA] 

data point to a significant loss of market share, then Sigma would generally use price to 

get share back. If Sigma wanted to grow volume, Sigma would also use price to attract 

sales. [T]hat’s always been the case, but it’s a question of degree.” A “mistaken 

diagnosis” about the reasons for a loss of market share makes it more difficult for 

Sigma to make the correct decision going forward, including decisions as to whether to 

lower price and/or to seek additional volume from existing customers. (CX 2527 (Pais, 

IHT at 85-87)).

770. In a December 2008 internal email from Mr. Pais to Mr. Walsh, Mr. Bhattacharji and 

Mr. Rybacki, Mr. Pais stated his belief that DIFRA data showed Suppliers that the 
108

severe decline in sales volume being experienced was likely due to “market weakness” 

rather than “losing to the competition.” (CX 1077 at 002; Pais, Tr. 2005-2006). 

771. Sigma used the DIFRA data to measure Sigma’s market share and to help formulate its 

pricing strategy. (Pais, Tr. 1986, 2002-2003; CX 1088 at 004).

772. In May 2009, Mr. Pais was reassured by the DIFRA data that Sigma was maintaining its 

share of the market in a declining market, when Sigma was losing volume. (CX 0319 at 

002).

773. Sigma used the DIFRA data to examine demand trends, i.e., whether or not the trend is 

for small diameter or large diameter or intermediate diameter fittings, which helped 

Sigma determine product ordering, and thereby better manage its inventory. Mr. 

Brakefield further explained:

It just basically helped us in establishing a much better flow of product. 

If you have what the customer is looking for and the trends in the 

marketplace, and you have that product and it’s available and not having 

to wait and then see the availability, get an order and then get it shipped 

from China or India, which obviously it’s a long time, we can do a little 

better forecasting to have what the customer is looking for when he 

needs it and we had it. And a lot of times that was the basis of a sale, 

availability.

(Brakefield, Tr. 1305-1306, 1308, 1389-1391).

c. Star

774. Star’s motivation for participating in the DIFRA aggregated tons-shipped data reporting 

system was to obtain good data on the size of the Fittings market and thereby get a 

better sense of Star’s share of the market. Previously, because the industry consists 

largely of privately held companies, good data was absent. As Mr. McCutcheon stated, 

absent good data, “it’s difficult to plan that way.” (CX 2538 (McCutcheon, IHT (Vol. 

2) at 241-243, 245), in camera; McCutcheon, Tr. 2413). As Mr. McCutcheon further 

explained:

[The DIFRA report] was the only confirmation that . . . we thought was 

accurate. . . . [W]e would try to download data from different 

government websites on housing starts and we just would do the best job 

that we could, but we always knew it was an educated guess, . . . [Star 

liked getting] DIFRA data . . . because it gave us a real-live measuring 

stick on how we were performing as a company. . . .

(CX 2538 (McCutcheon, IHT (Vol. 2) at 334), in camera).
109

775. According to Mr. McCutcheon, Star’s decision to notify its customers of multiplier 

changes in May 2008 had nothing to do with the fact that the DIFRA tons-shipped data 

reporting system was in place. (CX 0037; McCutcheon, Tr. 2554-55). 

776. Star used the DIFRA data, along with other data, to prepare internal reports estimating 

and tracking Star’s Fittings market share in the United States, in each state and 

regionally, by division manager. These internal reports were carefully reviewed and 

used by Star. (McCutcheon, Tr. 2445-2449, 2477-2482, 2492-2496, in camera; 

CX 1712 at 001, 004, in camera; CX 1707 at 001, 006, in camera; CX 1711 at 001, 

002, 004, 006, in camera). 

d. McWane

777. The DIFRA aggregated tonnage report helped McWane decide, in June 2008, to choose 

the low end of the 8% to 12% range of multiplier increases that Mr. Tatman had been 

considering, because the DIFRA report confirmed his suspicion that McWane was 

continuing to lose market share, and showed that McWane’s market share loss was 

worse than Mr. Tatman had suspected. (Tatman, Tr. 536-540, 958).

778. McWane relied on DIFRA aggregated tons-shipped data to help prepare an internal 

report tracking McWane’s market share. (CX 1562 at 001; Tatman, Tr. 546).

779. On September 9, 2008, Mr. Tatman concluded using the DIFRA data that McWane’s 

“[l]eading price stability has been detrimental to [market] share.” (RX 616 at 005; CX 

1188 at 005).

780. In a June 18, 2008 internal email from Mr. McCullough of McWane to Mr. Page 

transmitting the June 17, 2008 DIFRA aggregated tons-shipped report, Mr. McCullough 

noted that given McWane’s “dismal” share loss, McWane would be announcing an 8% 

increase in Fittings prices and will not support the 25% increase announced by Sigma 

and Star. “My gut feel is that we will be seeing increased cost pressures from China 

that will impact Sigma/Star more than us. . . . I believe that until [Sigma and Star] feel 

prolonged profit margin pressures they will continue their historical practice of 

undisciplined market pricing. . . . ” Mr. McCullough concluded that he was not in favor 

of any price increase support in the Fittings market until McWane’s market share 

improved. (CX 0139 at 001; CX 2479 (McCullough, Dep. at 230-231); CX 2482 (Page, 

Dep. at 207-209)). 

781. A September 19, 2008 internal PowerPoint presentation prepared by Mr. Tatman in 

connection with McWane’s evaluation of whether to close its South plant, included the 

statement “DIFRA will eventually add some increased stability . . .” (RX 616 at 012).

782. On January 21, 2009, Mr. Tatman sent an internal email to Mr. Walton, Mr. 

McCullough, and Mr. Jansen forwarding and summarizing a spreadsheet titled

“McWane, Inc. DIFRA Market Share Analysis” covering DIFRA data from 2006 

through December 2008. In his cover email Mr. Tatman noted: “December was clearly 

our worst share performance for the year!” and that: “Our share performance for the 
110

Sept-Dec. period is noticeably off from the May-Aug. period.” (CX 0656; Tatman, Tr. 

560-564).

783. In a January 23, 2009 McWane internal email regarding McWane’s market share based 

upon the December 2008 DIFRA data, Mr. Page stated: “Trying to not be emotional 

about it. But these numbers are infuriating. We have serviced our customers I assume 

and have the product they need, we are just being discounted against?” Mr. Page 

further explained: “Are . . . Leon, Rick and our salespeople not keeping our customers 

competitive and -- or do we not have the right product? Why are we losing market 

share? The question is, are we overpriced? Do we have the wrong mix of products? 

We don’t have what people need? But I’m upset with our people for not . . . managing 

their business.” (CX 1226 at 001; RX 642 (Page, Dep. at 238-239)).

784. Mr. Tatman used the DIFRA tons-shipped data in McWane’s internal analysis of its 

pricing for Fittings, in connection with McWane’s restructuring of list prices for 

medium and large diameter Fittings in early 2009. (F. 995, 997). Specifically, 

McWane was able to determine that McWane’s market share was strong or growing in 

some segments, but weak or falling in others, and changed prices accordingly. (CX 

0569; Tatman, Tr. 279-280, 594-595, 972-973). 

785. DIFRA aimed to include as members the five largest suppliers, McWane/Tyler, Sigma, 

Star, U.S. Pipe, and ACIPCO. (CX 1088 at 001 (Pais describing DIFRA membership: 

“Though we had aimed at enlisting the 5 largest members - McWane/Tyler, Sigma, 

Star, US Pipe and ACIPCO, the latter chose not to join. No effort was made to invite 

smaller suppliers . . . .”).

786. In February 7, 2008 email from Mr. Tatman of McWane to DIFRA’s President, Mr. 

Brakefield of Sigma, Mr. Tatman stated:

To have a viable association we’d need at a minimum McWane, Sigma 

and Star to be members. You have a historical perspective from the last 

attempt, but I would think ACIPCO and U.S. Pipe would bring some 

value to the association. There’s probably going to be some minimum 

requirement in terms of volume to join. Is 5,000 tons the appropriate 

level? If so who do you feel would be potential members?

(CX 1081 at 001; Tatman, Tr. 471-472).

787. U.S. Pipe did not participate in the DIFRA conference call on April 25, 2008 (F. 732), 

reporting to Mr. Long that U.S. Pipe’s representative would be out of the country, and 

that it would accept whatever decision was made by the others regarding reporting 

issues. (CX 0160 at 002; CX 1479 at 001).

788. U.S. Pipe submitted its tons-shipped data for DIFRA tons-shipped data reporting 

system, including after January 2009 and into July 2010. (CX 2232 at 001, 006; 

CX 1343).
111

F. May and June Pricing Events

1. Sigma notifies its customers of a price increase on April 24, 2008, to 

be effective May 19, 2008

789. In April 2008, Sigma was continuing to feel the pressure from costs, as it had in 2007. 

Fittings volume continued to be weak. Sigma was looking for a way to increase prices 

and at the same time not lose market share. (Pais, Tr. 1926; CX 1138 at 001; Rybacki, 

Tr. 3541-3542).

790. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to McWane’s 

telephone number for two minutes at 3:49 p.m. on April 4, 2008. A call from a cell 

phone issued to Mr. Rybacki was placed to someone at McWane for eight minutes at 

4:16 p.m. on April 4, 2008. Mr. Rybacki testified that he does not recall what was 

discussed. (CX 1621-A at 099, in camera; Rybacki, Tr. 3635-3636, 3610, 3617, in 

camera).

791. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to a cell phone 

issued to Mr. Tatman of McWane for 16 minutes at 8:45 a.m. on April 7, 2008. Mr. 

Rybacki testified that he did not recall what was discussed. (CX 1621-A at 100, in 

camera; Rybacki, Tr. 3636, in camera).

792. On April 11, 2008, Mr. Pais wrote an internal email to Sigma’s management team 

urging that Sigma take the lead in implementing a Fittings price increase of between 

two and ten multiplier points, to be effective in May 2008. Mr. Pais referred to his 

proposal as “big, bold, moves” by Sigma. Mr. Pais’ email to his team stated in pertinent 

part:

Keeping with our ongoing effort to boost our Prices and hence GMs as 

our AIC keep rising due to sharp overseas raw material increases, which 

have finally caught up with the domestic scrap costs too, please find the 

proposed MULTIPLIER MAP that LR and I discussed 4/8 . . .

Despite the gloomy assessment -- both about the market and competition 

-- we have a very strong opportunity to lead and be a catalyst in boosting 

the Multipliers to another level, in ONE SHOT! It’s time BIG BOLD 

MOVES (BBM, baby!) and this M[ultiplier]Map aims at just that...

. . .

It’s definitely time for some ‘BBM’s and SIGMA will have to make 

them as our two competitors lack the imitative, credibility and 

leadership...

(CX 1138 at 001-002 (emphasis in original); Pais, Tr. 1926-1927; Rybacki, Tr. 3541-

3546).
112

793. Mr. Pais and Mr. Rybacki denied discussing Sigma’s spring 2008 pricing intentions

with anyone at McWane. (RX 687 (Pais, Dep. at 76); Pais, Tr. 2080-2081, 2101-2102; 

Rybacki, Tr. 3708).

794. In the week following Mr. Pais’ April 11, 2008 internal email to Sigma’s regional 

managers (F. 792), there was an internal email discussion among Mr. Rybacki, Mr. 

Pais, and some of Sigma’s regional managers regarding the merits of Mr. Pais’ 

proposal, including whether or not the competition was likely to follow Sigma’s lead. 

(CX 1134; CX 1137). 

795. A call from a cell phone issued to Mr. Rybacki of Sigma was placed to a telephone 

number in Tyler, Texas for two minutes at 2:46 p.m. on April 15, 2008. A call was 

received by a cell phone issued to Mr. Rybacki from a phone number in Tyler, Texas 

for five minutes at 8:11 a.m. on April 16, 2008. Mr. Rybacki testified he had no idea 

who he called or what was discussed. (CX 1621-A at 104-105, in camera; Rybacki, Tr. 

3638, 3610, 3617, in camera).

796. Sigma ultimately decided that it would announce to its customers an increase in its 

published multipliers of up to ten multiplier points over prior published levels. Mr. Pais 

noted that the planned multiplier increase was one of the “BIGGEST” one-time 

increases Sigma had ever had, “almost 40% depending on the current base multipliers.” 

(CX 1134 at 001). Mr. Pais expressed his opinion that Star was “bound” to follow 

Sigma, “as they too are hit with sharp cost increases from China, from our reports . . . .” 

Mr. Pais expressed his belief that McWane would be more cautious because of its 

years-long excess inventory problem. (CX 1134 at 001-002; see also CX 1137).

797. In a customer letter dated April 24, 2008, Sigma notified its customers of a published 

multiplier increase of “up to10 multiplier points,” to take place on May 19, 2008: 

Dear Friends,

To say this year has been a challenge is a gross understatement. With 

rising costs in transportation, labor, medical benefits, raw materials. etc., 

2008 will certainly be a difficult year for all of us. Hopefully we will 

learn something from it and be better businesses in the future for having 

endured this very tough downturn. 

SIGMA Corporation, like all manufacturers in the Waterworks Industry, 

has been hit with unprecedented increases in scrap iron prices which 

have increased 7 fold in just a few short years. As a result we will be 

raising multipliers up to 10 multiplier points depending on your region. 

The increase will take place on May 19, 2008 and your SIGMA Regional 

Manager will inform you by letter before the end of April of your new 

multiplier.
113

We’ve cut the number of different multipliers across the country down to 

four or five with the ultimate goal of one multiplier for Fittings (MJ & 

Push-on, C-153, Flanged C-110) nationwide in the not too distant future. 

We can’t promise that this will be the last increase in 2008, but we can 

promise that we will give you ample warning of any future changes.

Only orders that are placed before May 19, 2008 with a specific shipping 

date will be honored and any jobs that are held for release will be subject

to the new multipliers.

In conclusion, we at SIGMA thank you for your loyalty and friendship 

and we wish you all the best during these trying times in our 

marketplace.

(CX 1858 at 002 (emphasis in original) (“April 24, 2008 Customer Letter”)).

798. The multiplier increase of up to ten multiplier points set forth in Sigma’s April 24, 2008 

Customer Letter (F. 797) was equal to a price increase for Sigma of approximately 25 to 

30 percent, depending on the geographic region. (Rybacki, Tr. 3710-3711).

799. Although discussed in Mr. Pais’ internal email of April 11, 2008 (F. 792), Sigma’s 

April 24, 2008 Customer Letter did not refer to any changes in Sigma’s Plant Work or 

Special Price policies. (CX 1858; compare CX 1138 at 001, 004).

800. Sigma’s April 24, 2008 Customer Letter was faxed to Sigma’s customers on or about 

April 25, 2008. (CX 1858 at 001; RX 052).

801. Sigma hoped its other competitors, including McWane, would follow Sigma’s price 

increase. (Pais, Tr. 2080-2081).

2. Star’s and McWane’s reaction to Sigma’s April 24, 2008 Customer 

Letter

802. Star learned of Sigma’s April 24, 2008 Customer Letter on April 25, 2008, noting that 

the letter had “just hit the streets today.” (CX 0862 at 001).

803. On May 7, 2008, Star sent a letter to its customers announcing a multiplier increase of a 

similar magnitude to that announced by Sigma, effective May 19, 2008. (CX 0037 at 

001; McCutcheon, Tr. 2419-2420; CX 0819; CX 2538 (McCutcheon, IHT (Vol. 2) at 

457-458); CX 0816; CX 0817; CX 0818; CX 0819; CX 0820; CX 0821; CX 0822; 

CX 0823).

804. McWane learned of Sigma’s price increase on April 25, 2008. Mr. Tatman forwarded 

the letter internally, which also attached one of Sigma’s regional multiplier maps, to Mr. 

McCullough and Mr. Walton of McWane. Mr. Tatman noted, among other things, that 

Sigma’s April 24, 2008 Customer Letter reflected a published multiplier increase of up 
114

to ten multiplier points, and that the multiplier map showed an increase of 18% and 

40% over Sigma’s prior published multipliers. Mr. Tatman further stated: 

I believe this is great for helping us achieve our business objective of 

regaining share while netting price. We can talk more next week about 

strategy. We’ll try to gather the other Sigma regional letters and 

multiplier maps.

I don’t think any of us truly believe that degree of net price will stick. 

Just this week we had a pretty solid input from a Mainline regional 

manager stating that when Sigma came in pitching the need for this 

increase[,] they then offered to increase the cash discount from 2% to 5% 

if Mainline would sign up for some incremental volume.

(CX 0176 at 001; Tatman, Tr. 490-491). 

805. On May 5, 2008, Mr. Tatman sent an internal email to Mr. McCullough and Mr. Walton 

attaching proposed new multipliers for McWane and a draft McWane customer letter, 

which would “align with the approach of waiting until the DIFRA data is available 

before announcing any price actions.” Mr. Tatman recommended against following 

Sigma’s price increase, regardless of what the DIFRA data would show: “Although the 

Sigma announcement represented an increase range of 20% to 40%, I don’t believe we 

would follow that lead regardless of the DIFRA data as it would lead to instability.” 

Mr. Tatman instead proposed that McWane publish multiplier increases in the range of 

8% to 12%. (CX 0137 at 001, 005-007; see F. 458, 618 (Mr. Tatman’s defining 

instability to mean selling prices that are 10% or more below published prices)).

806. Mr. McCullough of McWane believed that it was important to review the DIFRA tonsshipped report, which was due mid-May 2008, before announcing any price actions. 

Accordingly, on Mr. McCullough’s instructions, Mr. Tatman waited for the DIFRA 

data before issuing any price increases. (Tatman, Tr. 494-495, 519 (“On something like 

this that [Mr. McCullough] wants, I’m not going to challenge him on it.”); CX 0137; 

see F. 734 (targeting May 15, 2008 for submittal of data to DIFRA’s accountants)).

807. Mr. Tatman believed that Mr. McCullough wanted to wait for the DIFRA tons-shipped 

data because Mr. McCullough believed the data to be a more accurate reference point 

for assessing McWane’s market share than other reference points, such as DIPRA 

statistics and Valve Manufacturers Association (VMA) data, which Mr. Tatman had 

provided to Mr. McCullough to support Mr. Tatman’s price increase recommendation 

set forth in F. 805. (Tatman, Tr. 946, 950). 

808. On May 7, 2008, Star sent a letter to its customers announcing a multiplier increase of a 

similar magnitude to Sigma’s April 24, 2008 Customer Letter (F. 797), to be effective 

May 19, 2008. Star needed a price increase at the time because market prices had 

declined, while costs had increased for Star. Mr. McCutcheon denied that Star’s May 7, 
115

2008 Customer Letter had anything to do with DIFRA. (Minamyer, Tr. 3209; CX 819; 

McCutcheon, Tr. 2555).

809. On May 7, 2008, McWane sent a customer letter which stated as follows: 

Dear Valued Customer, 

You have likely heard or read about continued increases in factors of 

production impacting both domestic and global operations. The foundry 

industry has been hit particularly hard with sharp increases in scrap iron, 

alloys and transportation costs.

While the financial impact to our business is real, we also recognize 

there are restrictions as to the level and timing at which pricing can be 

accommodated in the market.

We are sending this general communication to our waterworks 

distribution customers to more clearly define our intention in regards to 

future pricing actions.

Before announcing any price actions, we carefully analyze all factors 

including: domestic and global inflation, market and competitive 

conditions within each region, as well as performance against our own 

internal metrics. We anticipate being able to complete our analysis by 

the end of May. At that point, we will send out letters to each specific 

region detailing changes, if any, to our current pricing policy.

For planning purposes only, we expect for regions with a change that 

multipliers will increase in the range of 6% up to 16% effective June 

16th.

(“May 7, 2008 Customer Letter”) (CX 2170 at 002).

810. Mr. Tatman acknowledged that it was unusual to send out a letter that stated intentions 

as to a future price increase, but not the actual price increase, and explained: “It’s not 

too often that you have to respond to a competitor putting out a 40 percent price 

increase, so these are unusual times.” (Tatman, Tr. 501-502).

811. Mr. Tatman denied that the point of McWane’s May 7, 2008 Customer Letter was to 

“reinforce” the point that Star and Sigma needed to submit their DIFRA data. (Tatman, 

Tr. 505-506). 

812. In addition to the anticipated May 2008 DIFRA report, Mr. Tatman planned to review 

and analyze McWane’s monthly financial data for April 2008, as set forth in McWane’s 

monthly financial reports known as “blue books,” which are prepared by McWane’s 

accountants on a monthly basis for management purposes. Mr. Tatman expected to 
116

receive this report by mid-May and be able to prepare a spreadsheet analysis by the end 

of May. Also, Mr. Tatman wanted to review all of the competitive inputs collected 

from the field. (Tatman, Tr. 497-498, 501-502). 

813. Mr. Tatman’s email transmitting McWane’s May 7, 2008 Customer Letter to 

McWane’s customers explained: “Given the market environment, we feel any pricing 

action warrants careful consideration and analysis. We simply needed more time 

beyond the competitive May 19th date to feel comfortable that we properly considered 

all factors.” (CX 2170 at 001).

814. Being given a range of an anticipated price increase does not help a Distributor 

negotiate a price increase from its own customers (the End Users), and in this regard,

McWane’s May 7, 2008 Customer Letter was not helpful to Distributors. (CX 2510 

(Groeniger, Dep. at 231-234, in camera)). 

815. Mr. Minamyer of Star received a copy of McWane’s May 7, 2008 Customer Letter, via

Stars’ customer HD Supply, on the afternoon of May 7, 2008. (CX 0863 at 001;

McCutcheon, Tr. 2422-2423). 

816. Approximately two hours after Mr. Minamyer received a copy of McWane’s May 7, 

2008 Customer Letter, Mr. McCutcheon sent an email confirmation to Mr. Long, 

DIFRA’s attorney, confirming that Star agreed with the DIFRA reporting procedures, as 

requested by Mr. Long in an email to DIFRA members dated May 5, 2008. Later in the 

afternoon of May 7, 2008, Mr. McCutcheon forwarded a copy of Mr. Long’s April 25, 

2008 email regarding DIFRA’s agreed tons-shipped data reporting procedures to Navin 

Bhargava, who would assemble Star’s tons-shipped data. (RX 580; F. 828; CX 0530).

817. Mr. McCutcheon of Star found McWane’s May 7, 2008 Customer Letter unusual 

because he had not seen anything like it before. As Mr. McCutcheon explained:

“[H]istorically, when the leader in an industry chooses to take an increase he announces 

we’re taking an increase. This was just written as an explanation to me. It was just 

worded odd and it looked arrogant and it looked humorous to me.” Mr. McCutcheon 

similarly stated with regard to his impression of the McWane letter: “Third paragraph, I 

don’t know why they did it. I mean, it looks like a -- I took it as being a minor poke at 

us, because we weren’t going to do careful analyzing -- we did our own analysis and we 

quickly determined that we were getting ready to lose money if we didn’t take an 

increase. . . . Other than an attempt to try to look more sophisticated . . . I don’t know.”

(CX 2539 (McCutcheon, Dep. at 178-179, in camera); CX 2538 (McCutcheon, IHT 

(Vol. 2) at 320, in camera)).

818. Mr. McCutcheon denied making any connection between McWane’s May 7, 2008 

Customer Letter and submission of DIFRA data by Star. (RX 698 (McCutcheon, Dep. 

201) (“Q. And it’s your testimony here today that you made no connection between . . . 

the submission of your DIFRA data and this letter, the May 7th, 2008, letter? A. 

Absolutely none. As a matter of fact, the first time that thought -- I’ve even ever heard 
117

that was today. Of linking that to DIFRA? Q. Linking this May 7th letter to the need to 

submit your DIFRA data. A. No, sir.”)).

3. Star’s and Sigma’s reaction to McWane’s May 7, 2008 Customer 

Letter

819. Sigma reviewed McWane’s May 7, 2008 Customer Letter. (Rybacki, Tr. 3568-3569). 

820. Mr. Rybacki of Sigma thought the language in McWane’s May 7, 2008 Customer Letter 

regarding McWane’s “carefully analyzing all factors including: domestic and global 

inflation, market and competitive conditions within each region, as well as performance 

against our own internal metrics” was notable because the language looked “a little 

quirky for Jerry Jansen” and not Mr. Jansen’s “style.” Mr. Rybacki had “no idea” what 

the language meant. (Rybacki, Tr. 3568-3570).

821. Mr. Rybacki thought that McWane’s May 7, 2008 Customer Letter was ambivalent as 

to whether McWane was going to issue a price increase and Mr. Rybacki was “leery” of 

the May 7, 2008 Customer Letter. (Rybacki, Tr. 3570-3571).

822. Mr. Pais of Sigma denied having any understanding that McWane was not going to 

increase prices on Fittings until all of the DIFRA members submitted their data and 

DIFRA issued the report, or that McWane was waiting to increase prices until after it 

had the DIFRA data and the DIFRA report, stating: “It is so farfetched and ridiculous, 

what can I say? No, no.” (RX 687 (Pais, Dep. at 381-382)).

823. Sigma’s regions have flexibility regarding the timing of multiplier changes. When 

Sigma’s regional managers saw that McWane was not following Sigma’s multiplier 

increase that Sigma announced in its April 24, 2008 Customer Letter, some regional 

managers opted to wait for McWane and just kept pricing at the old multipliers. The 

northeast regional manager chose to go ahead with Sigma’s new multipliers in May and 

June 2008, although the region lost sales as a result because it was higher priced than 

McWane during that period. (Rybacki, Tr. 3571-3572; RX 076 (noting that Sigma was 

delaying its price increase because Sigma was going to match McWane, but McWane 

had not notified the marketplace of its increase or timing for an increase)).

824. On May 12, 2008, Star put its planned price increase on hold. Mr. Minamyer of Star 

explained in an email to his district managers: 

Our current multiplier changes on fittings have been put on hold for the time 

being. The fittings market pricing is just coming off the last increase so we want 

to evaluate the market conditions for the next few weeks, let the market settle 

down a little bit, and then make a decision in early to mid June on to how to 

proceed.

Please let our customers know that we are on hold and will let them know what 
118

our plan is in time for them [to] prepare.

(RX 060).

4. Star’s submittal of its tons-shipped data to DIFRA’s accountants

825. McWane submitted its tons-shipped data to DIFRA’s accountants on May 14, 2008. 

(CX 1303 at 002).

826. On May 16, 2008, a four minute phone call was placed from a cell phone issued to 

Mr. Rybacki of Sigma to a telephone number at McWane. Mr. Rybacki testified that he 

does not know who he called that day, or what they spoke about. (Rybacki, Tr. 3642-

3643, 3610, 3617 in camera; CX 1621-A at 095, in camera).

827. On May 16, 2008, Mr. McCutcheon of Star sent an email to Mr. Brakefield of Sigma, 

DIFRA’s president, (F. 717) with the subject line “Star’s tonnage data,” stating: “Hello 

Tom, sorry for the delay. The info should be in next week.” Mr. Brakefield forwarded 

that message to Mr. Pais and Mr. Rybacki. (CX 1129; Rybacki, Tr. 3561-3563).

828. On May 19, 2008, Mr. Bhargava, who had been tasked to assemble Star’s tons-shipped 

data submission, sent Star’s tons-shipped data to Mr. McCutcheon. (CX 0530 at 001; 

McCutcheon, Tr. 2427).

829. On May 24, 2008, Mr. McCullough of McWane stated in an internal email to Mr. 

Tatman and Mr. Walton that he “still believe[d] we stand pat until market share info is 

available.” Mr. Tatman responded that he and Mr. Walton agreed with Mr. 

McCullough, stating: “Although somewhat painful to the bottom [line] in the short 

term, that would re[i]nforce the message we’ve been trying to drill in which when 

successful will pay long term dividends.” (CX 1186).

830. Mr. Tatman denied that the message he was trying to “drill in” (as stated in the email 

referred to in F. 829) was a message to the DIFRA members that they must get their 

DIFRA data in before McWane would announce a price increase. The message 

McWane was trying to “drill in” was that McWane was “not going to lose visibility of 

where the competitive marketplace is.” Mr. Tatman explained:

[L]et’s go back to our core strategy. 

If someone announced a 40 percent price increase and I follow it, I’m 

going to get a lot of price in the short term. That’s going to be a 

significant benefit in the short term to my bottom line. But do I believe 

that is in my best interest of my longer-term goal, which is gaining 

volume and gaining share? No.
119

So if I have a competitor that announces a 40 percent price increase, if I 

want to put money in my pocket for the next three months or the next six 

months, I’m going to jump on that.

So that is painful to the bottom line, on a relative basis, that I’m not 

going to jump on and support a 40 percent price increase because you’re 

going to get some traction off of that. It’s not like you’re -- you might 

not get 38-39 percent, but you’re going to get some traction on that.

And what I’m saying here is consistent with what we said all along, was 

we were not going to lose visibility of where the competitive 

marketplace is, and our primary focus at this point in time is volume, 

share.

(Tatman, Tr. 521-522).

831. On the afternoon of May 27, 2008, two calls were placed between a cell phone issued to 

Mr. Rybacki of Sigma and a cell phone issued to Mr. McCutcheon of Star for a

combined duration of ten minutes. That afternoon, a call was placed from a cell phone 

issued to Mr. Rybacki to a telephone number at McWane for two minutes. Mr. Rybacki 

testified that he has no idea what he and Mr. McCutcheon talked about, although it 

could have been the DIFRA data, and that he does not know who in Tyler Texas he 

called that day, or what they spoke about. (Rybacki, Tr. 3643-3644, 3610, 3617, in 

camera; CX 1621-A at 084, in camera). 

832. On May 29, 2008, McWane already had a draft of a price increase letter ready to send 

to its customers, announcing a weighted average increase in published multipliers for 

blended Fittings of approximately 8%. Mr. Tatman had already reviewed various 

reference points to assess market share, such as McWane’s sales data, and he knew 

McWane was losing market share. (CX 1193 at 001; Tatman, Tr. 516-517).

833. On May 30, 2008, the president of DIFRA, Mr. Brakefield of Sigma, forwarded an 

email from Mr. Herren, of the Bradley Arant law firm, dated May 28, 2008, reminding 

members to submit their data, to Mr. Rybacki, Mr. Bhattacharji, and Mr. Rona of 

Sigma, noting, “I will follow up on this and advise.” Thereafter, Mr. Brakefield, 

DIFRA’s President, spoke with Mr. McCutcheon regarding Star’s late submission of 

data. (CX 1090 at 001; Brakefield, Tr. 1291-1292; McCutcheon, Tr. 2430).

834. Mr. McCutcheon submitted Star’s tons-shipped data to Sellers Richardson at 12:37 p.m. 

on June 5, 2008, which, per the agreement of the DIFRA members, included tonsshipped data for 2006, 2007, and January 2008 through April 2008. (CX 0049; 

McCutcheon, Tr. 2427; CX 2538 (McCutcheon, IHT (Vol. 2) at 303-304), in camera). 

835. At 12:48 p.m. on June 5, 2008, Mr. McCutcheon notified Mr. Brakefield and 

Mr. Rybacki of Sigma by email that Star had submitted its tons-shipped data, and 

included a quote from McWane’s May 7, 2008 Customer Letter, stating:
120

Good morning Mr. President. I just sent our info in. Sorry it took so 

long, but we were “carefully analyzing all factors including: domestic 

and global inflation, market and competitive conditions within each 

region, as well as performance against our own internal metrics.” (Does 

that look familiar?).

(CX 1091; CX 0138). 

836. Mr. McCutcheon testified that his quoting of the portion of McWane’s May 7, 2008 

Customer Letter in his June 5, 2008 transmittal email to Mr. Brakefield, described in 

F. 835, was an attempt at humor. Mr. McCutcheon testified the quote was designed to 

“poke fun” at McWane for what Mr. McCutcheon thought was arrogant language by 

McWane, “poking” at Star for Star’s earlier attempt to lead a price increase with Sigma 

and not using a “careful analysis.” (CX 2538 (McCutcheon, IHT (Vol. 2) at 311-313, 

315); McCutcheon, Tr. 2431-2432).

837. Mr. McCutcheon denied that one of the reasons Star did not submit its tons-shipped 

data until June 5, 2008 was a reluctance to share the information with its competitors. 

“Probably not at that time. Once we decided that Star was going to join, I had every 

intention of being a member. I do remember it taking us a while to figure out how to do 

it, running it back through our purchasing people. I know that took a couple of weeks, 

easy.” (RX 698 (McCutcheon, Dep. at 197-198)).

5. McWane’s receipt of DIFRA aggregated tons-shipped report and 

McWane’s transmittal of June 17, 2008 Customer Letter

838. McWane and the other DIFRA members received the first DIFRA aggregated tonsshipped report from Sellers Richardson at 2:41 p.m. on June 17, 2008. The report set 

forth the aggregated total of tons shipped for the year 2006, for each month of 2007, and 

for January 2008 through April of 2008. (CX 0052; Tatman, Tr. 534-536, 936; 

Brakefield, Tr. 1297-1298; Pais, Tr. 2121; McCutcheon, Tr. 2444-2445, in camera).

839. Upon receiving the June 17, 2008 DIFRA tons-shipped report (F. 838), Mr. Tatman 

conducted an analysis to determine McWane’s market share. Mr. Tatman spent 

approximately 40 minutes reviewing the DIFRA tons-shipped data, comparing it to 

other reference points on McWane’s market share, such as McWane sales data, and 

DIPRA and VMA statistics, and prepared a spreadsheet of relevant data points. 

Mr. Tatman transmitted the DIFRA report and his spreadsheet analysis internally to Mr. 

McCullough, Mr. Walton, and Mr. Jansen. Mr. Tatman’s email observed:

1. 2006 baseline total DIFRA tonnage tracks very well with what we 

would have expected based upon walking the 2001 market data from 

the 421 hearings forward using the change in VMA units.
121

2. Our share loss for 2007 and Apr YTD 2008 is actually larger than 

what I expected. Note the DIFRA tonnage is not down as much over 

those period as the VMA unit data.

3. The “backed into” non DIFRA tonnage appears to be on the lower 

end of what we would have expected.

4. All points above suggest that data is accurate within reason which 

was probably the resistance to sending it out before we announced 

any price.

5. The larger than expected share loss will make the task of getting it 

back more difficult, but of course will make victory all the more 

sweater [sic] in terms of the incremental financial benefits.

(CX 0139; Tatman, Tr. 536-537, 946-950). 

840. In the early evening of June 17, 2008, approximately four hours after receiving the 

DIFRA aggregated tons-shipped report from DIFRA’s accountants, McWane sent a 

customer letter dated June 17, 2008, notifying McWane’s customers of an increase in 

Fittings multipliers effective July 14, 2008, and stating that the weighted average 

increase on blended Fittings and accessories was “approximately 8%.” (“June 17, 2008 

Customer Letter”) (CX 1191 at 001 (letter to Glenn Fielding at HD Supply); CX 1576 

at 001 (email to Mr. Doane and Mr. Thees at Ferguson); Tatman, Tr. 538-539, 544, 952; 

RX 644 (Tatman, Dep. at 155); CX 0047 (multiplier increase letter to southeastern 

states)).

841. McWane’s June 17, 2008 Customer Letter included the language: “This increase does 

not fully absorb the level of cost inflation that has occurred over the past few months, 

especially within our off-shore operations. As such, we will continue to a[ss]ess market 

& competitive conditions in addition to our internal operating metrics and advise you if 

additional actions will be required before year end.” (CX 1576 at 003; CX 1191 at 001; 

CX 0047 at 001).

842. In an email to Mr. Doane and Mr. Thees of Ferguson attaching McWane’s June 17, 

2008 Customer Letter, Mr. Tatman stated that “[t]he increase is significantly smaller 

than what I believe others have proposed, but we believe this level is rational given all 

factors considered.” (CX 1576 at 001).

6. Star’s and Sigma’s reactions to McWane’s June 17, 2008 Customer 

Letter

843. On June 27, 2008, Star sent a letter to its customers notifying them of the new published 

multipliers to be effective July 14, 2008, thereby effectively rescinding Star’s May 2008 

price increase announcement that Star had previously put on hold. Star’s new 
122

multipliers followed McWane’s new lower multipliers. (McCutcheon, Tr. 2424, 2448,

in camera; CX 2430; Minamyer, Tr. 3217-3218).

844. On or about July 8, 2008, Sigma sent a letter to its customers notifying them of an 

increase in published multipliers, to be effective July 14, 2008, thereby effectively 

rescinding Sigma’s May 2008 price increase that Sigma had previously delayed 

implementing. Sigma’s new multipliers essentially followed McWane’s. (CX 2253 at 

001-003; Rybacki, Tr. 3573-3577). 

G. Competitive Environment in 2008 

1. Facts related to alleged curtailment of Project Pricing 

a. Expert opinion

845. If there a were parallel reduction in Project Pricing, there would be an increase in the 

amount of product sold at multiplier and a decrease in the amount of product sold under 

special pricing, and a decrease in the “variation” of pricing, i.e., the dispersion of price 

points. (RX 712A (Normann Rep. at 15-16), in camera; Normann, Tr. 4749).

846. Dr. Normann calculated the “standard deviation” in price for Star, McWane, and Sigma, 

for the most common products sold, from 2007 to 2010, based on the Suppliers’ invoice 

data for these products. Dr. Normann concluded from this data that McWane’s price 

variation was largely unchanged until late 2008, while Star’s price variation increased. 

In addition, Dr. Normann concluded that price variation during 2008 was “generally 

higher” than any other time from 2007 to 2010. (RX 712A (Normann Rep. at 15-16 and 

Figure 4), in camera; Normann, Tr. 4749; 4817-4821).

847. The results set forth in F. 846 contradict a parallel curtailment of Project Pricing. The 

data does not suggest a reduction in job pricing. (RX 712A (Normann Rep. at 15-16 

and Figure 4), in camera; Normann, Tr. 4749; 4817-4821, 4824).

b. McWane 

848. McWane had used Project Pricing to sell Fittings prior to January 2008. (CX 2485 

(Walton, Dep. at 114) (“[T]here was job pricing somewhere in the country all the 

time.”).

849. Historically, at McWane, control of Project Pricing by sales persons was a little tighter 

under David Green, Mr. Tatman’s predecessor, than during Mr. Tatman’s tenure in 

which authority over Project Pricing was more flexible and control varied depending 

upon the extent to which the sales person could be trusted to exercise good judgment. 

(Tatman, Tr. 282-283). 
123

850. McWane continued to offer its customers Project Pricing as well as other price 

concessions to its customers throughout 2008, 2009, 2010 and into the present. (RX 

396, in camera; RX 399; Tatman, Tr. 387, 904-905, 907, 909-910, 914-915; RX 598; 

Tatman, Tr. 921, 930-931, 933-934, 995-998, in camera ; Tatman, Tr. 1071-1072. 

(“We continued to job-price every stinking month and we’ve never stopped.”).

851. Mr. Sheley of Illinois Meter, a Distributor, found McWane to be extremely aggressive 

on pricing in 2008, including pricing below published multipliers. (Sheley, Tr. 3445).

852. Beginning in 2008, McWane kept a “pricing protection log,” on which it tracked, in the 

normal course of business, instances of price protection (i.e., where McWane quotes a 

price to a customer and agrees to hold that price for a customer for some period of time, 

thereby “protecting” the price against increases) and Project Pricing. Mr. Napoli was 

responsible for maintaining the pricing protection log. (Tatman, Tr. 931-933; 1007, 

1012-1013, in camera; RX 396, in camera).

853. McWane did not track Project Pricing in 2007, when Mr. Green was in charge. Mr. 

Tatman’s preference was to have data for use in his decision making. (RX 644 

(Tatman, Dep. 109); Tatman, Tr. 1007-1008).

854. The pricing protection log (F. 852) is based upon information received from sales 

persons in the field. (Tatman, Tr. 1008), in camera).

855. The pricing protection log (F. 852) shows, among other things, the Fittings multiplier 

that was bid; the expiration date of the bid; and the published multiplier when the bid 

was issued. (RX 396, in camera).

856. The pricing protection log (F. 852) tracks other products in addition to Fittings. 

(Tatman, Tr. 1009, in camera; RX 396, in camera).

857. The pricing protection log (F. 852) does not separate “protected” prices from one-time 

“job prices,” but if the time period until expiration of the prices is short, for example, 

one month, that price is likely to be a Project Price, rather than a protected price. 

(Tatman, Tr. 1014-1015, in camera).

858. The pricing protection log (F. 852) does not include information on cash discounts, 

changes in freight terms, quarterly rebates, annual rebates, branch-level rebates, but 

only shows what is charged by invoice. (Tatman, Tr. 1018, in camera).

859. The pricing protection log (F. 852) includes a “comments” field. In some cases, the 

“comments” field states “to match Star” or “to match Sigma.” Such a comment 

indicates that McWane quoted the customer a discounted multiplier in order to match a 

discounted multiplier that the sales person reported had been quoted by Sigma or Star, 

according to the customer. (Tatman, Tr. 1022-1023, in camera; RX 396, in camera). 
124 

860. The “comments” field on the pricing protection log (F. 852) included notations 

regarding “matching” Sigma or Star more often between January 2009 and March 2009 

than between January 2008 and March of 2008. Mr. Tatman agreed that such notations 

appeared in the log “far more” often between January 2009 and March 2009 than 

between January 2008 and March 2008. (RX 396, in camera; compare Tab ‘2008,’ 

Column W, Rows 8-807, with Tab ‘2009,’ Column W, Rows 9-750; Tatman, Tr. 1028-

1029, in camera.) 

861. During 2008, McWane provided approximately { } different job prices to its 

customers. (RX 396, in camera (McWane 2008 price protection log); RX 644 (Tatman, 

Dep. at 109)). 

862. McWane provided Project Pricing to Illinois Meter in 2008, and offered better pricing 

to get jobs “aggressively.” (Sheley, Tr. 3445). 

863. Based on the “comments” field, the pricing protection log (F. 852 ) reflects fewer 

instances of McWane Project Pricing to match Star or Sigma in the second and third 

quarters of 2008 (between { 

}), compared to the fourth quarter of 2008 (between { 

 }), and the first quarter of 2009 (between { 

 }). (RX 396.xls, in camera, Tabs “2008” and “2009,” column 

W) (reflecting the following numbers of entries with comments referencing Sigma or 

Star: { 

 

 }).

864. An internal Tyler Union PowerPoint slideshow presentation titled “2009 Sales 

Meeting,” contained a graph showing McWane’s share of the Fittings market in the 

years 2005 through 2008. The graph shows a decline in market share from 2006 

through 2007 and again from 2007 through 2008. The graph also contains a notation: 

“Slight Share Erosion Due to Pricing Discipline.” (CX 0622 at 004). 

865. An internal Tyler Union PowerPoint slideshow presentation titled “2009 Sales 

Meeting,” contained a graph showing an increase in profitability between 2007 and 

2008, and attributed the increased profitability to “more discipline,” but does not 

indicate what products are included or excluded. 

(CX 0622 at 005; Tatman, Tr. 853, in camera).
125

866. In an internal September 2008 presentation to Mr. McCullough and Mr. Walton 

regarding “State of the Business and Potential Options,” a slide on the “Current 

Environment” noted, inter alia, that McWane’s share was down approximately 8 points 

since 2006 and that “[l]eading price stability has been detrimental to share.” Mr. 

Tatman explained that its effort to increase share by compressing pricing “didn’t work.” 

(RX 616 at 005; Tatman, Tr. 971-972). 

867. In a February 9, 2009 email to Mr. Tatman summarizing past and present pricing 

actions, Mr. Jansen reported that McWane had “stayed firm on pricing” for the better 

part of 2008, and had started to give out job pricing in a few territories in late 2008. 

Mr. Jansen reported as follows: 

Stayed Firm on Pricing = for better part of 2008 held pricing to try to 

stabilize market pricing.

• Consequence = Lost market share due to competitors playing 

pricing games and having distributors keep it quiet either on the 

front and/or backside.

• Customer Reaction = Customers had large scale reduction in 

inventory which is what we were getting and were relying more 

on regional distribution yards to supply jobs and support 

inventory.

Job Pricing = Gave out pricing on jobs in few territories late 2008.

• Consequences = started to get some support from customers that 

wondered where we had been. Too little too late since the jobs 

were few and far between.

• Customer Reaction = Numbers are dropping rapidly and they had 

been long before we started to move. They know it’s ugly but 

they are in survival mode and have very little loyalty. They 

would like to work with us but need to know we will support 

them.

(CX 1223 at 002 (emphasis in original); Tatman, Tr. 1074-1076).

c. McWane statements regarding curtailment of Project Pricing 

by Sigma and Star 

868. Mr. Tatman of McWane stated in his Executive Report for the first quarter of 2008, 

among other things, on the “Sales/Market/Competitive Environment” that:
126

Based upon our competitive feedback log, the level of multiplier 

discounting by both Star and Sigma appears to have died down 

significantly. As we understand it, both have removed pricing authority 

from the front line sales team and pushed it up higher within their 

organizations. Discounting is still available, but it now requires a more 

structured decision process. In an effort to drive some volume, they also 

both selectively honored prior job pricing beyond their published March 

1st cut-off date. Our hard stance on that date certainly appears to have 

cost us some short term tonnage.

. . . 

Somewhat off-setting the higher degree of price stabilization is [Star’s 

and Sigma’s] greater flexibility with extending terms,” to selected 

accounts. 

(CX 1564 at 004).

869. Mr. Tatman based the statement in the McWane 2008 first quarter Executive Report 

that “the level of multiplier discounting by both Star and Sigma appears to have died 

down significantly” (F. 868) upon competitive feedback provided by sales persons in 

the field. (CX 1564 at 004; Tatman, Tr. 1063-1064; see RX 598 (competitive feedback 

log)).

870. Mr. Tatman of McWane stated in his 2008 second quarter Executive Report, among 

other things, under the heading, “Sales/Market/Competitive Environment” that:

We continue to track the level of confirmed discounting and job pricing 

within our competitive action file. The level of activity appears to have 

slowed over the past several months probably driven by a combination of 

rising costs putting more pressure on price and more creative use of 

programs.

(CX 1562 at 004).

d. Star

871. Prior to 2008, Star had always used Project Pricing to sell Fittings. (CX 2539 

(McCutcheon, Dep. at 164) (“Being number three, we have to give a value to the 

customer; and we have chosen for that value to be price. And we have always project 

priced.”).

872. Project Pricing was a significant part of Star’s competitive strategy. As the smallest 

competitor in the market, Star needed to Project Price to remain competitively viable, 

and Project Pricing helped Star grow its market share. (McCutcheon, Tr. 2387; RX 685 

(Minamyer, Dep. at 26)).
127

873. Throughout 2008 and up until at least November 2008, Star wanted to see 

documentation of prices in the field before Star offered Project Pricing, and Mr. 

Minamyer reminded his sales force that this is what he wanted on more than one 

occasion. Star would hold to the published multiplier unless it learned that a competitor 

was pricing lower. (CX 2526 (Minamyer, Dep. at 157, 174-176); see also CX 0815).

874. In 2007 and in 2008, Star’s process for approving Project Pricing was that the territory 

manager who negotiates a Project Price had to submit a request in writing for approval 

(the “Pink” sheets) to his division manager, and most of the time the special price also 

had to be approved by the national sales manager and/or the VP of sales. (CX 2535 

(Bhutada, Dep. at 103-106), in camera; McCutcheon, Tr. 2272; Minamyer, Tr. 3144-

3145).

875. While Mr. Minamyer was the national sales manager, Mr. Minamyer or 

Mr. McCutcheon approved Project Pricing, although sometimes the discretion was 

delegated to Star’s divisional managers. There were instances where Mr. Minamyer 

would “push down” approval to the division managers, and sometimes even to the 

territory managers, if Mr. Minamyer had faith in them to make the correct judgment. 

(Minamyer, 3147; CX 2538 (McCutcheon IHT (Vol. 2) at 373); RX 685 (Minamyer, 

Dep. at 26-27)).

876. If the request for Project Pricing was approved, Star and the Distributor calculated the 

price Star charged for the product by multiplying the catalog price by the negotiated 

multiplier (the Project Price) rather than Star’s published multiplier. (Minamyer, Tr. 

3143-3144).

877. Star’s internal process for approving a special price for a customer uses a special pricing 

request – “SPR” – or “a pink, like the color.” (McCutcheon, Tr. 2273). 

878. In the course of the FTC’s investigation in this matter, Star produced a spreadsheet 

dated July 23, 2011, titled “2008_Pinks-final.xls.” (“RX 557.xls Pinks-final”). 

(McCutcheon, Tr. 2550-2551). 

879. The spreadsheet referred to in F. 878 includes all of the 2008 special pricing requests 

(“SPRs”) or “pinks” that were approved by Star in 2008 for all products, including 

Fittings. (McCutcheon, Tr. 2550-2552, 2673, 2692-2693; RX 557.xls).

880. The information in the spreadsheet referred to in F. 878 was drawn from the 

information in Star’s “pinks.” (F. 874, 877-878; McCutcheon, Tr. 2548 ).

881. The spreadsheet referred to in F. 878 shows 2,669 total instances of special pricing, 

including projects, “buy” programs, and “one-time-only” prices. (RX 557.xls).
128

882. Mr. McCutcheon requested the same information as set forth in F. 879 for 2008 for 

2007 through 2009, all of which he reviewed in summary “graph” form. (McCutcheon, 

Tr. 2553, 2684; CX 2570).

883. The data reflected by the spreadsheet referred to in F. 878 and the summary graph 

referred to in F. 882 are drawn from data provided in Star’s “Special Project Pricing 

Reports” (“SPPRs”), which are provided periodically by the Star’s sales force. 

(McCutcheon, Tr. 2673; see e.g., RX 444, RX 444.xls (utility spreadsheet, December 

2008); RX 548, RX 548.xls (utility spreadsheet, November 2008); RX 446, RX 446.xls 

(utility spreadsheet, September 2008); RX 448, RX 448.xls (utility spreadsheet, August 

2008); RX 449, RX 449.xls (utility spreadsheet, May 2008); RX 558, RX 558.xls 

(utility spreadsheet, March 2008); see RX 695 (Leider, Dep. at 36); CX 2532 (Berry, 

Dep. at 38-39)).

884. The SPPRs and the spreadsheet referred to in F. 878 include some entries for Project 

Prices offered to Distributors that involved other products and not Fittings, such as 

plumbing products, joint restraints, bolts and accessories, castings, and valve boxes. 

(McCutcheon, Tr. 2673-2676; RX 557.xls at Row 567 (plumbing products); CX 3033 at 

002 (showing project receiving special pricing reflected in RX 557.xls at Row 567 

referred to plumbing products); RX 558.xls at Row 69-71 (joint restraints); RX 558.xls 

at Row 2-3 (bolts and accessories); RX 558.xls at Row 33 (castings); RX 557.xls at 

Row 1452 (valve boxes); CX 3041 at 001 (showing project receiving special pricing 

reflected in RX 557.xls at Row 1452 referred to valve boxes)).

885. Star’s SPPRs include sales to Canadian customers. (McCutcheon, Tr. 2405; E.g., RX 

446.xls, Row 106 (sale to Howie Bird for project in New Brunswick); RX 446.xls, Row 

10 (sale to Wolseley for project in Quebec); RX 446.xls, Row 104 (sale to Marcel Baril 

for project in Quebec); RX 446.xls, Row 150 (sale to Temispal Val D’or for project in 

Quebec); RX 446.xls, Row 56 (sale to Real Huot for project in Quebec)).

886. Star sells very few Fittings outside the United States. (McCutcheon, Tr. 2405).

887. The overall number of instances in which Star engaged in Project Pricing on all 

products, including Fittings, dropped from 3,226 instances in 2007 to 2,669 in 2008. 

(CX 2570 at 001; McCutcheon, Tr. 2685). 

888. During the time period from February 2008 through March 2008, the number of 

instances of Star’s Project Pricing on all products, including Fittings, was 20% higher 

than the same period in 2007. (CX 2570 at 001; see McCutcheon, Tr. 2402-2403). 

889. The number of instances of Star’s Project Pricing on all products, including Fittings, 

was lower in January 2008 than January 2007; higher in February 2008 than in February 

2007; lower in March 2008 than in March 2007; higher in April 2008 than April 2007. 

(CX 2570 at 001).
129

890. The instances of Star’s Project Pricing on all products, including Fittings, were fewer in 

each month from May 2008 through November 2008, than May 2007 through 

November 2007. (CX 2570 at 001).

891. The number of instances of Project Pricing on all products, including Fittings, was 

higher in December 2008 than in December 2007. (CX 2570 at 001).

892. In an internal email to Mr. McCutcheon and to Star’s division managers dated August 

25, 2008, Mr. Minamyer stated: “I know we have been very careful on special pricing 

and it seems to be working pretty good.” (CX 0814; McCutcheon, Tr. 2570-2571).

893. On November 25, 2008, Mr. Minamyer wrote an email to his sales team, with the 

subject line, “Pricing Strategy Changes.” The email stated: 

TO: All

We have all been extremely diligent in protecting the stability of our 

market pricing. So much so that we have earned the reputation of being 

the best at protecting the market pricing and at times, to the extent that 

some think us inflexible in that area. You have all done a great job and 

deserve credit for these effort and results.

However, some of our competition has not performed as admirably nor 

are we now certain that it was ever part of their strategy. Considering 

that, we need to change our plan in how we are setting our multipliers. 

We have many instances where we have documented the competition 

being irresponsible (Mostly Sigma) and selling under our multipliers in 

almost every market with varying strategies. We have lost too much 

revenue to tolerate it any longer. 

Please get with your teams to be sure we are all clear on the following 

plan.

We will take every order we can after exhausting all avenues to 

document the competitors pricing. Please be diligent while talking to 

your customers that we want to continue being good stewards in the 

market but we will no longer tolerate the competition being 

irresponsible in the market and being undersold as a result. The 

reason is that we have documented so much under market pricing that 

we have to react to protect our partners’, and our own market shares. 

Do it with a combination of buy plans, short term buys, and project 

pricing. Do this quietly and selectively and as much under the radar as 

you can but, if it is necessary, be sure to do it. Go get every order!!!!!

You should also go after the competitors’ partners to try and gain some 

of that market share. This doesn’t give us the go ahead to be 
130

irresponsible on the market but rather the ability to be more flexible in 

pricing. If we are moving pricing we need to get more revenue as a 

result.

Your teams will need to be sure they are tracking every project in their 

territory so that they know what is going on and how to react.

. . .

To manage I will have all the pinks come through me again for awhile so 

we can measure the results.

. . .

(CX 0831(emphasis in original); Minamyer, Tr. 3226 (describing email as “asking them 

to get more aggressive on pricing to get more orders.”); see also CX 2526 (Minamyer, 

Dep. at 69-71, 72-73), in camera (“I’m telling them to take off the gloves and looks like 

we lost a market share and my patience had run out with that and we were going to go 

take it back.”; “Q. So what are you directing your sales folks to do? You said take off 

the gloves; what does that mean? A. It means we were attempting to hold our pricing 

and it looks like the competition was not, and we’re not going to do that anymore. 

We’re going to go out and we’re going to take that business back by using pricing.”)).

894. On February 3, 2009, Mr. Minamyer wrote an email to his sales team stating that 

“Divisional Managers will now be able to approve pinks without my approval” for 

certain specified products within specified multipliers. (CX 0884).

e. Sigma

895. Within Sigma, regional managers had authority to approve a Project Price to some 

extent, with ultimate authority resting with Mr. Rybacki. Sigma sales people had this 

authority in every region for all of 2008. (Rybacki, Tr. 1105-1106, 3696).

896. After receiving Mr. Pais’ January 24, 2008 email referred to in F. 663-664, Mr. Rybacki 

told his regional managers “once again that we needed to try to . . . make us more 

profitable because it was getting to the point where we couldn’t make any money at the 

prices we’re selling at.” (Rybacki, Tr. 1105-1106, 1137). 

897. There was no special effort made in 2008 at Sigma to reduce Project Pricing. As Mr. 

Rybacki further explained: “I think there’s an effort every single . . . quarter every 

single year to try to reduce it because job pricing has a tendency to get out of hand.” 

(Rybacki, Tr. 1107).

898. Sigma continued to Project Price throughout 2008. Sales persons continued to have 

some latitude in offering Project Pricing, although they had to prove to their regional 

manager that the price was necessary. Sigma’s pricing was “all over the map.” (RX 
131

1002 at 004-006; Rybacki, Tr. 3579, 3653-3659, in camera; Rybacki, Tr. 3696-

3697Pais, Tr. 1918-1919).

899. In the second half of 2008, Sigma observed a sharp erosion in market pricing. (RX 116; 

Pais, Tr. 2129-2131).

900. On November 24, 2008, Mr. Pais stated in an email:

I am sure Tyler is as guilty of ‘starting’ the price decline as any of the other 

two of us. But, generally, their record holds that ‘they may not make a 

price . . . but, will meet one’. Here, the culprit again may be the ‘PW or Job’ 

pricing which is still priced as in a different manner and this dual pricing 

practice could be continuing to harm our overall pricing as it has over the 

past 3-4 years! For sure, with their inventories climbing due to their 

commitment to a domestic production at 2 plants til 9/08 (mercifully, they 

closed Tyler, which is sure to relieve some pressure), Tyler had severe 

pressure to maintain their market share.

(RX 115 at 002).

2. Alleged “monitoring” and “cheating” documents

901. Mr. Minamyer received weekly activity reports from his divisional sales managers. 

(Minamyer, Tr. 3199). These weekly activity reports included paragraphs under several 

different category headings, including “Trends”; “Major Events/Happenings”; 

“Competition Update and/or New Information”; “Customer Service Issues (Good or 

Bad)”; and “Successes or issues from your sales people.” (See, e.g., CX 1692, CX 

1693, CX 1696).

902. A two page weekly activity report was provided by Star divisional sales manager Mr. 

Prado on March 6, 2008, for the week ending February 29, 2008. One of the four points 

under “Competition Update and /or New Information” included Mr. Prado’s statement: 

“It is still early, but it doesn’t appear that Sigma or Tyler is cheating on the new fitting 

multipliers being quoted after 2/18.” (CX 1692 at 002; Minamyer, Tr. 3199-3201; 

CX 2526 (Minamyer, Dep. at 201-202) (“Q. And what he was telling you here is that 

they were adhering to the published multipliers? A. I believe that is what he meant. Q. 

They weren’t cheating by undercutting them? A. It’s still early, but it doesn’t appear 

that they are. Right.”)).

903. “Cheating” is an internal Star term used to refer to any pricing that was below the 

published multiplier, including among other things, Project Pricing. (Minamyer, Tr. 

3201, 3218-3219, 3222, 3255, 3269-3273).

904. In a Star internal email on March 11, 2008, Mr. Minamyer requested his sales force to 

advise him of “any issues we had with Sigma on how they are handling the Mult 

increases. . . . Just give me major things that you [hear] of like: - No shipping 
132

restriction on NJ; - No letter out on MA; - Letter out late in XX; - Sales guys saying 

they didn’t know; - Honoring all previously priced jobs in OH; - Etc.” Mr. Minamyer 

requested the report because Star was “trying to figure out if Sigma was taking an 

increase or not.” (CX 0856 at 001-002; Minamyer, Tr. 3198). In the same email, Mr. 

Minamyer shared information he had acquired concerning Sigma quotes in various 

areas, as well as quotes by McWane and Star. (CX 856 at 001).

905. In response to Mr. Minamyer’s March 11, 2008 email asking for any reports on any 

issues with Sigma “handling the Mult increases” (F. 904), Star’s Southwestern Division 

Manager, Shaun Smith, responded on March 11, 2008 that: “It seems as though they 

have been pretty discipline[d] in my Division” and “everyone seems to be playing fair.” 

(CX 0856 at 001). By “playing fair,” Mr. Minamyer believed Mr. Smith meant “pricing 

per their published multiplier letters.” (Minamyer, Tr. 3199).

906. On April 2, 2008, Mr. Minamyer reported to Mr. McCutcheon that Star had lost a bid 

for a project with Winwater (referred to as the “Tulsa Bid Sleeves” project) because 

Star had not given Winwater special pricing, but “It looks like Sigma did, or at least 

that’s what [Winwater] told us. Sigma may be trying to buy some of our business. 

They should be very careful if they want to hold this price increase as we will not lose 

our partners or any more orders because they are not responsible in the market.” In 

referring to Sigma “trying to buy” Star’s business, Mr. Minamyer meant Sigma may be 

trying to undercut Star’s price to sell to one of Star’s better customers. In calling Sigma 

“not responsible,” Mr. Minamyer was referring to the fact that Sigma was pricing below 

its published multiplier letters. (Minamyer, Tr. 3204-3207; CX 0044 at 001; RX 697 

(McCutcheon, IHT (Vol. 2) at 453-454)).

907. In response to Mr. Minamyer’s April 2, 2008 email (F. 906), Mr. McCutcheon asked for 

additional information. (CX 0044 at 001 (“Please give me more info. Bid date, value, 

selling price, etc...”)).

908. In a weekly activity report dated April 21, 2008 for the week ending April 18, 2008, 

under the category “Major Events/ Happenings” it was reported, among other things,

that HD Supply was seeking price help on an order it was preparing to place with Star 

for a bid it had won. Mr. Smith, a Star divisional sales manager, stated in response: 

“You know the gig, ask them why? If they give you proof the other guys are cheating, 

then we will match!” (CX 1696 at 001). This was consistent with Star’s Project Pricing 

policy at that point in time. (Minamyer, Tr. 3203-3204).

909. On May 6, 2008, Mr. Minamyer in an email to his division managers, with a copy to 

Mr. McCutcheon, wrote: “We have to keep our focus on the pricing and continue to be 

diligent. I see it getting a little looser and am concerned that we won’t hold this 

increase. Don’t let our competitors[’] practices force us to fail. One competitor is 

being pretty strong and one is being pretty weak on pricing. Continue to have the talks 

with your customers at the highest level to try to hold pricing. All Mfg’s are taking 

increases so it is not an unfamiliar conversation to them.” (CX 0525).
133

910. In a weekly activity report dated June 30, 2008 for the week ending June 27,2008, under 

“Major Events/Happenings” Mr. Prado reported, among other things, “Received 

confirmation that Sigma is selling fittings in Florida below the state number of .25. 

[T]hey have made some verbal agreements to price certain customers 2 points below the 

state number. Developed plan to strategically lower committed fitting partners to the 

same level until further notice.” (CX 1693 at 001).

911. In a weekly activity report dated June 30, 2008 for the week ending June 27, 2008, 

under the heading “Competition Update and/or New Information,” Mr. Prado included 

the statement: “Confirmed that Sigma has been cheating in Florida with fitting 

multipliers. Also pretty certain that Tyler is doing the same.” (CX 1693 at 002).

912. On August 18, 2008, Mr. Smith sent an email to his sales force, with the subject line

“weekly report,” which stated in pertinent part:

We need to stay on the high road, but with our relationships, we should be 

able to react when necessary. I know it sometimes becomes a difficult 

discussion, but because of how manufactures/ distributors/contractors have 

acted over the years with (I need a better price!) it created this spiraling price 

erosion that needed to stop. It doesn’t help that the market is soft, but let’s 

be as diligent as we can gathering the proper data needed if the other 

suspects are cheating. We will react, just need to make sure it is real.

(CX 1695 at 001; Minamyer, Tr. 3219-3221).

913. On August 25, 2008, Mr. Minamyer wrote an email to his sales force and Mr. 

McCutcheon, regarding “Pricing in the Market.” Mr. Minamyer stated:

I have noticed that recently we have been seeing more pricing pressure in 

these forms:

- Ford, Smith Blair, and Romac being very low on multipliers.

- Sigma getting tricky with special local deals.

- Tyler has been pretty good but a couple of instances where they 

don’t respect the market price in markets where they get no 

business and have nothing too lose.

My guidance is:

- Don’t let anyone take your JR (or fittings) business on price. 

Confirm the price and match it to get it back. The JR market may 

be changing due to all the new players. Watch for Tyler and 

Bulldog very closely and don’t let them, or anyone, in.

- If it is a customer who will shop the price back to the competitor 

you need to use good judgment on how and if to match price.
134

- Do the same thing to Tyler that they do to you. Maybe it will get 

back to them and they will stop.

- Continue to report what’s going on.

I know we have been very careful on special pricing and it seems to be 

working pretty good. But, the competitors are starting to get weak and 

we can’t sit back and let them play games and lose our market share. Be 

aggressive when it happens.

(CX 0814).

914. On September 4, 2008, Mr. Smith of Star wrote an email regarding “BPU Pricing” and 

stating with regard to a bid, in part: “Both of these guys would be getting the standard 

.30 number from us. Is this an old contract price or did it just bid, with or without 

accy’s? We have seen Sigma cheat on larger projects in other parts of the country and 

have responded accordingly when we see something. As you know, we will always 

cover you in these situations, just [want] to make sure we don’t have a bidding mistake 

or [Distributors] HD and WW just getting stupid in the market.” (CX 1694 at 001).

915. On September 9, 2008, Mr. Minamyer received a report from a Star sales representative 

regarding HD Omaha: 

Tyler has slid back to a .28 in Omaha per Joe ... at HD. Municipal took the 

Omaha annual bid a month after the price increase below a .30 and called 

out Tyler I think with the market in NE being soooo [sic] bad if we don’t 

protect our partner we may loose [sic] them. I know we would like to keep 

the market up but Tyler and Sigma keep cheating and costing our partners in 

a baddddd [sic] market where they are down substantially already. I think we 

need to go to a .28 with HD. . . .Let me know, but I think after the beating 

our partners took last year for us trying to lead the market, we are going to 

loose [sic] market share by continuing the tough stance. Tyler got to where 

they are by being staunch and arrogant. I don’t want to be looking back a 

year from now with a 2% [price] increase and 25% less biz.

(CX 1697; Minamyer, Tr. 3222-3226 (“keep the market up” referred to prices, and 

“tough stance” refers to Star’s effort to not offer Project Prices); see also CX 1694 at 

001).

916. At the end of a 3-page Star internal email exchange among Mr. McCutcheon, Mr. 

Minamyer and Mr. Smith on October 22, 2008, regarding “Quote 10707007,” and 

whether to offer a customer a lower multiplier than Sigma had offered Mr. Smith stated: 

“I’m not sure about the market being already there. . . . I really only think this will 

affect the Houston market, but I am catching Sigma cheating more and more.” (CX 

1698). 

917. A weekly activity report from Mr. Smith for the week ending October 24, 2008, noted a 

number of jobs where Star was pricing to compete with prices from Sigma and 
135

McWane. A final entry under the heading “Competition,” noted “My team is in major 

attack mode – as reported, we are seeing cheating all over from Sigma – they have been 

instructed not to lose any orders.” (CX 1699).

918. On October 29, 2008, Mr. Minamyer wrote an email to his sales force, with the subject, 

“Sigma Antics.” Mr. Minamyer asked “off the top of your heads, please give me no 

more than the top five things Sigma does or has done in your division that is out of the 

market pricing or any weird stuff. Make sure they are legit.” As examples, Mr. 

Minamyer stated, “In New Mexico they keep dropping the fitting number to xx. The 

salesman says that is because they don’t get any share and have nothing to lose” and 

“The[y] put out a letter in TX and OK announcing a truck load special. Any full trucks 

get xx points off the s[t]ate mult.” (CX 0871).

919. On January 31, 2008, Mr. Tatman of McWane, received a copy of the Star January 30, 

2008 email to HD Supply in which Mr. Leider of Star, informed HD Supply it would 

match McWane’s multipliers and would be providing “NO UTILITY PROJECT 

PRICING NATIONWIDE” (F. 702 (emphasis in original)). Mr. Tatman forwarded the 

email to Mr. McCullough and Mr. Walton, both of McWane, stating:

Per the e-mail chain below Star is following the [McWane] Multiplier 

Maps also effective Feb 18th. Also note comment on NO UTILITY 

PROJECT PRICING NATION WIDE that was sent to HDS regional 

reps. The proof will be if they actually hold to what they say.

Note that Star has our actual maps, which isn’t a bad thing.

We heard a similar announcement is out from Sigma but we’ve yet to 

receive a copy.

(CX 0178 at 001 (emphasis in original); Tatman, Tr. 412-418).

920. Three minutes after receiving Mr. Tatman’s email referred to in F. 919, 

Mr. McCullough forwarded the email to McWane’s CEO, Mr. Page, writing that “[t]he 

first tentative baby steps are encouraging but the proof will be in ‘saying no’ to 

customer requests for special pricing.” (CX 0178 at 001; Tatman, Tr. 417). Mr. 

McCullough explained: 

[S]omeone makes the comment, “NO UTILITY PROJECT PRICING 

NATION WIDE.” You know, whereas I read that, and I know that this 

has never happened. So, regardless of what someone is saying, you 

know, the proof is in the pudding . . . I’m not certain now, but perhaps it 

would be that at least they’re giving the illusion of there will be no 

special project pricing, whereas in actuality, there’s always [been] 

project pricing . . . at least they were saying visibly that there’s no utility 

project pricing nation wide . . . . Maybe . . . they would carry through 

on what they’re saying here, and that there would be no project pricing. 
136

But I don’t know that anyone ever had any real belief that that was going 

to happen. 

(CX 2479 (McCullough, Dep. at 197-199)).

921. On March 10, 2008, Mr. Tatman sent an email to Mr. McCullough and Mr. Walton, 

regarding “VMA data compared to Tyler/Union YTD sales.” Mr. Tatman reported that 

while year-to-date valve sales were up 81% of 2007, “YTD fitting sales are lagging 

behind @ 69% of 2007.” Mr. Tatman’s email continued:

March 1st was the last published date for Tyler/Union, Sigma and Star to 

honor any job pricing. Market inputs suggest that both Sigma and Star 

put out some pretty low numbers in Feb trying to grab incremental 

tonnage prior to the March 1st date. We on the other hand honored 

existing job quotes but didn’t throw out any new low numbers after the 

increase was announced. In hindsight this might have been a tactical 

error given our soft tonnage.

Jerry is getting mixed competitive reports ranging from adherence to 

published pricing by Sigma and Star to cutting deals and extending 

terms. I have asked Jerry to work with his team on getting qualified 

competitive information rather than verbal inputs from branches who 

could be feeding false information to get us to budge. 

I’ll nervously wait for the March data to come in, but if we’re not seeing 

a recovery trend towards aligning with the general market we’ll have to 

discuss what options are appropriate. 

Even with the reduced production schedule, YTD inventory levels are up 

nearly 4,000 tons.

(CX 0339; Tatman, Tr. 421-422). 

922. On March 10, 2008, Mr. Rona, OEM Manager for Sigma, forwarded to Mr. Pais and 

others at Sigma, an email from Mr. Tatman at McWane regarding “3”-8” DIWF from 

Tyler/Union.” Mr. Rona reported in his email a number of points from a conversation 

he had with Mr. Tatman, including matters pertaining to McWane’s selling certain 

Fittings to Sigma. According to the Mr. Rona’s email, Mr. Tatman “said he hears that 

some of the new prices in the market are being compromised with deals. He hopes the 

market will improve and hopes [sic] do our part.” (CX 1124 at 002; Rona, Tr. 1609-

1613; CX 2530 (Rona, Dep. at 137)).

923. Mr. Tatman testified that he has no recollection of the conversation referenced in F. 

922. (CX 2484 (Tatman, Dep. at 106-107); Tatman, Tr. 422).

924. On August 22, 2008, Mr. Rona sent a Sigma internal email to “OEM5” re “Short talk 

with Rick Tatman.” The email stated:
137

Guys,

Rick was upset by the numbers in Florida and California based on what 

he has seen from us and Star. 

He said the .26 and .30 respectively were available from us both with 

any second thought.

Just FYI

(CX 1149). 

925. Mr. Rona recalled nothing about the conversation referenced in F. 924, including 

whether Mr. Tatman asked him to do anything, or why he used the word “upset.” Mr. 

Tatman also had no recollection of the call with Mr. Rona referred to in Mr. Rona’s 

August 22, 2008 email. (Rona, Tr. 1613; Tatman, Tr. 364).

926. Mr. Rona acknowledged that his August 22, 2008 email (F. 924) does not refer to any 

buying or selling between McWane and Sigma. (Rona, Tr. 1718).

927. Mr. Rona is not involved in setting prices at Sigma. (Rona, Tr. 1437-1440, 1453-1454).

928. Mr. Rybacki had authority over pricing at Sigma during the relevant period. (Rybacki, 

Tr. 1096).

3. Economic data

a. Background

929. With the economic decline during 2007, the Fittings industry experienced a period of 

declining demand, increased price competition resulting in price erosion, and increased 

costs. (RX 690 (Rybacki, Dep. at 66-67); Tatman Tr. 263-265; CX 2457). 

930. Demand for Fittings was falling beginning in 2007 because of the economic downturn 

and decreased demand for new housing. Business continued to drop off, particularly by 

the summer of 2008, when the economic crisis really hit “full steam.” (Tatman, Tr. 

269-272; Rybacki, Tr. 1104-1105; McCutcheon, Tr. 2654, in camera). 

931. In August 2008, the housing market declined precipitously, creating additional pricing 

pressure. (Rybacki, Tr. 1105, 3578 (testifying that “[a]fter the third week of August of 

2008, I alerted my team that the demand was starting to weaken” and that is when the 

“demand for all waterworks products started to get soft”); CX 1651 at 026, in camera

(graph showing drop in housing starts over the summer of 2008); CX 2531 (Rybacki, 

Dep. at 134-35, 157-58) (“That’s when housing had just stopped and the economy had 

taken -- in August of 2008, the market, somebody just shut the faucet off.”; “[W]e had a 
138

big July. I remember we had a big July and good first half of August, and that’s when it 

started to go down. It started to go down mid to late August 2008.”)).

932. In late 2007 and into 2008, McWane had excess capacity while demand was declining, 

and idle plant charges were negatively affecting profitability. (Tatman, Tr. 1036-1037, 

1040, in camera; CX 2416 at 0015, 0035, in camera).

933. Market pricing eroded sharply in the second half of 2008. Mr. McCutcheon of Star 

described Fittings pricing in the second half of 2008 as “chaotic.” (McCutcheon, Tr. 

2568; RX 116; Pais, Tr. 2129-2131, 2151; Tatman, Tr. 971-972).

b. Expert analysis 

934. Dr. Normann was charged, inter alia, with determining whether there was economic 

evidence consistent with the allegations of the Complaint; specifically, whether there 

was economic evidence consistent with collusive behavior among McWane, Sigma, and 

Star, to stabilize and increase prices for Fittings. Based on his review of the evidence 

and his analysis, Dr. Normann concluded that there was no economic evidence that the 

price changes in January or June of 2008 were coordinated, or that there was an 

agreement to reduce job pricing as would be reflected in a decrease in price variance; 

that there was economic evidence that contradicted a conclusion that prices were raised 

anticompetitively in the Fittings market; and that the pattern of sales and inventory 

contradicts the notion of quantity withholding, as would be needed to effect a price 

increase. (RX 712A (Normann Rep. at 1-3)).

935. Dr. Normann analyzed whether there was reduced price variation and whether prices 

were increased, as part of an agreement, as alleged in the Complaint. (RX 712A 

(Normann Rep. at 2)).

936. Dr. Normann examined, inter alia, McWane’s multiplier maps associated with the 

January and June 2008 multiplier changes. Dr. Norman found that McWane’s 

multipliers changed in different directions and by different amounts on a state-by-state 

basis, and concluded that this pattern is more consistent with competitive, independent 

decision-making by McWane than with concerted action. Moreover, Dr. Normann 

found that McWane’s published multipliers announced in January and June 2008 

actually did not increase in most States, which is inconsistent with the Complaint’s 

allegation that the January and June 2008 price changes were coordinated “price 

increases.” (RX 712A (Normann Rep. at 10, Figure 1); Normann, Tr. 4777-4779).

937. Dr. Normann examined the Suppliers’ invoice data, kept in the ordinary course of 

business and produced by the Suppliers in this case. The invoices record the sales price 

for the transaction in dollars, which includes any discounts off the published multiplier 

(i.e., Project Pricing), but does not include additional discounts that may arise from 

rebates, freight terms, or cash discounts. (Normann, Tr. 4740-4741, 4781).
139 

938. Because the alleged conspiracy in this case involves published multipliers and discounts 

from published multipliers given through Project Pricing, and there are no allegations 

involving other discounts, the invoice price is exactly the correct price measure. 

(Normann, Tr. 4741).

939. To control for product mix when analyzing the Suppliers’ invoice data, Dr. Normann 

created an index of Fittings, consisting of a “basket” of the 24 most common types of 

Fittings that are sold by McWane, Sigma, and Star, as determined by volume. 

According to Dr. Normann, any conspiracy to raise Fittings prices would be reflected in 

the invoice prices for this basket of products. (Normann, Tr. 4783-4785). 

940. Dr. Normann found, based on McWane’s invoice prices for McWane’s portion of the 

common Fittings basket (F. 939), that McWane’s average non-domestic (i.e., open 

specification) Fittings prices declined over the course of a multi-year period from

January 2007 through November 2010, including before, during, and after the period of 

January 2008 to February 2009. The period of January 2008 to February 2009 is the 

period that Dr. Normann derived from his review of the Complaint and other materials 

in the case to encompass the “conspiracy period.” (RX 712A (Normann Rep. at 12, 

Figure 2A); Normann, Tr. 4789, 5780). 

941. Dr. Normann’s use of a multi-year time series (F. 940) captures a rolling average and 

thereby captures the potential effect of time lags between the date a price was agreed to 

with a customer, and the date the order was invoiced and shipped. (Normann, Tr. 

5144). 

942. For the period from January 2008 through February 2009, Dr. Normann found that 

McWane’s average Fittings prices decreased by { }%, Sigma’s average Fittings 

prices increased by { }%, and Star’s average Fittings prices increased by { }%. A 

price decline by McWane during the same period as price increases by Sigma and Star 

is inconsistent with a conspiracy to raise prices involving McWane. (RX 712A 

(Normann Rep. at 13, Figure 2B), in camera; Normann, Tr. 4789). 

943. During a period beginning February 1, 2008 and ending October 1, 2008 McWane’s 

Fittings prices increased by { }%; Sigma’s increased by { }%; and Star’s 

increased by { }%. (Normann, Tr. 5776-5782, in camera (as corrected by Nov. 7, 

2012 Joint Stipulation Regarding Trial Transcript Errata)). 

944. Even when there is evidence of price increases, it is important in a conspiracy case to 

look at input costs to determine if there are competitive explanations for the price 

increases, such as needing to keep up with rising costs. (Normann, Tr. 4779-4780). 

945. Dr. Normann measured cost changes through an index he created of metal (such as 

scrap and pig iron) and energy costs. Metal costs, such as scrap and pig iron, and 

energy costs are variable costs that constitute the primary cost inputs in the manufacture 

of Fittings. These costs comprise about 30 percent of the total cost of McWane’s 

production of ductile iron pipe fittings. (Normann, Tr. 4779-4780, 4792). 
140

946. The cost data for Dr. Normann’s analysis (F. 949-951) came from McWane’s “blue 

books.” (Normann, Tr. 4792-2793).

947. “Blue books” are prepared by McWane’s controller’s office, are provided to 

Mr. McCullough and other executives within the company, and are important financial

documents used in running the waterworks business. (Tatman, Tr. 497-498, 844-845, in 

camera; see e.g., CX 2416, in camera).

948. Costs increased earlier and were more pronounced for Sigma and Star, compared to 

McWane, because of McWane’s domestic production. Inflation started earlier in China. 

(Normann, Tr. 4793).

949. The metal and energy cost input line on Figure 2B of Dr. Normann’s report is based 

upon McWane’s actual metal and energy cost data, but because metal and energy costs 

represent input costs that go into all fittings sold into the open-specification market, 

McWane’s input cost data is a good proxy for input costs incurred by Sigma and Star as 

well. (Normann, Tr. 4793-4794).

950. The metal and energy cost input line on Figure 2B, of Dr. Normann’s Report, included 

McWane’s metal and energy cost figures for its domestic product sold into open

specification jobs and for its imported product (i.e., McWane’s “blended” Fittings). 

(Normann, Tr. 4792-4794).

951. Metal and energy input costs went up 40% to 50% during 2008, and were up 70% to 

80% from 2007, which is a dramatic increase. (Normann, Tr. 4794-4795; RX 712A 

(Normann Rep. at 13, Figure 2B), in camera).

952. In a competitive environment, the cost increases referred to in F. 951 would result in 

significant pressure to increase price. In a competitive environment, it would be 

expected to see some changes in price because of increases in cost. Thus, when 

examining whether price increases are indicative of collusion, it is necessary to control 

for the underlying costs. (Normann, Tr. 4746-4749, 4795-4796).

953. Dr. Normann’s analysis showed declining prices for McWane and modest price 

increases for Sigma and Star during the period from January 2008 through February 

2009. Dr. Normann did not find the price increases to be significantly more than the 

cost increases in the same time period. (RX 712A (Normann Rep. at 13, Figure 2B), in 

camera; Normann, Tr. 4746-4749).

954. Dr. Normann’s analysis concluded that during the January 2008 through February 2009 

period the Suppliers’ price movements were not in parallel and that the Suppliers’ 

prices moved independently of one another. (Normann, Tr. 4747-4748; RX 712A 

(Normann Rep. at 12-13, and Figure 2B), in camera).
141 

955. Dr. Normann’s data analysis shows that from the period of mid-2007 through 2008 and 

into 2009, McWane’s non-domestic Fittings prices declined while its costs increased. 

(Normann, Tr. 4791-4792). 

956. The decline in McWane’s pricing (F. 940), given the rise in input costs (F. 951), is 

inconsistent with a conspiracy and consistent with independent pricing behavior. 

(Norman Tr. 4746-4749; RX 712A (Norman Rep. at 12-13 and Figure 2B), in camera).

957. A price increase for imported Fittings would show up as an increase in the price of 

Fittings sold into open specification jobs relative to domestic-only jobs. Over a multiyear period, including the period from January 2008 through February 2009, the price 

of open specification Fittings declined relative to the price of domestic-only Fittings, 

which is also inconsistent with the alleged conspiracy. (Normann, Tr. 4748, 4801-4804; 

RX 712A (Normann Rep. at 14-15 and Figure 3), in camera). 

958. Dr. Normann looked at the Suppliers’ inventory data to see if there was any evidence of 

withholding, which would facilitate a cartel’s ability to raise prices. He found no 

evidence of withholding, and instead found an increase in output. (Normann, Tr. 4748-

4749; 4805-4808; RX 712A (Normann Rep. at 19-21 and Figures 5, 6), in camera).

959. Dr. Normann’s findings, conclusions, and opinions regarding price movements in the 

Fittings market during 2008 constitute substantial, probative, economic evidence that is 

not consistent with an inference of a conspiracy among McWane, Sigma, and Star, to 

raise and stabilize prices in the Fittings market. (F. 934-958; see generally RX 712A 

(Normann Rep.) at 1-21). 

c. Other financial evidence 

i. McWane 

960. Mr. Tatman’s 2008 second quarter Executive Report showed that the gross invoice 

price-per-ton for 2007 for “blended” Fittings (i.e., the Fittings sold for open source jobs, 

including imported or domestically produced Fittings) was { } per ton, and the 

gross invoice price-per-ton for the first quarter of 2008 was { } per ton; April 

2008 was { } per ton; May 2008 was { } per ton; and June 2008 was 

{ } per ton. (Tatman, Tr. 546-548; CX 1562 at 002). 

961. McWane’s prices for non-domestic Fittings in 2008 did not keep pace with the level of 

inflation in McWane’s costs. (Tatman, Tr. 879-881, 971 (“Q. And you say you’re 

lagging inflation due to competitive actions, and what did you mean by that? A. 

Pricing. We couldn’t get enough price out there in what we were selling things for to 

cover our rising cost.”)).

962. McWane’s average price-per-ton for non-domestic Fittings for the year 2008 declined 

relative to inflation, because its non-domestic production costs rose by roughly { }% , 
142 

while price-per-ton for the year increased only by { }% over 2007. (Tatman, Tr. 859-

862, in camera, CX 2416 at 035, in camera).

963. Mr. Tatman’s April 29, 2008 General Manager’s Meeting presentation included a graph 

showing a 50% increase in profit for the period from January through April 2008, on a 

14% decline in sales volume. The graph does not attribute this to an increase in Fittings 

prices and states: “inventory write-up & blended-mix shift overriding volume impact.” 

(CX 2047 at 004). 

964. McWane’s gross profit margin on non-domestically produced Fittings fell from { 

 }, which Mr. Tatman attributed in part to job pricing. (CX 2416 

at 043, in camera; Tatman, Tr. 991-994, in camera).

965. McWane’s average blended Fittings price (the price of imported or domestic Fittings 

sold for open source jobs) for its 24 most commonly sold Fittings products declined 

throughout 2008, 2009, and 2010. (Normann, Tr. 4791-4797). 

966. An internal McWane “variance analysis” report comparing 2008 sales and profit figures 

to 2007 includes a line item for “Sell price – Prior” and “Sell price – Current” for 

domestic utility fittings and non-domestic utility fittings, on a per-ton basis. Nondomestic refers to imports shipped for an open or import specification. Domestic refers 

to domestic fittings shipped. Price-per-ton refers to aggregate dollars per ton of product 

sold. Variance analyses are prepared by McWane’s controller. The data in McWane’s 

variance analyses also appear in McWane’s “blue book” sales records. (CX 2126 at 

004, in camera; CX 1569, in camera; Tatman, Tr. 818-819, 823-824, 834, 844-846, in 

camera).

967. The McWane variance analysis referred to in F. 966, comparing sales and profit figures 

for 2008 to 2007, stated with regard to Utility Fittings: “Utility Fittings have contributed 

an additional { } of gross profits over the prior year. This is in spite of a { }% 

reduction in volume. Pricing gains, primarily on domestic product, have contributed an 

additional { } of gross profits. Increased product costs of both domestic and 

non-domestic product have eroded profits by { }. Although volume is down 

substantially, increased sales of the more profitable non-domestic product have reduced 

the overall volume loss to { }.” . . . Idle Plant Expenses of { } were 

incurred in 2008, which were { } less than 2007. (CX 2126 at 006, in camera; 

Tatman, Tr. 818-819, in camera).

968. The gross profits figures for fittings reflected in the variance analysis referred to in 

F. 967 do not include idle plant costs. “Idle plant” costs are the fixed overhead costs 

associated with running a Fittings manufacturing facility when the plant is not running 

on all days of the week. McWane reports this cost as a separate line item on its income 

statements called “idle plant.” (Tatman, Tr. 432-433, 832). 

969. McWane’s variance analysis report comparing 2008 sales and profit figures to 2007 

(F. 967) reflects an increase in non-domestic Fittings prices-per-ton between 2007 and 
143 

2008 from { } per ton, and an increase in Domestic Fittings prices-perton between 2007 and 2008 from { } per ton. (CX 2126 at 004, in 

camera; Tatman, Tr. 834, in camera; see also CX 2416 at 043, in camera (McWane 

blue book for year end 2008)).

970. Specifically, McWane’s average price-per ton for non-domestic Fittings were as 

follows: { } in January 2008; { } in February 2008; { } in March 2008; 

{ } in April 2008; { } in May 2008; { } in June 2008; { } in July 

2008; { } in August 2008; { } in September 2008; { } in October 

2008; { } in November 2008; and { } in December 2008}. (CX 2416 at 043, 

in camera; Tatman, Tr. 846-847, in camera).

971. McWane’s variance analysis reports stating price-per-ton do not break out fittings by 

size, or by where the fittings were sold. As Mr. Tatman explained, the price-per-ton 

figures reflect: 

[T]hat’s a big ball of iron that you sold that quarter. It doesn’t say what the 

mix is. We just said before that -- remember before we restructured the list 

price. There’s a huge variance, 250 percent, between the dollar-per-ton list 

price on a large-diameter fitting versus a small-diameter fitting[.] . . . [A]nd 

this also doesn’t say what area this was closed in. If you look at the 

multiplier map, . . . the Pacific Northwest is 30 or 40 percent higher in price 

than what is Florida here. So when you look at that variance, you have to 

understand what’s in there. The year before, did you happen to sell more 

small diameter versus large diameter? That’s going to swing it. 

Did you happen to sell -- the year before, did you have heavy sales in Florida 

and California and Arizona because those were the hot markets, and they 

were hot markets because they were growing in housing, and housing is 

small-diameter fittings? What that does on a dollar-per-ton basis, that drives 

that number down. Now you move forward here. If Arizona and California 

and Florida housing markets are falling off and you’re selling more product 

in the Pacific Northwest, it's not a price increase with respect to the Pacific 

Northwest, but in aggregate it’s a price increase. Are you now selling more 

large-diameter product because the housing market has tanked and you’re 

selling into municipalities for lines? That’s going to switch it.

So you can’t jump to the inference that you have based on this simple 

number. And this is the exact thing in my executive summary dashboard 

with that graph that you looked at that we walked through. It’s the exact 

same reference. You have to dig down about three levels deeper and take a 

look at did a 6” MJ fitting in Indiana over this period, what happened to 

time, what happened to price, if you really want to understand whether price 

was going up or whether it was going down. You just don’t have enough 

granularity in what you see here to make that judgment.
144

. . . 

It -- all it reflects is the big ball of iron that we sold the year prior and the big 

ball of iron we sold here went up -- I’ll agree. It is what it is, but it doesn’t 

give you any insights as to what happened and why.

(Tatman, Tr. 828-831).

972. Dr. Normann opined that price-per-ton is not a proper measure of price increases 

because selling a higher volume of higher priced items will create the illusion of an 

overall price increase. (Normann, Tr. 4782-4783).

973. A draft internal presentation prepared by Mr. Tatman dated October 20, 2008 included a 

chart with McWane’s gross profitability stated as a percentage, for each year from 1999 

through 2007, and for the first nine months of 2008. According to this document, the 

gross profitability of McWane’s fittings business on a percentage basis for the first nine 

months of 2008 was higher than for the full year figures for each year from 1999 

through 2007. (CX 0120 at 006; Tatman, Tr. 840-841).

974. Mr. Tatman explained the higher gross profitability in the first nine months of 2008 in 

comparison to prior years, as shown on the draft document described in F. 973, as 

follows:

[W]hy is gross profit negative in 2001, 2002, even 2003[?] [B]ecause 

what did we have there, we had only domestic production. We are trying 

to fight import prices with only domestic production. What happens 

when you do that, you have poor profitability.

Starting in about 2004 I believe is when we start sourcing product from 

overseas, started bringing in product. Sigma helped us out with that, so 

we had the ability now, rather than using a hundred percent domestic 

product to serve both the domestic-only spec market and the import 

market, we started having the ability to source product just like our 

competitors and sell that lower-cost Chinese product into open specs. 

[Mr. Tatman’s predecessor] David Green starts overproducing the plant, 

so you get an impact that helps you there. He’s running up the plants in 

2005-2006. He’s overproducing compared to what demand is. 

Inventory levels go up. But when you do that, your gross margins get 

better because your manufacturing costs go down. I show up in 2007. 

We got an inventory problem. . . . In 2007 we had heavy substitution of 

domestic product in blended sales.

Getting the inventory down, being able to run the plants, that’s going to 

drive your gross margin down. In the first nine months of 2008, I 

suspect if you look at the records and I think if you go through my 

analysis of the thing, I’ll bet you our substitution rate for the first nine 
145 

thousand -- first nine months of 2008 substituting domestic product 

against import specs is at a lower rate than it was in 2008, and that’s 

what drives your gross margin up. 

(Tatman, Tr. 839-840). 

975. Because of the higher cost of producing domestic fittings, providing domestic Fittings 

for jobs with open specifications was like “wrapping a dollar bill around that fitting” 

because it is shipped against an import price. Where a specification was open, and 

therefore did not require domestic product, McWane “would ship a portion of that 

[order] with import fittings, and . . . partial domestic product,” to reduce inventory and 

keep the domestic plants running. This is the basis for McWane’s use of the term 

“blended” fittings. (Tatman, Tr. 274-275). 

976. McWane’s variance analysis report comparing the first nine months of 2009 to the prior 

period stated with regard to fittings: “Non-Domestic Utility Fittings have experienced a

{ }% drop in volume resulting in a { } of gross profits. Increased costs 

reduced profits by { }. . . . pricing has deteriorated over the past two months. 

On a year-to-date basis, pricing reductions have lowered profits by { } with

{ } of that coming in October. Domestic Utility Fittings have experienced a 

{ }% drop in volume resulting in a { } of gross profits. However, 

improved pricing and lower manufacturing costs have offset this and enabled domestic 

fittings to show a { } improvement from the prior year. Additionally, in 

October, only { }% of the domestic fittings were substituted and sold at non-domestic 

prices, vs. the year-to-date-substitution average of { }%. . . . Idle Plant Expenses have 

been reduced by { } due to the closing of the Tyler South plant.” (CX 2153 at 

006). 

ii. Star

977. Star made { } million in gross profit on its sales of 3” to 24” diameter Fittings in 

January 2008, representing a gross margin of { }%. (McCutcheon, Tr. 2500-2501, 

in camera; CX 0042, in camera).

978. Star’s Fittings gross margin per pound can be calculated by subtracting its per pound 

cost of goods sold from its per pound realization. In January 2008, Star’s gross margin 

per pound for all fittings sold was { }. (McCutcheon, Tr. 2657-2658, in camera; 

CX 2470 at 004, in camera).

979. In the first four months of 2008, Star’s gross profits in the 3” to 24” diameter Fittings 

segment were at { }%, approximately the same as the same period in 2007. 

(McCutcheon, Tr. 2501-2502, in camera; CX 0528 at 003, in camera).

980. In 2008, Star had a gross profit margin of approximately{ }%, on all fittings. 

(McCutcheon, Tr. 2653, in camera; CX 2470 at 002, in camera).
146 

981. Star’s gross profit margins as to all fittings, for each month of 2008, were as follows: 

{ } (January), { } (February), { } (March), { } (April), { }

(May), { } (June), { } (July), { } (August), { } (September), 

{ } (October), { } (November), and { } (December)}. (McCutcheon, 

Tr. 2653, in camera; CX 2470 at 002, in camera).

982. Star’s Fittings net profits decreased in the fourth quarter of 2008 as a result of reduced 

sales caused by the global financial crisis and the seasonal nature of the Fittings 

business, with relatively few sales occurring in December. (McCutcheon, Tr. 2656, in 

camera; CX 2470 at 004, in camera).

983. Star uses a per pound realization calculation to measure the health of its fittings 

business. Over the course of 2008, Star’s per pound realization, as to all of Star’s 

fittings sales, increased. Star’s per pound realization for each month of 2008 were as 

follows: { } (January), { } (February), { } (March), { } (April), 

{ } (May), { } (June), { } (July), { } (August), { } (September), 

{ } (October), { } (November), and { } (December). (McCutcheon, Tr. 

2656-2657, in camera; CX 2470 at 004, in camera).

984. In August 2008, Star’s gross margin per pound for all its fittings was { }, 

approximately { }% higher than in January 2008. (McCutcheon, Tr. 2657-2658, in 

camera; CX 2470 at 004, in camera).

iii. Sigma

985. According to data collected and provided by Sigma in connection with a “broad 

estimate” appraisal of Sigma’s orderly liquidation value, Sigma’s average selling price 

(per metric ton) for its “group A” products, which includes all fittings sold by Sigma 

rose { }% from 2007 into 2008, from { } for 2007 to { } for 2008 through 

July. By December 2008 the year-to-date price had fallen approximately { }% from its 

height in July 2008 to { } per metric ton. (CX 0974 at 003, 009; Pais, Tr. 2006-

2008; see also Pais, Tr. 2122-2123). 

986. Sigma’s average “effective” multipliers (the average multipliers at which products were 

actually sold) (“actual transactional multiplier”) for small diameter mechanical joint 

Fittings in its southeast (ALX) region increased from { } in February 2008 to { }

in October 2008. (Rybacki, Tr. 3599-3601, in camera; CX 1002 at 004, in camera).

987. Sigma’s average actual transactional multipliers for all Group-A Fittings (i.e., 

“standard,” “fast-moving” items (Rybacki, Tr. 3600) in its southeast (ALX) region 

increased from { } in February 2008 to { } in October 2008). (Rybacki, Tr. 

3652, 3737, in camera; CX 1002 at 004, in camera).

988. Sigma’s average actual transactional multipliers for small diameter mechanical joint 

Fittings in its midwest (CHI) region increased from { } in February 2008 to { } in 

October 2008. (CX 1002 at 004, in camera; Rybacki, Tr. 3601, in camera).
147 

989. Sigma’s average actual transactional multipliers for all Group-A Fittings in its midwest 

(CHI) region increased from { } in February 2008 to { } in October 2008. (CX 

1002 at 004, in camera; Rybacki, Tr. 3737, in camera).

990. Sigma’s average actual transactional multipliers for small diameter mechanical joint 

Fittings in its southwest (HTN) region increased from { } in February 2008 to { }

in October 2008, with a peak of { } in August 2008. (CX 1002 at 004, in camera; 

Rybacki, Tr. 3602, in camera).

991. Sigma’s average actual transactional multipliers for all Group-A Fittings in its 

southwest (HTN) region increased from { } in February 2008 to { } in October 

2008, with a peak of { } in August 2008. (CX 1002 at 004, in camera; Rybacki, Tr. 

3738, in camera).

992. Sigma’s average actual transactional multipliers for small diameter mechanical joint 

Fittings in its western (ONT) region increased from { } in February 2008 to { }

in October 2008. (CX 1002 at 004, in camera; Rybacki, Tr. 3602-3603, in camera).

993. Sigma’s average actual transactional multipliers for all Group-A Fittings in its western 

(ONT) region increased from { } in February 2008 to { } in October 2008}. (CX 

1002 at 004, in camera; Rybacki, Tr. 3739, in camera).

994. The transactional multipliers shown by CX 1002 (F. 986-994) reflect only average 

transactional multipliers; the actual day-to-day multipliers differed “a lot” from regionto-region, product-to-product, day-to-day. (Rybacki, Tr. 3656-3658, in camera).

H. McWane’s Spring 2009 List Price Changes 

995. In a letter to its customers dated April 13, 2009, McWane announced that it would 

begin using a new price list, to be effective May 1, 2009 (“April 13, 2009 Customer 

Letter”). The April 13, 2009 Customer Letter stated that the price list would be made 

available on McWane’s website, or if the customer preferred, a hard copy of the new 

lists would be made available. (CX 0569 at 002). 

996. The cost of printing a new price list is expensive, with a cost of roughly $30,000. 

(Tatman, Tr. 257; RX 644 (Tatman, Dep. at 45-46); Rybacki, Tr. 3542). 

997. McWane’s announced list price changes (F. 995) resulted in average Fittings list price 

changes as follows:

a. (3” - 12”) fittings up 7.5% 

b. (14” - 24”) fittings down 16.6% 

c. (30” - 48”) fittings down 31.4% 

(CX 1563; Tatman, Tr. 279-280; Pais, Tr. 2011). 
148

998. The DIFRA data through December 2008 showed that McWane’s market share was 

strongest in the 3”-12” Fittings segment, and weaker in the 14”-24” and over 24” 

segments. McWane’s restructured prices went up in the 3”-12” segment and went down 

in the other segments. (Tatman, Tr. 594; CX 0656).

999. Prior to McWane’s April 13, 2009 Customer Letter, Mr. Tatman had conducted a 

product weight analysis to determine McWane’s dollars per pound in various product 

categories. (Tatman, Tr. 976).

1000. Mr. Tatman did not share the results of his product weight analysis (F. 999) with Star or 

Sigma. (Tatman, Tr. 976-977).

1001. McWane’s list price restructuring would increase prices for small diameter Fittings 

(where McWane’s market share was highest) and would lower prices for medium and 

large diameter Fittings (where McWane had little or no market share and Sigma and 

Star were stronger). The “net effect” across all Fittings size ranges was “near zero.” 

(CX 0569 at 001-002; CX 1669; CX 1563; Tatman, Tr. 595-597).

1002. McWane designed its new price list to be revenue neutral across all Fittings size ranges. 

McWane restructured its price list to (1) realign its prices among different Fittings size 

ranges in order to better align McWane’s prices with its production costs; (2) squeeze 

its competitors’ margins and give less “wiggle room” to its competitors for Project 

Pricing on larger diameter Fittings, where Star and Sigma had significantly larger 

market shares; and (3) attempt to compress the range between published pricing and 

actual market pricing, and thereby get McWane better visibility of pricing. (CX 0171 at 

001-002; Tatman, Tr. 595).

1003. The purpose of McWane’s 2009 list price restructuring was to try to win back market 

share that it had been losing to Star and Sigma and to compete in the segments of the 

market where Sigma and Star were strongest. (Tatman, Tr. 972-975; CX 569; 

McCutcheon, Tr. 2584-2585; CX 532). 

1004. McWane did not consult with Star or Sigma before restructuring its list prices in 2009. 

(Tatman, Tr. 978).

1005. On or about April 23, 2009, McWane learned that Star had sent a customer letter stating 

that it would change its price list, effective May 19, 2009, and that the new price list 

would be available on Star’s website “shortly.” (CX 2349).

1006. Star had internally decided to follow McWane’s new price list shortly after learning of 

McWane’s new price list. (McCutcheon, Tr. 2462).

1007. Sigma received word of McWane’s price restructuring on or about April 15, 2009. 

(CX 0989 at 003, 005; Rybacki, Tr. 3581-3583).
149

1008. Sigma determined that McWane’s price cut in larger Fittings (F. 997) was designed to 

hit Sigma and Star in products where they performed strongly. (CX 2531 (Rybacki, 

Dep. at 197-198); CX 0985).

1009. After learning about McWane’s new price list, Sigma undertook an analysis and 

determined that McWane’s new price list would have a fairly drastic impact upon 

Sigma’s bottom line. Mr. Pais considered Sigma’s options and perceived only two 

possible options – either follow McWane’s published prices as it normally did, or try to 

hold on to the previous prices. (Pais, Tr. 2011-2012).

1010. Sigma was upset about McWane’s price restructuring. Mr. Rybacki discussed with 

Mr. McCutcheon of Star the possibility of suing McWane for predatory pricing. 

(Rybacki, Tr. 3580-3581, 3719).

1011. Sigma wanted to stay with the prior price list and tried to keep to its existing price list in 

hopes that McWane would rescind its new price list. On April 27, 2009, Sigma sent a 

letter to its customers announcing that Sigma planned to continue to use its existing 

price list for Fittings. (CX 1454; Pais, Tr. 2012, 2022-2024; Rybacki, Tr. 3587-3588).

1012. Mr. Pais of Sigma met with Mr. McCullough of McWane on or about April 29, 2009 

regarding whether McWane would sell private-label, domestically-manufactured 

Fittings to Sigma following ARRA’s enactment. (Pais, Tr. 1744-1745; 1756-1757; RX 

639 (McCullough, Dep. at 61-64); RX 687 (Pais, Dep. at 188-189)).

1013. Mr. Pais denied that he discussed McWane’s new price list at the meeting referred to in 

F. 1012. Mr. McCullough recalled only discussing Mr. Pais’ desire to buy private label 

Fittings from McWane, and nothing else. (Pais, Tr. 2028-2029; RX 639 (McCullough, 

Dep. at 61-63)). 

1014. Mr. Pais of Sigma met with Mr. Page of McWane in Birmingham on or about May 1, 

2009 with regard to the possibility of Sigma selling McWane’s Domestic Fittings. Mr. 

Pais denied discussing McWane’s list price restructuring or Sigma’s reaction to it. 

(Pais, Tr. 2035; see RX 642 (Page, Dep. at 117-124 (Mr. Pais made various proposals 

for joint ventures with McWane over the years)).

1015. After Sigma sent out its customer letter stating that Sigma was staying with its prior 

price list (F. 1011), McWane did not know whether Star would follow McWane’s new 

price list or whether Star would retract its customer letter announcing a new price list 

and stay at the old price list, with Sigma. In an internal email dated April 27, 2009 to 

Mr. McCullough and Mr. Walton, Mr. Tatman wrote: “Note that Star announced late 

last week that they would have a new List Price effective May 19th. It will be 

interesting to see what they do in light of Sigma’s announcement.” (CX 0651 at 001; 

Tatman, Tr. 604-607; see also CX 1180; CX 2349 (Mr. Tatman advised Mr. Walton in 

an internal email that he was assuming Star’s new price list announced April 23, 2009 

would follow McWane’s)).
150

1016. In late April or early May 2009, Mr. Pais of Sigma conveyed an impression to Mr. 

McCutcheon of Star that McWane might change its mind about changing the price list, 

as McWane had announced. Mr. McCutcheon advised Mr. Pais that Star had decided to 

follow McWane’s price list, because McWane was the market leader and that is what 

Star’s customers require. (CX 2539 (McCutcheon, Dep. at 229-231), in camera).

1017. The impression that Mr. Pais of Sigma gave Mr. McCutcheon of Star McWane might 

change its mind about changing the price list created some doubt in Mr. McCutcheon’s 

mind as to whether McWane would stick with its previously announced new price list, 

and Mr. McCutcheon “wanted to make sure before [Star] moved ahead and printed all 

these price lists.” At some point in the late April or early May 2009 time period, Mr. 

McCutcheon decided to call Mr. Tatman to “make sure” McWane was going to stick 

with McWane’s previously announced new price list. (CX 2539 (McCutcheon, Dep. at 

231), in camera ).

1018. Mr. McCutcheon described his telephone conversation he had with Mr. Tatman, 

referred to in F. 1017, as follows:

It cost[s] us about $25,000 to print a new price list. So, I picked up the 

phone and I called Rick Tatman. And I said, I’m only going to ask you 

one question, are you guys going to come out with a new price list, 

because I’m getting ready to approve it and spend $25,000 to do it.

And he said, we absolutely are, and he says, I’m so sure that I’ll pay the 

$25,000 if we don’t. And I said, I appreciate that, nice talking to you, 

and hung up the phone.

(CX 2538 (McCutcheon, IHT (Vol. 2) at 257-258, in camera (emphasis added); RX 698 

(McCutcheon, Dep. at 232-234)).

1019. Mr. Tatman testified that he has no recollection of the telephone call with 

Mr. McCutcheon, referred to in F. 1018. (CX 2484 (Tatman, Dep. at 179-180); 

Tatman, Tr. 610).

1020. On the morning of April 28, 2009, Mr. Tatman sent an internal email to Mr. Walton and 

Mr. McCullough regarding Sigma’s April 27, 2009 customer letter announcing Sigma 

was staying with its existing price list (F. 1011). In response to Mr. Walton’s request 

for Mr. Tatman’s recommendation as to McWane’s strategy going forward, Mr. Tatman 

recommended staying the course for a variety of reasons, including that it “goes against 

what the importers want.” Mr. Tatman also advised that Star had put out a letter stating 

they would have a new list price, effective May 19 and that it would be posted to Star’s 

website “shortly” (see F. 1005). Referring to Star as a “wild card,” Mr. Tatman 

explained: “We assumed given the language and timing they would be following our 

List Price, but they very well may post their own List Price as an act of defiance. Star 

and Sigma don’t like each other but they will band together against the common enemy 

so there is now some probability that Star may change direction and retract their list 

price change.” Later in the day in response to Mr. McCullough’s request for a 
151

conference call, Mr. Tatman replied: We can discuss in more detail tomorrow, but I am 

now highly confident that Star will follow our List Price.” (CX 1180 at 001-002). 

1021. On April 30, 2009, in a McWane internal email exchange between Mr. Jansen and Mr. 

Tatman, Mr. Jansen advised Mr. Tatman that he had heard conflicting information from 

the field about whether Star was having new list prices. Mr. Tatman replied that he had 

heard from a Mr. Fielding (a customer), that Star was following McWane’s new price 

list. Mr. Tatman concluded: “I think it will be mid next week until the dust settles. If 

they stick with the old List . . . the[n] we should sell alot in the Northwest.” (CX 3027). 

1022. On May 1, 2009, Mr. Minamyer of Star sent an internal email to Star’s division 

managers (copying Mr. McCutcheon of Star), setting out an implementation plan for 

Star to match McWane’s new prices. (CX 0890; McCutcheon, Tr. 2464). 

1023. In a customer letter dated May 4, 2009, Star announced a new price list for Fittings, as 

well as new multipliers, to be effective May 12, 2009. The letter stated among other 

things that the new price list would be made available on Star’s website “shortly,” and 

that hard copies would be distributed upon request. Star adopted Fittings list prices and 

multipliers that were substantially identical to McWane’s. (RX 620 at 001-002; 

CX 2358; CX 2359).

1024. On May 11, 2009, Sigma sent letters to its customers announcing that it would adopt 

McWane’s restructured list prices and multipliers. (CX 1060 at 001, 002; Rybacki, Tr. 

3588, 3591).

1025. McWane kept its 2009 list price reductions for medium and large diameter Fittings in 

place. (Rybacki, Tr. 3664-3665, in camera; RX 242 at 004, in camera; Pais, Tr. 2046).

I. Monopoly Power

1. Percentage of the Fittings market that is Domestic Fittings 

1026. In 2003, Buy American preference provisions applied to 10% to 20% of all ductile iron 

fittings shipments in the United States. (RDX 012 at 033) (U.S. International Trade 

Commission report on Certain Ductile Iron Waterworks Fittings From China, Dec. 

2003; ITC’s finding based on testimony of McWane (the petitioner in the ITC matter, 

see RDX 012 at 009) and Sigma)).

1027. “Domestic-only spec[ification]s have done nothing but erode over time.” (Tatman, Tr. 

280-281). HD Supply observed that imports had been taking market share from 

domestics consistently. (RX 673 (Webb, Dep. at 23)). 

1028. Less than approximately 5% of municipalities in Illinois Meter’s service area have 

domestic-only specifications today. (Sheley, Tr. 3447). In the view of Illinois Meter, in 

the absence of a strong union and municipal push for domestic-only specifications, 

fewer municipalities require domestic-only Fittings. (RX 674 (Sheley, IHT at 71-72)). 
152

1029. Prior to the passage of ARRA in 2009, domestic-only Fittings projects comprised 

approximately 15% to 20% of the overall Fittings market. (CX 2260-A (Schumann 

Rep. at 15); see also Tatman, Tr. 236 (15% to 18%); McCutcheon, Tr. 2279-2280 (Star 

estimated 15% to 20%); CX 2535 (Bhutada, Dep. at 11), in camera (approximately 

20%); CX 2501 (Prescott, IHT at 41) (20% of customers were “a hundred percent 

domestic”); Webb, Tr. 2732).

1030. Respondent’s expert, Dr. Normann, estimates that Domestic-only Fittings projects grew 

from 20% of Fittings sales in 2009 to 28% in 2010. (RX 712A (Normann Rep. at 26, 

40 fig. 7, 12), in camera; Normann, Tr. 5685-5686), in camera). 

1031. Following the end of ARRA funding for waterworks projects in 2011 (F. 1033-1036), 

the demand for Domestic Fittings reverted back to where it had been before the ARRA 

period, approximately 15% to 20% of the overall Fittings market. (Schumann, Tr. 

4632; RX 712A (Normann Rep. at 26, 40 fig. 7, 12 (20% in 2011), in camera)). See 

also Schumann, Tr. 4632 (total tons of Domestic Fittings dropped in half in 2011 from 

2010 because ARRA ended).

2. The impact of ARRA on the Domestics Fittings Market

1032. According to the EPA publication “Implementation of the American Recovery and 

Reinvestment Act of 2009,” all ARRA funded projects were to be under contract by 

February 2010. As a result, Dr. Normann used March 2009 to February 2010 as “the 

ARRA period.” (RX 712A (Normann Rep. at 40-41)). Industry participants use the 

term “the ARRA period” to refer to sales made through 2010. F. 1035-1036.

1033. The total number of waterworks projects that were built, repaired, or otherwise 

commissioned in the United States increased during the period that ARRA funding was 

available. (Joint Stipulations of Fact, JX0001 ¶ 22).

1034. Distributors’ sales of Domestic Fittings increased during the period when ARRA 

funding was available. (CX 2502 (Prescott, Dep. at 89); RX 663 (Thees, Dep. at 54-

55); CX 2492 (Johnson, Dep. at 73-75)). 

1035. Market participants felt the majority of the impact of ARRA and its resulting increase in 

the number of Domestic Fittings sales in 2010. (Tatman, Tr. 1003, in camera; Sheley,

Tr. 3402 (“Q. Are you still bidding on ARRA jobs today? A. No. Q. When did you see 

those jobs stop coming through? A. Mid to late 2010.”); CX 2502 (Prescott, Dep. at 

90)).

1036. While ARRA-funded jobs were primarily serviced during the 2010 calendar year, there 

were some projects that continued into 2011. (McCutcheon, Tr. 2614; Supp. Response 

to RFA at ¶ 8 (McWane competed for sales of Domestic Fittings for use in ARRA 

projects after February 2010); CX 2500 (Swalley, Dep. at 60-61) (While ARRA expired 
153

in February 2010, there were still ongoing, unfinished projects that are using ARRA 

funds)).

1037. ARRA had only a short-term impact on Domestic Fittings, as testified to by each of the 

suppliers of Fittings:

• “ARRA was a blip in the map. Demand went up for about a sixmonth period, and then it evaporated as soon as it came.” (McWane, 

Tatman, Tr. 281).

• “For domestic fittings specifically associated with ARRA, we knew that it 

was not forever.” (Sigma, Rona, Tr. 1671).

• “By the definition of that law and the scope, we knew it was going to be a 

short-term impact.” (Sigma, Pais, Tr. 1738).

• ARRA “had a limited life.” (U.S. Pipe, Morton, Tr. 2888).

• By fall of 2010, bidding on ARRA jobs had ceased. (Electrosteel, RX 659 

(Swalley, Dep. at 158)).

• ARRA funded only “a finite amount of jobs.” (Backman Foundry, RX 648 

(Backman, Dep. at 109-110)).

1038. ARRA had only a short-term impact on Domestic Fittings, as testified to by each of the 

Distributors of Fittings:

• ARRA’s impact on demand for Domestic Fittings was “mild, at 

best.” (HD Supply, RX 673 (Webb, Dep. at 29); Webb, Tr. 2731-

2732) (ARRA’s impact was “very minimal and mostly played out in 

2009 and 2010”).

• ARRA “had a small effect” on sales of Fittings. (Illinois Meter, 

Sheley, Tr. 3446; RX 674 (Sheley, IHT at 74-75) (“[I]n reality, I 

don’t believe that’s [ARRA’s] impacted our business at all.”). 

• ARRA’s impact was “minimal.” (Dana Kepner, RX 652 (Johnson, 

Dep. at 30)).

• ARRA did not have much impact on Fittings sales. (WinWholesale, 

RX 705 (Gibbs, Dep. at 23, 106)).

1039. Given ARRA’s limited effect, former Domestic Fittings manufacturers and specialty 

Domestic Fittings manufacturers did not believe that ARRA made it worthwhile for 

them to expand or return to a full line of Domestic Fittings production. (Morton, Tr. 

2875 (Q: “And despite this history and the fact that it owned patterns in Mexico, it 
154 

decided in the spring of ‘09 that it did not make financial sense to try to get back in the 

domestic market; correct?” ... A: “That’s correct.”); RX 646 (Burns, Dep. at 30-31, 35-

36, 176-177); RX 667 (Kuhrts, Dep. at 38, 49-50, 74); RX 648 (Backman, Dep. at 109-

110) (Backman Foundry never considered expanding its production as a result of 

ARRA “when anybody and their dog can see that this market is going to end at some 

point.”)). 

3. Market share in the Domestic Fittings market

1040. From at least 2006 and until Star entered the Domestic Fittings market in late 2009, 

McWane was the only source of Domestic Fittings. (Answer ¶ 40; Tatman, Tr. 1047; 

CX 2513 (Webb, IHT at 178); Thees, Tr. 3078; Sheley, Tr. 3401-3402 (when ARRA 

was enacted in 2009, only McWane sold Domestic Fittings, with the exception of 

Backman Foundry in Utah, which only sold “some specialty stuff...the real oddball 

fitting”); Morton, Tr. 2817-2818 (after U.S. Pipe closed its Chattanooga, Tennessee 

plant in April 2006, McWane was the only producer of Domestic Fittings)).

1041. The only firms that currently manufacture a full line of Domestic Fittings are McWane 

and Star. (Supp. Response to RFA at ¶ 10; see Tatman, Tr. 238-240, 1047; CX 2488 

(Backman, Dep. at 16)). 

1042. In 2010, after Star entered the Domestic Fittings market, McWane’s approximate share 

of the Domestic Fittings market was { }%. Star’s approximate share of the 

Domestic Fittings market was { }%. (CX 2260-A (Schumann Rep. at 19 tbl. 2), in 

camera (basing market share calculations on supplier sales data); Tatman, Tr. 240-241 

(estimating that McWane’s share of the Domestic Fittings market in early 2009 was 

“around 90 percent”)). 

1043. In 2011, McWane’s approximate share of the Domestic Fittings market was { }%; 

Star’s approximate share of the Domestic Fittings market was { }%. (CX 2260-A 

(Schumann Rep. at 19 tbl. 2), in camera).

 

4. Barriers to entry

a. Barriers for new entrants

1044. A new entrant must make a significant capital investment to enter the Fittings market. 

(CX 2530 (Rona, Dep. at 256-257); CX 2500 (Swalley, Dep. at 102-107 (describing 

costs of obtaining certifications and develop molds)). A new entrant into the Fittings 

market must also either build its own foundry or develop a supply chain of foundries 

that can produce its Fittings. (Saha, Tr. 1166-1167). 

1045. A new entrant into the Fittings market must develop expertise in design engineering. 

(Rybacki, Tr. 1092, 1094 (even as a “virtual manufacturer,” Sigma’s engineering staff 

produces the drawings to make Fittings patterns, and Sigma maintains engineering 

groups in China and India to oversee the production process)). 
155

1046. A new entrant into the Fittings market must secure the testing and approval of its 

Fittings by the municipalities or other End Users. (CX 2538 (McCutcheon, IHT (Vol. 

2) at 348), in camera; see also Saha, Tr. 1166-1167, 1163 (to begin selling Fittings, 

NACIP needed to obtain warehouses, obtain AWWA Underwriters Laboratories (“UL”) 

certification and National Sanitation Foundation (“NSF”) approvals, acquire patterns or 

molds, source foundries that produced Fittings, and establish Distributors through which 

to sell); CX 2522 (Agarwal, Dep. at 77-78), in camera, (to sell Fittings, SIP first needed 

to obtain UL and NSF certification; SIP also received municipality approvals and 

placement on engineers’ approved lists before supplying Domestic Fittings)).

1047. A new entrant into the Fittings market would need to develop hundreds of patterns and 

moldings. (CX 2533 (Bhargava, Dep. at 88-89); Saha, Tr. 1166-1167; CX 2500 

(Swalley, Dep. at 102-107)).

1048. Because Fittings are commodity products, Distributors base their purchasing decisions 

in part on relationships, so developing relationships with Distributors is an important 

part of the business of Fittings suppliers. (Minamyer, Tr. 3135; CX 2538 (McCutcheon, 

IHT (Vol. 2) at 348)). A new entrant must overcome existing relationships between 

existing manufacturers and the Distributors and End Users. (CX 2525 (Minamyer, IHT 

at 99, 102, 103-104)). When SIP began offering Fittings, SIP had existing relationships 

with waterworks suppliers due to its sale of municipal castings. (RX 681 (Agarwal, 

Dep. at 77)).

1049. A new entrant into the Fittings market would need about three to five years to enter the 

market. (CX 2538 (McCutcheon, IHT (Vol. 2) at 348)). SIP took approximately three 

years to offer a full line of 3500 unique Fittings up to 48” in diameter. (RX 681 

(Agarwal, Dep. at 30); CX 2521 (Agarwal, IHT at 64-65)).

1050. The Fittings and Domestic Fittings markets have high barriers to entry. (F. 1044-1049; 

CX 2260-A (Schumann Rep. at 37).

b. Star did not face the same barriers as new entrants

1051. Through its import business, Star already had the expertise needed to operate its own 

fittings foundry. (Bhargava, Tr. 2979-2980, in camera) (describing his own 35-plus 

years of experience manufacturing, Star’s 20 engineers who have worked in 

manufacturing in different capacities, and Star’s past work setting up foundries).

1052. As an existing supplier of non-Domestic Fittings, Star already had in place the network 

of Distributor customers required to enter and compete effectively in the Domestic 

Fittings market. (See F. 110, 117-119, 402; Answer ¶ 25 (“[A]ll suppliers of [Fittings] 

have distribution relationships or other abilities within the United States sufficient to 

enable them to compete effectively throughout the country.”)). Star’s entry into the 

Domestic Fittings market did not require any changes to Star’s relationships with its 
156

existing Distributor customers, who would also be its customers for Domestic Fittings. 

(McCutcheon, Tr. 2287).

1053. Star’s entry into the Domestic Fittings market did not require any changes to Star’s 

existing regional distribution centers, which Star would also use for Domestic Fittings. 

(McCutcheon, Tr. 2287).

1054. Star’s entry into the Domestic Fittings market did not require any changes to Star’s 

sales team. (McCutcheon, Tr. 2287).

1055. In 2009, Star already had in place the back office support needed to sell a line of 

Domestic Fittings. (McCutcheon, Tr. 2288).

c. Domestic foundries, pipe suppliers, and other suppliers are 

not potential entrants

Domestic foundries

1056. Frazier & Frazier, Glidewell, EBAA, and East Jordan, which are all domestic foundries 

that have produced unfinished Domestic Fittings or castings, have no plans to enter the 

market for selling finished Domestic Fittings. (CX 2505 (Frazier, Dep. at 69-70); 

CX 2507 (Glidewell, Dep. at 127); CX 2499 (Keffer, Dep. at 13-14); CX 2498 (Teske, 

Dep. at 33-34)).

1057. Currently, Frazier & Frazier, Glidewell, and Mabry are each producing Domestic 

Fittings castings, or unfinished Fittings, for suppliers like Star. (CX 2505 (Frazier, Dep. 

at 68-69); CX 2507 (Glidewell, Dep. at 122-123); RX 676 (Hall, Dep. at 16-20)).

1058. Frazier & Frazier, Glidewell, and Mabry do not sell Domestic Fittings or Domestic 

Fittings castings to any End User. (CX 2505 (Frazier, Dep. at 68-69); CX 2507 

(Glidewell, Dep. at 122-123); CX 2517 (Hall, Dep. at 148-150)).

1059. Backman Foundry “never even considered” producing large quantities of Domestic 

Fittings in response to the demand created by ARRA because of the “many million 

dollars” it would cost to “make the expansion to be able to get into the market.” (RX 

648 (Backman, Dep. at 109-110)).

1060. While EBAA and East Jordan produce waterworks products, neither foundry currently 

produces Domestic Fittings castings. (RX 658 (Keffer, Dep. at 7-9); CX 2498 (Teske, 

Dep. at 12)).

1061. To enter into the manufacturing of Domestic Fittings would require major equipment 

additions and an economic investment at EBAA, including: molding machines; 

equipment for producing cored or hollow castings; and new furnaces. (CX 2499 

(Keffer, Dep. at 13-14)).
157

1062. EBAA considered expanding into Domestic Fittings production three or four years ago 

and estimated that the required expansion would cost at least $10 to $12 million and 

take two years to realize. (CX 2499 (Keffer, Dep. at 49-51)).

1063. Manufacturing Domestic Fittings at East Jordan would require an extremely expensive 

capital investment including a major conversion of EJ’s East Jordan, Michigan melt 

facility, the purchase of core-making equipment, and an investment in Domestic 

Fittings tooling. (CX 2498 (Teske, Dep. at 31-34)).

1064. To manufacture finished Domestic Fittings, a domestic foundry already making 

Domestic Fittings castings would have to design and develop a Domestic Fittings 

product line, identify customers, and invest in the equipment and expertise required to 

finish Domestic Fittings. (CX 2505 (Frazier, Dep. at 69-72); CX 2507 (Glidewell, Dep. 

at 125-126)).

Pipe manufacturers 

1065. Griffin, ACIPCO, and U.S. Pipe have no plans to begin manufacturing Domestic 

Fittings under 24” in diameter. (CX 2508 (Kuhrts, Dep. at 19-20, 49, in camera); 

CX 2486 (Burns, Dep. at 70-71, 123-124); CX 2542 (Morton, Dep. at 56)).

1066. ACIPCO presently lacks the equipment necessary for producing Domestic Fittings of 

less than 30” in diameter. (CX 2486 (Burns, Dep. at 84)).

1067. U.S. Pipe evaluated re-entering domestic production in 2009 and chose not to re-enter 

because it was cost prohibitive. (RX 701 (Morton, Dep. at 47-49, 56-57)).

1068. To produce Domestic Fittings under 24” in diameter would require a major overhaul of 

Griffin’s existing foundries. (CX 2508 (Kuhrts, Dep. at 19-20, 49, in camera)).

Other suppliers of imported Fittings 

1069. Metalfit, a Mexican Fittings producer and supplier to the United States market, has no 

plans to begin manufacturing Domestic Fittings under 24” in diameter. Even a 10% 

increase in the price of Domestic Fittings would not induce Metalfit to invest in entering 

the Domestic Fittings market. (CX 2518 (Meyer, Dep. at 184-185)).

1070. SIP, a supplier of imported Fittings, does not intend to enter the Domestic Fittings 

market for numerous business reasons, including the fact that ARRA presented a very 

short time window, that SIP believed it needed to offer a full line of fittings to be 

considered a viable supplier, that it had taken SIP a full three years to develop a full line 

of imported fittings, the uncertainties of success, the high cost of developing patterns 

for a full line of fittings, the fact that there was not one single foundry available to make 

all the fittings, the vagaries of long term supply given the changing capacity of jobber 

foundries, the $5 to 10 million cost estimated to develop the line, the need/cost to 

develop drilling and machining capabilities, the uncertainties of the ARRA demand, and 
158

the uncertainties about the post-ARRA domestic demand. (CX 2522 (Agarwal, Dep. at 

54-68), in camera). See also infra II.J.14.

1071. Electrosteel is not poised to make an investment in entry into the Domestic Fittings 

market. (CX 2500 (Swalley, Dep. at 184-185), in camera).

5. Ability to control prices

1072. In 2008, McWane did not typically offer Project Pricing for Domestic Fittings because 

the less competitive Domestic Fittings market did not require it. (Tatman, Tr. 334-335; 

CX 2199 at 001 (McWane’s Pricing Coordinator’s email refusing a sales person’s 

request for Project Pricing for Domestic Fittings because “We are the only one who 

makes the full line of 24” and down. No need to drop the price unless Star is an 

issue.”); CX 2480 (Napoli, Dep. at 73)).

1073. McWane was not willing to negotiate the price of Domestic Fittings after the passage of 

ARRA. (CX 2489 (Morrison, IHT at 45) (“[U]ntil the stimulus project came around, 

everything was negotiable. When the stimulus project came around, the price became 

firm on the domestic fitting. There has been little if any that I’m aware of negotiation 

on what you’re going to pay for the domestic fitting and the spread widened.”); 

CX 2515 (Sheley, IHT at 28) (“Well, on that import product you can negotiate prices. 

Domestic product, there’s a price and that’s what you pay.”); CX 2513 (Webb, IHT at 

99-100) (explaining that after ARRA was passed McWane “changed and reduced” the 

rebate on Domestic Fittings which is “effectively” an increase in price for Domestic 

Fittings)). 

1074. In a November 3, 2009 internal McWane email to the McWane sales team, McWane’s 

National Sales Manager, Mr. Jansen, instructed: “when you have someone say that we 

need to match pricing due to the other guys we need to take a firm stance and ask who 

is going to use them. There can be a price out there but if no one uses it then it 

becomes a [moot] point.” (CX 0108 at 001 (emphasis in original)).

1075. Domestic Fittings are sold at higher prices than non-Domestic Fittings. (Answer ¶ 20 

(admitting that McWane’s Domestic Fittings sold into Domestic-only Specifications are 

generally sold at higher prices than non-Domestic Fittings); CX 2535 (Bhutada, Dep. at 

13); Webb, Tr. 2733; Sheley, Tr. 3402-3404 (both before and after passage of ARRA, 

the price of Domestic Fittings was higher than the price of imported Fittings); Thees, 

Tr. 3074). 

1076. McWane’s February 2008 price multipliers for domestically manufactured fittings sold 

into Domestic-only Specifications were substantially higher than its February 2008 

“blended” multipliers (for Fittings sold into Open Specification projects). For example, 

whereas a given non-Domestic Fitting might sell in Texas for $280, the corresponding 

Domestic Fitting would sell for $440, an approximately 57% higher price. (RX 410 at 

0001, 0002 (Domestic and blended multiplier maps)). Further examples of the price 

differences between Domestic and non-Domestic Fittings according to McWane’s 
159

February 2008 price multiplier maps include the following:

State Non-Domestic 

Multiplier

Domestic 

Multiplier

Percentage 

Difference

California .33 .44 33.3%

Colorado .33 .49 48.5%

Florida .25 .49 96.0%

Michigan .33 .45 36.4%

Minnesota .28 .45 60.7%

New York .31 .44 41.9%

Ohio .25 .45 80.0%

Oregon .42 .51 21.4%

(RX 410 at 0001, 0002).

1077. Non-domestic Fittings manufactured in countries such as China, India, Korea and 

Mexico are less expensive, by approximately 25%, than Fittings produced in the United 

States. (RX 658 (Keffer, Dep. at 58-59); RX 675 (Sheley, Dep. at 55); see also RX 661 

(Prescott, Dep. at 29-30, 33); RX 673 (Webb, Dep. at 24-25); RX 646 (Burns, Dep. at 

20-21)). 

1078. McWane’s costs to produce Domestic Fittings are higher than its costs to produce 

imported Fittings. (Tatman, Tr. 275, 879, 881; RX 642 (Page, Dep. at 112)).

1079. There are two components of McWane’s costs of production of Domestic Fittings: (1)

manufacturing costs (F. 1080) and (2) idle plant charges (F. 968, 1081). (Tatman, Tr. 

275-276).

1080. Manufacturing costs are the costs of producing an item based on raw material, including 

labor and direct overhead. McWane’s manufacturing costs to produce Domestic 

Fittings are higher than its costs to produce imported Fittings. (Tatman, Tr. 275-278).

1081. Idle plant costs reflect the overhead costs it takes to have a foundry not running at full 

capacity. If a plant is normally supposed to run five days a week, but it is only running 

three days a week, idle plant costs are the costs associated with running a facility for 

those other two days of the week. (Tatman, Tr. 432-433).

1082. In 2007, McWane booked $7 million in idle plant charges. McWane produced 

approximately 25,000 to 30,000 tons domestically in 2007. The $7 million idle plant 

charges divided by the tons produced amounts to about $650 a ton idle plant cost. That 

amount is more than half the cost of producing a fitting in China. (Tatman, Tr. 275-

277). 

1083. On December 21, 2009, Mr. Tatman sent out customer letters announcing multiplier 

increases for Domestic Fittings, effective January 22, 2010. (Tatman, Tr. 811; CX 1656 

at 001-003). 
160

1084. When McWane issued the December 21, 2009 price increase for Domestic Fittings, it 

also issued a price increase for non-domestic Fittings. (Tatman, Tr. 811; CX 1656 at 

001-003). 

1085. McWane’s manufacturing costs for producing Domestic Fittings began to increase 

fairly steadily from early 2009 through 2010. (Normann, Tr. 4894).

1086. In June 2009, McWane understood that the impact of the ARRA would be short-lived 

and did not want to overcharge for Domestic Fittings in the short term at the expense of 

harming its position in the overall Fittings market. (Tatman, Tr. 979-981) (We didn’t 

really understand the impact of the ARRA, but we all knew that it was a short-term 

event. And . . . because we think long term[,] . . . we didn’t want to overcharge in the 

short term, make a large business profit off the situation and set ourselves up for the 

long term where people felt that we took advantage of the situation or we overcharged, 

and that would be more pressure to work against domestic specs, so Leon is really there 

-- is really saying always keep your mind on the long term (explaining RX 595 (a June 

5, 2009 internal McWane email from Leon McCullough, stating “It has never been our 

intent to ‘over charge’ because of the [Buy American] provision [of ARRA].”)).

1087. In preparing the budget for 2010 in the fall of 2009, Mr. Tatman expected to have an 

overall growth of 2 percent due to Domestic Fittings and made a core assumption that 

pricing on Domestic Fittings would be flat or fixed to what it was at the time he 

prepared the budget. (Tatman, Tr. 983-986; CX 0102).

1088. Since Star entered the Domestic Fittings market in 2009, prices eroded. (Tatman, Tr. 

988-989). 

1089. Looking at sales data on Domestic Fittings in 2010, Respondent’s expert concluded that 

Star failed to price at a discount to McWane. There are numerous states where Star’s 

average price is higher than McWane’s. (Normann, Tr. 4979-4980; RX 712A

(Normann Rep. at 68-69, Figure 27, in camera)).

1090. Looking at sales data on Domestic Fittings from January 2009 to November 2011 by 

state, Respondent’s expert concluded that the presence of Star in the Domestic Fittings 

market in various states did not result in lower prices. In those states where McWane 

had effectively one hundred percent of the Domestic Fittings sales, McWane’s pricing 

was not higher than in those states where McWane had a lower share of Domestic 

Fittings sales. McWane’s prices on Domestic Fittings were relatively constant state by 

state, regardless of the presence of Star in certain states. (Norman, Tr. 4975-4976; RX 

712A (Normann Rep. at 70-72, Figure 28, 29, in camera)).

1091. Since 2009, the first year for which McWane’s blue books report gross profits for 

Fittings sold into domestic-only projects, McWane has sold Domestic Fittings at prices 

that earn it significantly higher gross profits than it has earned in the same time period 

on the sale of non-Domestic Fittings. For year-end 2009, McWane reported gross 
161 

profits for Domestic Fittings of { }% and reported gross profits for non-Domestic 

Fittings of { }%. (RX 721 at 0041, 0043, in camera). For year-end 2010, McWane 

reported gross profits for Domestic Fittings of { }% and reported gross profits for 

non-Domestic Fittings of { }%. At these levels, McWane earned { }% higher 

gross profits from the sale of Domestic Fittings than for non-Domestic Fittings sales in 

2009; and { }% higher gross profits in 2010. (RX 632 at 0027, 0029, in camera; 

Tatman, Tr. 1004, in camera).

 

1092. McWane’s blue book financials for year-end 2010 reported its 2010 Domestic Fittings 

sales increased { }% in volume by tons, and { }% in unit price, compared to 2009. 

(RX 632 at 027, in camera; Tatman, Tr. 1004, in camera ). 

1093. McWane’s blue book financials for year-end 2010 reported { } in costs from 

2009 to 2010 for its Domestic Fittings. (RX 632 at 027, in camera). 

6. Entry by Star into the Domestic Fittings market

a. Star’s announcement to enter the Domestic Fittings market 

1094. In reaction to ARRA’s passage in February 2009, Star began to develop plans to expand 

its product lines to include Fittings that satisfied the “Buy American” provisions of the 

ARRA. (Bhargava, Tr. 2927 (“Q. And what prompted Star to first consider entering the 

domestic market? A. In 2008, there was a recession and then there was a stimulus 

package, the ARRA, which specified there will be a significant amount of funds 

available for projects that would require only domestically produced product, so that 

made us look at the possibility of going into the domestic market.”); McCutcheon, Tr. 

2603-2604; CX 2533 (Bhargava, Dep. at 11) (Star first considered producing fittings 

domestically in 2009 after the passage of ARRA, because projects funded by ARRA 

had to be made in the United States.)).

1095. At a June 2009 AWWA industry conference, Star publicly announced that it would 

offer Domestic Fittings starting in September 2009. (Joint Stipulations of Fact, JX0001 

¶ 23; McCutcheon, Tr. 2603-2604). 

1096. On or about June 15, 2009, Star sent a letter to customers stating, “Look for our . . . 

Fitting inventories to start arriving in September.” (CX 1674 at 002). 

b. Star’s contracts with domestic foundries 

1097. Star concluded by March or April of 2009 that ARRA’s “Buy American” provisions 

would require the products to be manufactured in the United States. Star then focused 

on three possible courses of action in order to manufacture Fittings in the United States: 

(1) building a foundry from “ground zero”; (2) buying an existing foundry in the United 

States; or (3) contracting with existing domestic foundries to produce the desired 

Fittings. (Bhargava, Tr. 2928-2929). 
162 

1098. Star realized that ARRA provided a limited time window of opportunity and, in March 

or April 2009, elected to pursue contract manufacturing as the option that would allow 

it to get product to the marketplace in the shortest amount of time. (Bhargava, Tr. 

2930-2931, 2989-2990, in camera).

1099. Star had a preference for owning its own foundry and did not rule out buying a foundry 

in March or April 2009, but made the deliberate decision in the spring of 2009 to pursue 

contract manufacturing instead, so that they could enter the market more quickly. 

(Bhargava, Tr. 2930, 2990, in camera).

1100. Domestic foundries had substantial excess capacity in 2009. (Bhargava, Tr. 2931, in 

camera; CX 2535 (Bhutada, Dep. at 26-27, 118-119), in camera; McCutcheon, Tr. 

2284). 

1101. Star began phoning and emailing potential foundry candidates in the spring of 2009 that 

could make domestic castings for Star. Star initially contacted 60 to 70 domestic 

foundries, and from May 2009 through September 2009, Star visited at least 20 

domestic foundries to identify those that could produce Domestic Fittings for Star. 

(Bhargava, Tr. 2931-2932, 2997-2999, in camera; CX 2535 (Bhutada, Dep. at 56), in 

camera).

1102. Star sought domestic foundries that could produce Fittings from 2” in diameter to 48” in 

diameter. No single contract foundry could make the entire size range of Domestic 

Fittings, so Star utilized multiple foundries in different locations. (Bhargava, Tr. 3000, 

in camera; CX 2535 (Bhutada, Dep. at 57, 118-119), in camera).

1103. Once Star decided to use a particular foundry for its Domestic Fittings production, it 

took approximately two months for that foundry to begin producing Domestic Fittings 

for Star, and it took approximately three to six months for that foundry to begin 

producing all the different types of Fittings that Star required from that foundry. 

(Bhargava, Tr. 2945-2946, in camera).

1104. None of the contract foundries that produced Fittings for Star were capable of the 

finishing operations necessary to transition a raw casting into a finished Fitting. 

Finishing is the process, after the foundry makes a casting, of drilling holes, adding 

lining, and painting the Fitting. Star shipped the castings to its Houston facility to 

perform the finishing process. (Bhargava, Tr. 2937-2940, 2999-3000, in camera; 

McCutcheon, Tr. 2618-2620; RX 572). 

1105. Star invested approximately ${ } million in the expansion of its finishing facility in 

Houston. (McCutcheon, Tr. 2288-2289; Bhargava, Tr. 2937-2939, in camera; RX 694 

(Bhutada, Dep. at 62-63)). 

1106. Star ultimately contracted with multiple domestic foundries to produce Domestic 

Fittings, including among others, Frazier & Frazier, Glidewell and Mabry. The 
163

foundries with which Star contracted made different size Fittings. (Bhargava, Tr. 2933, 

in camera; CX 2535 (Bhutada, Dep. at 60-61), in camera). 

1107. Star and Frazier & Frazier, a domestic foundry, signed a confidentiality agreement on 

June 2, 2009, and a supply chain agreement on June 12, 2009. (RX 665 (Gupta, Dep. at 

16, 20, 43-44)).

1108. On July 2, 2009, Star submitted a purchase order to Frazier & Frazier for $328,599 

worth of Domestic Fittings castings. (RX 665 (Gupta, Dep. at 48, 49)). Frazier & 

Frazier sold its first Domestic Fitting casting to Star in approximately August 2009. 

(RX 665 (Gupta, Dep. at 57-58)).

1109. Frazier & Frazier produced 70 to 80 patterns of Domestic Fittings castings for Star by 

the end of 2009, which increased to approximately 300 unique patterns with a 9” 

diameter or smaller by 2012. (CX 2506 (Gupta, Dep. at 75-76, 89-90)).

1110. Star first contacted Glidewell about making Domestic Fittings castings at the end of 

2009 or the beginning of 2010, and Glidewell began producing Domestic Fittings 

castings for Star less than one month later. (RX 666 (Glidewell, Dep. at 29-30, 58)).

1111. In 2010, Glidewell sold $635,439 worth of products, and 34 different types of Fittings 

castings to Star in 2010. (RX 666 (Glidewell, Dep. 54); CX 1417 at 007). In 2011, 

Glidewell sold $590,773 worth of products, and 46 different types of Fittings castings to 

Star in 2011. (RX 666 (Glidewell, Dep. at 55-57); CX 1418 at 008). From January 1, 

2012 through March 23, 2012, Glidewell sold $83,878 worth of products to Star. (RX 

666 (Glidewell, Dep. at 58); CX 1419 at 002).

1112. Star and Mabry entered into an agreement for the production of Domestic Fittings 

castings on November 2, 2009, and Mabry began producing at least three types of 

Domestic Fittings castings for Star by the end of 2009. (RX 676 (Hall, Dep. at 32-33, 

36-38, 67-68)).

1113. In 2010, Mabry produced at least 135 types of Domestic Fitting castings for Star. To 

date, Mabry has produced at least 177 types of Domestic Fitting castings for Star, 

resulting in approximately $2.9 million in invoices from Mabry to Star. (CX 1581; RX 

676 (Hall, Dep. at 69-70)).

1114. In March or April 2009, Star recognized that contract manufacturing its Fittings from 

domestic foundries would result in inefficiencies and higher costs to Star. (Bhargava, 

Tr. 2990-2992, in camera).

1115. Star understood that the contract foundries manufacturing Fittings for Star would build 

a profit margin into the price that they charged Star. (Bhargava, Tr. 2991, in camera).
164 

1116. Having multiple foundry locations and a separate finishing facility would result in 

additional freight charges and materials handling inefficiencies for Star. (Bhargava, Tr. 

2991, in camera).

1117. Rather than shipping finished goods directly to a customer or distribution yard, Star’s 

process necessitated raw castings from six locations across the country being shipped to 

the Houston finishing facility. (Bhargava, Tr. 2991, 2998-3000, in camera).

1118. Star recognized that one of the risks of sourcing Domestic Fittings from six different 

foundries was that it would not control its supply chain, and that the foundries it 

contracted with might later raise prices or elect not to do business with Star at all. 

(Bhargava, Tr. 2991-2992, in camera).

 

c. Star’s acquisition of patterns to make Domestic Fittings

1119. Star decided that it would be a full line supplier and acquired patterns from China in the 

summer of 2009. (Bhargava, Tr. 2999-3000, 3011, in camera; McCutcheon, Tr. 2605-

2606; RX 234). 

1120. Star planned to enter the Domestic Fittings market by offering the most popular Fittings 

items first. Star developed a priority for the patterns it constructed by identifying the 

best-selling Fittings, which require approximately 150 to 200 patterns, but account for 

approximately 80% of Fittings sales. (CX 2535 (Bhutada, Dep. at 52-53)).

1121. Star planned to offer a relatively full line of the more commonly used C153 Domestic 

Fittings, and a more limited line of C110 Fittings, for which Star would stock the 

common “A” items, (F. 306) and otherwise produce on a per-project basis. 

(McCutcheon, Tr. 2292-2293). 

1122. By May 2012, Star had invested approximately $3.5 million to secure the patterns 

necessary for producing Domestic Fittings. (RX 694 (Bhutada, Dep. at 62)). 

1123. By the end of 2009, Star had more than { } patterns in place at third-party domestic 

foundries. (Bhargava, Tr. 3010, in camera).

1124. Star gradually added patterns after 2009, irrespective of whether Star had an order for 

the specific Fittings. (CX 2533 (Bhargava, Dep. at 66), in camera).

1125. By June 2010, Star had a Domestic Fittings pattern stock comparable to McWane’s 

Domestic Fittings items. (Bhargava, Tr. 3012, in camera).

1126. By the end of 2010, Star had close to { } patterns in stock. (Bhargava, Tr. 3011-

3012, in camera).
165

d. Star’s sales of Domestic Fittings

1127. By September 2009, Star recorded its first sales of domestically manufactured Fittings 

to customers. (Bhargava, Tr. 3002, in camera).

1128. Star began shipping Domestic Fittings to Distributors in late 2009. (CX 2535 (Bhutada, 

Dep. at 60), in camera).

1129. By September or October of 2009, Star was building product for its inventory of 

Domestic Fittings. (McCutcheon, Tr. 2300; RX 692 (Bhargava, Dep. at 113)).

1130. Star’s target, in November 2009, was to develop a full line of Domestic Fittings equal to 

the stock offered by McWane. By June 2010, Star had come close to that goal, but 

there were still quite a few odd patterns that Star decided not to make. (Bhargava, Tr. 

3010-3013), in camera).

1131. Star recognized that it would not have the full range of Domestic Fittings it intended to 

supply available to its customers on day one, and that a ramp-up period would be 

required. (McCutcheon, Tr. 2606).

1132. Star recognized that some Distributors were cautious about purchasing Domestic 

Fittings from Star in 2009 and early 2010 because of delays in filling orders.

(Bhargava, Tr. 3003, in camera; McCutcheon, Tr. 2634).

1133. As of March 2010, although Star could supply most of the fast-moving items in a timely 

manner, it still had some problems in supplying the very slow-moving items for which 

Star may not yet have developed a pattern. In addition, Star was still building inventory 

in March 2010. (Bhargava, Tr. 3008-3010, in camera).

1134. Since its entry in 2009 into the Domestic Fittings market, Star has sold Domestic 

Fittings every month and every year. (Bhargava, Tr. 3027, in camera).

1135. Star endeavored to and did “pick off” orders of Domestic Fittings from McWane where 

it could. Mr. McCutcheon asked his division managers to send him lists of Distributors 

who were purchasing from Star and those who were committed to purchasing from 

McWane. The report that Mr. McCutcheon received from his Southwest Division 

Manager on October 9, 2009, listed 44 Distributors or branches of Distributors. Of 

those 44, the report indicated that 17 were going with Star, about half that amount were 

going with McWane/Sigma, and the remaining were “on the fence.” (McCutcheon, Tr. 

2606-2612).

1136. Star sold Domestic Fittings to many distributors during the last quarter of 2009, and 

throughout 2010 and 2011, including HD Supply, Ferguson, WinWater, and Dana 

Kepner. (McCutcheon, Tr. 2590-2592; Webb, Tr. 2798-2800; Thees, Tr. 3084, 3111-

3112; RX 652 (Johnson, Dep. at 17-18)).
166 

1137. Some of Star’s sales of Domestic Fittings were made in circumstances in which 

McWane could not provide Domestic Fittings in a timely fashion (e.g., large-diameter 

Fittings), or where the End User needed a special coating, such as “Protecto 401,” that 

Star specialized in. (McCutcheon, Tr. 2666-2667). 

1138. Hajoca’s Tulsa branch had ordered over { } million dollars’ worth of Domestic Fittings 

from Star as early as January 2010. (RX 671 (Pitts, Dep. at 102-103)). 

 

1139. Dana Kepner determined in February 2010 that it would use Star for all of its Domestic 

Fittings needs. (CX 0585; McCutcheon, Tr. 2612-2613).

1140. TDG, in 2010, selected Star as a TDG Domestic Fittings vendor partner. (JX 694 

(Bhutada, Dep. at 155); RX 675 (Sheley, Dep. at 68); see infra F. 1346 (discussing 

TDG vendor partner program)).

1141. Since entering the market, Star has made sales of Domestic Fittings to more than 100 

Distributors. (Normann, Tr. 5042-43, in camera). 

1142. In calculating the number of Distributors to whom Star sold Domestic Fittings to be 

130, Dr. Normann did not differentiate Distributors based on size of the Distributor, the 

number of projects for which the Distributor sought bids, the number of locations the 

Distributor operated, the amount of Domestic Fittings the Distributor purchased from 

Star, the circumstances of the purchase or whether it fell into one of the exceptions to 

the Full Support Program (F. 1173). (Normann, Tr. 5626-5634). 

1143. Star had { } million dollars in Domestic Fittings sales in both 2010 and 2011, and 

expects to sell more Domestic Fittings in 2012. (Bhargava, Tr. 3027-3028, in camera; 

McCutcheon, Tr. 2597). 

1144. Star was on pace, at the time of trial, to have its best year ever for Domestic Fittings 

sales in 2012. (Bhargava, Tr. 3028, in camera).

J. McWane’s Full Support Program5 

1. McWane’s Views on Star’s Entry into the Domestic Fittings market

1145. In June 2009, McWane was deeply concerned about the viability of its sole remaining 

domestic Fittings plant, Union Foundry. (RX 643 (Tatman, IHT at 151)). 

1146. Because its last remaining domestic foundry had high inventory levels and insufficient 

demand (F. 18, 477-478), McWane was concerned that if Star entered the Domestic 

 

5 As defined infra F. 1173, McWane sent a letter to its Distributor customers on September 22, 2009, which 

advised that customers who do not fully support McWane for their Domestic Fittings needs may forego 

participation in rebates or shipments of their Domestic Fittings orders. (CX 0010 at 001).
167

Fittings market, McWane would not be able to generate enough business to operate its 

foundries. (RX 638 (McCullough, IHT at 34-36)). 

1147. McWane was concerned that Star would choose to manufacture only the highest-selling, 

fastest-moving Fittings. (RX 643 (Tatman, IHT at 152-153) (“The worst case scenario 

for me is that Sigma or Star comes into the domestic segment of the waterworks fittings 

market with a cherry-picking strategy. They bring in 50 patterns or 100 patterns, and 

they get those A items, and they go after those, and I lose volume on those items that I 

need for my plant . . .”).

1148. On June 24, 2009, Mr. McCullough sent an internal McWane email to Mr. Tatman, 

with a copy to Mr. Walton, requesting information about Star’s entry and Sigma’s 

potential entry into the Domestic Fittings market. Mr. McCullough raised questions 

regarding McWane’s “position short term/long term on sharing distribution of our 

domestic fitting line. Just because we share our blended fittings does not require us to 

share our domestic, especially if the competition is a short line domestic supplier.” 

(CX 0074 at 002; Tatman, Tr. 646-647).

1149. In a June 24, 2009 internal email, Mr. Walton responded to Mr. McCullough’s email 

(F. 1148) stating:

Whether we end up with Star as a complete or incomplete domestic 

supplier my chief concern is that the domestic market gets creamed from 

a pricing standpoint just like the non-domestic market has been driven 

down in the past. That would dramatically [a]ffect our profit potential. 

Further, I have a sense there is a slim to none possibility that we would 

ever be able to sell Star domestic product at this point, one I do not think 

they would ever trust us and, two they seem to be so far down the road 

that I do not think they will be willing to turn back. I do agree whole 

heartedly that we need to evaluate our options and plot a comprehensive 

strategy going forward.

(CX 0074 at 001; CX 2485 (Walton, Dep. at 91-92) (email accurately reflected 

Mr. Walton’s “chief concern” regarding Star’s entry at the time); Tatman, Tr. 647).

1150. Mr. Tatman’s initial response to Mr. McCullough’s and Mr. Walton’s emails (F. 1148-

1149) was an internal email on June 24, 2009 stating:

I agree that at this stage the chance for profitable cohabitation with Star 

owning a pc of the Domestic market is slim. Their actions in soil pipe 

are a good indication. . . . If their claims are ahead of their actual 

capabilities we need to make sure that they don’t reach any critical 

market mass that will allow them to continue to invest and receive a 

profitable return. . . . I don’t sense that Sigma is yet fully committed and 
168

they will be watching our response very closely to assess their strategy 

and probability of financial success.

(CX 0074 at 001; Tatman, Tr. 649-652).

1151. In the narrative for McWane’s 2010 budget, Mr. Tatman listed the biggest risk factor 

for McWane’s Fittings business in 2010 as the “Erosion of domestic pricing if Star 

emerges as a legitimate competitor.” (CX 0102 at 002).

1152. In an August 2, 2010 internal email, Mr. Napoli wrote to Mr. Tatman: 

It’s the take-a-hit now vs take-a-hit-for-decades argument as in 1984-

1990. We chose to not to react then and know the result. We may not be 

losing business now but I am concerned about the future. Those dist. not 

aligned with us or Sigma will be aggressive with Star backing them 

against our people. . . . When that happens our distributors will 

continually pressure us to ‘do something’ (lower prices). If they stay in

the business we will always see downward pressure in the future.

(CX 2192; CX 2480 (Napoli, Dep. at 90-95) (discussing CX 2192 and that, in order to 

avoid the loss of business and lower prices that occurred when imported Fittings first 

entered the U.S. market, McWane should lower their Domestic Fittings prices so that 

Star will become convinced that the Domestic Fittings business is unprofitable and exit 

the market)).

1153. McWane’s National Sales Manager, Mr. Jansen, wrote an email on November 3, 2009 

to his sales representatives regarding Domestic Fittings, “We don’t want the market 

tumbling and if we keep everyone on board we shouldn’t have to drop prices.” 

(CX 0107 at 001; CX 2477 (Jansen, Dep. at 228-229) (explaining that “market 

tumbling” means prices falling; and “keep everyone on board” refers to Distributors 

being loyal to McWane under the Full Support Program)).

1154. In a September 3, 2010 email to a McWane sales representative, Mr. Jansen wrote: “We 

need to make sure we are getting into the smaller [Distributors] up there and keep them 

from Star. That’s how a cancer starts is by letting them get in with one, two, then three, 

and it crumbles from there.” (CX 2261 at 002). Mr. Napoli explained this email as 

follows:

Like any -- any competitive situation in any industry, I mean, they’ll start 

with the small ones. They won’t go after the big fish first. They’ll go to 

the small ones and build their -- build their reputation. You know, a 

competitor is not going to go to -- a new competitor in something is not 

going to go to Walmart from day one. They’ll go to somebody smaller. 

Maybe that’s not a good analogy, but they’ll go to somebody smaller and 

build reputation and build a -- you know, a base and then go from there 
169

to bigger ones, makes them a little more legitimate, let’s say, if they have 

a history or a track record.

(CX 2480 (Napoli, Dep. at 104-107)).

2. McWane’s strategic responses to Star

1155. In a May 26, 2009 brainstorming document to spark discussion of McWane’s possible 

strategic responses to potential competitive entry into the Domestic Fittings market and 

whether to sell Domestic Fittings to Sigma, Mr. Tatman observed that “any competitor” 

seeking to enter the Domestic Fittings market could face “significant blocking issues” if

they are not a “full line” domestic supplier. (CX 0067 at 002; Tatman, Tr. 620-621; see 

also CX 2529 (Rona, IHT at 195-196) (“Q. Do you think McWane’s policy that we’re 

discussing here, this exclusivity with respect to distributors, is something that could 

erect a roadblock to a new entrant coming into the market with less than a full line? A. 

There’s -- there’s no question for any entrant that requiring exclusivity on those parts 

would be inherently more difficult than without it.”)).

1156. On or about June 29, 2009, after Star had announced its planned entry into the Domestic 

Fittings market (F. 1095), Mr. Tatman drafted and sent an internal PowerPoint 

Presentation (“June 29, 2009 PowerPoint Presentation”) to Mr. McCullough and Mr. 

Walton, intended as a brainstorming document based on a series of assumptions to 

spark discussion. (CX 0076; Tatman, Tr. 653-656).

1157. In a cover email transmitting his June 29, 2009 PowerPoint Presentation, Mr. Tatman 

stated that if McWane could keep Sigma from establishing an independent source for

Domestic Fittings, leaving Star as the only Domestic entrant, then “the appropriate 

response to distribution is probably fairly hard line approach like a full line or no line 

approach.” (CX 0076 at 001; Tatman, Tr. 653-655).

1158. Among the series of assumptions in the June 29, 2009 PowerPoint Presentation were 

that Star might “drive profitability out of our business,” and that Star “would not be a 

responsible competitor [in the Domestic market] as long as incremental sales generate 

incremental margins for their business.” (CX 0076 at 006, 009; Tatman, Tr. 653-656).

1159. Mr. Tatman’s June 29, 2009 PowerPoint Presentation described as topics for discussion, 

three potential options for McWane’s response to Star’s entry: employ a “Wait and See 

approach,” “Handle on a Job by Job basis,” or “Force Distribution to Pick their Horse.” 

(CX 0076 at 009; Tatman, Tr. 658).

1160. With respect to the “Wait and See approach,” identified as a topic for discussion in the 

June 29, 2009 PowerPoint Presentation, a disadvantage identified by Mr. Tatman was 

that it would give Star “time to continue building their business model.” (CX 0076 at 

009).
170

1161. With respect to the “Handle on a Job by Job basis” identified as a topic for discussion in 

the June 29, 2009 PowerPoint Presentation, a disadvantage was that it would allow Star 

to “drive profitability out of our business.” (CX 0076 at 009; Tatman, Tr. 658).

1162. With respect to the “Force Distribution to Pick their Horse” approach identified as a 

topic for discussion in the June 29, 2009 PowerPoint Presentation, the advantages listed 

as topics for discussion by Mr. Tatman included:

• It “[a]voids the job by job auction scenario within a particular 

distributor”

• It “[p]otentially raises the level of supply concern among 

contractors” and

• It “[f]orces Star/Sigma to absorb the costs associated with having a 

more full line before they can secure major distribution”

(CX 0076 at 009; Tatman, Tr. 658-666; see also CX 2483 (Tatman, IHT at 242-243) 

(explaining, in the context of this language, that it is quicker to build business through 

large national Distributors such as HD Supply and Ferguson); Tatman, Tr. 676-679 

(Tatman does not recall the intent behind the discussion point “[f]orces Star/Sigma to 

absorb the costs associated with having a more full line before they can secure major 

distribution”); Tatman, Tr. 679-680 (Tatman does not recall whether he considered 

“major distribution” to be major national Distributors)).

1163. The “Pick your Horse” topic identified in the June 29, 2009 PowerPoint Presentation, 

described a “Soft Approach – Rebates at 100% or 0%” whereby a “domestic rebate 

would require exclusivity,” and a “Hard Approach – Full Line or No Line,” under 

which access to Domestic product line would “require[] exclusivity for Domestic fitting 

items we manufacture” – i.e., if a customer did not support McWane’s full Domestic 

Fittings line, McWane would not sell to them. (CX 0076 at 010; Tatman, Tr. 672-674).

1164. Listed as a topic for discussion in the June 29, 2009 PowerPoint Presentation under both 

the “Soft Approach” and the “Hard Approach” under the “Pick your Horse” option 

(F. 1163) was “Applied on a corporate not branch by branch basis.” (CX 0076 at 010; 

Tatman, Tr. 675).

1165. On July 2, 2009, when asked by Mr. Walton for a recommended course of action with 

respect to Domestic Fittings, Mr. Tatman responded that the June 29, 2009 PowerPoint 

Presentation “was more for information sharing rather than trying to obtain agreement 

on a specific course of action which is probably premature at this point.” Mr. Tatman 

further wrote, “[f]rom the information currently available, a Full Line or No Line 

approach would be the preferred approach and certainly the best option against Star.” 

(CX 0329 at 001). Mr. Tatman testified that when he wrote that, he was “floundering 

in the dark” and that the information in the document was based on speculation. 
171

(Tatman, Tr. 749-750) (regarding Star’s entry into the domestic segment, “[t]here’s 

never been a hard game plan”).

1166. On August 5, 2009, regarding McWane’s relationships with foundries, Mr. McCullough 

wrote:

As we establish or continue existing casting sourcing relationships we 

need to emphasize with our casting suppliers that we are not interested in 

sharing their foundry production with Star/Sigma as we feel it will 

weaken the “McWane” brand recognition in the market place.

(CX 0354 at 001).

1167. On August 24, 2009, Mr. Tatman sent an internal email to Dennis Charko, head of 

Clow Water (a subsidiary of McWane) that sells a limited number of Fittings, regarding

“McWane Domestic Fittings 2010 brand/market protection” stating:

Star, has announced a Domestic line of waterworks fittings and 

restraints. . . .

To protect our domestic brands and market position we are going to 

adopt a distributor exclusivity program for 2010 wherein we won’t 

provide domestic product to distributors who are not fully supporting our 

domestic product lines.

(CX 0113 at 001; Tatman, Tr. 686-687).

3. McWane’s 2009 revisions to its corporate rebate programs

1168. McWane’s waterworks fittings division has always had rebate programs with its 

customers which typically expire on an annual basis (“corporate rebate programs”). 

McWane’s rebate programs with individual Distributors are based on the Distributor’s 

specific needs and sizes. McWane’s major customers, including WinWholesale, 

Ferguson, Hajoca, HD Supply and Mainline, have participated in McWane’s corporate 

rebate program during the relevant period. TDG has a separately negotiated rebate 

program. (CX 2479 (McCullough, Dep. at 27-28, 33-34); Tatman, Tr. 708-711). 

1169. McWane’s corporate rebate program has specific requirements that participating 

Distributors must meet in order to earn a 2% rebate. If a Distributor fails to comply 

with a requirement, Mr. McCullough speaks to that Distributor and asks it to correct its 

non-complying conduct. (CX 2479 (McCullough, Dep. at 28, 33-34, 45-47)).

1170. In a document described as the “final” corporate rebate program for HD Supply for 

2010 through 2012, one of the provisions lists as one of the requirements for HD Supply 

to get its 2% corporate rebate, which is based on all of HD Supply’s purchases of 

Fittings, soil pipe, iron pipe, and valve and hydrants, is: McWane “require[s] HD 
172

Supply to support its efforts to maintain and promote domestic specifications, when 

McWane domestically made products are available.” (CX 0131 at 001, 002).

1171. In a draft corporate rebate program for Hajoca for 2010, one of the provisions states: 

McWane “will share Hajoca’s valve, hydrant, soil pipe & soil fitting and domestic 

requirements for ductile iron waterworks fittings with only other historical, domestic, 

national, and full line manufacturers.” In his November 17, 2009 transmittal email to 

Mr. McCullough, Mr. Tatman wrote that the proposed modification to McWane’s 

corporate rebate program was to “essentially eliminate Star as a supplier of domestic 

fittings.” (CX 0100 at 001, 002).

1172. On December 8, 2009, Mr. McCullough wrote to Mr. Tatman and Mr. Walton that he 

was “thinking of implementing a 3 year [corporate rebate] program, basically the same 

as the 2009 programs for [McWane’s] national accounts. Most everyone [h]as asked 

about extended programs.” One of Mr. McCullough’s stated reasons for this idea was: 

“My interest [in] getting everyone on board and committed for the next three years is to 

remove the opportunity for Star to introduce their domestic made fittings into our major 

national accounts.” There were other reasons for extending the duration of the 

corporate rebate program unrelated to Star, including that customers did not want to 

have to renegotiate corporate rebate programs on an annual basis. (CX 0126 at 001; 

CX 2479 (McCullough, Dep. 146-148)).

4. McWane’s September 22, 2009 Letter to Distributors regarding Full

Support Program

1173. On September 22, 2009, McWane sent a letter to Distributors that stated as follows:

[E]ffective October 1, 2009, McWane will adopt a program whereby our 

domestic fittings and accessories will be available to customers who 

elect to fully support McWane branded products for their domestic 

fitting and accessory requirements. This applies whether these products 

are purchased through Tyler Union, Clow Water or through Sigma.

Exceptions are where Tyler Union or Clow Water products are not 

readily available within normal lead times or where domestic fittings and 

accessories are purchased from another domestic pipe and fitting 

manufacturer along with that manufacture’s ductile iron pipe.

Customers who elect not to support this program may forgo participation 

in any unpaid rebates for domestic fittings and accessories or shipment 

of their domestic fitting and accessory orders of Tyler Union or Clow 

Water products for up to 12 weeks.

(“Full Support Program”). (CX 0010 at 001; Tatman, Tr. 659, 687-688).
173

1174. In the same September 22, 2009 letter through which McWane announced its Full 

Support Program, McWane also announced to its Distributors that it had entered into a 

Master Distribution Agreement (“MDA”) with Sigma, through which Sigma would sell 

McWane Domestic Fittings. (CX 0010 at 001 (“We are pleased to announce that 

McWane domestic fittings . . . will now be available through Sigma.”). See infra II.K.

1175. A purpose of McWane’s Full Support Program was to persuade McWane’s customers 

to support McWane’s full line of domestic Fittings, rather than “cherry picking” and 

buying only oddball items from McWane, while purchasing the most commonly used 

Fittings from Star, in order to generate enough sales volume to sustain McWane’s last 

remaining domestic foundry. (RX 638 (McCullough, IHT at 34-36); RX 643 (Tatman, 

IHT at 151); see also CX 2203 at 002; Morton, Tr. 2844-2846 (According to U.S. Pipe, 

Mr. Tatman explained to U.S. Pipe that U.S. Pipe could not cherry pick high volume 

configurations from other domestic suppliers; i.e., if Star was capable of producing A 

and B items, the high-volume configurations, but couldn’t produce the C and D items, 

U.S. Pipe could not buy the high-volume configurations from Star and then turn to 

McWane for only the C and D items.).

1176. Mr. Tatman referred to the Full Support Program as an “exclusivity” policy both before 

and after the policy was announced on September 22, 2009. (CX 0340 (referring to 

“pending policy on supply exclusivity” on September 8, 2009); Tatman, Tr. 692; 

CX 1246 (referring to “exclusivity policy” on September 23, 2009); Tatman, Tr. 697).

1177. Mr. Tatman purposefully included the language “may” and “or” in the Full Support 

Program. (Tatman, Tr. 687-689 (“Q. And the potential consequences for customers 

were: Customers who elect not to support this program may forgo in any unpaid rebates 

for domestic fittings and accessories or shipment of their domestic fitting and accessory 

orders of Tyler/Union or Clow Water products for up to twelve weeks; correct, sir? A. 

With the words “may” and “or” specifically put in there by me. Q. That’s a yes, sir? A. 

Yes, sir.”)).

1178. Mr. Tatman believed that McWane had little or no ability to dictate terms to the 

Distributors, who held significant market power over it. (Tatman, Tr. 660 (“This is a 

weak -- a weak stance in this letter because I know when I write this letter that I’m a 

Chihuahua barking at Rottweiler and I know who has the power here.”)).

5. McWane’s communications to Distributors regarding the Full 

Support Program

1179. In preparation for the rollout of the September 22 Full Support Program, McWane’s 

National Sales Manager, Mr. Jansen, led an internal conference call with the McWane 

sales force on August 28, 2009, where he explained to his sales force the “new policy 

on Star Domestic” as follows:

• What are we going to do if a customer buys Star domestic? We are 

not going to sell them our domestic. . . .
174

o This means the customer will no longer have access to our 

domestic. They can still buy [non-Domestic] from us.

o Once they use Star, they can’t EVER buy domestic from us. . . .

o For companies with multiple branches (HD, Ferguson, Winwater, 

Hajoca, etc) - if one branch uses Star, every branch is cut off.

. . .

• Make sure you are discussing our stance with all customers, every 

day.

(CX 0710 at 001, 002 (summarizing sales conference call); see also CX 2477 (Jansen, 

Dep. at 164-169) (confirming that CX 0710 accurately reflects Mr. Jansen’s statements 

during conference call)). 

1180. McWane communicated to customers that the Full Support Program would be applied 

on a company-wide basis, such that if one branch purchased Domestic Fittings from 

Star, all branches would be cut off. (CX 0108 at 001; CX 2477 (Jansen, Dep. at 177-

178); CX 2501 (Prescott, IHT at 50-51)).

1181. Mr. Jansen wrote to his sales force on November 3, 2009:

Team, I think we have made it very clear in the market regarding our 

stance on supporting the McWane domestic brand of fittings whether 

purchased through Tyler/Union, Clow or Sigma. If one branch buys 

f[ro]m someone other than this then the whole company will be 

[a]ffected not just that branch.

(CX 0108 at 001; CX 2477 (Jansen, Dep. at 177-178) (explaining that he wanted to 

make sure that the sales people expressed this “one clear message” to the market); see 

also CX 1599; CX 2477 (Jansen, Dep. at 173-176) (two regional vice presidents of HD 

Supply expressed concern to McWane’s National Sales Manager, Mr. Jansen, that they 

did not want to be “punished” under the McWane policy if another HD Supply branch 

bought Star Domestic Fittings)).

1182. The McWane sales force was tasked with compiling logs to document communicating 

the Full Support Program to Distributors. (CX 2477 (Jansen, Dep. at 179); CX 1600, 

CX 1601, CX 1602 (sales force logs of “Star Domestic Conversation with customers”)).

1183. In a presentation which was apparently prepared by Mr. Tatman after implementation of 

the September Full Support Program, Mr. Tatman stated: “Although the words ‘may’ 

and ‘or’ were specifically used, the market has interpreted the communication in the 

more hard line ‘will’ sense. . . . Access to McWane or Sigma requires distributors to 
175

exclusively support McWane where products are available within normal lead times. 

Violations will result in: Loss of access, loss of accrued rebates.” (CX 0119 at 002, 

004; Tatman, Tr. 704-707, 723-725).

1184. Hajoca believed that, despite the terms “may” and “or” in the Full Support Program, it 

would lose its rebates or be cut off from purchasing from McWane if Hajoca purchased 

from Star. (CX 2511 (Pitts, IHT at 78) (“Q. So, even though this letter, as written, 

suggests that you may or may not be penalized and that if you are penalized, it could be 

for -- it could be one or the other -- A. Yeah, um-hum. Q. -- or essentially both -- A. 

Selective enforcement, yeah. Q. -- the -- the message that Hajoca received, and 

specifically that Mr. Tatman and Mr. Jansen relayed to you, was that it would be – both 

would be implemented against Hajoca -- A. Correct. Q. -- and it would happen 

indefinitely -- A. Correct. Q. -- if -- if -- A. That’s right. Q. -- you started purchasing 

from Star. A. Correct.”); CX 2511 (Pitts, IHT at 76-79, 137-139) (stating: “It wasn’t an 

either/or. It was both.”; and: “we were told right away that our Lansdale location would 

be cut off. They couldn’t buy the fittings anymore.” Mr. Pitts further stated that to him, 

“may” meant “would”, and “or” meant “and.”).

1185. HD Supply believed that under the Full Support Program, HD Supply would fully 

support McWane’s domestic line of fittings, and that HD Supply would purchase all of 

its domestic Fittings from McWane except where McWane was unable to fill an order. 

(Webb, Tr. 2769-2770). See also CX 2514 (Webb, Dep. at 90) (“My understanding is 

that we would lose the rebate on the domestic fittings . . . .”).

1186. Ferguson did not view the Full Support Program as preventing Ferguson from 

purchasing Domestic Fittings from Star and believed that the rebate terms and lead 

times mentioned in the September 2009 Rebate Policy could be negotiated. (Thees, Tr. 

3109-3111).

1187. Groeniger viewed the Full Support Program as a threat that if Groeniger purchased 

Domestic Fittings from Star, McWane would not sell any Domestic Fittings to them. 

(CX 2510 (Groeniger, Dep. at 92) (“We were informed that they [McWane] were going 

to pull everything away from us, a threat.”)).

1188. Illinois Meter believed it had been threatened by Mr. Jansen, in January 2010, with loss 

of access to McWane’s Domestic Fittings if Illinois Meter bought Domestic Fittings 

from Star. (Sheley, Tr. 3411-3412 (“The implied threat that if we bought anybody 

else’s fittings, they [McWane] wouldn’t do business with us in any way, shape or 

form.); CX 2515 (Sheley, IHT at 76-78, in camera (“Rick [Tatman] made the 

statement that he expected a hundred percent support for domestic product . . . if we 

bought any domestic from Star, they would not sell us anything. And the statement I 

made to Rick . . . I asked the question, ‘So you’re telling us all or none?’ And he said, 

‘That’s correct.’”)). See also Sheley, Tr. 3456-3458 (the Full Support Program does not 

accurately reflect the policy as communicated to Illinois Meter in conversations that 

Mr. Sheley had with Mr. Jansen and Mr. Tatman).
176

1189. Illinois Meter interpreted the Full Support Program to mean that Illinois Meter would 

lose any unpaid rebates on both Domestic and imported Fittings. “[S]o if a rebate had 

been earned in January through, say, September and you chose not to participate, you 

would lose all those previous rebates that were unpaid.” (Sheley, Tr. 3456-3458; 

CX 2515 (Sheley, IHT at 85), in camera).

1190. E.J. Prescott explained the Full Support Program as follows: “The understanding is in 

writing. If you bought one [Domestic] fitting [from Star] in one of our 26 places, we’re 

out, simple. . . . They [McWane] said it’s all or nothing.” (CX 2501 (Prescott, IHT at 

50)).

1191. Utility Equipment Company explained the Full Support Program as follows: “Q. And 

was it your understanding that if you did purchase [Star Domestic Fittings] that you 

would lose your rebate dollars? A. Yes. Q. The policy on its face states that they may 

forego participation in any unpaid rebates. Was it your understanding, though, that you 

would forego them and that it wasn’t a ‘may forego’? A. Well, I took this as that we 

were going to lose it.” (CX 2544 (Coryn, Dep. at 113-114); CX 2543 (Coryn, IHT at 

126) (“There was . . . a veiled threat out there that if . . . [McWane] found out you were 

buying from [Star], something would happen.”)).

1192. CI Thornburg explained its understanding of the Full Support Program as follows: “Q. 

What did you think the letter meant as a practical matter? A. Well, I knew what it 

meant was: You better not buy anything from Star. . . . [McWane’s] message was clear, 

both written and verbally, that if you buy a project from Star, you’re going to go on our, 

I’m picking the term ‘bad list.’” (CX 2489 (Morrison, IHT at 72); CX 2490 (Morrison, 

Dep. at 79-80) (“When I read the letter that they [McWane] sent out . . . I interpreted 

that as a threat.”)).

6. Full Support Program as it relates to Hajoca

a. Hajoca elected not to participate in the Full Support Program

1193. Hajoca has nine profit centers or branches that sell waterworks products, three of which 

sell waterworks exclusively: Tulsa, Oklahoma (“Tulsa”); Salt Lake City, Utah; and 

Olathe, Kansas. Hajoca’s Lansdale, Pennsylvania (“Lansdale”) branch also sells 

waterworks products. (Pitts, Tr. 3296-3297).

1194. At the time of McWane’s September 22, 2009 Full Support Program, almost all of 

Hajoca’s purchases of Domestic Fittings were made by Hajoca’s Tulsa and Lansdale 

branches. (CX 0023).

1195. Each of Hajoca’s branches makes its own vendor selection decisions, including those 

regarding Domestic Fittings purchases. (Pitts, Tr. 3306-3307). 

1196. In a September 22, 2009 email from Mr. Tatman to Mr. Pitts, Hajoca’s director of 

vendor relations, attaching the Full Support Program, Mr. Tatman stated: “[t]he policy 
177

announced is intended to apply at the corporate level, which I understand will give you 

a few more challenges to manage compared to other nationals.” (CX 0021-A at 001).

1197. The week before McWane announced the Full Support Program, Mr. Jansen,

McWane’s National Sales Manager, met with Mr. Pitts. Mr. Pitts reported that meeting 

as follows:

I had heard from Jerry Jansen last week that [McWane] would be taking 

a hard stance regarding domestic fittings manufactured for Star. . . . 

Jerry had told me last week that if any PC [profit center or branch] in the 

US purchases domestic fittings from Star, all PCs would lose access to 

McWane’s fittings and possibly lose rebates.

(CX 0021-A at 001; Pitts, Tr. 3296, 3304-3305).

1198. Based on McWane’s September 22, 2009 Full Support Program and his conversation 

with Mr. Jansen, Mr. Pitts believed that if any branch of Hajoca purchased Domestic 

Fittings from Star, the consequences would include loss of rebates from McWane and 

an interruption of Domestic Fittings shipments from McWane to all of Hajoca’s 

branches. (Pitts, Tr. 3300-3303; CX 0021-A at 001).

1199. Mr. Pitts had conversations with Mr. Tatman, in addition to Mr. Jansen, about the Full 

Support Program, both before and after the September 22, 2009 announcement, and 

Mr. Tatman reinforced the nationwide all-or-nothing nature of the policy – that if one 

Hajoca branch purchased from Star, all branches would be subject to the consequences. 

(Pitts, Tr. 3305-3306).

1200. On September 30, 2009, Mr. Pitts asked Mr. Tatman to modify McWane’s Full Support 

Program so that McWane would not hold all Hajoca branches responsible if a single 

branch purchased Domestic Fittings from Star. Mr. Tatman explained that McWane 

applies the policy at the corporate level because “that’s where the [rebate] check is 

sent,” and did not agree to alter McWane’s policy. Hajoca also offered to change its 

rebate model so that checks would be sent to the individual branches, but Mr. Tatman 

did not agree to change the policy. (CX 0022 at 002; Pitts, Tr. 3306-3308).

1201. In a November 3, 2009 email to Mr. Kelly and Mr. Pitts of Hajoca, Mr. Jansen 

reiterated the all-or-nothing nature of McWane’s Full Support Program:

[I]f any Hajoca location chooses to buy another domestic fitting

supplier[’s] product Hajoca will not have direct access to the McWane 

ductile iron water main fittings for a period of time as well as loss of any 

accrued rebate to date.
178

(CX 0024 at 001; Pitts, Tr. 3311-3313 (CX 0024 accurately reflects September 2009 

Rebate Policy as described to Mr. Pitts by Mr. Tatman and Mr. Jansen in multiple 

conversations)).

1202. In an email exchange between Mr. Jansen of McWane and Mr. Kelly of Hajoca between 

November 3, 2009 and November 7, 2009, Mr. Jansen reiterated the company-wide 

application of the Full Support Program, and acknowledged that Hajoca would have to 

make a decision as to whether to purchase exclusively from McWane. (CX 0024 at 

001; Pitts, Tr. 3308-3310).

1203. Hajoca’s Lansdale, Pennsylvania location purchased a higher volume of Domestic 

Fittings than other Hajoca branches and anticipated losing business if it lost access to 

McWane’s Domestic Fittings. (Pitts, Tr. 3314).

1204. Hajoca chose to continue to allow each of its branches to make its own Domestic 

Fittings vendor selections. (Pitts, Tr. 3313 (“Our decision was to stand by our [business 

model] and let the manager of the [Tulsa] location purchase those fittings if he chose 

to.”)).

1205. On November 16, 2009, Mr. Kelly informed Mr. Jansen that Hajoca “will not be 

changing our current business practice that allows our managers in the field to 

determine where or from whom they buy their product,” and “cannot in good 

conscience support a program where the actions of one manager somewhere in the 

country could undermine an entire rebate program for the balance of the business.” 

(CX 0731 at 001).

1206. The day after Mr. Kelly’s communication with Mr. Jansen (F. 1205), November 17, 

2009, Greg Dill of Hajoca’s Tulsa branch contacted Ms. Susan Schepps of Star and 

informed her that he would be placing a Domestic Fittings stock order the following 

day. (CX 0731 at 001; see also Pitts, Tr. 3309 (the Tulsa branch was buying Domestic 

Fittings from Star)).

b. McWane did not accept new orders for Domestic Fittings 

from Hajoca

1207. As a result of Hajoca’s decision to continue allowing its branches to make its own 

Domestic Fittings vendor selections, all of Hajoca’s branches, including Hajoca’s 

Lansdale, Pennsylvania location, were not able to place new orders from McWane for 

Domestic Fittings. (Pitts, Tr. 3313-3315; Tatman, Tr. 730 (“Q. And you were enacting 

this policy [September 2009 Rebate Policy] here by telling Hajoca, you’re cut off; 

right? A. At this moment in time, that’s what we did.”); see also CX 0173 at 001 

(Jansen January 19, 2010 email to a customer of Hajoca’s Lansdale branch explaining 

McWane’s cutoff of Hajoca: “We don’t like the situation either but feel we can’t 

support someone who is helping our competition build a line against us.”); CX 2477 

(Jansen, Dep. at 223-225)).
179

1208. On November 23, 2009, Mr. McCullough informed Sean Kelly of Hajoca that McWane 

would “discontinue selling Hajoca domestic fittings since they are supporting Star’s 

domestic line.” (CX 1800; Tatman, Tr. 729).

1209. Based on his November 23, 2009 discussion with Sean Kelly (F. 1208), 

Mr. McCullough reported that Sean Kelly understood “[that] Lansdale will be also cut 

off on domestic. They had hoped to be able to buy Tyler/Union domestic at a higher 

price, but I advised this was not an option.” (CX 1800; CX 2479 (McCullough, Dep. at 

152) (CX 1800 accurately describes Mr. McCullough’s conversation with Sean Kelly of 

Hajoca)).

1210. Mr. Tatman sent an internal email to Mr. McCullough and Mr. Walton, on November 

23, 2009, to confirm that all Hajoca orders had been placed on hold, that Sigma had 

been advised to do the same per the terms of the Master Distribution Agreement (infra 

II.K.11.), and that Jeff Otterstedt and Scott Frank of Clow Water had also been advised. 

(CX 1800; Tatman, Tr. 729-730).

1211. On November 24, 2009, Mr. Jansen confirmed to a member of the McWane sales team 

that the Hajoca decision (F. 1204) was the “[f]inal word unless they change direction 

corporately.” (CX 0702 at 001).

1212. On November 26, 2009, Mr. Tatman sent an email to Mr. Pitts and Mr. Kelly of Hajoca, 

stating:

If the PA branch or other Hajoca branches – excluding Tulsa – have in 

process domestic jobs that require near term shipments, please send 

those into your normal customer service points before December 4th. . . . 

While you certainly don’t agree with our stance, I hope that at least you 

will consider the broader market view under which we have to make 

these decisions. 

(RX 237; Tatman, Tr. 730-731). See also Tatman, Tr. 715 (“So November 26 

I’m saying, if you got anything in-house, I’ll ship it. If you have any new 

requirements that you want, just get the orders in-house by -- and I gave a date --

and we’ll ship those.”).

1213. Hajoca’s Tulsa branch was excluded from the allowance for final Domestic Fittings 

orders (F. 1212) because it was the Hajoca location that had purchased Domestic 

Fittings from Star. (Pitts, Tr. 3316).

1214. McWane allowed Hajoca’s Lansdale branch to place orders to cover existing 

commitments and provided an extension to the December 4, 2009 date referenced in 

Mr. Tatman’s November 26, 2009 email (F. 1212) to enable Hajoca’s Lansdale branch 

to place orders to satisfy the known requirements of an existing contract with a 

municipality. (Pitts, Tr. 3314-3320; Tatman, Tr. 714-718 (“the financials records said 

we shipped Hajoca November, December, January, February, March. We continued 
180

shipping Hajoca product all the way through 2009, all the way through 2010. McWane 

continued to honor the orders Hajoca had previously placed.”).

1215. An Hajoca business document listing “all the Union Foundry purchases (receipts) from 

1/1/10 through 09/29/10” indicates that Hajoca’s Lansdale Branch received Domestic 

Fittings at the Lansdale branch in January, February and March 2010. (RX 0289 at 001, 

004; Pitts, Tr. 3320, 3351-3355).

1216. On December 14, 2009, Mr. Tatman informed Sigma that Sigma could not supply 

Domestic Fittings to Hajoca per the terms of the Master Distribution Agreement 

(F.1540) because Hajoca’s Tulsa branch “elected to support another brand for some of 

their Domestic fitting needs,” and that McWane therefore had “elected not to supply 

any of the Hajoca branches with our domestic product.” (CX 1801 at 001; Tatman, Tr. 

720, 729-730, 739-740).

1217. On December 15, 2009, Mr. Tatman instructed Clow Water not to accept any Hajoca 

orders. (CX 0477 at 001; Tatman, Tr. 721; see also Tatman, Tr. 730 (when McWane 

cut off Hajoca, Mr. Tatman, as a matter of policy, told Clow Water not to sell to 

Hajoca)).

1218. Mr. Scott Frank of Clow Water responded to Mr. Tatman’s December 15, 2009 

instruction (F. 1217) that “All of Clow is aware to NO QUOTE and REFUSE all Hajoca 

orders.” (CX 1802 (emphasis in original); Tatman, Tr. 738-739).

1219. Between December 4, 2009 and April 13, 2010, Hajoca’s Lansdale, Pennsylvania 

branch was unable to place new Domestic Fittings orders with McWane. (Pitts, Tr.

3314-3315, 3326-3327, 3363; CX 0027 at 001 (internal Hajoca email dated March 9, 

2010: “I can no longer purchase from [McWane] and have an immediate need for a 

large quantity of flanged fittings that must be Tyler Union.”).

1220. On March 27, 2010, prior to McWane executives meeting with Hajoca executives to 

discuss negotiations with Hajoca, Mr. McCullough sent an internal email asking others 

at McWane “[h]ow our potential FTC action might [a]ffect how we do business with 

[Hajoca].” (RX 628) (referring to January 22, 2010 letter from FTC to McWane 

informing McWane that the FTC was conducting an investigation to determine whether 

McWane had engaged in unfair methods of competition, attached as Attachment B to 

CCFF).

1221. In April 2010, Hajoca and McWane negotiated regarding McWane’s Full Support 

Program and came to an agreement whereby McWane agreed to allow Hajoca’s 

Lansdale, Pennsylvania branch to resume buying Domestic Fittings from McWane. 

(Pitts, Tr. 3325, 3347-3348, 3355).

1222. On April 13, 2010, Mr. Kelly reported within Hajoca that he had spoken with 

Mr. Tatman, and that “we will be moving forward with Tyler Union in Lansdale and 

perhaps some other waterworks locations depending on how the local relationships 
181 

fare.” (CX 0030 at 001; Pitts, Tr. 3324-3325). See also CX 0028 at 001 (April 1, 2010 

internal Hajoca email reporting meeting with McWane and that Hajoca’s Lansdale, 

Pennsylvania branch “will be reinstated as a full stocking distributor of [McWane] 

fittings.”).

1223. McWane did not reinstate Domestic Fittings service to Hajoca’s Tulsa, Oklahoma 

branch. (CX 0030 at 001 (April 13, 2010 internal Hajoca email: “Tulsa is excluded 

from the deal and will not have access to Tyler Union.”); Pitts, Tr. 3325-3326). 

c. McWane withheld Hajoca’s rebate

1224. McWane withheld Hajoca’s rebate in the fourth quarter of 2009 because that was the 

quarter when Hajoca violated the Full Support Program. (Pitts, Tr. 3322).

1225. In a February 4, 2010 email to Roy Pitts of Hajoca, Mr. Tatman confirmed that 

McWane had withheld Hajoca’s fourth quarter 2009 Domestic Fittings rebate as a result 

of Hajoca’s decision to sell Star products in Tulsa. (CX 1803 at 001; Tatman, Tr. 740; 

Pitts, Tr. 3322-3323). 

1226. Hajoca’s fourth quarter of 2009 rebate for non-domestic fittings, which was withheld 

(F. 1224), was $3,563. (Pitts, Tr. 3323; Tatman, Tr. 726, 740). 

1227. With the exception of the fourth quarter of 2009, McWane continued to pay rebates to 

Hajoca as Hajoca’s Lansdale branch purchased McWane Domestic Fittings, even 

though its Tulsa branch purchased Star Domestic Fittings. (Pitts, Tr. 3366). 

d. Hajoca continued to purchase from Star

1228. Since September 2009, Hajoca’s Domestic Fittings purchases have been split about 

50/50 between McWane and Star. (Pitts, Tr. 3337). 

1229. After negotiating McWane’s Full Support Program in April 2010, McWane allowed 

Hajoca’s Lansdale branch to purchase McWane’s Domestic Fittings, even though 

Hajoca’s Tulsa branch was continuing to buy Domestic Fittings from Star. (Pitts, Tr. 

3325, 3337, 3347-3348, 3355); see also Tatman, Tr. 715-718 (“[Hajoca] kept buying 

from Star, and we kept selling them product. . . . And regardless of what we said with 

Hajoca, we continued to ship them product. They continued to buy from Star.”). 

1230. By January 2010, the Tulsa branch of Hajoca had ordered over { } million dollars’ 

worth of Domestic Fittings from Star. (RX 671 (Pitts, Dep. at 102-103); RX 61). 
182

7. Full Support Program as it relates to HD Supply

a. Communications between McWane and HD Supply in 

advance of the Full Support Program

1231. Before issuing its Full Support Program in September 2009, Mr. Tatman of McWane 

met with HD Supply. (Tatman, Tr. 689).

1232. By internal McWane email dated September 8, 2009, Mr. Tatman informed 

Mr. McCullough that Mr. Jansen had been discussing McWane’s “pending policy on 

supply exclusivity” for Domestic Fittings with Distributors, and that he was “starting to 

pick-up some negative reaction from the HD Supply Region, District, and Branch 

managers.” The “negative reaction” at HD Supply was not universal and depended 

upon “what level at HD Supply you would talk to.” (CX 0340; Tatman, Tr. 689-693).

1233. In his September 8, 2009 email to Mr. McCullough and Mr. Jansen (F. 1232), Mr. 

Tatman suggested to Mr. McCullough that HD Supply’s CEO, Jerry Webb, should send

a communication within HD Supply that HD Supply had elected to use McWane 

Domestic Fittings as its sole supply source through 2010. Mr. Tatman provided 

Mr. McCullough with draft language for an email or communication to Mr. Webb. 

(CX 0340; Tatman, Tr. 693-694).

1234. On September 22, 2009, Glenn Fielding, HD Supply’s Director of Sourcing and Price 

Management, sent an email to Jerry Webb, CEO, and Darrin Anderson, Vice President 

of Sourcing and Operations of HD Supply, forwarding the text of the Full Support 

Program and recounting a conversation with Mr. Tatman in which Mr. Tatman 

informed Mr. Fielding that the policy “must be adhered to by entire company -- if one 

branch buys domestic from someone else it affects the whole compan[y’s] program.” 

(CX 2173 at 001; Webb, Tr. 2750-2753).

1235. Mr. Fielding of HD Supply expressed concern about a reduction in rebate dollars as a 

result of McWane’s Full Support Program and even greater concern about the impact to 

customer satisfaction in the event that McWane cut off HD Supply’s access to 

McWane’s Domestic Fittings. (CX 2173 at 003).

1236. On September 23, 2009, Mr. Tatman sent an internal email to Mr. McCullough and 

Mr. Walton relaying a report he had received from Mr. Jansen. Mr. Jansen had met 

with Jack Shaller of HD Supply, who told Mr. Jansen that HD Supply had held a 

manager’s meeting “and the McWane exclusivity policy for domestic fittings was 

discussed at length,” and that “nobody from Jerry [Webb] on down was happy about it.” 

Mr. Tatman noted that “I suspect Jerry [Webb] sold this as a ‘We have to do’ rather 

than a ‘In the big picture this is best for our business.’” (CX 1246; Tatman, Tr. 696-

697).

1237. HD Supply interpreted McWane’s Full Support Program to require HD Supply to 

purchase “all” of its Domestic Fittings from McWane, except where McWane was 
183

unable to supply the Domestic Fittings in question. (Webb, Tr. 2768-2770 (“Q. And 

was this an all-or-nothing support? A. This was all to the extent other than the 

exceptions where they had a service or inability to fill an order.”)).

1238. HD Supply interpreted McWane’s Full Support Program to mean that if HD Supply 

purchased Domestic Fittings from Star that HD Supply “would lose the rebate on the 

domestic fittings and potentially lose access to the domestic line. . . . [I]t could be a 

significant event.” (CX 2514 (Webb, Dep. at 90-91); Webb, Tr. 2760-2761 (“Q. How 

did you interpret this policy from Tyler/Union? A. That if their domestic line was not 

fully supported, there could be implications to your rebate and access to domestic 

fittings.”); CX 2173 at 001).

1239. On September 23, 2009, HD Supply’s Jerry Webb sent a memorandum to HD Supply’s 

district managers, branch managers and operations managers stating: McWane has 

“established their position to not support any company purchasing American made 

fittings from any other source [besides Sigma and McWane].” (CX 0552; Webb, Tr. 

2763-2765).

1240. Mr. Webb’s September 23, 2009 memorandum (F. 1239) further stated: “Due to the 

‘Buy American’ requirements in the ARRA funded jobs and with the expectation that

the flow of money to these projects will pick up the latter part of 2009 through 2010; we 

need to adhere to this mandate and purchase all of our American made fittings through 

Union-Tyler or Sigma. This will ensure . . . continued compliance with the [f]ederal 

requirements.” (CX 0552; Webb, Tr. 2765-2766) (explaining that the “mandate” was 

McWane’s Full Support Program).

1241. Without McWane’s September 22, 2009 Full Support Program, Mr. Webb would not 

have issued his September 23, 2009 company-wide policy requiring HD Supply 

managers to only purchase Domestic Fittings from McWane (or Sigma). (Webb, Tr. 

2804).

b. Impact of Full Support Program on HD Supply

1242. With the exception of items that McWane did not have available or that had been 

committed to prior to September 22, 2009, HD Supply’s then-pending Domestic 

Fittings orders with Star were canceled. (McCutcheon, Tr. 2310-2311; CX 2539 

(McCutcheon, Dep. at 248-250) (“[Webb] asked me for a list of the outstanding quotes 

that we had with his company. So we put together the list of projects that we had 

worked with his company and sent it to him. And to my knowledge, all of those were 

canceled.”)).

1243. After September 22, 2009, based on conversations between Mr. McCutcheon of Star 

and Mr. Webb of HD Supply, Mr. McCutcheon believed that HD Supply could not buy 

Star’s Domestic Fittings because of the Full Support Program. (McCutcheon, Tr. 2302-

2303).
184

1244. Mr. McCutcheon believed that HD Supply could not purchase Domestic Fittings from 

Star because McWane’s Full Support Program required HD Supply to buy 100% of its 

Domestic Fittings requirements from McWane. (CX 2539 (McCutcheon, Dep. at 248-

249)). 

1245. On September 28, 2009, in response to a request from Mr. Webb of HD Supply, 

Mr. McCutcheon of Star sent Mr. Webb a list of orders and inquiries that HD Supply 

had pending with Star, noting that “I have instructed our people not to pursue these 

because of the recent events.” (CX 0013 at 001). Mr. McCutcheon instructed Star’s 

sales team not to pursue the listed items, based on his conversation with Mr. Webb 

regarding McWane’s Full Support Program. (McCutcheon, Tr. 2307-2312; CX 2539

(McCutcheon, Dep. at 250)).

1246. Two HD Supply Regional Vice Presidents and two HD Supply District or Branch 

Managers each relayed to Mr. Michael Berry, a general manager of Star that they could 

not purchase Domestic Fittings from Star because of McWane’s Full Support Program 

and that they did not have the discretion to do so under the HD Supply corporate policy. 

One of those Regional Vice Presidents also indicated that he could not purchase 

Domestic Fittings from Star for a project in Arkansas because he could not be the 

reason that HD Supply lost its rebate for purchases from McWane. (CX 2532 (Berry, 

Dep. at 138-141)). Mr. Berry believed that the reason that HD Supply refused to 

purchase Domestic Fittings from Star for these and other projects, such as the Hughson 

Modesto WWTP, because of the HD Supply corporate policy to not purchase from Star. 

(CX 2532 (Berry, Dep. at 169-170)). 

1247. Star maintained and used a “domestic quote log” to track won and lost Domestic 

Fittings bids. (McCutcheon, Tr. 2312; CX 2294). Ms. Pam Garey of Star compiled the 

log on a regular basis at Mr. McCutcheon’s request, and used information provided by 

Star’s sales department. (McCutcheon, Tr. 2315).

1248. Star’s domestic quote log indicated that between September 22, 2009 and February 22, 

2010, Star lost about 25 Domestic Fittings jobs for which Star submitted a quote to HD 

Supply, but where HD Supply purchased from McWane or Sigma rather than Star. In 

the “status/update” field of the domestic quote log on some of these jobs are the 

following comments: “HD mandate letter,” “mandate letter,” “letter directing fitting 

purchases,” “Tyler-Sigma announcement,” or “HD will not buy from Star.” (CX 2294 

at 010-011, 013, 015, 017-019; McCutcheon, Tr. 2313 (explaining that “lost due to 

mandate letter” on the log refers to the fact that Star lost an HD order due to the 

McWane Full Support Program)).

1249. Star’s domestic quote log indicated that between September 22, 2009 and February 22, 

2010, Star lost many Domestic Fittings jobs for which Star submitted a quote to HD 

Supply where in the “status/update” field of the domestic quote log are the following 

comments: “lost due to delivery times,” “lost due to delivery requirement,” “lost, lead 

times were too long.” (CX 2294 at 012-014; see also McCutcheon, Tr. 2632-2634) 

(Star lost lots of Domestic Fittings jobs due to delay in delivery). 
185 

1250. Since September 2009, no one at McWane ever threatened to cut HD Supply off from 

Domestic Fittings, refused to sell or deliver Domestic Fittings to HD Supply, or refused 

to pay HD Supply rebates that it earned on Domestic Fittings. (Webb, Tr. 2800; RX 

673 (Webb, Dep. at 46-47)). 

1251. McWane’s Full Support Program made HD Supply less willing to do business with 

Star. (Webb, Tr. 2766-2767; CX 2514 (Webb, Dep. at 95)). 

c. HD Supply’s views on and purchases from Star

1252. HD Supply believed that Star did not have the capacity to service HD Supply’s needs 

for Domestic Fittings in the fall of 2009 because HD Supply believed that Star did not 

have a full line of Domestic Fittings to offer and it was important to HD Supply to be 

able to offer a full line of product to its customers. (Webb, Tr. 2788-2790). 

1253. HD Supply had concerns about Star’s ability to service Domestic Fittings in the fall of 

2009. (Webb, Tr. 2792). 

1254. HD Supply had concerns about Star’s use of various foundries, as opposed to use of one 

central foundry, to manufacture its Domestic Fittings in the fall of 2009. (Webb, Tr. 

2794-2795). 

1255. There were risks to HD Supply’s ability to service its own customers if HD Supply 

were to do business with Star in Domestic Fittings. (Webb, Tr. 2795-2796). 

1256. HD Supply views McWane as a known, full line Fittings supplier with a good track 

record. (RX 673 (Webb, Dep. at 123-125)). 

1257. HD Supply, the largest distributor in the industry, has purchased some amount of 

Domestic Fittings from Star regardless of McWane’s Full Support Program. (Webb, Tr. 

2798-2800; McCutcheon, Tr. 2591-2592). 

1258. HD Supply is Star’s largest customer. Star estimates that it has greater than a { }% 

share of HD Supply’s non-Domestic Fittings business. Star estimates that it has less 

than a { }% share of HD Supply’s Domestic Fittings business. (McCutcheon, Tr. 2651-

2652, in camera).

8. Full Support Program as it relates to Ferguson

a. Impact of Full Support Program on Ferguson

1259. Ferguson received notice of McWane’s Full Support Program from McWane on 

September 22, 2009. (Thees, Tr. 3086; CX 0506). 
186

1260. When Mr. William Thees, Vice President of the Waterworks Division at Ferguson, 

received notice of the Full Support Program, Ferguson’s concerns about the possibility 

of foregoing unpaid rebates or the potential to lose access to McWane’s Domestic 

Fittings were only secondary concerns. (Thees, Tr. 3086-3089). See F. 1271-1275 

(Ferguson’s primary concerns).

1261. When Mr. Thees received notice of McWane’s Full Support Program, he called his 

district managers to ensure that Ferguson communicated support for McWane’s 

Domestic Fittings by continuing to purchase Domestic Fittings from McWane and not 

purchasing Domestic Fittings from Star. To his knowledge, his district managers 

followed his instruction. (Thees, Tr. 3091-3092, 3095). 

1262. After McWane’s Full Support Program was announced, Star’s Mr. Berry had 

negotiations with Darryl Case and Phil Selby, who are Ferguson district managers, and 

Dan Warner, who is a Ferguson general manager, for the sale of Star’s Domestic 

Fittings to Ferguson. Mr. Berry of Star believed that there was a corporate edict that no 

Ferguson employees purchase Star Domestic Fittings unless McWane did not have the 

Domestic Fittings. (CX 2532 (Berry, Dep. at 131-133)). 

1263. In a Star sales person’s weekly report to Mr. Berry, the sales person noted that Star had 

been awarded a job to supply Domestic Fittings for a certain project, but that Ferguson 

cancelled that job after Ferguson issued its corporate policy notifying its employees that 

they should not purchase Star Domestic Fittings. (CX 2532 (Berry, Dep. at 164-165); 

CX 2288). 

1264. Star’s domestic quote log (F. 1247) indicated that between September 22, 2009 and 

February 22, 2010, Star lost numerous Domestic Fittings jobs for which Star submitted 

a quote to Ferguson, but where Ferguson purchased from McWane or Sigma rather than 

Star. In the “status/update” field of the domestic quote log on some of these jobs are 

comments including: “letter threatening to cut off if they use Star domestic,” “Ferguson 

will not buy domestic from Star currently,” and “All Ferguson are lost-they only get 

quotes from us for reference.” (CX 2294 at 013-018).

1265. Star’s domestic quote log indicated that between September 22, 2009 and February 22, 

2010, Star lost many Domestic Fittings job for which Star submitted a quote to 

Ferguson where in the “status/update” field of the domestic quote log are the following 

comments: “lost due to delivery requirements,” “lost ftgs due to delivery,” “cust. 

required immediate shipment,” and “lost due to lead time.” (CX 2294 at 007-013). 

1266. At the time Ferguson received notice of McWane’s Full Support Program, Ferguson 

was already planning to purchase all of its Domestic Fittings from McWane regardless 

of the Full Support Program. (Thees, Tr. 3108-3109).

1267. The Full Support Program did not prevent Ferguson from purchasing Domestic Fittings 

from Star. (Thees, Tr. 3109-3110).
187

1268. When Ferguson’s Mr. Thees received notice of McWane’s Full Support Program, he 

thought it was unlikely that McWane would withhold rebates from Ferguson and 

believed that the rebate terms and lead times stated in the Full Support Program could 

be negotiated. (Thees, Tr. 3110).

b. Ferguson’s views on and purchases from Star

1269. When Star began selling Domestic Fittings in 2009, Ferguson had already been 

purchasing Domestic Fittings from McWane for over twenty years. Ferguson viewed 

McWane as a good, reliable supplier of Domestic Fittings with whom Ferguson was 

comfortable. (Thees, Tr. 3101-3102).

1270. Ferguson has historically increased its purchases of McWane’s Fittings (and other 

products) in order to maximize its rebate under McWane’s rebate programs. (CX 2503 

(Thees, IHT at 139-141) (“Q. Is . . . this the rebate structure that you’re pointing to as 

preferable to the programs offered by Sigma or Star? A. Yes. Q. The share tier, the 50-

percent share and 55-percent share, do those incentives shape your purchasing activity 

in any meaningful way? A. Yes. Q. Do you on occasion direct the branches to 

maximize their purchases and fittings from Tyler in order to qualify for the next tier? 

A. Yes.”)).

1271. Star entering as an unknown in the Domestic Fittings market was Ferguson’s primary 

concern in determining whether to purchase Domestic Fittings from Star. (Thees, Tr. 

3096).

1272. Ferguson was reluctant to purchase Domestic Fittings from Star because Ferguson was 

concerned about Star’s ability to produce a complete line of Domestic Fittings without 

having their own manufacturing facility. Because Star was not using one central 

foundry, Ferguson was concerned that Star was not controlling the manufacturing 

process of its Domestic Fittings. (Thees, Tr. 3087, 3103).

1273. Ferguson was reluctant to purchase Domestic Fittings from Star because Ferguson was 

concerned that Star was using jobber facilities with extra capacity to produce Domestic 

Fittings for them, Star would not disclose to Ferguson which foundries it was using, and 

Ferguson was concerned that any of these domestic foundries could abandon Star, 

leaving Star unable to supply Ferguson with Domestic Fittings. (Thees, Tr. 3102-3103).

1274. At the time Star began producing Domestic Fittings, Star did not have the depth and 

breadth of inventory to supply Ferguson with all of Ferguson’s Domestic Fittings needs. 

(Thees, Tr. 3103-3104).

1275. Ferguson has had past business dealings with Star that put a strain on the relationship 

between the two companies. This strain was a leading component in Ferguson’s 

decision to not purchase Domestic Fittings from Star. (Thees, Tr. 3105-3107 

(discussing RX 255, a January 21, 2010 email from Mr. McCutcheon of Star to Mr. 
188 

Thees stating “It is obvious we dropped the ball the last couple years” and explaining 

that Star’s actions were a “breach of trust.”)).

1276. After McWane announced its Full Support Program, Star sold Domestic Fittings to 

Ferguson. (McCutcheon, Tr. 2591-2592; Thees, Tr. 3111-3112). 

1277. In 2011, Ferguson purchased hundreds of thousands of dollars’ worth, but less than a 

million dollars’ worth, of Domestic Fittings from Star. (Thees, Tr. 3112). 

1278. McWane has never refused to pay Ferguson a rebate it earned on Domestic Fittings 

purchased from McWane. (Thees, Tr. 3112). 

1279. McWane has never threatened not to sell Domestic Fittings to Ferguson. (Thees, Tr. 

3112-3113). 

1280. Ferguson is Star’s second largest customer. Star estimates that it has a { }% 

share of Ferguson’s non-Domestic Fittings business. Star estimates that it has less than

a { }% share of Ferguson’s Domestic Fittings business. (McCutcheon, Tr. 2652, in 

camera).

1281. According to records maintained by Ferguson, in the first four months of 2010, 

Ferguson purchased { }% of its Domestic Fittings from Star, while purchasing 

approximately { }% from McWane and { }% from Sigma. (CX 0502, in camera; 

CX 2503 (Thees, IHT at 146-147)). 

9. Full Support Program as it relates to U.S. Pipe 

a. U.S. Pipe’s purchasing history and reaction to ARRA 

1282. U.S. Pipe sells complete waterworks systems that include its ductile iron pipe packaged 

together with related products, including Fittings and accessories. Until April 2006, 

U.S. Pipe manufactured Domestic Fittings. (Morton, Tr. 2809-2812). 

1283. In 2008, U.S. Pipe’s primary source for non-Domestic Fittings was Sigma, with Star as 

its secondary Supplier. Currently, U.S. Pipe purchases non-Domestic Fittings primarily 

from Star, with Sigma as a secondary supplier. (Morton, Tr. 2819-2820). 

1284. After U.S. Pipe stopped manufacturing Fittings in April 2006 until 2010, U.S. Pipe’s 

sole source for Domestic Fittings was McWane. (Morton, Tr. 2810, 2818, 2820, 2857). 

1285. Following the passage of ARRA in 2009, U.S. Pipe needed to ensure that it had sources 

for Domestic Fittings. (Morton, Tr. 2826). 

1286. U.S. Pipe believed that it would benefit from having more than one supplier for 

Domestic Fittings because it wanted to, among other reasons, ensure supply and enjoy 

the benefits of competition. (Morton, Tr. 2826-2827). 
189

1287. U.S. Pipe began investigating small and medium Domestic Fittings sources other than 

McWane in early 2009. (Morton, Tr. 2825-2826).

1288. U.S. Pipe initially considered manufacturing its own Domestic Fittings in response to 

ARRA. U.S. Pipe stopped investigating that option in part because Sigma contacted it 

in June of 2009 and made a commitment to produce Domestic Fittings. (Morton, Tr. 

2876-2877). 

1289. The primary reason U.S Pipe decided not to manufacture its own Domestic Fittings in 

response to ARRA was that it would be cost prohibitive given ARRA’s “limited 

window.” (Morton, Tr. 2867-2877, 2876, 2888; RX 701 (Morton, Dep. at 47-49, 56-

57)).

1290. Sigma told U.S. Pipe in August 2009 that Sigma had no concrete plans to begin 

producing Domestic Fittings. (Rona, Tr. 1693-1694 ).

1291. In September 2009, U.S. Pipe and Star discussed the potential purchase by U.S. Pipe of 

Domestic Fittings from Star. (Morton, Tr. 2834-2835; CX 2215 at 001).

1292. On September 3, 2009, Mr. McCutcheon of Star sent an email to Mr. Thomas Morton, 

U.S. Pipe’s Vice President of purchasing, and others at U.S. Pipe, thanking them for 

meeting the day before, and setting forth a schedule for the availability of Star’s 

Domestic Fittings. (CX 2215 at 002-003; see also RX 207 (same schedule as sent to 

Ferguson in more legible form)).

1293. On September 15, 2009, Mr. Morton wrote an email to Ms. Susan Schepps of Star’s 

sales group stating: “We are definitely interested in pursuing the purchasing of our 

domestic requirements from Star and are looking forward to receiving the list of 

configurations that will be available.” (Morton, Tr. 2834-2835; CX 2215 at 001).

1294. On September 28, 2009, Mr. Morton met with Ms. Schepps in Birmingham, Alabama 

regarding U.S. Pipe’s interest in purchasing Domestic Fittings from Star. Ms. Schepps 

provided a detailed list of Domestic Fittings products that Star was committed to having 

available by the end of 2009. (Morton, Tr. 2835-2837; CX 1936).

1295. Star initially proposed to U.S. Pipe pricing for 3” to 12” in diameter Domestic Fittings 

that matched McWane’s Domestic Fittings multipliers. In response to U.S. Pipe’s 

statement to Star that it needed to incentivize U.S. Pipe to leave McWane, Ms. Schepps 

further committed to U.S. Pipe that Star would offer Domestic Fittings pricing 

significantly below McWane’s in exchange for a major portion of U.S. Pipe’s volume. 

(CX 1936 at 001; Morton, Tr. 2837-2838).
190

b. Impact of Full Support Program on U.S. Pipe

1296. After U.S. Pipe received notice of McWane’s September 22, 2009 Full Support 

Program, Stephen Gables of U.S. Pipe’s sales group forwarded the letter to 

Mr. Crawford, Mr. Morton, and U.S. Pipe’s President Ray Torok, noting as follows:

There was a lot of buzz last week about [McWane] preparing to “cut off” 

certain wholesale distributors if they were found to have purchased any 

STAR domestic product. These letters make that buzz more like the 

sound of a 757. 

(CX 2205 at 001; Morton, Tr. 2849).

1297. U.S. Pipe has never had a Fittings rebate program in place with McWane. (Morton, Tr. 

2849, 2862).

1298. On October 13, 2009, Mr. Morton met with Mr. Tatman in Birmingham, Alabama 

regarding how McWane wanted to conduct business with U.S. Pipe going forward. In 

that meeting, Mr. Tatman explained to Mr. Morton that McWane’s agreement with 

Sigma (F. 1540, 1571-1573) would not allow Sigma to supply U.S. Pipe with McWane 

manufactured Domestic Fittings and that U.S. Pipe would have to buy Domestic 

Fittings from McWane directly. (Morton, Tr. 2840-2842).

1299. In the October 13, 2009 meeting between Mr. Morton and Mr. Tatman (F. 1298), Mr. 

Tatman explained that U.S. Pipe would be required to purchase 100% of its domestic 

requirements from McWane, and not purchase Domestic Fittings from Star, unless 

McWane did not have the needed items or its lead times were too long. (Morton, Tr. 

2842-2845; see also CX 2203 at 002 (Morton meeting notes indicating “Tatman -

expect customers including USP to be loyal and purchase 100 percent of their 

requirements from [McWane]”)).

1300. In the October 13, 2009 meeting between Mr. Morton and Mr. Tatman, Mr. Tatman 

also explained that U.S. Pipe could not “cherry pick” “A” or “B” items, or high volume 

Domestic Fittings from Star, and expect McWane to supply the balance. (CX 2203 at 

002; Morton, Tr. 2845-2846). In notes Mr. Morton took of that meeting, Mr. Morton 

recorded: “if USP strays and purchases any of these fittings from Star, don’t come back 

to [McWane] and expect [McWane] to sell any of the AWWA 4” to 24” fittings to 

USP.” (CX 2203 at 002).

1301. Because U.S. Pipe needed access to a full line of Domestic Fittings, not just the “A” and 

“B” items initially being offered by Star, Mr. Morton’s recommendation to his boss 

after meeting with Mr. Tatman in October 2009 was to continue to look for alternative 

sources, but unless U.S. Pipe was convinced that those sources could provide 100% of 

U.S. Pipe’s requirements for Domestic Fittings, U.S. Pipe needed to take the 

notification from Mr. Tatman very seriously and buy its Domestic Fittings from 

McWane. (Morton, Tr. 2846, 2848).
191

1302. Mr. Morton instructed his purchasing manager not to purchase Domestic Fittings from 

Star unless McWane could not provide the needed Domestic Fittings. (Morton, Tr. 

2915-2916). 

1303. Around November 12 or 13, 2009, Mr. Morton and Stephen Gables of U.S. Pipe met 

with Mr. McCutcheon and Ms. Schepps of Star. At that meeting, U.S. Pipe conveyed to 

Star the message that U.S. Pipe received from McWane that if U.S. Pipe purchased any 

of its Domestic Fittings requirements from anyone other than McWane, then McWane 

would not sell U.S. Pipe any Domestic Fittings. (CX 2217 at 002; Morton, Tr. 2853-

2854).

1304. U.S. Pipe further conveyed to Star in the November 2009 meeting that “[w]e must have 

100% confidence in Star’s ability to deliver all of our domestic requirements” before 

moving away from McWane. (CX 2217 at 002; Morton, Tr. 2854-2855).

1305. With the exception of minor purchases falling within the limited exceptions to 

McWane’s Full Support Program (e.g., where McWane’s lead time to supply the 

requested Fitting was too long, or if McWane didn’t make a particular Fitting 

configuration), U.S. Pipe did not purchase significant amounts of Domestic Fittings 

from Star until September of 2010. (Morton, Tr. 2856-2859, 2915-2916).

c. U.S Pipe’s views on and purchases from Star

1306. Prior to the end of 2009, Star was not manufacturing many of the Fittings that U.S. Pipe 

required. (Morton, Tr. 2860, 2899-2901 (“Q. And then below is literally eight pages of 

single-spaced references to many, many domestic fittings that Star was anticipating 

producing; correct? A. Correct. . . . Q. And it’s true, sir, isn’t it, that many of the 

different item numbers listed on these eight pages were in fact not available by the end 

of 2009; correct? . . . A. I do not believe they were.)).

1307. Early in Star’s domestic development process, U.S. Pipe, had concerns about Star’s 

ability to provide a full line of Domestic Fittings. (Morton, Tr. 2892-2894 (certain 

Domestic Fittings, for example, the C153s up to 24 inches would not be available until 

as late as February 15, 2010 and other Domestic Fittings, for example, the DI full-body 

MJ fittings up to 24 inch would be available only “by project,” meaning that if U.S. 

Pipe had a requirement for that type of Fitting, U.S. Pipe would submit it, and Star

would provide U.S. Pipe with a lead time of up to 90 days)). 

1308. In 2009, U.S. Pipe was concerned that Star would not commit to putting the tooling in 

place in advance of getting a requirement for volume. (Morton, Tr. 2893-2894).

1309. From January 2010 to September 2010, U.S. Pipe purchased a minor number of 

Domestic Fittings from Star in instances where McWane could not provide the required 

fittings. (Morton, Tr. 2915-2916).
192

1310. In September 2010, U.S. Pipe was purchasing “a significant portion” of its Domestic 

Fittings from Star. (Morton, Tr. 2856-2857).

1311. In September 2010, U.S. Pipe “decided as an executive team that the risk of [McWane] 

not selling us [Domestic Fittings] even if [U.S. Pipe] bought from Star, given the 

announced FTC investigation, would be significantly less . . . . We believed that 

[McWane] would not refuse to sell us [Domestic F]ittings.” (Morton, Tr. 2857-2858; 

CX 2210 at 001 (“We also believe that with the current FTC investigation that it is 

unlikely that McWane will deny selling domestic fittings to USP.”)).

1312. McWane never cut off U.S. Pipe from sales of Domestic Fittings. (Morton, Tr. 2861-

2862).

10. Full Support Program as it relates to Groeniger

a. Impact of Full Support Program on Groeniger

1313. Prior to the Full Support Program, in September 2009, Groeniger gave Star Domestic 

Fittings business on “two sizeable projects” to “test[] to find out if Star could produce 

the domestic fittings.” (CX 2509 (Groeniger, IHT at 110); CX 2510 (Groeniger, Dep. at 

213-214)).

1314. Groeniger awarded the two projects (F. 1313) to Star for Domestic Fittings “[b]ecause 

they were more competitive.” Groeniger wanted another supplier of Domestic Fittings 

for “competitive pricing” and “better availability” and “better service.” (CX 2509 

(Groeniger, IHT at 111-112)).

1315. After McWane’s Full Support Program was announced, Groeniger was reluctant to 

purchase Domestic Fittings from Star “[b]ecause of the inherent threats of retaliation” 

from McWane. (CX 2510 (Groeniger, Dep. at 207) (“Q. Have you considered 

purchasing more [ductile] iron pipe fittings from Star on the domestic side? A. Yes. Q. 

And did you purchase more domestic [ductile] iron pipe fittings from Star? A. Probably 

not. Q. Why not? A. Because of the inherent threats of retaliation. Q. Who was 

threatening you? A. Tyler.”); CX 2509 (Groeniger, IHT at 116-118) (“Q. Sir, you 

testified just now I asked you why you haven’t purchased any more domestic fittings 

from Star and you responded, well, because of the potential retribution. Do you recall 

that? A. Yes. Q. Did you mean because of the potential retribution from Tyler? A. 

Yes.”)).

1316. In 2009, Groeniger needed access to McWane’s Domestic Fittings in order to service 

customers with McWane-only Domestic Fitting requirements. (CX 2510 (Groeniger, 

Dep. at 214-215) (“There are one or two districts that are big . . . [that have a] Tyler 

requirement, they didn’t approve Star domestic, they wouldn’t approve them. . . . So 

the realization is if we were going to be in that ballgame during that period of time 

when that was the biggest entity of anything going on in the Hayward region, and to 
193

support two of our major contractors in the area that were bidding work down there, we 

had to have Tyler. And Tyler knew that, it was pretty obvious.”)).

1317. Groeniger was concerned about “[b]eing shut out” from McWane if it purchased 

Domestic Fittings from Star. (CX 2509 (Groeniger, IHT at 119) (“Q. What’s your 

understanding of the possible consequences of purchasing domestic fittings from Star in 

terms of what Tyler might do? A. Being shut out.”)).

1318. Groeniger described the Full Support Program as “the hammer” that “could [a]ffect you 

price-wise and availability-wise” and could put Groeniger “theoretically out of 

business.” (CX 2509 (Groeniger, IHT at 142-143)).

1319. McWane never withheld rebates from Groeniger, even though Groeniger bought 

Domestic Fittings from Star. (RX 669 (Groeniger, Dep. at 99) (“Q. In the 2009 time 

frame after receiving [the Full Support Program] and later, did Tyler ever not pay you a 

rebate that you were due because you had a relationship with Star? A. I don’t think 

so.”)).

1320. McWane never refused to sell Domestic Fittings to Groeniger, even though Groeniger 

bought Domestic Fittings from Star. (RX 669 (Groeniger, Dep. at 99) (“Q. In the 2009 

time frame after receiving [the Full Support Program], Mr. Groeniger, did Tyler ever 

refuse to sell you something because you had a relationship with Star? A. Not to my 

knowledge.”)). See also RX 643 (Tatman, IHT at 197-198 (Groeniger was “using Star 

product. We talked to Mike the owner -- nice guy -- at a trade show, and Mike basically 

said, Look, we’re going to do what we have to do, and you guys do what you have to 

do. And we left it that way. We never -- we wanted them to support us. We made a 

little bit of rumbling to have them support us, but in the end, we kept selling Groeniger 

material.”) 

1321. McWane increased prices on Domestic Fittings it sold to Groeniger in 2010. (CX 2509 

(Groeniger, IHT at 143); CX 2510 (Groeniger, Dep. at 216)).

b. Groeniger’s views on and purchases from Star

1322. The two projects that Groeniger awarded to Star in September 2009 (F. 1313) “were 

difficult jobs,” but Star performed to Groeniger’s satisfaction. (CX 2509 (Groeniger, 

IHT at 110)).

1323. After McWane announced its Full Support Program, Mr. Berry of Star had at least three 

conversations with representatives of Groeniger, including Mike Groeniger, President 

of Groeniger. (CX 2532 (Berry, Dep. at 111-113)).

1324. After September 22, 2009, Star perceived that Groeniger had fears that it would not be 

able to purchase Domestic Fittings from McWane if Groeniger purchased Domestic 

Fittings from Star. As a result, Star pursued selling Domestic Fittings to Groeniger 

indirectly, through Griffin Pipe. (CX 2532 (Berry, Dep. at 110-114); RX 224). 
194

1325. In October 2009, Groeniger and Star negotiated a sale whereby Groeniger purchased 

Star’s Domestic Fittings indirectly through Griffin. (CX 2532 (Berry, Dep. at 114-

115)).

1326. In an internal email from Mr. Berry to Mr. McCutcheon and others at Star dated 

October 29, 2009, Mr. Berry reported: “All 24” fittings will be excluded on this 

[Groeniger] order, because of our delivery dates.” (RX 224; McCutcheon, Tr. 2625-

2626) (These fittings were excluded by Groeniger because Star couldn’t meet the 

delivery dates.).

1327. In the October 29, 2009 email (F. 1326), Mr. Berry also reported: “They [Groeniger] 

want this material brought into Sacramento, so they can will call. . . . They will commit 

all domestic/import business to us if we do so.” (RX 224; McCutcheon, Tr. 2625-2526)

(Groeniger was willing to buy from Star in October 2009).

1328. In a March 10, 2010 internal email to Mr. McCutcheon, Mr. Berry reported that 

Groeniger wanted to purchase Domestic Fittings from Star for another project, but had 

committed to McWane because of the Full Support Program. (CX 2532 (Berry, Dep. at 

163-164); CX 2288). 

1329. After October 2009, Groeniger did purchase Domestic Fittings from Star, but not 

frequently. (CX 2532 (Berry, Dep. at 114-115); see also McCutcheon, Tr. 2591-2594) 

(Groeniger purchased Domestic Fittings from Star following the issuance of McWane’s 

Rebate Policy.).

1330. In 2010, Groeniger would have given Star more of its Domestic Fittings business if 

McWane had not announced the September 2009 Full Support Program. (CX 2510 

(Groeniger, Dep. at 219) (“Q. So had Tyler not issued this letter in September 2009, you 

would have purchased 50 percent of your domestic fittings needs from Star? A. I would 

think we would have. Knowing personalities involved, knowing the history involved 

and the sales people that Star had currently in effect in the Central Valley coming out of 

Sacramento who were very astute to our needs and our capabilities, I think so, yeah.”)).

11. Full Support Program as it relates to WinWater

1331. Mr. Eddie Gibbs, vice president of vendor relations for WinWholesale, which does 

business as WinWater Works (“WinWater”) (F. 236), visited Star’s Houston, Texas 

facility on September 10, 2009. WinWater was potentially interested in purchasing 

Domestic Fittings from Star and wanted to access “how fast they were ramping up 

production, when product would be able to be shipped.” (CX 2545 (Gibbs, IHT at 41-

42)).

1332. On September 22, 2009, Mr. Gibbs received notice of McWane’s Full Support Program 

from Mr. Tatman. (CX 2167 at 001).
195

1333. On September 24, 2009, Mr. Gibbs emailed all the WinWater local companies 

(branches), Regional Vice Presidents, Area Coordinators and Area Leaders, forwarding 

McWane’s Full Support Program announcement. (CX 2166 at 001-002; CX 2546 

(Gibbs, Dep. at 72)).

1334. On November 2, 2009, Mr. Gibbs emailed Mr. Tatman stating: “This email will serve as 

our official acceptance of the terms of the [Full Support Program]. Any violation of this 

agreement that Tyler identifies will be brought to WinWholesale corporate’s . . . 

attention before any punitive action takes place against the local company.” (CX 2167 

at 001).

1335. On April 14, 2010, Mr. Gibbs emailed all the WinWater local companies, Regional 

Vice Presidents, Area Coordinators and Area Leaders, again forwarding McWane’s Full 

Support Program and stating: “It has come to my attention that I had failed to put out a 

specific notice concerning Star Pipe being given Not Approved status on their new 

line of [Domestic Fittings].” (CX 2166 at 001 (emphasis in original); CX 2546 (Gibbs, 

Dep. at 72)).

1336. Star was verbally notified of WinWholesale’s intention to place Star on its “not 

approved” list for Domestic Fittings in early December 2009 and received “written 

notice on February 5, 2010 in the form of our 2010 Preferred Vendor letter listing them 

as NOT APPROVED . . . .” (CX 2166 at 001 (emphasis in original); CX 2546 (Gibbs, 

Dep. at 72-73); see also RX 601 at 001 (internal McCutcheon email stating 

“WinWholesale VP, Eddie Gibbs sent letter to their people telling them that Star can 

not be a provider on Domestic fittings.”)).

1337. At WinWholesale, “any vendor that receives not approved status means that the local 

companies are not to buy from them under any circumstances unless they seek board 

approval.” (CX 2546 (Gibbs, Dep. at 73)).

1338. Although it placed Star on the “Not Approved” vendor list for Domestic Fittings, 

WinWholesale instructed the WinWater companies that they could purchase Domestic 

Fittings from Star “if, because of Tyler’s inability to perform, they have to buy domestic 

fittings from Star.” (CX 2166 at 002).

1339. WinWholesale was not concerned about the overall WinWater locations being able to 

get product from Tyler/Union, if an individual WinWater local company purchased 

Domestic Fittings from Star. (CX 2546 (Gibbs, Dep. at 82-83); RX 705 (Gibbs, Dep. at 

35-36) (Gibbs did not interpret the Full Support Policy as McWane telling 

WinWholesale that they would not sell Domestic Fittings to WinWholesale)).

1340. WinWholesale had some concerns that if the WinWater local companies, “on an 

ongoing basis,” purchased Domestic Fittings from Star, they would lose their rebate and 

“be placed at the back of the line when [they] place [their] Tyler/Union orders.” 

(CX 2546 (Gibbs, Dep. at 82-83)).
196

1341. In 2010, WinWholesale had concerns about Star’s reliability as a domestic Fittings 

supplier that were independent of McWane’s Full Support Program. WinWholesale 

was concerned about whether Star had the capacity and quality, whether Star could ship 

the product, and whether the product would be consistent. (RX 705 (Gibbs, Dep. at 87-

88, 93-94) (“[I]f Tyler/Union had never written this letter, I would still have the same 

issues that I’ve stated.”)). 

1342. Mr. Gibbs put Star on the “not approved” list not because of the rebate element of the 

Full Support Program, but because WinWholesale had no background on where Star 

was making its product, because Star had not produced any test data or anything that 

would lead WinWholesale to believe that Star was as credible a vendor on Domestic 

Fittings as it was on imported Fittings, or that they could do a good, consistent job 

making Domestic Fittings using seven foundries. (RX 705 (Gibbs, Dep. at 85-88)). 

1343. After McWane announced its Full Support Program, Star sold Domestic Fittings to 

WinWater. (McCutcheon, Tr. 2591-2592).

1344. McWane has never withheld a rebate to WinWholesale even though WinWholesale 

bought Domestic Fittings from Star. (RX 705 (Gibbs, Dep. at 35-39); RX 638 

(McCullough, IHT at 173)).

1345. McWane has never cut off or threatened to cut off WinWholesale from purchasing 

Domestic Fittings from McWane even though WinWholesale bought Domestic Fittings 

from Star. (RX 705 (Gibbs, Dep. at 36)).

12. Full Support Program as it relates to TDG

a. TDG Vendor Committee negotiations on rebates

1346. The Distribution Group (“TDG”) collectively negotiates various terms, including 

rebates, with suppliers, which it refers to as vendors, on behalf of its 32 independent 

Distributors. Vendors pay earned rebates to TDG and TDG then distributes those 

rebates back to the member Distributors in proportion to their purchases. TDG 

members must purchase certain percentages of their purchases from TDG vendors, but 

members are not required to purchase products from any specific vendor just because 

the vendor has a rebate program with TDG. F. 244-249.

1347. McWane had a rebate program in place with TDG for Domestic Fittings in 2007, 2008, 

and 2009. (CX 2494 (R. Fairbanks, Dep. at 107-108), in camera; CX 1361 at 004, 018, 

034, in camera). In negotiating terms with TDG, McWane did not include a rebate for 

Domestic Fittings in its 2010 proposal. (CX 2494 (R. Fairbanks, Dep. at 107-108), in 

camera; CX 1366 at 002).

1348. The TDG Vendor Committee wanted to have a rebate proposal on Domestic Fittings 

from McWane. (CX 2494 (R. Fairbanks, Dep. at 107), in camera). 
197 

1349. In September of 2009, at the annual TDG Vendor Committee negotiations, McWane 

explained that its new rebate program for TDG required TDG to police its members’ 

Domestic Fittings purchases to ensure that all locations for all TDG Distributors 

purchase all of their Domestic Fittings from McWane. Unless all TDG members 

purchased their Domestic Fittings solely from McWane, McWane would cut off all 

TDG members’ access to McWane’s Domestic Fittings. (Sheley, Tr. 3408-3409). 

1350. TDG did not accept McWane’s September 2009 Domestic Fittings rebate proposal, in 

part, because TDG refused to police its members’ Domestic Fittings purchases. 

(Sheley, Tr. 3409; CX 2494 (R. Fairbanks, Dep. at 113-114), in camera).

1351. In 2010, TDG selected Star, but not McWane, as a TDG Domestic Fittings vendor 

partner. Selecting Star as a vendor partner did not require TDG members to buy any 

Domestic Fittings from Star, nor did it preclude TDG members from buying Domestic 

Fittings from McWane. However, by selecting Star as a vendor partner, TDG did give 

its members an incentive to buy from Star. (RX 694 (Bhutada, Dep. at 155; CX 2494 

(R. Fairbanks, Dep. at 17-18, 33, 37-38), in camera; RX 675 (Sheley, Dep. at 68); RX 

652 (Johnson, Dep. at 35-36)).

1352. The 2010 proposal that Star offered to give all members of TDG, and that TDG 

accepted, was a { }% rebate on all purchases of Domestic fittings 3” to 48”

mechanical joint, push-on, and flanged. (RX 601 at 025-027, in camera; McCutcheon, 

Tr. 2646-2647, in camera).

b. Various TDG members’ views and purchases from Star

1353. C.I. Thornburg, in 2010, purchased 95-98% of its Domestic Fittings from Tyler Union 

or Sigma, which sold Tyler Union Domestic Fittings. Towards the end of 2010, C.I. 

Thornburg started purchasing small amounts of Star Domestic Fittings that would “not 

get McWane’s attention.” (CX 2489 (Morrison, IHT at 64-67)). C.I. Thornburg would 

have been interested in purchasing “A” item Fittings from Star and then purchasing odd 

ball Fittings from McWane and would have given a third to a half of all its domestic 

business to Star, but for McWane’s Full Support Program. (CX 2489 (Morrison, IHT at 

83-86)). 

1354. Western Waterworks’ Mr. Jim McDowell, a sales manager and now part owner of 

Western Waterworks, informed Mr. Berry of Star in the course of its negotiations with 

Star that Western Waterworks was willing to purchase Domestic Fittings from Star only 

if the transaction could “fly under the radar,” i.e., that McWane would not find out 

about the sales. (CX 0011; CX 2532 (Berry, Dep. at 124)). 

1355. HD Fowler Company informed Mr. Berry of Star in January 2010 that it would not 

purchase Star’s Domestic Fittings because it was afraid that McWane would not sell 

Domestic Fittings to HD Fowler if HD Fowler purchased Domestic Fittings from Star. 

(CX 2532 (Berry, Dep. at 134)). Star submitted bids for Domestic Fittings to HD 

Fowler for a project called “Shelton WWTP.” HD Fowler purchased large Domestic 
198

Fittings from Star for this project because, at the time, Star could deliver the product 

more quickly than McWane. (CX 2532 (Berry, Dep. at 168)). However, for the same 

project, HD Fowler was unable to purchase smaller Domestic Fittings from Star 

because McWane could supply the product. (CX 2532 (Berry, Dep. at 167-169) (also 

testifying that HD Fowler did not purchase Domestic Fittings from Star for its Coeur 

d’Alene, Idaho WWTP project; its Pendleton, Oregon WWTP project, or its HD ValleyBrownsville project); CX 2288).

1356. Hayes Pipe informed Star that it would not purchase Domestic Fittings from Star 

because of McWane’s Full Support Program. (CX 2537 (McCutcheon, IHT (Vol. 1) at 

163), in camera).

13. Full Support Program as it relates to Illinois Meter

a. Impact of Full Support Program on Illinois Meter

1357. Illinois Meter, a member of TDG, was informed independently of TDG, by Mr. Tatman, 

Mr. Jansen, and Ms. Jennifer Heys of McWane, that the terms of McWane’s Full 

Support Program applied to Illinois Meter. Mr. Tatman and Mr. Jansen told Mr. Sheley 

of Illinois Meter that if Illinois Meter purchased Domestic Fittings from anyone but 

McWane, it “would lose the right to buy [McWane’s Domestic Fittings] completely” 

and would also lose its rebate from its purchases of non-domestic Fittings. Mr. Tatman 

and Mr. Jansen told Mr. Sheley this in September 2009 at a TDG meeting, and Mr. 

Jansen reiterated the message in January of 2010 at the TDG meeting in Dallas. 

(Sheley, Tr. 3407-3411).

1358. Losing access to McWane’s Domestic Fittings was a more serious consequence to 

Illinois Meter than losing McWane’s rebates because Illinois Meter needs to have 

access to a full line of Domestic Fittings in certain locations and McWane carries a 

complete line. (Sheley, Tr. 3412).

b. Illinois Meter’s views on and purchases from Star

1359. Illinois Meter still would have purchased 90-plus percent of its Domestic Fittings from 

McWane, whether the Full Support Program existed or not. (RX 674 (Sheley, IHT at 

90) (“Q: Had McWane not implemented this policy, would you have purchased 

domestic Fittings from Star? A: Probably not. I’d probably still be buying 90-plus 

percent of all my stuff from [McWane].”)). 

1360. In 2009, when Star first announced its Domestic Fittings product line, McWane’s Full 

Support Program did not affect Illinois Meter’s decision to not buy Domestic Fittings 

from Star. (RX 675 (Sheley, Dep. at 162-163) (“Q. But you also said that 

unequivocally you would not be purchasing Star’s domestic? A. In 2009, that’s correct. 

Q. So McWane’s -- or Tyler’s rebate policy had no effect whatsoever on your decision? 

A. At that point when they first come out with it, no, it did not.”)).
199

1361. Illinois Meter had a negative experience with Star’s reliability as a supplier when Star 

first entered the joint restraint business, and was not willing to give Star any Domestic 

Fittings orders in early 2010 until Star had demonstrated it had sufficient inventory to 

meet Illinois Meter’s needs. (Sheley, Tr. 3448-3451).

1362. Illinois Meter did not think that Star could supply Illinois Meter with a complete line in 

early 2010 and Illinois Meter was not willing to risk coming up short on a project if it 

could not turn to McWane for Domestic Fittings because of McWane’s Full Support 

Program. In the summer of 2010, Illinois Meter was interested in purchasing Domestic 

Fittings from Star for an ARRA-funded water treatment plant in Winchester, Illinois, 

and for a Domestic specification job in Macomb, Illinois. Both projects required 

smaller-diameter Domestic Fittings that Illinois Meter believed Star could provide. 

(Sheley, Tr. 3413, 3417-3418).

1363. Illinois Meter did purchase a half dozen Domestic Fittings from Star to evaluate their 

quality and because it had a couple of engineers who wanted to see what they looked 

like. Although Illinois Meter found the quality of Star’s Domestic Fittings to be very 

good, Illinois Meter does not buy or supply them. (Sheley, Tr. 3419-3420). 

1364. Illinois Meter does not buy Domestic Fittings from Star and has been unwilling to stock 

or ship Star’s Domestic Fittings because it does not want to lose the ability to buy 

McWane’s Domestic Fittings. (Sheley, Tr. 3407-3408).

14. Serampore Industries Private decides not to enter the Domestic

Fittings market

1365. Serampore Industries Private (“SIP”) supplies Fittings in the United States that it 

imports from China, India, and Mexico, and currently sells to approximately 50 to 60 

Distributors in approximately 35 states. (CX 2522 (Agarwal, Dep. at 6, 22, 29, 38), in 

camera; CX 2521 (Agarwal, IHT at 13), in camera). 

1366. From May 2009 to September 2009, SIP evaluated entering the Domestic Fittings 

market. (CX 2522 (Agarwal, Dep. at 56, 107, in camera)).

1367. When Star announced in June 2009 that it would begin producing Domestic Fittings, 

SIP began to look more closely at entering the Domestic Fittings market because SIP 

did not want to be left behind as a supplier without a Domestic Fittings offering. SIP 

was concerned that Star could increase its import sales if it had a domestic offering also. 

(CX 2522 (Agarwal, Dep. at 93-94), in camera; CX 2521 (Agarwal, IHT at 158-159), in 

camera).

1368. SIP interviewed foundries and customers as SIP evaluated whether to enter the 

Domestic Fittings market. (RX 681 (Agarwal, Dep. at 56-57), in camera).
200 

1369. Customers, including HD Supply, informed SIP that they wanted another source of 

Domestic Fittings, because McWane was currently the only source, and it was better to 

have multiple choices. (CX 2522 (Agarwal, Dep. at 111-112), in camera).

1370. SIP had a preexisting relationship with U.S. Foundry. These companies had bought and 

sold municipal castings and other products from one another for 30 years. In 2009, U.S. 

Foundry had the equipment and excess capacity to produce for SIP Domestic Fittings 

up to 12 inches, but did not have the immediate capacity to produce Domestic Fittings 

up to 24 inches. (CX 2522 (Agarwal, Dep. at 101-103), in camera).

1371. U.S. Foundry quoted SIP approximately { } cents per pound for the production of 

Domestic Fittings castings under 12”. Mr. Bharat Agarwal, SIP’s Vice President for 

business development, believed that this production cost would allow SIP to meet its 

margin requirements. (CX 2522 (Agarwal, Dep. at 103), in camera; see also CX 0004 

at 001, in camera).

1372. SIP never entered into any contract or agreement with U.S. Foundry to produce fittings 

for SIP. (CX 2522 (Agarwal, Dep. at 62-63), in camera). 

1373. SIP estimated that manufacturing Domestic Fittings would require a 5 to 10 million

dollar investment. SIP had sufficient internal financing available to cover its estimated 

costs to enter the Domestic Fittings market. (CX 2522 (Agarwal, Dep. at 60, 100-101), 

in camera). 

1374. To be viable in the Domestic Fittings market, SIP estimated that it needed a minimum 

gross margin of approximately { }%, and a minimum net margin of about { 

}%. SIP believed it could meet those margin targets if SIP entered the Domestic 

Fittings market. (CX 2522 (Agarwal, Dep. at 95-96), in camera).

1375. While SIP had a spare set of Fitting patterns up to 24” in diameter in China available for 

producing Domestic Fittings, it was not known whether those patterns could be used for 

domestic production and even if they could be used, substantial rework would have 

been required. (CX 2521 (Agarwal, IHT at 152-154), in camera; CX 2522 (Agarwal, 

Dep. at 97), in camera).

1376. SIP viewed the implications of McWane’s Full Support Program as significant to the 

Distributors that were SIP’s potential Domestic Fittings customers. SIP believed that 

McWane’s policy would deter Distributors from purchasing Domestic Fittings from SIP 

because forgoing Domestic Fittings shipments from McWane for up to 12 weeks, and 

delaying an End User’s project, were significant penalties. (CX 2521 (Agarwal, IHT at 

199-200), in camera). 

1377. Given SIP’s evaluation of the consequences to Distributors of McWane’s Full Support 

Program, SIP believed it would have difficulty acquiring Domestic Fittings Distributor 

customers if it entered the market with something less than a full line of Domestic 

Fittings, and it therefore decided not to enter. (CX 2521 (Agarwal, IHT at 200-202), in 
201

camera (“[I]f it’s a domestic job, then you need to have a domestic fitting, and if [the 

Distributor is] buying from either SIP or Star and you only had A fittings let’s say and 

even if it was a B fitting, even if it was an A fitting which was 24 inches in diameter, 

. . . so the distributor would be stuck for twelve weeks. They could not live with 

that.”)).

1378. SIP made its determination to not enter the Domestic Fittings market for numerous 

business reasons, including the fact that ARRA presented a very short time window, 

that SIP believed it needed to offer a full line of fittings to be considered a viable 

supplier, that it had taken SIP three years to develop a full line of imported fittings, the 

uncertainties of success, the high cost of developing patterns for a full line of fittings, 

the fact that there was not one single foundry available to make all the fittings, the 

vagaries of long term supply given the changing capacity of jobber foundries, the 5 to 

10 million dollar estimated cost to develop the line, the need/cost to develop drilling 

and machining capabilities, the uncertainties of the ARRA demand, and the 

uncertainties about the post-ARRA domestic demand. (CX 2522 (Agarwal, Dep. at 56-

68), in camera).

1379. McWane’s Full Support Program was not the only reason SIP decided not to enter the 

Domestic Fittings market. (CX 2522 (Agarwal, Dep. at 68), in camera (“I would like to 

clarify something at this point: I think in my previous testimony there has been a place 

where I mentioned that this letter was the reason why we stopped exploration of 

domestic production. I’d like to further clarify: This letter wasn’t the only cause. All 

these other reasons which we just went through in this deposition all added up and 

summed up to that.”)).

1380. While McWane’s Full Support Program was not the only reason SIP decided not to 

enter the Domestic Fittings market, it was a significant reason. (CX 2522 (Agarwal, 

Dep. at 67-68), in camera (“That was the straw that broke the camel’s back.”)).

15. Impact of McWane’s Full Support Program on Star

a. Star’s perception of McWane’s Full Support Program

1381. After McWane announced its Full Support Program on September 22, 2009, Star 

observed a decline in the number of requests for quotes that resulted in customer orders 

after McWane’s announcement. (Bhargava, Tr. 2958-2960, in camera). 

1382. After McWane announced its Full Support Program on September 22, 2009, numerous 

Distributors, including HD Supply, Ferguson, Winwater, and independent customers 

pulled their requests for quotes from Star. (CX 2535 (Bhutada, Dep. at 80, 87-88), in 

camera; see also F. 1242 (HD Supply); F. 1263 (Ferguson)).

1383. Star believed that HD Supply would not buy Domestic Fittings from Star because of 

McWane’s Full Support Program. (McCutcheon, Tr. 2329-2330; see also CX 2537 

(McCutcheon, IHT (Vol. 1) at 168-169); see also Bhargava, Tr. 2976-2977, in camera).
202

1384. Star believed that Ferguson would not purchase Domestic Fittings from Star because of 

McWane’s Full Support Program. (McCutcheon, Tr. 2326-2327; Bhargava, Tr. 2976-

2977, in camera).

1385. Star believed that Distributor Custom Fab would not purchase Star’s Domestic Fittings 

because of McWane’s Full Support Program. (McCutcheon, Tr. 2321-2324). 

1386. Star believed that Distributor Dana Kepner would not purchase Star’s Domestic Fittings 

because of McWane’s Full Support Program. (McCutcheon, Tr. 2324-2326).

1387. Star believed that Distributor Prescott Supply, PJP would not purchase Star’s Domestic 

Fittings because of McWane’s Full Support Program. (McCutcheon, Tr. 2326).

1388. Star believed that Distributors Illinois Meter and C.I. Thornburg would not purchase 

Domestic Fittings from Star because of McWane’s Full Support Program. 

(McCutcheon, Tr. 2327-2328 (Mr. McCutcheon received reports from his sales force 

that Distributors Illinois Meter and C.I. Thornburg would not purchase Domestic

Fittings from Star because of McWane’s Full Support Program)).

1389. Star believed that Distributor WinWater would not buy Domestic Fittings from Star 

because of McWane’s Full Support Program. (McCutcheon, Tr. 2329 (Eddie Gibbs, an 

employee at Distributor WinWater, informed Mr. McCutcheon that WinWater could not 

buy Domestic Fittings from Star because of McWane’s Full Support Program, and that 

he had instructed his employees not to purchase Domestic Fittings from Star)).

1390. Star believed that Distributors Western Water Works and Wells Supply would not 

purchase Domestic Fittings from Star because of McWane’s Full Support Program. 

(McCutcheon, Tr. 2330-2333 (Star Territory Manager John Ristine informed his 

superiors that Distributor Western Water Works reported that if it purchased Star’s 

Domestic Fittings, McWane would cut them off, and that Distributor Wells Supply 

reported that if it purchased Star’s Domestic Fittings McWane would either double the 

sell price for shorts or cut them off altogether); CX 0011).

1391. Even when Star offered a rebate program to TDG Distributors that was more generous 

than McWane’s rebate program (F. 1347), some TDG members were still unwilling to 

buy from Star. F. 1353-1356; 1364. Star believed that these Distributors were 

unwilling to purchase from Star because of the “all-or-nothing domestic fitting policy 

from McWane.” (McCutcheon, Tr. 2648-2650, in camera).

1392. Star believed that McWane’s Full Support Program made Distributors less willing to 

take the risk of purchasing Domestic Fittings from Star. As Mr. Berry, Star’s Regional 

Sales Manager explained in his deposition:

Every distributor -- every customer distributor that we talked to or that I 

talked to after this letter came out, wanted to talk about it. And they all 

wanted to know what I had seen in other parts of the countr[y] or if any 

distributors were purchasing our domestic. And if so, had Tyler 
203 

punished them. And -- and I had not seen anywhere or heard from 

anybody that -- that there was any repercussions for people buying our 

fittings anywhere from anybody. But the fear that something could 

happen in -- in areas that actually buy domestic fittings, customers are 

afraid. They don’t want to take the chance of the what-if.

(CX 2532 (Berry, Dep. at 144)). 

1393. Star would not have been able to compensate Distributors for taking the risk of buying 

Domestic Fittings from Star created by McWane’s Full Support Program. (CX 2513 

(Webb, IHT at 204-205) (“not enough money . . . that could be offered” to compensate 

HD Supply for assuming the risk of dealing with Star under the terms of McWane’s 

Full Support Program); CX 2491 (Johnson, IHT at 66-67) (“Q. [I]s there any way that 

Star could have compensated you for taking that risk on before July of 2010? A. I don’t 

think so. I mean you can have all the guaranties from a money standpoint, but you’re 

still not servicing your customer. And the long-term fallout from that could have been 

much more than a million dollars.”); see also CX 2537 (McCutcheon, IHT (Vol. 1) at 

196) (Star’s cost structure would not allow it to cut prices further); CX 2537 

(McCutcheon, IHT (Vol. 1) at 156-157) (Star could not compensate a Distributor for 

purchasing any Domestic Fittings from Star by charging the Distributor a lower price, 

because a Distributor would not accept the risk of losing access to any supply from 

McWane)).

1394. Star estimated that, absent McWane’s Full Support Program, Star would have { 

} million dollars in sales of Domestic Fittings in 2010, potentially rising to an annual 

rate of { } million dollars in 2011. (CX 2537 (McCutcheon, IHT (Vol. 1) at 

110), in camera; CX 2535 (Bhutada, Dep. at 79), in camera;).

1395. Star’s estimated lost sales due to McWane’s Full Support Program (F. 1394) were based 

in part on 10 million dollars in requests for quotes for Domestic Fittings that Star 

received between June 15, 2009, when it announced its Domestic Fittings entry, and 

September 22, 2009, when McWane announced its Full Support Program. The requests 

for quotes included requests by HD Supply, Ferguson, Mainline, WinWater, and a 

variety of independent customers. (CX 2535 (Bhutada, Dep. at 79-80, 87), in camera).

b. Star did not generate enough sales to purchase its own 

 foundry

1396. Star had approximately { } million dollars in sales of Domestic Fittings in 2010. 

(CX 1801-A at 002, in camera; CX 2535 (Bhutada, Dep. at 68), in camera; RX 698 

(McCutcheon, Dep. at 136)). 

1397. Star had approximately { } million dollars in sales of Domestic Fittings in 2011. 

(CX 1801-A at 003, in camera; CX 2535 (Bhutada, Dep. at 68), in camera; RX 698 

(McCutcheon, Dep. at 137)). 
204 

1398. Star had approximately { } million dollars in sales of Domestic Fittings in the first 

quarter of 2012. (CX 1801-A at 004, in camera; CX 2535 (Bhutada, Dep. at 68-69), in 

camera).

1399. { 

 }. 

(Bhargava, Tr. 2970-1972, in camera; CX 1801-A at 002, in camera; CX 1801-A at 

003, in camera).

1400. In 2009, Star estimated that it needed between { } million dollars in sales of 

Domestic Fittings to justify purchasing its own domestic foundry. Since then, Star has 

estimated that it needs between { } million dollars to justify purchasing its own 

foundry. (Bhargava, Tr. 2961-2963, in camera).

1401. Star was not able to generate a sufficient volume of sales of Domestic Fittings to realize 

cost efficiencies or justify operating a foundry of its own. (CX 2535 (Bhutada, Dep. at 

84-85), in camera; CX 2537 (McCutcheon, IHT (Vol. 1) at 117-121, 179-181), in 

camera).

c. Star considered purchasing a dedicated foundry for Domestic

 Fittings production

1402. Star had been considering the purchase of its own domestic foundry in the spring of 

2009. (CX 2533 (Bhargava, Dep. at 26), in camera).

1403. While there were no foundries for sale in 2009 that were equipped exclusively to 

produce Fittings, there were foundries available that could be converted for the 

exclusive production of Fittings. (CX 2535 (Bhutada, Dep. at 83-84), in camera).

1404. In September or October 2009, Star began considering the potential acquisition of the 

{ } foundry and entered into acquisition discussions with them. 

(Bhargava, Tr. 2956, in camera; CX 2535 (Bhutada, Dep. at 136-137), in camera; 

CX 2533 (Bhargava, Dep. at 67), in camera).

1405. Star estimated it would have to make an investment of approximately { } million 

dollars to acquire the { } foundry and to convert it to be a dedicated 

foundry for Fittings. (CX 2535 (Bhutada, Dep. at 138-139), in camera).

1406. Star had the financial reserves and borrowing ability to acquire the { }

foundry and to convert it to a dedicated foundry for Fittings. (CX 2535 (Bhutada, Dep. 

at 138-139), in camera).

1407. When evaluating whether to acquire the { } foundry, Star considered 

whether it would have enough volume to support owning its own foundry. (Bhargava, 

Tr. 2959, in camera).
205 

1408. McWane’s announcement of its Full Support Program on September 22, 2009 impacted 

Star’s decision to not move forward with the potential acquisition of { 

} foundry. (CX 2535 (Bhutada, Dep. at 137), in camera; Bhargava, Tr. 2957-

2958, 3020, in camera).

d. Star’s costs of contracting with other foundries

1409. Rather than owning its own foundry, Star contracted with six foundries to produce raw 

castings for Domestic Fittings for Star, which Star then shipped to its Houston facility 

to perform the finishing process. (Bhargava, Tr. 2937-2940, 2999-3000, in camera; 

McCutcheon, Tr. 2618-2620; RX 572). 

1410. Independent foundries are more costly and less efficient than a foundry owned and 

operated by Star would be because using independent foundries involves: less 

specialized and less efficient equipment; smaller batch sizes; additional logistical costs 

associated with inventory, finishing, and freight; less control over inventory levels; less 

ability to expedite orders; and inefficiencies resulting from dealing with multiple 

foundries. (Bhargava, Tr. 2946-2949, 2974, in camera; CX 2535 (Bhutada, Dep. at 74, 

126-127), in camera).

1411. Shipping costs from the six foundries utilized by Star (F. 1409) to Houston alone added

approximately { }% to the cost of Star’s Domestic Fittings. (CX 2534 (Bhutada, IHT at 

91), in camera). 

1412. Independent foundries have higher labor costs because a dedicated foundry would have 

a labor force trained in producing Fittings and would therefore be more efficient than a 

non-specialized labor force at an independent foundry. (CX 2535 (Bhutada, Dep. at 

129), in camera).

1413. Fittings produced at independent foundries are more costly than a Star operated foundry 

would be because the independent foundries add an estimated { }% markup or 

profit margin for the production of Fittings sold to Star. (Bhargava, Tr. 2950, 2954, in 

camera; CX 2535 (Bhutada, Dep. at 74, 91, 128, 131), in camera)).

1414. Star’s relationship with the independent foundries it uses for the production of Domestic 

Fittings is on a purchase order basis for the specific Fittings it seeks to have made. 

(CX 2533 (Bhargava, Dep. at 47), in camera).

1415. Star does not have long term, guaranteed price or minimum quantity supply contracts 

with the independent foundries utilized by Star for Domestic Fittings. (Bhargava, Tr. 

2935-2936, in camera; CX 2533 (Bhargava, Dep. at 55), in camera).

 

1416. In 2010, Star had to stop using two of the six independent foundries that it had initially 

used for producing Domestic Fittings. In one case, the foundry lost its excess capacity 

and told Star that the foundry would stop filling orders within 30 days. In another case, 
206 

the foundry determined that it had underestimated its costs of production, and asked for 

a price increase. (Bhargava, Tr. 2933, 2954-2955, in camera). 

1417. As the overall economy has improved, particularly in 2012, the independent foundries 

that Star used for producing Domestic Fittings have become increasingly busy with 

work for other customers, which has impacted Star’s Domestic Fittings delivery 

schedules and increased its costs. (Bhargava, Tr. 2941-2942, in camera; e.g., CX 2375 

at 001, 002, in camera).

1418. Star has little option but to accept surcharge and price increases from its independent 

foundries because there are fewer foundries with capacity that are willing to undertake 

the learning curve required to make Star’s Domestic Fittings. (Bhargava, Tr. 2942-

2945, in camera (“[W]hen they come to you with these demands, in the foundry 

environment you really don’t have a choice . . . .”); CX 2375 at 001, in camera). 

1419. Star estimated that the cost of producing Domestic Fittings at its own foundry would be 

{ }% lower than the cost of contracting with independent foundries. (Bhargava, 

Tr. 2963, 2995, in camera; see also CX 2535 (Bhutada, Dep. at 127), in camera; 

McCutcheon, Tr. 2343). 

1420. Star estimated that if it owned its own foundry that produced its Domestic Fittings, Star 

could have lowered its Domestic Fittings prices by { }%. (McCutcheon, Tr. 2343, 

2348-2350; Bhargava, Tr. 2963-2964, in camera). 

K. McWane and Sigma Enter into a Master Distribution Agreement6

1. Sigma’s initial reaction to ARRA 

1421. After ARRA was enacted, Sigma believed that it needed to offer Domestic Fittings. 

(CX 2524 (Box, Dep. at 22, 61, 82); CX 2530 (Rona, Dep. at 39-40, 239-240); Rona, 

Tr. 1457 (Sigma believed demand for Domestic Fittings would increase as a result of 

ARRA and that Sigma therefore “needed to explore the option of being in a position to 

produce fittings for oursel[ves]”); CX 0219 at 001 (Rona writing in May 2009 that the 

ARRA Buy American requirement was an “extremely real threat” and that “[i]t is quite 

clear now that we need a credible plan”); RX 688 (Rona, IHT at 176-178 (After ARRA, 

there was “an immediate demand for fittings.”)). 

1422. Sigma knew that ARRA was a short term stimulus program. (RX 687 (Pais, Dep. at 

182) (“It was intended as a shovel-ready stimulus. So there was a lot of emphasis on 

now. In fact, rightly speaking, we should have had that [domestic] capability on day 

 

6 As defined infra F. 1540, on September 17, 2009, McWane entered into an OEM Distribution Agreement 

(commonly referred to as the “Master Distribution Agreement,” or “MDA”) for McWane to supply Domestic 

Fittings to Sigma for resale. (CX 1194 (signed MDA)).
207

one for us to have any capacity to supply the projects. So we were already behind the 

eight ball on day one, because it was just a ball from the blue.”)). 

1423. Sigma considered two potential avenues for entering the Domestic Fittings market: (1) 

purchasing “private label” Domestic Fittings from McWane (i.e., Fittings manufactured 

by McWane for Sigma and branded as Sigma); or (2) producing Domestic Fittings 

using the “virtual manufacturing” model that it used for imported Fittings (i.e., 

contracting with independent, domestic foundries). (Rona, Tr. 1630; Pais, Tr. 1752; 

CX 2528 (Pais, Dep. at 184-185)).

1424. Sigma pursued both private label and virtual manufacturing options for entering the 

Domestic Fittings market simultaneously because “the conditions were just so urgent.” 

(Pais, Tr. 1758; CX 0231; CX 2530 (Rona, Dep. at 211-212)).

2. Sigma’s initial discussions with McWane

1425. In the first half of 2009, Mr. Pais of Sigma asked McWane’s CEO, Mr. Page, to supply 

Sigma with “private label” Domestic Fittings. (See CX 1225 at 003, 004; Pais, Tr. 

1744-1745).

1426. In the spring of 2009, Mr. Pais told Mr. Page and Mr. McCullough of McWane that 

Sigma would pursue its own Domestic Production if McWane did not supply it with 

Domestic Fittings. (CX 2527 (Pais, IHT at 100-101, 105-106)).

1427. Mr. McCullough met with Mr. Pais in April 2009. After that meeting, Mr. McCullough 

believed that Sigma had the ability to enter into domestic production of fittings, had 

access to the needed capital, and “also had the contacts and the talent [as] they’ve been 

importing for a very long time.” (CX 2479 (McCullough, Dep. at 76-78).

1428. As of April 25, 2009, McWane had decided not to sell Domestic Fittings to Sigma. 

(CX 1289; CX 2479 (McCullough, Dep. at 76)).

1429. In a May 4, 2009 memorandum to the Sigma Board, Mr. Pais reported that Sigma had 

initially received approval from McWane’s top management to a “private label” 

Domestic Fittings supply agreement, but that the McWane operational/sales team 

persuaded McWane’s management not to do this. (CX 0214 at 001, 004; see also Pais, 

Tr. 1744-1745; CX 0908 (April 9, 2009 email from Mr. Page to Mr. Pais stating that 

“after significant internal discussion,” McWane’s Fittings team had “decided not to sell 

Sigma private label product from our domestic foundries”)).

1430. After being initially turned down, Sigma’s Mr. Pais traveled to two separate meetings 

with top McWane executives in an effort to convince them to offer private label Fittings 

to Sigma. Mr. Pais spoke with Mr. McCullough in Iowa on April 28, 2009, and with 

Mr. Page in Birmingham, Alabama on May 1, 2009. (Pais, Tr. 1756-1757, 2035; 

CX 0209 at 001, 004; CX 0728; CX 0314).
208

3. McWane’s initial response to Sigma

1431. In May 2009, Mr. Tatman suggested that continued exploration of a limited Domestic 

Fittings supply arrangement with Sigma may be worthwhile, informing Mr. Page in a 

May 18, 2009 email that “we could [still] continue to creatively explore whether or not 

there could be a healthy relationship structure established between McWane, Sigma and 

ACIPCO.” (CX 0456 at 001).

1432. Mr. McCullough, Mr. Walton, and Mr. Tatman scheduled an internal McWane meeting 

on May 26, 2009 to discuss “supplying Domestic product to our competitors.” 

(CX 0067 at 001).

1433. In preparation for that meeting, on or about May 26, 2009, Mr. Tatman circulated a 

memorandum (“May 26, 2009 memorandum”) containing the notes he jotted down as 

discussion points to weigh the advantages and disadvantages of supplying Domestic 

Fittings to Sigma (“May 26, 2009 memorandum”). (CX 0067 at 003; Tatman, Tr. 621, 

623).

1434. In his May 26, 2009 memorandum, Mr. Tatman included as a discussion point that if 

McWane choose not to sell Domestic Fittings to Sigma, McWane would “[r]etain the 

full margin for Domestic product within McWane.” (CX 0067 at 003; Tatman, Tr. 621, 

623).

1435. In his May 26, 2009 memorandum, Mr. Tatman estimated that Sigma would need a 

20% discount from McWane’s published prices to be “viable,” i.e., to be able to resell 

the Fittings profitably. (CX 0067 at 004; Tatman, Tr. 624-626 (referring to the 

estimates as “back of the napkin”)).

1436. The 20% minimum discount required by Sigma that Mr. Tatman estimated in his May 

26, 2009 memorandum included matching McWane’s 8% rebate, 2% payment terms, 

and 4% on freight, to arrive at a total of 14% with zero absorption of any operating 

expenses. (CX 0067 at 004; Tatman, Tr. 632-633).

1437. In his May 26, 2009 memorandum, Mr. Tatman also estimated that the “break even” 

point for McWane selling Domestic Fittings to Sigma would be a 12% discount from 

published prices, i.e., McWane would earn the same profits selling Domestic Fittings to 

Sigma at a 12% discount as it would from selling at full price to Distributors in light of 

freight and Distributor rebate savings. (CX 0067 at 004; Tatman, Tr. 624-626, 634-636 

(referring to the estimations as “back of the napkin”)).

1438. Using Mr. Tatman’s estimations (F. 1437), for McWane to sell to Sigma at greater than 

a 12% discount from published prices, McWane would be losing money. (Tatman, Tr. 

624-626).

1439. In his May 26, 2009 memorandum, Mr. Tatman also noted as a conversation topic that 

one reason for McWane to sell Domestic Fittings to Sigma was to “eliminate the 
209

probability” that Sigma would secure another domestic source option. (CX 0067 at 

003; CX 2479 (McCullough, Dep. at 86-87)). 

1440. Mr. Tatman’s May 26, 2009 memorandum contained the following discussion points in 

conclusion: McWane’s decision to sell Domestic Fittings to Sigma “probably comes 

down to two factors:

1. How legitimate of a risk is there with a competitor successfully 

introducing a Domestic product line?

2. Do we believe that in the bigger picture, supporting competitors with 

Domestic product would result in a healthier industry on the nonDomestic side of the business?”

(CX 0067 at 002, 004; Tatman, Tr. 627-629).

1441. On May 29, 2009, in a follow up email to the May 26, 2009 memorandum, Mr. Tatman 

provided to Mr. McCullough a list of “all the potential reasons to not sell domestic 

product to Sigma.” Among the reasons for not selling Domestic Fittings to Sigma, Mr. 

Tatman’s May 29, 2009 email listed:

• Loss of margin because “any incremental margin $ retained by 

Sigma would be incremental margin $ lost by McWane”;

• Loss of business growth opportunities as ARRA and Domestic 

Fittings sales could be a “foot in the door” to regain former 

customers;

• Upsetting McWane’s most loyal customers, particularly if they lost 

an ARRA-funded job to a competitor who obtained Domestic 

Product from Sigma;

• The possible erosion of blended Fittings sales as Distributors placed 

import Fittings orders to fill the truck for a Domestic Fittings order 

with Sigma; and

• Losing the ability to leverage its position in Domestic Fittings to 

benefit its other business lines, including non-Domestic Fittings.

(Tatman, Tr. 634; CX 0070 at 001-002 (emphasis in original) (also noting other reasons, 

such as losing McWane’s identity as “the Domestic supplier,” and placement of 

Domestic Fittings in regional yards could backfire if McWane has less responsive 

service); Tatman, Tr. 635-637; CX 2479 (McCullough, Dep. at 98-99); CX 1209 

(McCullough February 2009 email suggesting need to “leverage our domestic position” 

to require Distributors to acquire non-Domestic Fittings from McWane)).
210

1442. In Mr. McCullough’s view:

[U]ltimately [McWane’s] decision [of whether to sell Domestic Fittings 

to SIGMA] was SIGMA has the ability to get into domestic made 

manufacturing of waterworks fittings, just as Star did. If we had the 

choice between their not being in it and us selling them, or them being in 

it and us not selling them, that ultimately, we made the decision it’s 

under our best interest to sell them.

(CX 2479 (McCullough, Dep. at 104-105)).

1443. On June 5, 2009, McWane made its initial offer to sell Domestic Fittings to Sigma at 

5% off McWane’s published prices (“June 5, 2009 offer”). (CX 1434; CX 0225 at 003; 

Rona, Tr. 1490; Pais, Tr. 1760-1761). 

1444. Sigma was not satisfied with McWane’s June 5, 2009 offer, as it would not allow Sigma 

enough margin to cover operating costs. (CX 0909; CX 2531 (Rybacki, Dep. at 149-

150) (“5 percent wouldn’t even cover the freight, let alone handling; and not only would 

we not make money, we would lose money; and we couldn’t afford to lose money for 

two years on a deal. It was a terrible deal.”); Pais, Tr. 1760-1761 (describing offer as 

“nominal” because it did not provide Sigma the opportunity to make any margin off the 

resale of Domestic Fittings); Rona, Tr. 1492, 1489-1490).

1445. Sigma did not accept McWane’s June 5, 2009 offer. (Pais, Tr. 1761).

4. Sigma’s efforts to enter the Domestic Fittings market

1446. In early 2009, Sigma pursued the virtual manufacturing option for producing Domestic 

Fittings by forming a Sigma Domestic Production (“SDP”) plan and assembling a team 

of executives responsible for investigating and exploring the possibility of Sigma 

producing Fittings domestically. (Rona, Tr. 1457, 1470).

1447. The SDP team, consisting of Mr. Pais, Mr. Bhattacharji, Mr. Rona, Mr. Box, and Mr. 

Ramanathan, investigated the possibility of Sigma entering the Domestic Fittings 

market by producing fittings through independent, domestic foundries and evaluated the 

costs, foundry capabilities, and time it would take for Sigma to produce Domestic 

Fittings in response to ARRA. (Rona, Tr. 1462-1463; Pais, Tr. 1751-1752). 

1448. In a May 4, 2009 memorandum to the Sigma Board, Mr. Pais described the ARRA 

“Buy-American” provision and declared that “it behooves SIGMA to review the 

feasibility of producing a line of ‘domestic’ Fittings, to meet this growing need, in order 

to reassure our customer base and retain their loyalty and their business at the current 

levels.” (CX 0214 at 001-002, 005; Pais, Tr. 1751-1752).
211

1449. Sigma spent between $50,000 and $75,000 investigating domestic production options. 

(CX 2529 (Rona, IHT at 142-143); CX 0958 at 001 (request to establish accounting 

mechanism for Sigma’s SDP expenses)).

1450. Sigma investigated all aspects of the processing steps necessary to make Fittings, from 

beginning to end: casting, machining, transportation, and finishing. (CX 2524 (Box, 

Dep. at 28) (describing how Sigma “looked at all aspects of the processing steps 

necessary from the beginning to the end; casting, machining, transportation, 

finishing.”)).

1451. Sigma had personnel who could supervise a virtual manufacturing operation for 

Domestic Fittings such as Stuart Box, who had extensive experience in United States 

foundry work and Fittings manufacturing before joining Sigma, and Gopi Ramanathan, 

who also had extensive foundry experience. (CX 2530 (Rona, Dep. at 213-214); Rona, 

Tr. 1469-1470).

1452. Sigma’s SDP team considered using factories and independent foundries to produce 

Domestic Fittings based on Sigma’s drawings and tooling, similar to Sigma’s existing 

methods of producing Fittings overseas. Sigma contemplated doing the finishing, or 

lining and painting, of its Domestic Fittings itself. (Rona, Tr. 1469-1470; CX 2524 

(Box, Dep. at 41)).

1453. By May 20, 2009, Mr. Pais asked the SDP team to prepare a project plan, including 

economical, logistical, and financial plans, and including the cost of production. (Pais, 

Tr. 1759; CX 0307 at 001).

1454. On or about June 5, 2009, Mr. Box summarized the results of SDP planning meetings 

held on June 3 and 4, 2009, which included detailed action plans for identification of 

top Fittings, foundries, molding machines, cost modeling, testing of lost foam 

production technology, and visits to potential foundry partners. (CX 0963 at 001; Rona, 

Tr. 1482-1486 (Sigma identified top Fittings for production, identified and visited 

foundries, identified machinery, prepared to produce a sample Fitting for the AWWA 

show, and purchased equipment)).

1455. In an update by Mr. Pais to Sigma’s Board after Sigma had rejected McWane’s June 5, 

2009 offer, Mr. Pais wrote: “We now need to go all out and implement a SDP plan -

replicating SIGMA’s ‘virtual manufacturing’ model working with a collection of 

domestic foundries who have ample idle capacity, to produce the range of Fittings, just 

as we do thru a collection of facilities overseas.” (CX 1997 at 001, 008, in camera).

1456. As of June 5, 2009, Sigma identified over 50 potential foundries in the United States as 

potential sources of domestic production capacity. (CX 2524 (Box, Dep. at 27-28); 

CX 0963 at 001; CX 0964 at 001-002).

1457. By June 18, 2009, Sigma’s SDP team was working on obtaining patterns for producing 

Domestic Fittings from Metalfit, and had placed orders for foam patterns and other 
212

equipment, such as cope and drag patterns, flasks and vibration tables, to be used in 

Domestic Fittings production. (Rona, Tr. 1507-1511; CX 0978 at 002).

1458. By June 18, 2009, Sigma was arranging foundry site visits by Mr. Rona. (Rona, Tr. 

1507-1508, 1511-1512; CX 0978 at 002).

1459. Mr. Rona visited at least five different domestic foundries as a part of Sigma’s 

investigation of the production of Domestic Fittings: Pryor Foundry, Quality Foundry, 

Eureka Foundry, and two foundries in eastern Pennsylvania. (Rona, Tr. 1508-1509).

1460. Sigma purchased two large flasks for large Domestic Fittings production trials. (Rona, 

Tr. 1485-1486; CX 0963 at 001).

1461. By the time of the June 2009 AWWA conference, Sigma had produced two large 

sample Domestic Fittings at the Eureka Foundry in Tennessee, using patterns supplied 

by Metalfit. (Rona, Tr. 1480, 1485-1486; Pais, Tr. 2173-2175 (describing the Fittings 

as trial runs, i.e., not commercially ready)).

1462. U.S. Pipe and ACIPCO, two important OEM customers that owned foundries and had 

expertise casting fittings domestically, were working cooperatively with Sigma to help 

Sigma set up domestic production. (CX 2527 (Pais, IHT at 140)).

1463. As of July 11, 2009, Sigma was still pursuing its SDP plan to produce Domestic 

Fittings, although it was proceeding more “deliberately and thoughtfully” because 

Sigma was finding the plan more and more difficult to implement. (CX 1505 at 001; 

Pais, Tr. 1780-1781; Rona, Tr. 1538).

1464. On August 11, 2009, Sigma received a quote from Metalfit for the production of tooling 

to be used in Sigma’s Domestic Fittings production. (CX 0257 at 001; Rona, Tr. 1593-

1594).

1465. As of mid-2009, Sigma had no domestic foundries, no contracts with existing domestic 

foundries, no core boxes, no machining facilities, and no finishing facilities or contracts 

for coating, painting, and lining, for Domestic Fittings. (Pais, Tr. 2173-2175; Rona, Tr. 

1672-1673).

1466. In the summer of 2009, “[t]here were no really good options. The SDP plans were a not 

very discrete or quantifiable effort. It was -- we were at the early stages.” (Pais, Tr. 

1761-1762). 

1467. In August 2009, Sigma informed its customer, U.S. Pipe: “To date Sigma has not made 

any concrete plans to either invest in all the required tooling or not invest at all.” (CX 

0258 at 002; Rona, Tr. 1693-1694).

1468. Sigma believed it needed to be able to offer around 730 different types of Domestic 

Fittings and that it needed a minimum of 450 core patterns to produce those 730 types 

of Fittings. (Rona, Tr. 1671-1674).
213

1469. Sigma contemplated beginning Domestic Fittings production incrementally, increasing 

the number of Fittings available each month. (Rona, Tr. 1555-1556).

1470. In September 2009, Sigma had very few of the patterns it needed for making Fittings in 

the United States. (Rona, Tr. 1674-1675; Brakefield, Tr. 1417-1418).

1471. In September 2009, Sigma did not have any contracts with any pattern shops to build 

the patterns it would need to produce Fittings in the United States. (Rona, Tr. 1674-

1675).

1472. In September 2009, Sigma did not have any contracts with any domestic foundries to 

produce Fittings in the United States. (Rona, Tr. 1672-1673).

1473. In September 2009, Sigma did not have a viable domestic production option. (Pais, Tr. 

1799).

1474. In a September 9, 2009 report to the Sigma Board, Mr. Pais stated: 

For Fittings, the range of sizes and complexities of the line items 

required even at a certain select level is rather huge and along with the 

additional processing required for machining, coating and packing etc. 

the entire project was found to be too overwhelming and cumbersome, 

calling for a sizable Capital Expenditure in the range of $6M to $8M as 

per the initial estimates. The likely sales volume we could garner from 

our [Buy American] capability was uncertain at best and far less than 

what we had originally feared. But most importantly, in the end, the 

time it would have taken for us to come on line and our inability to 

service our customers with the [Buy American] requirements over the 

next 12 months and of course the huge [capital expenditures], made us 

wish for an alternate viable option and as such, we responded when 

McWane too revived our dialog to accommodate us as a Master 

Distributor with better terms. 

(CX 1022 at 003).

1475. If Sigma had started producing Domestic Fittings in September of 2009, Sigma could 

not have sold its first Domestic Fittings until some time between February and May 

2010. (Rona, Tr. 1676-1677).

1476. Sigma would have required lead time of at least 18 to 24 months to begin production of 

a full range of Fittings, and approximately 6 to 8 months to produce even one Domestic 

Fitting. (Rona, Tr. 1673).

1477. Sigma recognized that the time window for selling Domestic Fittings into ARRA 

funded projects was a short time window. (Rona, Tr. 1671). See also Pais, Tr. 1800-
214 

1801 (“This is a very difficult time when the customers are looking to Sigma to come 

up with . . . a so-called domestic option from a company which had no domestic 

capability, and it was only mandated because the U.S. government forced it down to us 

overnight.”). 

1478. The SDP team modeled the costs of producing Domestic Fittings using estimates of key 

variables, including the size of the Domestic-only market, production costs (based on 

quotes from numerous domestic foundries), and market prices, and arrived at estimated 

gross margins for the various size categories of Fittings. (CX 2529 (Rona, IHT at 22-

23); Rona, Tr. 1522-1523, 1533-1537; CX 0237 at 001, 002). 

1479. Sigma estimated that it could develop the tooling required for the full line of 

approximately 700 Domestic Fittings items for approximately $3 to $5 million. (Rona, 

Tr. 1517; CX 2530 (Rona, Dep. at 214-215) (“[T]he bulk of all the capital expenditure 

would be in actual tooling, so the budget of three to five million likely covered just 

tooling and equipment related to manufacturing the fittings and foundries.”); see also 

CX 0258 at 002 (Sigma letter to U.S. Pipe stating, our estimates for conventional 

tooling would run in excess of 6 million dollars)). 

1480. Sigma’s estimates for its costs to enter the Domestic Fittings market were between 

about 5 and 10 million dollars. (RX 0163 at 007; CX 2531 (Rybacki, Dep. at 138-139) 

(estimating a full line of Fittings would cost between 10 to 12 million dollars); CX 2523 

(Bhattacharji, Dep. at 63-64) (“it would take between $5 and $10 million to have a 

domestic fitting supply chain.”); CX 1997 at 008, in camera (June 5, 2009 

memorandum from Mr. Pais informing the Sigma Board that “[w]e expect the total 

investment in a SDP capability to be about $5M.”); CX 2523 (Bhattacharji, Dep. at 194) 

($5 million for SDP was “a placeholder for the board.”); CX 1022 at 003 (September 9, 

2009 presentation to the Sigma Board stating the capital expenditure was in the range of 

6 to 8 million dollars)).

5. Sigma’s financial position in 2009 

1481. Sigma’s financial condition in the second half of 2008 was very poor. (RX 687 (Pais, 

Dep. at 153-154) (“2008 was a tale of two halves, if you will. The first half was 

respectable. And the second half was very poor, because most of the problems we 

faced from the poor market and the increasing costs and the reduced lower prices, all 

coalesced into the second half, and especially the last quarter. So the year as a whole 

was off, compared to plan and compared to ‘07. Q. When you say the year as a whole 

was off, what do you mean by the year was off compared to plan and compared to ‘07? 

A. In terms of the profitability.”)). 

1482. Sigma had a loss of { } million dollars in 2008. (Pais, Tr. 2193, in camera).

1483. Throughout 2009, Sigma was in a “precarious position overall in financial terms.” 

(Pais, Tr. 1760). 
215 

1484. In a May 5, 2009 Market Review update, Mr. Pais warned that Sigma was in a “grave” 

financial situation, pointing out that the market “update can be deemed to be definitely 

and mostly bleak.” (Pais, Tr. 2163-2164; CX 214 at 002). 

1485. In 2009, Sigma was “in survival mode” because its sales were down { } million 

dollars and its EBITDA was { }. (Rybacki, Tr. 3672,

in camera).

1486. Sigma’s 2009 year-end financial information, which was discussed at a Board meeting, 

described 2009 as an “extremely challenging” year for Sigma. Sigma’s financial 

condition in 2009 was “horrendous” in part because of the collapse of municipal 

spending and the lowest residential construction rates since World War II. (RX 242 at 

003, in camera; Rybacki, Tr. 3663-3664, in camera).

1487. As a result of the “very, very difficult” financial environment it faced in 2009, Sigma 

was forced to lay off employees, cut salaries and benefits for employees who remained, 

and cut numerous other expenses. (Rybacki, Tr. 3670-3671, in camera). 

1488. Sigma had a very large amount of debt at the end of 2008, and even breached some of 

its bank covenants in 2009. (Pais, Tr. 2195-2196, in camera; Rybacki, Tr. 3730, in 

camera).

1489. In 2009, a significant portion of Sigma’s substantial debt was unsecured and carried 

high interest rates. (Rybacki, Tr. 3672 in camera).

1490. Sigma’s long-term debt was approximately { } million dollars at the end of 2008, 

which it reduced to approximately { } million dollars at the end of 2009. (Pais, Tr. 

2195-2196, 2206-2207, in camera; CX 1749 at 004, in camera). 

1491. Sigma’s paying down of debt (F. 1490) was mostly a by-product of reduction of 

inventories. (Pais, Tr. 2207, in camera). 

1492. In 2009, Sigma’s lead bank for loans was PNC Bank. Sigma had a long-term revolving 

credit loan with PNC Bank of { } million dollars at the end of 2008, which it paid 

down to { } million dollars at the end of 2009. (Pais, Tr. 2211, in camera; CX 1749 

at 014, in camera). 

1493. In 2009, Sigma had extremely high interest rate loans with Ares Capital, an unsecured 

lender, who attended Sigma’s quarterly Board of Director meetings. (Pais, Tr. 2153-

2154, Rybacki, Tr. 3672, in camera; CX 2523 (Bhattacharji, Dep. at 198-200); CX 

1749 at 015, in camera). 

1494. Ares Capital held { } million dollars of Sigma’s debt, which constituted roughly 20% 

of Sigma’s total debt at the end of 2008 and 27% at the end of 2009, when Sigma had 

reduced its first-lien debt. (CX 1740 at 015, in camera). The interest rate on the second 

lien term loan was { }%. (Pais, Tr. 2208-2209, in camera).
216 

1495. In April 2009, Sigma negotiated amendments to the financial covenants applicable to a 

second long-term debt facility it had entered into in 2007. (Pais, Tr. 2211, in camera; 

CX 1749 at 015, in camera; CX 2523 (Bhattacharji, Dep. at 169-171); CX 1998 at 002 

(Sigma April 2009 Board minutes)). 

1496. In June 2009, Mr. Pais issued an update to Sigma’s Board of Directors outlining his 

“SOS” plan to save Sigma. In that update, Mr. Pais notes the decline of about { }

percent in earnings level in 2008 and that Sigma stood to lose another { } percent in 

2009; that Sigma will barely be able to meet its second quarter 2009 covenants; that the 

second quarter 2009 results were “marginal at best,” which “may cause a lot of concern 

to all, especially the banks, as we would be unable to assure them of the future 

performance trends.” (Pais, Tr. 2199-2203, in camera; RX 163 at 002-003, in camera). 

1497. In Mr. Pais’ June 2009 update to Sigma’s Board, Mr. Pais reviewed Sigma’s bank 

covenants and wrote, “as unthinkable and unpleasant it may be, it’s amply evident that 

without a major infusion of additional equity, ‘internal measures alone’ will NOT allow 

us to function in any semblance of normalcy and clear focus.” Mr. Pais listed two 

measures, lease buybacks of real estate holdings and a special effort to reduce inventory 

through aggressive sales, to pay down Sigma’s debt. (Pais, Tr. 2202-2203, in camera; 

RX 163 at 005) (emphasis in original). 

1498. In July 2009, Sigma “came to the conclusion that it [Sigma Domestic production] would 

be a tough investment but something that we had to make if this is the only option that 

we would go ahead with.” (CX 2527 (Pais, IHT at 158); CX 0240 (July 11, 2009 SDP 

Domestic Fittings budget); Pais, Tr. 1762-1765 (discussing CX 0240); CX 0246 (July 

20, 2009 SDP Domestic Fittings budget)). 

1499. Capital expenditure limits imposed by Sigma’s lenders in 2009 were extremely low. 

(Rybacki, Tr. 3670, in camera).

1500. The Frontenac Group, a private equity firm, which purchased a 60% ownership interest 

in Sigma in 2007, was the largest shareholder of Sigma in 2009. (F. 54; Pais, Tr. 2149). 

1501. Frontenac and the shareholders said at Sigma’s July 2009 Board meeting that Sigma did 

not have the capability to invest in Domestic Fittings production and that Frontenac 

would not have provided the finances for Sigma’s domestic production plan. (Pais, Tr. 

2222, in camera).

1502. On July 27, 2009, following the July 15, 2009 Sigma Board meeting, Walter Florence, a 

Frontenac managing director and a member of Sigma’s Board of Directors (F. 55), sent 

an email to Sigma management regarding strategy for upcoming lender meetings. In 

this email, he noted that Sigma’s liquidity was fine, that it had recently received an 

injection of capital from investors and shareholders, and that these investors and 

shareholders were prepared to invest $7.5 million more to fund the SDP program and 

strategic business additions, which will enhance credit quality and help Sigma grow and 

build equity value. (CX 0099 at 001, 006-007). 
217 

1503. Sigma’s lenders never authorized it to invest in becoming a domestic Fittings supplier, 

and Sigma lacked sufficient funds to invest in such an operation on its own. (Pais, Tr. 

2184). 

1504. At the same time as it was considering entering production of Domestic Fittings in 

2009, Sigma attempted to become a supplier of domestic pipe restraints, a product 

distinct from Fittings which required less initial investment. (Rybacki, Tr. 3672-3673,

in camera; Pais, Tr. 1781-1782, 2184-2186). 

1505. To enter domestic production of pipe restraints, Sigma acquired a portion of The 

Unique Company in the first quarter of 2010 for approximately { } million dollars. 

(Pais, Tr. 2211-2212, in camera). 

1506. Domestic production of pipe restraints is a much simpler, smaller and less expensive 

venture with a much smaller range of product than Domestic Fittings and thus was an 

easier market for Sigma to try to enter. (Pais, Tr. 1781-1782, 2184-2186, 2212, in 

camera). 

1507. Mr. Rybacki described Sigma’s domestic restraints project as “a disaster for us because 

we were very unsuccessful at it.” (Rybacki, Tr. 3672-3673, in camera).

1508. Mr. Rybacki believed that it was inadvisable for Sigma to attempt to become a domestic 

Fittings supplier in 2009, because “we proved it with the domestic restraint [effort] that 

we weren’t real good at it.” (Rybacki, Tr. 3677). 

6. Renewed negotiations between McWane and Sigma 

1509. After Sigma rejected McWane’s June 5, 2009 offer (F. 1445), in mid-July 2009, 

Mr. Pais reported that he had directly informed McWane’s Mr. Page of Sigma’s plans to 

develop its own Domestic Fittings capability. (CX 1018 at 001) (July 13, 2009 email 

from Mr. Pais to Mr. McGivern explaining that Mr. Pais’ negotiations included “My 

own with the CEO announcing our ‘SDP’ plans . . . ”)).

1510. Mr. Rona of Sigma told Mr. Tatman in mid-July 2009 that “Sigma’s preference is to 

work something out with McWane but we are committed and have the financial backing 

to move forward either way.” (CX 0568 at 003; Tatman, Tr. 760-761; CX 2530 (Rona, 

Dep. at 218-220)). 

1511. McWane viewed Sigma’s entry into the Domestic Fittings market to be more likely 

after Star announced its intended entry at the June 15, 2009 AWWA conference. 

(CX 0076 at 008 (“Sigma is now in a position where they will feel the need to 

react. . . . Rybacki said at AWWA their program would announce[] in 4 weeks”); 

CX 2479 (McCullough, Dep. at 103-104) (explaining that McWane believed Sigma 

would announce entry plans within four weeks of AWWA)). 
218

1512. In evaluating whether to enter into the MDA with Sigma, Mr. Tatman believed that 

Sigma was in a “much better position” to develop its own Domestic Fittings capability 

than Star, in part because of Sigma’s existing OEM relationships (with ACIPCO and 

U.S. Pipe) and Sigma’s access to financial backing. (CX 0067 at 003; Tatman, Tr. 618-

619).

1513. McWane believed that Sigma wanted to enter the Domestic Fittings market either 

through developing their own sourcing options or through a purchasing arrangement 

with McWane. (Respondent’s Response to RFA at ¶ 34 (McWane “believed Sigma 

wished to obtain access to domestically-manufactured fittings after ARRA’s enactment, 

either by manufacturing, through sourcing, or pursuant to a purchasing arrangement 

with McWane”); (CX 1179 at 002) (Tatman’s October 2009 Q&A document circulated 

to McWane’s sales force stating: “in the absence of the MDA with TylerUnion, Sigma 

was going to develop their own domestic sourcing options to the extent they could”)).

1514. The likelihood of Sigma contracting with independent, domestic foundries to produce 

Domestic Fittings using the “virtual manufacturing” model that it used for imported 

Fittings was part of the discussion within McWane as it considered whether to sell 

Domestic Fittings to Sigma. (CX 2485 (Walton, Dep. at 71-72); CX 0329 at 001 

(McWane email stating that Mr. Tatman’s main intent in discussion with Mr. Rona of 

Sigma was “to flush out where SIGMA is in their process of securing Domestic 

production sources”)).

1515. In a June 24, 2009 internal McWane email, Mr. McCullough asked for Mr. Tatman’s 

opinion on Sigma’s likely reaction to Star’s announced entry into the Domestic Fittings 

market:

Sigma’s reaction to [Star’s entry] and their future positioning, develop 

their own line as Star does? Align with McWane,? Establish buy/sell 

relationship with Star that is better than our last offer?

(CX 0074 at 002).

1516. Mr. Tatman believed that there was a “probability” that Sigma would enter the 

Domestic Fittings market through developing its own sourcing options because Sigma

communicated that intention to McWane. (CX 2483 (Tatman, IHT at 175) (“[Y]ou’ve 

got SIGMA coming in saying that they’re going to do something, and it’s a little bit of 

chest-beating. . . . [Sigma] say[s] that they’re coming in. We don’t know if they’re

really doing it. So it’s a probability. Is what they’re saying true? Are they going to 

execute on that? Yes or no, I don’t know.”)).

1517. Mr. Tatman noted on July 27, 2009, “the correct decision really depends upon whether 

on their own Sigma truly does have the resolve and financial backing to make a long 

term strategic commitment to being a supplier of domestic products.” (CX 0465 at 

010).
219

1518. In a June 29, 2009 brainstorming slide to spark discussion within McWane, Mr. Tatman 

noted:

If [Sigma is] truly committed to make the investment level required to be 

a viable competitor regardless of our actions, then producing for [Sigma] 

is probably of greater financial benefit to our business than having them 

source elsewhere.

(CX 0076 at 008 (“Tatman June 29, 2009 strategy presentation”)).

1519. Mr. Tatman’s June 29, 2009 strategy presentation included the remarks: “[t]he only 

reason for [Sigma] not to pursue [Domestic entry] is if they feel McWane’s response 

will make Star’s or their programs un-successful which may cause them to hold off 

making any heavy investments[.]” (CX 0076 at 008).

1520. On July 13, 2009, Mr. Pais informed Sigma’s senior management that he believed 

McWane would be motivated to enter an agreement with Sigma to avoid having Sigma 

add new capacity to the Domestic Fittings market:

[T]he high profile publicity by Star as to their domestic plans and our 

own (low key) plans may have finally convinced [McWane] that addition 

of new capacity isn’t good for them or the industry . . . It’s wait and see 

. . . one step at a time, chess play . . . .”

(CX 1018 at 001; Pais, Tr. 1774 (“[I]t was just my assessment that all these factors 

would finally sort of persuade them to come up with an agreement to accommodate 

us.”)).

1521. On July 16, 2009, in response to an update of Star’s progress in entering the Domestic 

Fittings market, Mr. Pais wrote to Sigma’s management team speculating that Star’s 

very public entry strategy “may induce McWane to think that they may have long term 

competition even in the BA [Buy American] segment and may create some unique 

market realignment and hence opportunities for us.” (CX 1505 at 001; Pais, Tr. 1779-

1780).

1522. In late June and early July 2009, Mr. Rona approached Mr. Walton of McWane with the 

idea of resuming discussions regarding Sigma’s desire to have McWane supply 

Domestic Fittings to Sigma. (RX 688 (Rona, IHT at 184-188); RX 643 (Tatman, IHT at 

149-150)).

1523. Between June 30 and July 2, 2009, Mr. Tatman suggested to Mr. Rona that he make a 

counterproposal to McWane’s June 5, 2009 Domestic Fittings supply offer.

Mr. Tatman also communicated that McWane would require two conditions: First, 

McWane would have to be Sigma’s exclusive supplier of Domestic Fittings; and 

second, the Domestic Fittings would have to be branded Tyler/Union, not Sigma (i.e., it 
220

would not be a private-label arrangement). (CX 0329 at 001 (Tatman email to 

McCullough and Walton reporting on conversation); Tatman, Tr. 747-748).

1524. On July 2, 2009, Mr. Tatman reported to Mr. McCullough and Mr. Walton regarding 

his conversation with Mr. Rona of Sigma:

Mitchell Rona called and we had a fairly lengthy discussion. I can fill in 

the details if needed but the takeaway is that Mitchell/Sigma will come 

back to us with a counter proposal under the conditions that we would be 

their exclusive supplier of Domestic fittings and the product would be 

branded Tyler/Union not Sigma. My main intent was to flush out where 

Sigma is in their process of securing Domestic production sources and I 

was somewhat surprised by his non-resistance to those two conditions. 

If Sigma’s counter does comply with those two conditions it would be 

pretty good indication that at present they don’t have a very strong hand 

to play.

(CX 0329 at 001; Tatman, Tr. 747).

1525. On July 14, 2009, Mr. Rona transmitted Sigma’s counterproposal to McWane’s June 5, 

2009 offer to Mr. Walton and Mr. Tatman, and noted: “As promised please find a 

simple but straight forward proposal from Sigma for master distribution of your 

domestic fittings. I hope McWane will find this offer favorable and respond with 

further discussions about how we can move this forward.” (CX 0243 at 001; Rona, Tr. 

1560-1561).

1526. Sigma’s July 14, 2009 counterproposal consisted of a one-page term sheet titled 

“Master Distributor Agreement for AWWA domestic pipe fittings” and described an 

agreement under which “Sigma would have access to Tyler, Union, and Clow branded 

domestically produced fittings for a minimum of 3 years beginning August 1st 2009.” 

The counterproposal included the following provision:

Sigma in turn will not seek any other sources either directly or through 

3rd party for the production or distribution of domestic fittings with the 

following exceptions -- Sigma shall have the right to produce or 

purchase fittings which are outside the McWane domestic range or 

which cannot be provided by McWane within a reasonable and 

customary time frame.

(CX 0243 at 002; Rona, Tr. 1560-1561).

1527. In a July 21, 2009 email to McWane’s CFO, Mr. Nowlin, Mr. Tatman described the 

discussions with Sigma regarding selling McWane’s Domestic Fittings to Sigma as 

follows:
221

We are having some discussions with Sigma as to providing them with 

Domestic fittings as an alternative to them securing their own source 

option such as Star has done.

This is certainly a choice of evils as having more Domestic suppliers 

doesn’t really increase the size of the pie. Our ultimate decision will be 

based upon:

• If we say No, would Sigma really spend the $ required to execute 

a domestic product option

• Would providing Sigma with access to Tyler/Union domestic 

[product] help us either better protect our brand/share against Star 

or promote more stable market prices.

(CX 0729 at 001; Tatman, Tr. 754-756; CX 2481 (Nowlin, Dep. at 138-139) (calling the idea of 

having more domestic suppliers does not really increase the size of the pie “a fairly obvious 

statement”)).

1528. In a July 27, 2009 draft presentation sent to Mr. McCullough and Mr. Walton, 

Mr. Tatman listed:

Mitchell [Rona] now understands that we will most likely require “all” 

distributor customers to be exclusive to the Tyler/Union brand for 

Domestic fittings. That seemed to catch him by surprise. He said he 

understood and would discuss internally. . . .

My sense is they don’t yet have a cost-competitive option for the [below] 

24”. The [disamatic] product quote from last year is probably a concern 

for them as to our cost position.

(CX 0568 at 003; Tatman, Tr. 761-762).

1529. On July 29, 2009, McWane responded to Sigma’s July 14, 2009 counterproposal for the 

sale of McWane’s Domestic Fittings to Sigma. Among other provisions, McWane’s 

response:

• Offered to sell Domestic Fittings to Sigma at a 20% discount off 

published multipliers;

• Required Sigma to agree to only sell to customers that are in an 

exclusive supply relationship with McWane;

• Required Sigma to agree to sell at McWane’s suggested published 

price levels; and
222

• Had a term of three years unless earlier terminated by agreement or 

for cause.

(CX 1805 at 002).

1530. On August 18, 2009, Mr. Tatman sent an internal email to Mr. McCullough and 

Mr. Walton with an attached presentation (“August 17, 2009 presentation”) that 

provided an update on the status of negotiations with Sigma. Mr. Tatman was “leaning 

towards not throwing too much [money]” at what he referred to as an “insurance 

policy” against Sigma’s entry, noting that he is “not picking up any strong sense that 

they have a strong alternate path at this point that they’d be willing to invest significant 

$ into.” (CX 1184 at 001; Tatman, Tr. 771-772, 783-785).

1531. In his cover email attaching his August 17, 2009 presentation, Mr. Tatman reported that 

he and Mr. Rona were discussing the final issues in the agreement -- the discount 

percentage and duration of the agreement. (CX 1184 at 001-002; Tatman, Tr. 771-772).

1532. Mr. Tatman’s August 17, 2009 presentation provided an update on two conversations 

Mr. Tatman had with Mr. Rona after Sigma received McWane’s July 29, 2009 offer 

letter:

• Sigma has now agreed in principle to our requirement for Distributor 

exclusivity . . .

• Sigma has agreed in principle to selling at Published pricing . . .

• Sigma has agreed to be exclusive to [McWane] for all sales to 

Distributors . . .

• I sense our distributor exclusivity requirement might have rocked 

them back a bit on what would be required to enter this market on 

their own[.]

(CX 1184 at 004; Tatman, Tr. 778-783).

1533. Mr. Tatman’s August 18, 2009 presentation included a “Pro Forma” analysis in which 

Mr. Tatman estimated that by selling Domestic Fittings to Sigma at a 20% discount, 

McWane would lose approximately 5% of gross profit margin. This estimation was 

“simplistic” and did not include provision for idle plant costs, inventory reduction or 

“anything else.” (CX 1184 at 003; Tatman, Tr. 778).

1534. On August 24, 2009, Mr. Tatman sent a letter of intent to Mr. Rona with the following 

“core agreement elements:”

• “McWane shall be Sigma’s exclusive source of supply”;
223

• Sigma may only sell McWane’s Domestic Fittings to Distributors 

that are “in an exclusive relationship with McWane branded Product 

for all of their domestic requirements where McWane branded 

Products are available”;

• McWane will sell its Domestic Fittings to Sigma at an effective 20% 

discount from McWane’s published pricing;

• Disputes will be handled through non-binding dispute resolution 

process; and

• The agreement will have a 1-year term, with automatic 1-year 

extension, unless either party provides 90 days’ notice prior to the 

anniversary date or McWane has cause.

(CX 1806 at 002; Rona, Tr. 1571-1572).

1535. McWane’s August 24, 2009 letter of intent sent by Mr. Tatman to Mr. Rona stated that 

Sigma was “expected” to:

• Support any pending or existing Buy American legislation;

• “Independently adhere” to McWane’s published pricing, and 

maintain prices at or above 98% of McWane’s published pricing on a 

weighted average basis;

• Provide significant Sigma customers with an appropriate rebate 

program, with the “expectation [of] an 8% annual rebate for 

customers with annual purchases of greater than $100,000”; and

• “Not introduce your own domestic product while the Master 

Distributorship is active.”

(CX 1806 at 003).

1536. In a September 8, 2009 email to Sigma’s OEM5 management group, Mr. Pais 

acknowledged the potential impact of McWane’s Full Support Program, as applied to 

Distributors who purchased Domestic Fittings through Sigma as follows:

What intrigues me is how customers like Ferguson would even toy with 

Star when they can risk total exclusion from [Buy America] service from 

Tyler on the strength of their passionate commitment to the ‘1C’ clause -

- Exclusivity! SO, actually, it may generate a steady loyalty to 

MCW/SIG if it is thoughtfully and effectively introduced and promoted! 

Sensing the pivotal importance of this clause, I have disguised it as an 
224

issue of ‘fairness’ -- helping SIG/McW thru their loyalty in return of our 

service of them thru delivery of the ENTIRE job!

(CX 0948 at 001) (emphasis in original)).

7. McWane and Sigma enter into the MDA 

1537. On or about September 17, 2009, Mr. Tatman, on behalf of McWane, and Mr. Pais, on 

behalf of Sigma, signed the MDA. (CX 1194 at 001, 013-014; Tatman, Tr. 791; Pais, 

Tr. 1807-1808; CX 0278 at 001, 015; CX 0950 at 001).

1538. In its September 22, 2009 letter to Distributors announcing its Full Support Program, 

McWane also announced to its Distributors that it had entered into an MDA with 

Sigma, through which Sigma would sell McWane Domestic Fittings, and informed 

Distributors that the Full Support Program applies to Domestic Fittings whether 

purchased through McWane or Sigma. (CX 0010 at 001). 

1539. Sigma announced the MDA on September 22, 2009, the same day as McWane. 

(CX 0803; Pais, Tr. 1821).

1540. Under the MDA, McWane and Sigma agreed as follows:

a. Appointment: McWane hereby appoints Sigma, and Sigma hereby 

accepts appointment, as an authorized OEM Distributor of McWane 

Domestic Fittings upon the terms and conditions of this Agreement.

b. Exclusivity: Sigma agrees that McWane shall be Sigma’s sole and 

exclusive source for Domestic Fittings, with the exception that: 

(1) Sigma may purchase Domestic Fittings in the 30”- 48” diameter 

size range from other manufacturers so long as Sigma is the sole 

owner of the patterns for such Domestic Fittings, but only for resale 

to other domestic foundry manufacturers of ductile iron pipe and 

fittings; 

(2) If McWane does not own patterns for a particular Domestic 

Fitting, Sigma may purchase that Domestic Fitting from an 

alternative source, but only until such time as McWane acquires the 

pattern for that Domestic Fitting; and 

(3) Sigma may purchase Domestic Fittings from alternative sources 

on an order by order basis only if McWane cannot deliver McWane 

Domestic Fittings to the designated delivery point by the time 
225

specified in the order or within 30 days after the order has been

received and processed by McWane, whichever occurs later.

(CX 1194 at 001).

1541. Under the MDA, Sigma became a master distributor of Tyler brand Domestic Fittings.

(Pais, Tr. 1830). The MDA explicitly provided, “Sigma shall not relabel any McWane 

Domestic Fittings prior to sale without written consent from McWane.” (CX 1194 at 

007).

1542. The initial term of the MDA was for one year, from September 2009, expiring in 

September 2010. Either party to the MDA could terminate it with or without cause by 

giving the other party one hundred eighty days’ advance written notice. (CX 1194 at 

007). 

8. Sigma stopped its efforts to enter the Domestic Fittings market

1543. By agreeing to the MDA, Sigma agreed to stop its efforts to produce its own Domestic 

Fittings. (CX 2529 (Rona, IHT at 173-175) (“As part of our agreement with McWane 

for the MDA, we agreed that we wouldn’t produce -- it’s in the agreement that we 

wouldn’t produce other small-diameter fittings -- again, I think it’s 24” and down”).

1544. Mr. Rona believed that Sigma’s pursuing its own domestic production would be a 

breach of the MDA agreement:

[O]nce the MDA was signed, we did not pursue [Sigma’s SDP efforts] at 

that point to go ahead. And we knew that, again, understanding the 

agreement as it was written, if we decided to continue to go ahead, we 

technically could go ahead and could, but we would then be in breach of 

the contract[.]

(Rona, Tr. 1581-1582; CX 0278 at 002 § 1(b) (“Sigma agrees that McWane shall be 

Sigma’s sole and exclusive source for Domestic Fittings”)).

1545. Upon agreeing to the MDA, Sigma stopped its efforts to try to develop its own 

Domestic Fittings production capacity. (Rybacki, Tr. 3729; Rona, Tr. 1548; CX 2523 

(Bhattacharji, Dep. at 221-222); CX 2530 (Rona, Dep. at 296-297) (“[O]nce we had the

MDA, we were satisfied we had a source of domestic fittings for ARRA, period.”); 

CX 2524 (Box, Dep. at 81) (Mr. Box recommended that Sigma not go forward with 

domestic production of small Fittings in light of the availability of Fittings from 

McWane via the MDA)). 

1546. On October 3, 2009, Mr. Bhattacharji informed Sigma’s China production manager that 

Sigma’s “development plans for domestic fittings are taking a back seat for the moment. 

This is because we have an MDA (Master Distributor Agrmt) deal with McWane for the 

fittings.” (CX 0934 at 001; Pais, Tr. 1853-1856).
226

1547. After signing the MDA, Sigma continued its development of larger-sized Domestic 

Fittings since McWane did not provide larger-sized Domestic Fittings. (Pais, Tr. 1804; 

CX 1166; CX 1194 at 001 § 1(b) (excepting from exclusive source position Fittings for 

which McWane does not have the patterns)).

9. Pricing requirements of the MDA

1548. The provision of the MDA relating to pricing of McWane’s Domestic Fittings set forth:

Pricing. McWane will sell McWane Domestic Fittings to Sigma at a 

discount of twenty percent (20%) off McWane’s published distributor 

pricing in effect at the time the order is received by McWane. 

While Sigma may resell McWane Domestic Fittings at any price it 

deems appropriate, it is the unilateral policy of McWane not to appoint 

or continue any OEM distributor who resells McWane Domestic Fittings 

at a price less than 98% of McWane’s published pricing on a weighted 

average basis for all customers and items sold during any given quarterly 

period, before rebates, freight and prompt payment discounts (the 

“Suggested Resale Price”), or who fails to establish a rebate program of 

8% or greater for customers, excluding manufacturers of ductile iron 

pipe, who purchase more tha[n] $200,000 annually of McWane 

Domestic Fittings or who stock McWane Domestic Fittings in the 

normal course of business. 

The determination of whether an OEM distributor has met these 

requirements shall be made in accordance with the formulas and method 

set forth in the attached Exhibit A. This agreement shall terminate 

immediately and without notice in the event that Sigma resells McWane 

Domestic Fittings at a price below the Suggested Resale Price, or fails to 

implement and maintain the Suggested Rebate for eligible customers; 

provided, however, that the Suggested Rebate shall not apply to 

customers who are domestic manufacturers of ductile iron pipe. 

McWane reserves the right to audit Sigma’s compliance with this 

paragraph at any time through a third party . . . auditor chosen by 

McWane.

(CX 1194 at 002 § 1(d)).

1549. The MDA provided that McWane would sell McWane Domestic Fittings to Sigma at a 

discount of 20% off McWane’s published pricing. (CX 1194 at 002 § 1(d); CX 2479 

(McCullough, Dep. at 121) (McWane agreed to sell Domestic Fittings to Sigma under 

the MDA at a 20% discount off McWane’s published multiplier terms for truckload 

shipments)).
227

1550. The MDA required that Sigma resell McWane Domestic Fittings at a weighted average 

of no less than 98% of McWane’s published prices during any given quarterly period, 

before rebates, freight and prompt payment discounts (the “Suggested Resale Price”). 

(Tatman, Tr. 798-803; Pais, Tr. 1829-1830; CX 1194 at 002§ 1(d)). 

1551. Under the MDA, by using a weighted average, Sigma could sell particular jobs at 

different percentages off McWane’s published prices, so long as all of the prices of the 

jobs over the quarterly period amounted to within 98% of McWane’s published prices. 

Sigma was also allowed to give rebates, cash discounts, and to set freight terms and 

payment terms that they wanted. (Tatman, Tr. 801-802). 

1552. Under the MDA, if Sigma did not resell McWane’s Domestic Fittings at McWane’s 

suggested resale price, McWane could immediately terminate the MDA without notice. 

(CX 1194 at 002 § 1(d); Tatman, Tr. 802-803).

1553. Mr. Pais described the pricing provision of the MDA as follows: “with the pricing, we 

are obliged to be as close to the published multiplier as possible. Our hands are not tied 

– but we cannot sell below, because it will undermine McWane’s own sales.” 

(CX 0997 at 004 (September 22, 2009 message dictated by Mr. Pais)).

1554. On December 21, 2009, McWane announced multiplier increases for Domestic Fittings 

effective January 22, 2010. (CX 1544 at 002).

1555. Mr. Tatman forwarded McWane’s December 21, 2009 price increase announcement to 

Mr. Rona of Sigma: “Per our MDA this will impact Sigma orders as of the effective 

date.” (CX 1662 at 001; see also Rona, Tr. 1602-1604 (discussing CX 1662)).

1556. Mr. Greg Fox of Sigma forwarded the McWane December 21, 2009 price increase 

announcement within Sigma, noting:

Under the terms and agreements of our Master Distribution Agreement 

with [McWane], we will mirror the multiplier and implementation dates 

of this letter. We have no latitude for exceptions.

(CX 1519 at 002; see also CX 1544 at 001 (Mr. Rona forwarding McWane price 

announcement within Sigma); CX 2530 (Rona, Dep. at 300)).

1557. Sigma announced the same price increase as McWane did (F. 1554), effective January 

22, 2010. (CX 1519 at 001 (Mr. Pais email December 29: “I am glad to comply” with 

McWane price increase); CX 1852 at 001 (Mr. Pais December 30 email attaching “our 

version of the Customer Letter to announce the price increase.”)).

10. The MDA limited the Distributors to whom Sigma could resell

McWane Domestic Fittings

1558. The MDA limited Sigma’s ability to resell McWane Domestic Fittings as follows:
228

Markets. Sigma may only resell McWane Domestic Fittings to:

(1) American Cast Iron Pipe Company; and 

(2) Other customers, including distributors, contractors and fabricators, 

but excluding manufacturers of ductile iron pipe that have agreed to 

purchase McWane Domestic Fittings as their sole source of Domestic 

Fittings when McWane Domestic Fittings are available at the time of 

order. 

McWane shall from time to time provide Sigma with a list of customers 

who have not agreed to source their Domestic Fittings solely from 

McWane. Sigma agrees not to sell McWane Domestic Fittings to any 

customer so listed by McWane, or to any other customer who Sigma 

actually knows has purchased Domestic Fittings from a source other than 

McWane at any time during the previous 60 days. 

McWane reserves the unconditional right in its sole discretion to (i) call 

upon and sell McWane Domestic Fittings directly to any prospective 

customers or existing customers, (ii) investigate and resolve customer 

complaints, (iii) distribute sales and advertising information and (vii) 

perform other services. McWane reserves the right in its sole discretion 

to appoint or designate other distributors or representatives other than 

Sigma to sell McWane Domestic Fittings.

(CX 1194 at 001-002 § 1(c)).

1559. Under the MDA, McWane prohibited Sigma from selling McWane Domestic Fittings to 

any customer listed by McWane as not having agreed to purchase their Domestic 

Fittings solely from McWane or Sigma, through the MDA. (CX 1194 at 001-002 

§ 1(c); Tatman, Tr. 798). 

1560. Under the MDA, Sigma agreed not to sell McWane Domestic Fittings to any customer 

identified by McWane as having “purchased Domestic Fittings from a source other than 

McWane at any time during the previous 60 days.” (CX 1194 at 001-002 § 1(c); Pais, 

Tr. 1816-1819).

1561. The MDA provided that:

Sigma shall . . . take reasonable efforts to monitor its customer’s sources of 

supply of Domestic Fittings, and shall notify McWane as soon as possible if 

Sigma becomes aware of any purchases of non-McWane Domestic Fittings by 

any such customer.

(CX 1194 at 004 § 3(c)(v)).
229

1562. Sigma believed that under the MDA, if a customer wanted to buy Domestic Fittings 

through Sigma, they could, but they would have to buy all their Domestic Fittings from 

Sigma and that if a customer purchased Domestic Fittings from Star, Sigma could no 

longer sell them McWane’s Domestic Fittings. (Pais, Tr. 1817-1819).

1563. McWane informed major Distributor customers that Sigma would not sell McWane’s 

Domestic Fittings to customers who purchased Domestic Fittings from Star. (CX 2479 

(McCullough, Dep. at 142); CX 2477 (Jansen, Dep. 179-180); CX 0108). See also

CX 2479 (McCullough, Dep. 142-144) (testifying that he “probably” told Distributors 

Ferguson, Groeniger, and WinWater that, pursuant to the MDA, Sigma could not sell to 

customers who bought from Star).

1564. Mr. Jansen of McWane conveyed to his sales force that Sigma would enforce the MDA, 

writing on November 3, 2009:

Team, I think we have made it very clear in the market regarding our 

stance on supporting the McWane domestic brand of fittings whether 

purchased through Tyler Union, Clow or Sigma. If one branch buys 

from someone other than this then the whole company will be [a]ffected 

not just that branch.

(CX 0108 at 001).

1565. Mr. Tatman described Sigma’s role in McWane’s Full Support Program as follows:

Access to McWane domestic product either through McWane or Sigma 

requires distributors to exclusively support McWane where products are 

available within normal lead times. Violation will result in: Loss of 

access [and] Loss of accrued rebates.

(CX 0119 at 002, 004; Tatman, Tr. 722-723). 

11. Sigma implemented McWane’s Full Support Program

1566. In Sigma’s September 22, 2009 announcement to its customers, Sigma informed its 

customers as follows:

As per this MDA, we are now Master Distributors of [McWane] 

domestic Fittings. As such, we will follow [McWane’s] distribution and 

pricing policies as they are announced from time to time. 

As mentioned in their own letter from [McWane] to their customers, 

which you too may have received, we wish to supply the [McWane] 

domestic Fittings to any customers who elect to commit to fully support 

[McWane] branded Fittings for their requirements of domestic Fittings, 
230

purchased thru [McWane] or SIGMA. We appeal to you to accept this 

requirement of exclusive choice, as a fair and reasonable one, in light of 

the considerable investment by [McWane] to provide this range of 

domestic production, which is now being expanded to offer domestic 

Fittings up to 48”. 

Please note that customers who elect not to fully support this program 

may forgo any unpaid volume incentive rebates applicable to only the 

domestic Fittings and delivery of domestic Fittings up to 12 weeks.

(CX 0803 at 002 (emphasis in original); Pais, Tr. 1821).

1567. In the Q & A document that Mr. Tatman prepared and circulated to the McWane sales 

force after execution of the MDA, Mr. Tatman described Sigma’s participation in 

McWane’s Full Support Program in response to a hypothetical customer question:

Question: Can I utilize another domestic fitting and accessory brand 

other than Tyler Union or Clow Water products and then still purchase 

Tyler Union or Clow Water products through Sigma?

Answer: No, Sigma will be adhering to the same distribution program 

and policies as the Tyler Union and Clow Water divisions of McWane.

(CX 1179 at 004; Tatman, Tr. 807).

1568. On December 14, 2009, McWane informed Sigma that it was cutting off Hajoca under 

its Full Support Program and that Sigma must do the same. Mr. Tatman told Mr. Rona: 

“Per the terms of our MDA I need you to acknowledge that Sigma will also not supply 

any Hajoca branch with Domestic fittings or accessories until further notice.”

(CX 1801 at 001; Tatman, Tr. 720 (Mr. Tatman told Sigma not to sell to Hajoca). See

II.J.6. (McWane’s enforcement of its Full Support Program against Hajoca).

1569. Mr. Rona forwarded the email to Sigma’s CEO, who responded that Sigma had “no 

choice but to agree to abide by the rules of the MDA.” (CX 0940; Rona, Tr. 1606, 1608 

(Rona forwarded to Sigma’s distribution group the instruction not to sell McWaneproduced domestic fittings to any Hajoca branch); CX 2530 (Rona, Dep. at 258) 

(McWane told Sigma that it could not sell to Hajoca)).

1570. As requested by McWane, on December 15, 2009, Mr. Rona confirmed to McWane that 

Sigma was “clear about Hajoca” and would not sell Domestic Fittings to any Hajoca 

branch. (CX 1801 at 001; Rona, Tr. 1606).

12. Sigma was not permitted to sell to U.S. Pipe

1571. The MDA precluded Sigma from selling McWane’s Domestic Fittings to U.S. Pipe. 

(CX 2203 at 001; Morton, Tr. 2850-2851).
231

1572. McWane agreed to permit Sigma to resell McWane Domestic Fittings to ACIPCO, but 

not to U.S. Pipe. As Mitchell Rona explained in the course of the MDA negotiations:

McWane will not amend to formally include U.S. Pipe. [Mr. Tatman] is 

firm that they will not share their profit here too and feel they already did 

so with Acipco who is formally in the agreement now.

(CX 1046 at 001; Rona, Tr. 1587-1590).

1573. At his October 13, 2009 meeting in Birmingham, Alabama with Mr. Morton of U.S. 

Pipe, Mr. Tatman conveyed to Mr. Morton that under the MDA between McWane and 

Sigma, U.S. Pipe would not be able to source its Domestic Fittings through Sigma, but 

would instead have to purchase McWane’s Domestic Fittings directly from McWane. 

(Morton, Tr. 2842; CX 2203 at 001 (“Tatman informed me that Sigma was forbidden 

from selling to USP as per the Master Distributio[n] Agreement signed between Union 

[and] Sigma.”)).

1574. Mr. Morton had met with Sigma about procuring Domestic Fittings, and believed that 

Sigma expected to be able to provide U.S. Pipe with Domestic Fittings pursuant to the 

MDA. (Morton, Tr. 2852-2853). 

13. Sigma’s intent to block Star through the MDA

1575. As early as February 20, 2009, when Sigma began assessing its options for offering 

Domestic Fittings, Mr. Pais wrote to Walter Florence, a Sigma Board Member, the

following: 

With our relationship with McWane, it is also fully conceivable to get 

part of our needs produced with SIGMA label, once we establish 

ourselves as the ‘2nd choice’ for the [Buy American] segment, as they 

may privately prefer it to be just a 2-supplier market! Besides, this may 

marginalize Star. . . 

(CX 1003 at 004).

1576. In a September 9, 2009 report to the Sigma Board, Mr. Pais noted that Sigma’s 

“strategy to team up with McWane” through the MDA was “likely to have the intended 

effect of marginalizing Star whose ability to deliver jobs will be highly suspect, at least 

over the next 12 months or so.” (CX 1022 at 004, in camera). 

1577. As Mr. Pais explained in a September 22, 2009 dictated voice message:

[I]f we do our job right, it might isolate Star and make them suffer with their 

investment even more, because they may not be able to gain credibility. . . . We 
232

need to develop an exclusive agreement arrangement with each customer . . . or 

we will end up strengthening Star.

(CX 0997 at 003-004; Pais, Tr. 1842-1848).

14. McWane’s intent to block Star through the MDA

1578. Mr. McCullough, Mr. Tatman, Mr. Jansen, and Mr. Walton had an internal McWane 

meeting on August 20, 2009 at which they discussed, among other things, McWane’s 

decision to sell Domestic Fittings to Sigma through the MDA. (CX 2353 (Mr. Walton’s 

handwritten notes from that meeting); CX 2485 (Walton, Dep. at 36-38)).

1579. At the August 20, 2009 meeting (F. 1578), as recorded in the handwritten notes of Mr. 

Walton, Mr. McCullough made the following points about selling Domestic Fittings to 

Sigma through the MDA:

LM [Leon McCullough] want[s] to sell SIGMA to put pressure on Star. 

LM hopefully to drive Star out of business. Would rather have 

competition other than Star.

LM thinks that we should sell SIGMA as an insurance policy and to 

continue to put pressure on Star. . . . LM approved Rick [Tatman]’s 

recommendation page of his PowerPoint presentation on selling SIGMA.

(CX 2353 at 004 (Mr. Walton handwritten notes of August 20, 2009 meeting); CX 2485 

(Walton, Dep. 42-43) (“I wrote down that Leon said that. . . . I remember it more as 

comments that Leon made towards the end of the meeting.”)).

1580. In evaluating the decision to sell Domestic Fittings to Sigma, Mr. Tatman wrote, on 

June 29, 2009, as a “brainstorming slide” for purposes of discussion, that he did not 

think that Sigma would be “willing to generate little to no incremental margin $ just to 

help us block Star.” (CX 0076 at 008; Tatman, Tr. 653-654). 

1581. In a July 27, 2009 PowerPoint Presentation titled “Sigma - Domestic Review Session,” 

intended for brainstorming and spurring discussion within McWane, Mr. Tatman wrote 

that having Sigma sell McWane branded product should (1) “reduce Star’s ability to 

grow share,” (2) “[k]eep[] additional overcapacity from being added to the industry,” 

and (3) “help drive some additional level of price stability.” (CX 0465 at 002, 010; see 

also CX 0170 at 009 (subsequent version of the same presentation sent to Mr. 

McCullough and Mr. Walton)).

15. Benefits of the MDA 

1582. Sigma entered into the MDA with McWane because Sigma saw the MDA as its only 

viable option for supplying Domestic Fittings to Sigma’s customers during ARRA’s 

short time window. (Rona, Tr. 1481; Pais, Tr. 1800-1801 (“[W]e had finally found a
233

recourse by going to our competitor because we thought that was the only option that 

was viable because the service of the customer was imminent. . . . There was no other 

option that we could -- this is not a premeditated three or four-year plan that we had to 

enter a new product.”). See also Pais, Tr. 1803 (“I would say . . . with the certitude with 

respect to the requirements of ARRA that we were facing [in September 2009 that] yes, 

we could not meet the domestic supply option to start complying with the requirements 

of our customers.”).

1583. Sigma perceived that if it was unable to supply Domestic Fittings to its customers, it 

might also lose some portion of its non-domestic business with those customers. (RX

689 (Rona, Dep. at 118-120) (“I perceived that without domestic fittings, that it could 

hurt our other fitting or our other products’ business. . . . The ARRA period was a very 

volatile time in a down economy, and if people call you and say do you have any 

fittings for this, no, I don’t have any fittings for that job. The same customers were 

buying domestic fittings, other fittings, accessories or restraint products, manholes, and 

people could potentially forget about you. And as a result, I felt that it was important 

that we offer a solution to people that they would not forget about us, so I thought it was 

critical for us. . . . Entering into the master distribution agreement with McWane was a 

solution to the problem we had.”)).

1584. Sigma, with its network of regional distribution yards and larger field sales force, was 

better able than McWane to provide certain servicing benefits, such as faster delivery to 

Distributors. (RX 689 (Rona Dep. at 120-124, 133-134); RX 643 (Tatman, IHT at 176-

178) (“We have customers that SIGMA has a better relationship [with] than we did. 

Potentially that could -- volume could be sold from SIGMA versus Star being able to 

sell that volume. So it’s all kind of protecting that volume scenario.”); RX 688 (Rona, 

IHT at 176-78) (“We felt, as a distributor for McWane, that we could take their 

production as they ramped up and help ourselves and in essence help the market and 

help them to distribute the fittings through our 14 locations nationwide. That, to us, we 

perceived as a value.)).

1585. Sigma’s distribution centers were more strategically located for more efficient customer 

delivery than McWane’s. (RX 689 (Rona, Dep. at 311-313)).

1586. ACIPCO preferred to buy Domestic Fittings from Sigma rather than McWane, because 

Sigma provided additional specialty services, including coatings, linings, taps and other 

add-ons, that ACIPCO felt McWane could not provide as effectively. (RX 688 (Rona, 

IHT 95-96); Tatman, Tr. 797-798).

1587. ACIPCO benefitted logistically from buying McWane Domestic Fittings from Sigma, 

rather than McWane, and found the pricing to be competitive. (RX 646 (Burns, Dep. 

139-140, 175)).

1588. Groeniger preferred buying Domestic Fittings from Sigma, because Groeniger preferred 

Sigma’s service to both Star and McWane. (RX 669 (Groeniger, Dep. 87-88 (“SIGMA 

was our prime supplier of foreign product, but understanding that they were now part of 
234

this domestic application, we felt that SIGMA’s support, SIGMA’s service would now 

reflect a domestic forehand, that we really did not need Tyler. And . . . we could simply 

buy the Tyler from SIGMA which was potentially great for us. Because SIGMA had 

the best service, service, service by far, not even close. Better than Star, much better 

than Tyler.”).

1589. EJ Prescott preferred to buy Domestic Fittings from Sigma when it was concurrently 

ordering non-domestic Fittings, because Sigma was its preferred non-domestic supplier 

and it could efficiently round out blended orders. (RX 661 (Prescott, Dep. at 35-36)).

16. The MDA did not increase output or expand the market for

Domestic Fittings

1590. McWane’s CEO, Ruffner Page, was in favor of entering into the MDA with Sigma 

because McWane needed “tons in the plant.” (RX 642 (Page, Dep. at 61-63)).

1591. McWane had not expected that entry by Sigma into the Domestic Fittings market –

through the MDA or independently – would increase the size of the Domestic Fittings 

market. (CX 0729 at 001 (Tatman July 21, 2009 email: “having more Domestic 

suppliers doesn’t really increase the size of the pie.”); CX 2481 (Nowlin, Dep. at 138-

139) (calling the idea of having more domestic suppliers does not really increase the 

size of the pie “a fairly obvious statement”)). 

1592. In a June 29, 2009 internal McWane PowerPoint Presentation, Mr. Tatman noted as a 

discussion topic that “[w]hat we ‘Assume’ to be true at this point” is that having 

multiple domestic suppliers would not significantly increase the overall Domestic 

Fittings market size and that a net tonnage gain scenario for McWane was unlikely. 

(CX 0076 at 006; Tatman, Tr. 656).

1593. The MDA did not increase the size of the Domestic Fittings market. (CX 2531 

(Rybacki, Dep. at 160-161) (“Q. The fact that Sigma had access to McWane fittings 

under the MDA, that didn’t cause there to be more domestic jobs; is that right? A. 

Correct.” “Q. . . . By having access to those fittings, you didn’t expand the size of the 

pie, if you will, you expanded Sigma’s ability to service a piece of that pie, is that fair? 

A. Yes.”)). 

17. The scope of the MDA

1594. The MDA was a one-year agreement, terminable by either party with 180 days’ notice. 

(Rona, Tr. 1699-1700; CX 1194).

1595. On February 17, 2010, McWane provided Sigma with 180 days’ notice that McWane 

wished to terminate the MDA. (RX 689 (Rona, Dep. at 303-304); CX 1435).

1596. The MDA was in effect for less than a year, from September 2009 to August 2010. 

(RX 689 (Rona, Dep. at 303-304)).
235

1597. Through the MDA, Sigma’s sales of Domestic Fittings were approximately eight to ten 

million dollars. (CX 2531 (Rybacki, Dep. at 29).

III. ANALYSIS

A. Jurisdiction

The Complaint charges Respondent McWane, Inc. (“Respondent” or “McWane”) with 

violations of Section 5 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45. 

Section 5(a)(2) of the FTC Act gives the Commission jurisdiction “to prevent persons, 

partnerships, or corporations . . . from using unfair methods of competition in or affecting 

commerce . . . .” 15 U.S.C. § 45(a)(2); Kaiser Aluminum & Chem. Corp. v. FTC, 652 F.2d 

1324, 1327 n.2 (7th Cir. 1981). Respondent McWane, Inc. manufactures, markets and sells 

products for the waterworks industry, including ductile iron pipe fittings that are 3” to 24” in 

diameter (“Fittings”). F. 2. Respondent is a corporation, as “corporation” is defined in Section 

4 of the FTC Act, 15 U.S.C. § 44. F. 3. 

Respondent’s challenged activities relating to the sale of Fittings are in or affect 

commerce in the United States, as “commerce” is defined in Section 4 of the FTC Act, 15 

U.S.C. § 44. F. 4. Thus, the Commission has jurisdiction over Respondent and the subject 

matter of this proceeding, pursuant to Section 5 of the FTC Act. 

B. Burden of Proof and Statutory Framework

The parties’ burdens of proof are governed by Federal Trade Commission Rule 3.43(a), 

Section 556(d) of the Administrative Procedure Act (“APA”), and case law. Pursuant to 

Commission Rule 3.43(a), “[c]ounsel representing the Commission . . . shall have the burden of 

proof, but the proponent of any factual proposition shall be required to sustain the burden of 

proof with respect thereto.” 16 C.F.R. § 3.43(a). Under the APA, “[e]xcept as otherwise 

provided by statute, the proponent of a rule or order has the burden of proof.” 5 U.S.C. 

§ 556(d). The APA, “which is applicable to administrative adjudicatory proceedings unless 

otherwise provided by statute, establishes ‘. . . the traditional preponderance-of-the evidence 

standard.’” In re Rambus Inc., 2006 FTC LEXIS 101, at *45 (Aug. 20, 2006) (quoting 
236

Steadman v. SEC, 450 U.S. 91, 95-102 (1981)), rev’d on other grounds, 522 F.3d 456 (D.C. 

Cir. 2008), cert. denied, 129 S. Ct. 1318 (2009). See In re Automotive Breakthrough Sciences, 

Inc., 1998 FTC LEXIS 112, at *37 n.45 (Sept. 9, 1998) (holding that each finding must be 

supported by a preponderance of the evidence in the record); In re Adventist Health 

System/West, 1994 FTC LEXIS 54, at *28 (Apr. 1, 1994) (“Each element of the case must be 

established by a preponderance of the evidence.”).

Respondent asserts that Complaint Counsel must prove its case under Section 5 of the 

FTC Act by “substantial evidence,” and that Complaint Counsel must prove substantial injury. 

RB at 64 (citing FTC v. Cement Inst., 333 U.S. 683, 705 (1948); California Dental Ass’n v. 

FTC, 224 F.3d 942, 957 (9th Cir. 2000); Cinderella Career & Finishing Sch., Inc. v. FTC, 425 

F.2d 583, 592 n.2 (D.C. Cir. 1970); Rayex Corp. v. FTC, 317 F.2d 290, 292 (2d Cir. 1963)). In 

Steadman, the Supreme Court held that the requirement under Section 556(d) of the APA that 

agency orders be “supported by and in accordance with the reliable, probative and substantial 

evidence” is satisfied by “the traditional preponderance-of-the-evidence standard.” Steadman, 

450 U.S. at 99, 102. See also In re Chicago Bridge & Iron Co., 138 F.T.C. 1024, 1027 n.4 

(2005) (“[W]e take it as settled law that regardless of the standard under which a reviewing 

court must accept the Commission’s findings of fact, the Commission (and the Administrative 

Law Judge (“ALJ”) normally must base findings upon a ‘preponderance of the evidence.’”) 

(citing Carter Prods., Inc. v. FTC, 268 F.2d 461, 487 (9th Cir. 1959)). 

Respondent further asserts that Complaint Counsel must prove substantial injury to 

consumers. RB at 64 (citing 15 U.S.C. § 45(n)). See also RB at 60-63 (asserting Complaint 

Counsel failed to prove McWane’s actions caused “substantial injury” to consumers). The 

statute upon which Respondent relies provides that “[t]he Commission shall have no authority 

. . . to declare unlawful an act or practice on the grounds that such act or practice is unfair 

unless the act or practice causes or is likely to cause substantial injury to consumers which is 

not reasonably avoidable by consumers themselves and not outweighed by countervailing 

benefits to consumers or to competition.” 15 U.S.C. § 45(n). The Commission originally 

articulated the Section 5(n) [15 U.S.C. § 45(n)] standard in a 1980 policy statement, which was 

drafted in response to a Congressional inquiry regarding the limits of the Commission’s 

consumer protection authority. Federal Trade Commission Statement of Policy on the Scope of 
237

Consumer Unfairness Jurisdiction (December 17, 1980) at n.4, reprinted in In re Int’l

Harvester Co., 1984 FTC LEXIS 2, at *304 & n.3. The 1980 policy statement explicitly stated 

that it did not address the Commission’s “competition or antitrust mission,” which is guided by 

“a considerable body of antitrust case law.” Id. The 1980 policy statement was later codified 

as Section 5(n) of the FTC Act, 15 U.S.C. § 45(n), and consistent with its applicability to the 

Commission’s consumer protection jurisdiction, has the heading: “Definition of unfair acts or 

practices.” See Pub. L. No 103-312, 108 Stat. 1695 (codified at 15 U.S.C. § 45(n)); see also 

Rambus, 2006 FTC LEXIS 102, at *35. Because none of the claims in this case is brought 

under the Commission’s “unfair acts or practices” authority, Section 5(n) does not apply. 

The provision of the FTC Act under which this case does proceed, Section 5(a) of the 

FTC Act, prohibits “unfair methods of competition in or affecting commerce.” 15 U.S.C. 

§ 45(a). Unfair methods of competition under Section 5 of the FTC Act include any conduct

that would violate Sections 1 or 2 of the Sherman Act. See, e.g., California Dental Ass’n v. 

FTC, 526 U.S. 756, 762 & n.3 (1999); Cement Inst., 333 U.S. at 691-92 (stating that “soon after 

its creation the Commission began to interpret the prohibitions of § 5 as including those 

restraints of trade which also were outlawed by the Sherman Act, and . . . this Court has 

consistently approved that interpretation of the Act); Rambus Inc. v. FTC, 522 F.3d 456, 462 

(D.C. Cir. 2008). Although the Commission does not directly enforce the Sherman Act, 

conduct that violates the Sherman Act is generally deemed to be a violation of Section 5 of the 

FTC Act as well, and principles of antitrust law developed under the Sherman Act apply to 

Commission cases alleging restraint of trade or unfair competition. E.g., Fashion Originators’ 

Guild, Inc. v. FTC, 312 U.S. 457, 463-64 (1941); FTC v. Indiana Fed’n of Dentists, 476 U.S. 

447, 451-52 (1986). Accordingly, it is appropriate to rely upon Sherman Act jurisprudence in 

determining whether the challenged conduct violated Section 5 of the FTC Act. E.g., Polygram 

Holding, Inc. v. FTC, 416 F.3d 29, 32 (D.C. Cir. 2005) (“[T]he analysis under § 5 of the FTC 

Act is the same . . . as it would be under § 1 of the Sherman Act.”); Rambus, 522 F.3d at 462 

(holding that Section 5 of the FTC Act reaches all conduct that violates Section 2 of the 

Sherman Act). 

Section 1 of the Sherman Act prohibits “every contract, combination in the form of trust 

or otherwise, or conspiracy, in restraint of trade or commerce among the several States . . . .” 
238

15 U.S.C. § 1. Despite its broad language, the ban on contracts in restraint of trade extends 

only to unreasonable restraints of trade, i.e., restraints that impair competition. State Oil Co. v. 

Khan, 522 U.S. 3, 10 (1997). Section 2 of the Sherman Act prohibits monopolization, 

attempted monopolization, and combination or conspiracy to monopolize. 15 U.S.C. § 2. The 

specific standards applicable to the violations alleged in the Complaint are set forth in more 

detail, infra. 

C. The Relevant Market

In a Section 1 case, the first step in determining if a respondent unreasonably restrained 

trade in the relevant market “is determining the relevant market.” Wampler v. Southwestern 

Bell Tel. Co., 597 F.3d 741, 744 (5th Cir. 2010). In a Section 2 case, as well, the first step in 

assessing whether a respondent possesses monopoly power is establishing the relevant market. 

Spectrum Sports v. McQuillian, 506 U.S. 447, 456 (1993) (“without a definition of th[e 

relevant] market there is no way to measure [the defendant’s ability] to lessen or destroy 

competition”). A relevant market is comprised of a relevant product market and a relevant 

geographic market. Brown Shoe Co. v. United States, 370 U.S. 294, 325-26 (1962); H.J., Inc. 

v. Int’l Tel. & Tel., 867 F.2d 1531, 1537 (8th Cir. 1989). 

The Complaint alleges that there are two relevant product markets: (1) the supply of 

ductile iron pipe fittings of 24” and smaller in diameter, that are sold for use on open 

specification jobs (“Fittings”); and (2) the supply of ductile iron pipe fittings of 24” and smaller 

in diameter that are made in the United States, that are sold for use on jobs with domestic-only 

specifications (“Domestic Fittings”). Complaint ¶ 21; CCB at 59. Respondent does not 

challenge the allegation that Fittings are a relevant product market. See RB at 83-87; Answer 

¶ 21 (“McWane admits . . . that the ‘marketing and sale of DIPF’ may be a relevant product 

market and that all DIPF [ductile iron pipe fittings], whether imported or domestic, compete for 

all or virtually all jobs.”). Respondent does, however, dispute the allegation that there is a 

separate relevant product market for Domestic Fittings. RB at 83-87. Specifically, Respondent 

asserts, imported Fittings and Domestic Fittings that meet American Water Works Association 

standards are entirely interchangeable commodities that are metallurgically and functionally the 

same. RB at 83. Respondent further asserts that the American Recovery and Reinvestment Act 
239

of 2009, discussed below, had little or no impact on Domestic Fittings and had insufficient 

impact on the interchangeability of non-domestic and Domestic Fittings. RB at 84-86.

To analyze the alleged relevant markets requires first a discussion of background 

information on fittings, market participants, and the bidding process. Second, to frame the 

analysis of the relevant market, a discussion of the economic backdrop and the competition 

between Domestic Fittings and imported Fittings is required. 

1. Background

a. Fittings

Ductile (easily molded) iron pipe fittings (“Fittings”) are a small but essential part of 

any waterworks project that involves pressurized water distribution and treatment systems, such 

as potable water lines that connect water supply facilities to neighborhoods and certain sewer 

lines. F. 5, 278-279; see also F. 328, 371. Fittings attach to the ends of pipes in order to: 

change the direction of water flow; connect pipes of different sizes; merge two pipelines into 

one, or branch one pipeline off into two; and attach pipes to valves, fire hydrants, or water 

meters. F. 5, 278-279. There are thousands of different types and sizes of Fittings that each 

serve a different purpose, such as connecting to different sized pipes or providing various 

degrees of “bend.” F. 286-287, 293; see also F. 288-292. 

Fittings that are 24” or less in diameter are commonly used in underground water 

distribution networks. F. 291. Larger diameter fittings (above 24” in diameter) are more 

commonly used in water treatment plants or large transmission lines. F. 292. As discussed 

below, the relevant product markets in this case consist of ductile iron pipe fittings of 24” and 

smaller in diameter. Thus, the term, “Fittings,” as used in this Initial Decision, refers to 

Fittings that are 24” or less in diameter, except where otherwise indicated.

Although Fittings come in thousands of configurations of shape, size, and coating, there 

are around 100 commonly used configurations (referred to as “A” and “B” items) that account 

for approximately 80% of all Fittings sales. F. 306; see also F. 307. 

Fittings are homogeneous commodity products produced to standards and specifications 
240 

of the American Water Works Association (“AWWA”). F. 322. Any Fitting that meets an 

AWWA specification is functionally interchangeable with any other Fitting that meets the same 

specification. F. 323. 

b. Market Participants

i. Suppliers

There are three main Fittings suppliers in the United States: Respondent, McWane, Inc. 

(“McWane”), Sigma Corporation (“Sigma”), and Star Pipe Products, Ltd. (“Star”). See F. 2, 

51, 108, 505. Together, McWane, Sigma, and Star accounted for between 90 and 97 percent of 

United States Fittings sales in 2008 and 2009. F. 355-356. 

McWane has manufactured Fittings at two domestic foundries: its Tyler Pipe & 

Foundry Company South Plant in Tyler, Texas and its Union Foundry Company in Anniston, 

Alabama. F. 15. Faced with high inventory levels and insufficient demand for Domestic 

Fittings, McWane closed its Tyler facility in the fall of 2008 and opened a foundry in China, 

Tyler Xin Xin. F. 16, 18. In 2007, McWane consolidated internal management of all of its 

Fittings operations, both domestically and in China, into a single division, “Tyler/Union.” 

F. 17. 

McWane had more than a 40% share of the United States Fittings market in both 2008 

and 2009. F. 356 ({ }% in 2008; { }% share in 2009). From April 2006 until Star began 

manufacturing Fittings in the United States in 2009, McWane was the only significant supplier 

of Fittings manufactured in the United States. F. 1040. 

Sigma imports and sells Fittings and other waterworks products that are made in China, 

India, and Mexico. F. 56. Sigma engages in “virtual manufacturing” whereby it provides 

engineering support to foundries that make its Fittings. F. 57. Sigma had more than a 30% 

share of the United States Fittings market in both 2008 and 2009. F. 356 ({ }% in 2008; 

{ }% in 2009). 

Star also imports Fittings from China for sale in the United States. F. 108, 113. Star 

had nearly a 20% share of the United States Fittings market in both 2008 and 2009. F. 356 
241 

({ }% in 2008; { }% in 2009). In 2009, Star began contracting with foundries in the 

United States to manufacture Fittings domestically. F. 112. 

In addition to McWane, Sigma, and Star, there are a few small suppliers of Fittings, 

including Serampore Industries (“SIP”), NAPAC, Inc., North American Cast Iron Products 

(“NACIP”), Metalfit, Backman Foundry, and, starting in 2009, Electrosteel. F. 358; see also 

F. 162, 169, 176, 178, 186, 196. Combined, these other sellers represented between three and 

ten percent of the United States Fittings market in 2008 and 2009. F. 358. 

ii. End Users

End users of Fittings are typically municipalities, regional water authorities, and the 

contractors they hire to construct waterworks projects (collectively, “End Users”). F. 10; see 

also F. 363-366. 

iii. Distributors

McWane, Sigma, and Star sell “all or virtually all” of their Fittings to a relatively 

unconcentrated group of wholesale waterworks distributors (“Distributors”), who then resell 

the Fittings to End Users. F. 373-374. There are two large national Distributors, HD Supply 

and Ferguson, which have 235 and 167 locations nationwide, respectively. F. 223, 228, 377. 

Together, they account for approximately 50% of all Fittings sales in the United States. F. 377-

379. The remaining direct purchasers of Fittings consist of a number of regional waterworks 

distributors with multiple branches that service specific regional areas, and hundreds of small, 

local companies with just one or a few distribution yards. F. 375. 

c. Bidding Process

When a municipality or regional water authority undertakes a waterworks project, it 

will generally issue specifications for all of the pipes, valves, hydrants, Fittings and related 

waterworks equipment needed for the project, and seek bids from contractors for its 

completion. F. 333. These specifications may identify which brands can be used for the 

project, as well as whether domestically manufactured Fittings are required. F. 339, 346. Once 
242

contractors receive the specifications, contractors will solicit bids and other assistance from 

Distributors that supply the various components for that project. F. 340. 

d. Open Specifications v. Domestic-only Specifications

Waterworks projects specifications that do not specify the country of origin are referred 

to as “open specifications.” F. 349. Either imported or Domestic Fittings can be used in open 

specification projects. F. 349, 350. When a mix of imported and domestically manufactured 

Fittings are sold into open specifications projects, the mix is referred to as “blended.” F. 351.

Waterworks projects specifications that require the use of domestically manufactured 

Fittings are referred to as “domestic-only specifications.” F. 347. Imported Fittings cannot be 

used in domestic-only specifications. F. 350. A project may have a domestic-only 

specification either because of an End User preference or because municipal, state, or federal 

law imposes a “Buy American” requirement. F. 347. Domestic Fittings sold for use in 

domestic-only specifications are sold at higher prices than Fittings (whether imported or 

domestically manufactured) that are sold into open specification jobs. F. 1075. 

e. Economic Backdrop

A few decades ago, most Fittings used in waterworks projects in the United States were 

manufactured in the United States. F. 462. Beginning in the mid-1980s, importers began to 

successfully convert End Users’ specifications for domestically produced Fittings to open

specifications, which permitted the use of both domestic and imported Fittings. F. 463. This 

process accelerated during the 1990s and 2000s, with non-domestic Fittings comprising the 

vast majority of the Fittings market by 2005. F. 463.

Prior to the entry of importers into the Fittings market, in addition to McWane, full line 

domestic manufacturers included U.S. Pipe and Foundry Company (“U.S. Pipe”), Griffin Pipe 

(“Griffin”), and American Cast Iron Pipe Company (“ACIPCO”). F. 462. These other 

domestic foundries either dramatically reduced or exited domestic Fittings production in the 

face of the flood of cheap imports from China, Korea, India, Mexico, and Brazil. F. 472-475. 

Fittings manufactured in foreign countries such as China are far less expensive than Fittings 
243

manufactured domestically because labor and wages are cheap and environmental, health, and 

safety protocols are much less onerous than those of the United States. F. 468. 

In response to what it saw as a flood of cheap imports, McWane filed a complaint 

before the International Trade Commission (“ITC”). F. 469. In December 2003, the ITC 

determined that Fittings from China had surged “into the United States in such increased 

quantities or under such conditions as to cause market disruption to the domestic producers[,]” 

but the President declined to impose the recommended tariffs. F. 470-471. Believing that it 

could not remain competitively viable with only its United States manufacturing operations, 

McWane made the decision to build its own foundry in China. F. 16, 477. 

With this background in mind, the Initial Decision turns to the issue of the relevant 

product markets in this case.

2. Relevant product markets

a. General legal standards

A relevant product market consists of “products that have reasonable interchangeability 

for the purposes for which they are produced - - price, use and qualities considered.” United 

States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 404 (1956). “In determining relevant 

product markets, courts have traditionally considered two factors: ‘(1) the reasonable 

interchangeability of use and (2) the cross-elasticity of demand between the product itself and 

substitutes for it.’” FTC v. CCC Holdings Inc., 605 F. Supp. 2d 26, 38 (D.D.C. 2009) (quoting

Brown Shoe, 370 U.S. at 325). 

Two products are reasonably interchangeable if they can be used for the same purpose. 

FTC v. Staples, 970 F. Supp. 1066, 1074 (D.D.C. 1997). Cross-elasticity of demand refers to 

the “responsiveness of the sales of one product to price changes of the other.” du Pont, 351 

U.S. at 400. Thus, “[i]nterchangeability of use and cross-elasticity of demand look to the 

availability of products that are similar in character or use to the product in question and the 

degree to which buyers are willing to substitute those similar products for the product.” FTC v. 

Swedish Match, 131 F. Supp. 2d 151, 157 (D.D.C. 2000) (citing du Pont, 351 U.S. at 393); In 

re Evanston Nw. Healthcare Corp., 2007 FTC LEXIS 210, at *144 (Aug. 6, 2007). 
244

b. Fittings for use on open specification jobs

The first relevant product market in this case is the supply of ductile iron pipe fittings of 

24” and smaller in diameter, that are sold for use on open specification jobs (“Fittings”). 

F. 480. As explained below, it is appropriate to group ductile iron pipe fittings of 24” and 

smaller in diameter into a cluster market and there are no widely available substitutes for 

ductile iron pipe fittings. As discussed in the following section, ductile iron pipe fittings of 24” 

and smaller in diameter that are made in the United States and that are sold for use on jobs with 

domestic-only specifications (“Domestic Fittings”) are another relevant product market, a

submarket of the Fittings market.

i. Fittings 24” and smaller are an appropriate cluster

While there are thousands of different Fittings, as discussed below, it is appropriate to 

group all Fittings (24” and smaller in diameter) into a single product market. A cluster of 

products can constitute a relevant market, even if the individual components of the cluster may 

not all be – and likely are not – interchangeable or substitutable. See United States v. 

Philadelphia Nat’l Bank, 374 U.S. 321, 356 (1963) (holding that cluster of products and 

services constituting “commercial banking” constituted a relevant market); Staples, 970 F. 

Supp. at 1074. “[C]luster markets [are] based on analytical convenience [and] are [both] useful 

and appropriate for evaluating competitive effects” under appropriate circumstances. In re 

Promedica Health Sys., Inc., 2012 FTC LEXIS 58, at *48-49 (Mar. 28, 2012).

Using cluster markets is appropriate when the applicable competitive conditions are 

identical or nearly so for the entire class of products. For example, in Brown Shoe, the 

defendant appealed the district court’s finding that children’s shoes represented one relevant 

product market, arguing that such a market includes products that are not reasonably 

interchangeable for one another: “Brown argues, for example, that ‘a little boy does not wear a 

little girl’s black patent leather pump’ and that ‘[a] male baby cannot wear a growing boy’s 

shoes.’” 370 U.S. at 327. The Court reached the pragmatic conclusion that to subdivide the 

children’s shoe market on the basis of size, age, and sex would not advance the antitrust 

analysis, and therefore was unnecessary:
245

Further division does not aid us in analyzing the effects of this merger. 

. . . Appellant can point to no advantage it would enjoy were finer 

divisions than those chosen by the District Court employed. Brown 

manufactures significant, comparable quantities of virtually every type 

of nonrubber men’s, women’s, and children’s shoes. Thus, whether 

considered separately or together, the picture of this merger is the same.

Id.

The thousands of different types and sizes of Fittings in this case generally are not 

substitutes for each other. F. 498, 500. For example, a four inch diameter Fitting cannot 

substitute for an eight inch Fitting because it would not fit on an eight inch pipe; and a Fitting 

with a ninety degree “bend” cannot substitute for a Fitting with a forty-five degree bend (or for 

a straight Fitting). See F. 500. However, all Fittings sized 24” and smaller in diameter are 

manufactured in substantially the same manner and with the same inputs, are sold to the same 

network of wholesale waterworks distributors for resale to the same End Users, are sold for the 

same end uses, and are sold in every state in the country. F. 501-503. 

It is not necessary to analyze each size and shape of ductile iron pipe fittings in the 

range of 24” and below as a separate market. CX 2260-A (Schumann Rep. at 13); Schumann, 

Tr. 3791-3792. The market analyses of each of these Fittings items would be essentially 

identical because the primary suppliers, customers, and Distributors are the same and the 

materials and other inputs used to produce the products are the same. CX 2260-A (Schumann 

Rep. at 13); Schumann, Tr. 3791-3792. 

The rationale supporting a cluster market of Fittings 24” in diameter and smaller does 

not support the inclusion of large ductile iron pipe fittings in the same market. Fittings of 24” 

in diameter and smaller are sold for different uses than fittings over 24” in diameter. See 

F. 289-292, 510-511. Whereas Fittings of 24” or less are typically used underground, for 

residential work, and by municipalities or plants with long transmission lines, fittings over 24” 

in diameter are used for large treatment plants or large transmission lines and are a more 

unusual size for the industry. F. 289-292, 510-511. Fittings 24” in diameter and below make 

up around 90% of the overall market for ductile iron pipe fittings. F. 290. 
246

Historically, the waterworks industry has differentiated Fittings of 3” to 24” in diameter 

from fittings of 30” or greater in diameter. F. 515. Moreover, McWane’s internal documents 

group Fittings into categories of 24” or less and 24” or greater. F. 514. The January 2009 

DIFRA Report (F. 8, 741-742) also grouped shipments of Fittings by three size ranges: 2”-12”, 

14”-24”, and over 24”. F. 516. 

In addition, whereas over 90% of Fittings below 24” are sold by three manufacturers, 

McWane, Sigma, and Star, there is a fourth substantial supplier of ductile iron pipe fittings of 

30” and larger, ACIPCO. F. 154-155. ACIPCO has an approximate market share of around 40

percent in ductile iron pipe fittings of 30” and larger in diameter. F. 513. ACIPCO exited the 

manufacture of fittings under 30” in diameter in 2006 and does not have any interest in 

extending its product scope to include small and medium diameter Fittings. F. 155, 1065. For 

these reasons, fittings above 24” in diameter are not properly included in the relevant product 

market in this case. See also CX 2260-A (Schumann Rep. at 14).

Thus, for the above stated reasons, ductile iron pipe fittings with a diameter of 24” or 

less can be analyzed as if they are part of a single product market. See also CX 2260-A

(Schumann Rep. at 13); RX 712A (Normann Rep. at 23 (“domestic and imported product are 

routinely sold to the same distributors, sold for the same end use, and . . . sold in every state in 

the country”)).

ii. No widely used substitutes for ductile iron pipe 

Fittings

Products are included in the same relevant market only if they are both functionally and 

reasonably interchangeable. United States v. Chas. Pfizer & Co., 246 F. Supp. 464, 468 n.3 

(E.D.N.Y. 1965); accord FTC v. Arch Coal, Inc., 329 F. Supp. 2d 109, 119 (D.D.C. 2004). See 

Brown Shoe, 370 U.S. at 325 (identifying “reasonable interchangeability of use” between 

products as determinative of product market parameters); Swedish Match, 131 F. Supp. 2d at 

157 (considering both the “similar in character or use to the product in question” and whether 

“buyers are willing to substitute those similar products” when analyzing substitution).
247

There are no widely used substitutes that constrain the price of ductile iron pipe 

Fittings. F. 492. Indeed, McWane admits that there are no “widely used substitutes” for 

Fittings. (Answer ¶ 23). The closest substitute for Fittings are fittings made from a type of 

plastic: polyvinyl chloride (“PVC fittings”). F. 481. However, as explained below, PVC 

fittings are not reasonably interchangeable with Fittings. 

In the view of consumers, PVC fittings are more expensive, have lower pressure ratings, 

are more difficult to restrain and install, and are viewed as more susceptible to fracture than 

Fittings. F. 482-484, 487. In addition, PVC fittings are limited in size to 12” and below and 

some jurisdictions do not allow plastic fittings. F. 485-486. 

In the view of the manufacturers of Fittings, PVC fittings are not reasonable substitutes 

for Fittings. McWane’s Price Coordinator and Quality Manager, Mr. Vince Napoli, who has 

over 20 years of industry experience and was formerly responsible for interpreting product 

specifications and suitable product applications at McWane, testified at his deposition that:

“[n]o one, to my knowledge, has come up with a good plastic substitute for the strength of 

ductile iron.” F. 484. Mr. Napoli further explained that, in connection with high-pressure 

applications, “I don’t recall ever seeing a PVC fitting even attempt to be used by an engineer 

[End User].” F. 483. 

Further, Fittings suppliers do not track the price of PVC fittings and do not take the 

price of PVC fittings into account when setting Fittings prices. F. 493. This indicates that 

Fittings and PVC fittings are not sensitive to each other’s price changes, and therefore are in 

separate markets. (CX 2260-A (Schumann Rep. at 10)). See Beatrice Foods v. FTC, 540 F.2d 

303, 309 (7th Cir. 1976) (finding separate market when manufacturers of one product did not 

consider price of other product in setting prices); Staples, 970 F. Supp. at 1075-79 (failure to 

track or react to prices of other products is evidence of separate markets); see also Brown Shoe, 

370 U.S. at 325 (identifying “sensitivity to price changes” of other products as a factor for 

market definition); Staples, 970 F. Supp. at 1076 (defendant’s internal documents comparing its 

prices to some companies’ prices, but not to other companies’ prices, indicate the boundaries of 

the product market). 
248

Fittings are a small sub-segment of the overall waterworks market, comprising 5% or 

less of the total cost of a typical waterworks project. F. 326. An increase in price in Fittings 

does not lead to a reduction in demand for Fittings. F. 327-328. McWane’s economic expert, 

Dr. Parker Normann, confirmed that “industry demand for [Fittings] is likely inelastic,” i.e., 

that demand does not decline significantly as price increases. (RX 712A (Normann Rep. at 

24)). This acknowledgment that consumers cannot substitute an alternative product when faced 

with a price increase for Fittings indicates that Fittings constitute a relevant antitrust product 

market. See FTC v. Whole Foods Mkt., 548 F.3d 1028, 1038 (D.C. Cir. 2008). For the reasons 

set forth above, ductile iron pipe fittings of 24” and smaller in diameter, that are sold for use on 

open specification jobs, constitute a relevant product market (“the Fittings market”).

c. Fittings for use with domestic-only specification jobs

There is also a separate relevant product market for ductile iron pipe fittings of 24” and 

smaller in diameter that are made in the United States, for use in waterworks projects with 

domestic-only specifications (the “Domestic Fittings market”). F. 518. Domestic Fittings are 

properly clustered into Fittings sized 24” and smaller in diameter for the same reasons as 

Fittings sold into open specifications. The Domestic Fittings market is comprised of Domestic 

Fittings sold into all domestic-only specifications, including domestic-only specifications 

required by law and those based upon End User preference. 

i. No reasonable substitutes for Domestic Fittings 

in domestic-only specifications 

In form and functionality, imported and Domestic Fittings are completely 

interchangeable: they are manufactured with the same general materials; meet the same 

AWWA standards; and provide the same functionality and role in waterworks projects. F. 517. 

Thus, in waterworks projects with open specifications, imported and Domestic Fittings are 

substitutes for each other. F. 349-350.

However, in waterworks projects where the End User’s specification calls for a 

Domestic Fitting, a Distributor will not purchase an imported Fitting; only Domestic Fittings 

can be used. F. 350. Thus, for a buyer, i.e., the Distributor having to supply Fittings for a 
249

domestic-only waterworks specification, imported Fittings are not interchangeable or a 

reasonable substitute for Domestic Fittings on domestic-only specifications. Accordingly, 

because there are no reasonable substitutes, Domestic Fittings sold into waterworks projects 

with domestic-only specifications are a relevant product market. See du Pont, 351 U.S. at 394-

95 (defining relevant product market to include all products that are reasonable substitutes for 

the same purpose for a buyer); Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1435 (9th 

Cir. 1995) (same). 

The evidence in this case demonstrates that some waterworks projects are legally 

required to use only Domestic Fittings. F. 519-523, 526. Indeed, Respondent’s expert witness

acknowledges: “There are some locations that have a preference or legal requirements for 

American-made fittings, but this segment is no more than 20% of the market, is declining, and 

the preferences only apply at certain price ranges.” (RX 712A (Normann Rep. at 24)). 

Jurisdictions that legally require Buy American specifications include the State of 

Pennsylvania, the State of New Jersey, the United States Air Force, and various municipalities 

located across the United States. F. 520-523. In addition, in February 2009, Congress passed

the American Recovery and Reinvestment Act of 2009 (“ARRA”). F. 7. ARRA allocated 

more than $6 billion to water infrastructure projects. F. 524. Waterworks projects funded by 

ARRA were required by federal law to use Domestic Fittings. F. 526-527. 

Respondent contends that the United States Environmental Protection Agency (“EPA”) 

granted a number of waivers permitting imported Fittings to be used on ARRA-funded jobs 

(RRB at 57). The evidence demonstrates that the use of such waivers was insignificant. 

F. 531-533, 537. Neither McWane nor Star sold any imported Fittings for use in any ARRAfunded waterworks projects. F. 538, 540. To the extent that Sigma’s imported Fittings were 

used on any ARRA-funded waterworks project, the quantities were few and the circumstances 

limited. F. 539. Other suppliers, Metalfit, SIP, and Electrosteel, each were unaware of any 

instances where imported Fittings were used for ARRA-funded projects. F. 543, 545-546. 

Distributors HD Supply, Ferguson, and Illinois Meter, did not know of any instance in which a 

customer used an imported Fitting for an ARRA-funded waterworks project, or any instance in 

which a customer received a waiver of ARRA’s Buy American requirement for a Fittings 

purchase. F. 541-542, 544. 
250

“To the extent that regulation limits substitution, it may define the extent of the 

market.” Phillip Areeda & Herbert Hovenkamp, Antitrust Law ¶ 572b at 430 (3d ed. 2007);

U.S. Dep’t of Justice & Fed. Trade Comm’n, Horizontal Merger Guidelines, § 4.2.2 (example 

15, describing where “[c]ustomers in the United States must use products approved by U.S. 

regulators[,] . . . [t]he relevant product market consists of products approved by U.S. 

regulators”) (Aug. 19, 2010) available at http://www.ftc.gov/os /2010/08/100819hmg.pdf 

(hereafter “Merger Guidelines § __”); Apani Southwest, Inc. v. Coca-Cola Enters., 300 F.3d 

620, 626 (5th Cir. 2002) (regulatory constraints impeding the free flow of competing goods 

may be considered in defining relevant market). Here, not only were there legal requirements 

that only Domestic Fittings be used in some waterworks projects, the evidence overwhelming 

showed these regulations did in fact limit substitution.

Respondent further contends that, while there are municipal engineers or other 

customers who prefer to buy Domestic Fittings, “preferences alone . . . are insufficient as a 

matter of law to serve as the basis for a finding that domestic Fittings constitute a separate 

relevant antitrust market.” RB at 86. However, consumer preference is critical in defining the 

market. “After all, market definition focuses on what products are reasonably substitutable; 

what is reasonable must ultimately be determined by ‘settled consumer preference.’” Whole 

Foods, 548 F.3d at 1039 (emphasis in original) (citation omitted). Other cases cited by 

Respondent (RB at 86-87) illustrate the importance of consumer preference in defining 

markets. Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327, 1338 (11th Cir. 2010) (consumer 

preferences are “crucial to understanding whether a separate market exists”); Buehler AG v. 

Ocrim S.p.A., 836 F. Supp. 1305, 1325-26 (N.D. Tex. 1993) (defining relevant market to 

consist of both American and European roller mills, rather than a European-only market, 

because consumers “typically consider both types before purchase”). Furthermore, Distributors 

consistently testified that Distributors will not purchase an imported Fitting if the End User’s 

specification calls for a Domestic Fitting. F. 527, 537, 542, 544. Additionally, in light of the 

Buy America legal requirements, it is not “preferences alone” that creates the separate domestic

only market. 
251

Respondent also contends that the vast majority of specifications are open to both 

imports and Domestic Fittings, that cheap imports now constitute the lion’s share of all Fittings 

purchased in the United States today, and that ARRA had little or no impact on Domestic 

Fittings during its short lifespan. RB at 83-84. Even if the vast majority of specifications are 

open to imports and Domestic Fittings and even if ARRA had little impact on Domestic 

Fittings (infra III.G.2.), such points go to the size of the Domestic Fittings market, and not to 

the issue of whether such a market exists.

ii. Fittings sold into domestic-only specifications are 

priced differently than Fittings sold into open 

specifications

McWane charges different prices for Fittings sold into open specifications than it does 

for Fittings sold into domestic-only specifications. F. 1075; see also infra Section 

III.G.2.b.ii.(a). For example, in McWane’s February 2008 price multipliers7

, domestically 

manufactured fittings sold into domestic-only specifications were substantially higher than its 

February 2008 “blended” multipliers (a mix of imported and domestically manufactured 

Fittings sold into open specifications projects). F. 1075-1076. 

A substantial gap in pricing can be indicative of separate markets. Geneva Pharms. 

Tech. Corp. v. Barr Labs., 386 F.3d 485, 497 (2d Cir. 2004). In Geneva Pharmaceuticals, the 

court found that generic and branded drugs were not in the same market despite therapeutic 

equivalence because sustained price differential showed that neither product constrained the 

other’s pricing. Id. at 496-97. Similarly, in U.S. Anchor Mfg. v. Rule Indus., 7 F.3d 986, 997-

98 (11th Cir. 1993), where there was “no reasonable possibility that a significant number of 

consumers would have switched to [patented products], many of which were offered at nearly 

double the price of their generic substitutes, in response to more modest increases in generic 

prices,” “distinctly higher prices, a distinct group of customers, strongly inelastic demand and 

limited substitution of supply” weighed heavily in determining the relevant product market. Id. 

“Moreover, the higher prices charged for [the patented product] are evidence that a distinct 

group of customers was unwilling to switch away from the prestigious branded product in 

 7 Multipliers are published discounts off a Fittings supplier’s published list price. F. 419. 
252

response to price increases above competitive levels.” Id. See also Merger Guidelines at 

§ 4.1.4 (“If a hypothetical monopolist could profitably target a subset of customers for price 

increases, the Agencies may identify relevant markets defined around those targeted customers, 

to whom a hypothetical monopolist would profitably and separately impose at least a [small but 

significant and non-transitory increase in price] SSNIP.”); United States v. Aluminum Co. of 

America, 377 U.S. 271, 276 (1964) (“[W]here insulated aluminum conductor pricewise stands 

so distinctly apart, to ignore price in determining the relevant line of commerce is to ignore the 

single, most important, practical factor in the business.”).

The evidence establishes that, regardless of price, a Distributor will not purchase an 

imported Fitting if the End User’s specification calls for a Domestic Fitting. Where the price of 

Domestic Fittings sold into domestic-only specifications stands so distinctly apart from Fittings 

sold into open specifications, this important, practical factor is further evidence that Domestic 

Fittings sold into domestic-only specifications make up a separate product market. For the 

reasons set forth above, ductile iron pipe fittings of 24” and smaller in diameter that are made 

in the United States, for use in waterworks projects with domestic-only specifications,

constitute a relevant product market (“the Domestic Fittings market”).

3. Geographic market

Complaint Counsel contends that the relevant geographic market for both the Fittings 

market and the Domestic Fittings market is the United States. CCB at 70-81. Respondent does 

not address this issue in either its Post Trial Brief or Reply Brief. Respondent’s expert witness

opines that the geographic market is no larger than the United States; however, it may be 

smaller than the whole United States, as there may be separate regional markets. F. 553.

A relevant geographic market is defined as “the ‘area of effective competition . . . in 

which the seller operates, and to which the purchaser can practicably turn for supplies.’” 

Philadelphia Nat’l Bank, 374 U.S. at 359 (quoting Tampa Electric Co. v. Nashville Coal Co.,

365 U.S. 320, 327 (1961)); see also Morgenstern v. Wilson, 29 F.3d 1291, 1296 (8th Cir. 1994)

(defining the relevant geographic market as the “area to which consumers can practicably turn 

for alternative sources of the product and in which the antitrust defendants face competition”).
253

The market area in which the Fittings suppliers operate and to which the purchasers can 

practicably turn for supply, is the United States. F. 554. For example, McWane, Sigma, and 

Star each use warehouses and distribution centers located throughout the United States to 

supply Fittings to waterworks distributors across the United States. F. 551. Specifically, 

McWane has distribution centers that enable one to two day delivery to 95 percent of the 

United States. F. 551. Sigma has five main warehouses, some satellite warehouses, and 

distribution centers in Florida, California, Washington, and Arizona. F. 551. Star has thirteen 

distribution centers in the United States, in order to “stock product closer to [customers] for 

better delivery times.” F. 551. From the perspective of a local Distributor, the Fittings of one 

manufacturer are interchangeable with those of another manufacturer located elsewhere in the 

United States. F. 552. Both Complaint Counsel’s and Respondent’s expert witnesses opined 

that the geographic market is no larger than the United States; however, it may be smaller than 

the whole United States, as there may be separate regional markets. F. 553.

Defining the relevant geographic market as the United States is common where, as here, 

firms use competing distribution networks supplying the entire nation. E.g., FTC v. Cardinal 

Health, 12 F. Supp. 2d 34, 50 (D.D.C. 1998) (“the wholesale [drug] industry is largely driven 

by the competition that takes place on a national level”); Frito-Lay, Inc. v. Bachman Co., 659 

F. Supp. 1129, 1138 (S.D.N.Y. 1986) (“Defendant’s contention that the entire United States 

constitutes the relevant geographic market is a logical one since Frito-Lay distributes [salted 

snack foods] throughout the United States.”). 

For the above stated reasons, in the Fittings market, the relevant geographic market is 

the United States. By definition, purchasers of Fittings in the Domestic Fittings market can 

turn only to manufacturers that produce fittings in the United States. It follows that, in 

connection with the supply of Domestic Fittings, the relevant geographic market is the United 

States. Accordingly, the relevant geographic market for both the Fittings market and the 

Domestic Fittings market is the United States.
254

D. Count One: Alleged Conspiracy with Sigma and Star to Stabilize and Raise 

Fittings Prices 

1. Overview 

a. Conspiracy law

Count One of the Complaint charges that McWane conspired with Sigma and Star to 

raise and stabilize prices in the Fittings market. Section 1 of the Sherman Act provides in 

pertinent part: “Every contract, combination in the form of trust or otherwise, or conspiracy, in 

restraint of trade or commerce among the several States, or with foreign nations, is declared to 

be illegal.” 15 U.S.C. § 1. A violation of Section 1 of the Sherman Act also constitutes an 

unfair method of competition under Section 5 of the FTC Act, 15 U.S.C. § 45. See California 

Dental Ass’n, 526 U.S. at 762 & n.3; FTC v. Motion Picture Adver. Service Co., 344 U.S. 392, 

394-95 (1953). 

To prevail on this Count, Complaint Counsel must prove: “(1) the existence of an 

agreement, combination or conspiracy, (2) among actual competitors (i.e., at the same level of 

distribution), (3) with the purpose or effect of ‘raising, depressing, fixing, pegging, or 

stabilizing the price of a commodity,’ (4) in interstate or foreign commerce.” Cayman 

Exploration Corp. v. United Gas Pipe Line Co., 873 F.2d 1357, 1361 (10th Cir. 1989) (citing

United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 216-19 (1940); National Soc’y of 

Prof’l Engineers v. United States, 435 U.S. 679 (1978)).

A conspiracy to raise and stabilize prices is illegal per se under Section 1. SoconyVacuum Oil Co., 310 U.S. at 223 (“[A] combination formed for the purpose and with the effect 

of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or 

foreign commerce is illegal per se.”); United States v. Container Corp. of America, 393 U.S. 

333, 337 (1969) (stating that “interference with the setting of price by free market forces is 

unlawful per se”). See also Northern Pac. Ry. v. United States, 356 U.S. 1, 5 (1958) (stating 

that price fixing agreements are among those “certain agreements or practices which because of 

their pernicious effect on competition and lack of any redeeming virtue are conclusively 

presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise 
255

harm they have caused or the business excuse for their use”); Leegin Creative Leather Prods. v. 

PSKS, Inc., 551 U.S. 877, 886 (2007) (“Restraints that are per se unlawful include horizontal 

agreements among competitors to fix prices . . . .”).

“The existence of an agreement is ‘the very essence of a section 1 claim.’” In re Flat 

Glass Antitrust Litig., 385 F.3d 350, 356 (3d Cir. 2004) (quoting Alvord-Polk, Inc. v. 

Shumacher & Co., 37 F.3d 996, 999 (3d Cir. 1994)). Section 1 of the Sherman Act “does not 

prohibit [all] unreasonable restraints of trade[;] . . . only restraints effected by a contract, 

combination, or conspiracy. . . .” Copperweld Corp. v. Independence Tube Corp., 467 U.S. 

752, 775 (1984). As the First Circuit Court of Appeals has summarized:

Section 1 by its plain terms reaches only “agreements” -- whether tacit or 

express. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 553, 127 S. Ct. 1955, 167 L. 

Ed. 2d 929 (2007). It does not reach independent decisions, even if they lead to 

the same anticompetitive result as an actual agreement among market actors. 15 

U.S.C. § 1; Am. Needle, Inc. v. Nat’l Football League, 130 S. Ct. 2201, 2208-09, 

176 L. Ed. 2d 947 & n.2 (2010); Clamp-All Corp. v. Cast Iron Soil Pipe Inst., 

851 F.2d 478, 484 (1st Cir. 1988). The statute “does not require sellers to 

compete; it just forbids their agreeing or conspiring not to compete.” In re Text 

Messaging Antitrust Litig., No. 10-8037, 630 F.3d 622, 2010 U.S. App. LEXIS 

26299, 2010 WL 5367383, at *4 (7th Cir. Dec. 29, 2010) (Posner, J.).

White v. R.M. Packer Co., 635 F.3d 571, 575 (1st Cir. 2011). 

Thus, the crucial question in determining conspiracy is “whether the challenged 

anticompetitive conduct ‘stem[s] from independent decision or from an agreement . . . .’” Bell 

Atl. Corp. v. Twombly, 550 U.S. 544, 553 (2007). An “agreement” is “a unity of purpose or a 

common design and understanding, or a meeting of minds” as to the alleged unlawful 

arrangement at issue. American Tobacco Co. v. United States, 328 U.S. 781, 810 (1946). In 

other words, there must be a “conscious commitment to a common scheme designed to achieve 

an unlawful objective.” Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984). 

A conspiracy may be demonstrated by direct or circumstantial evidence. See Monsanto, 

465 U.S. at 768. “Direct evidence in a Section 1 conspiracy must be evidence that is explicit 

and requires no inferences to establish the proposition or conclusion being asserted.” In re 

Baby Food Antitrust Litig., 166 F.3d 112, 118 (3d Cir. 1999). As a practical matter, however, it 
256

is rare to be able to prove a conspiracy with direct evidence, such as explicit agreements or 

admissions of conspiracy; more typically, the proponent of an alleged conspiracy will rely upon 

inferences drawn from circumstantial evidence, such as the conduct of the parties. City of 

Tuscaloosa v. Harcros Chemicals, 158 F.3d 548, 569 (11th Cir. 1998); ES Dev., Inc. v. RWM 

Enterprises, 939 F.2d 547, 553-54 (8th Cir. 1991); VI Phillip E. Areeda & Herbert 

Hovenkamp, Antitrust Law ¶ 1410c at 71 (3d ed. 2010) (hereafter, “Areeda”). Such 

circumstantial evidence will “usually be . . . of two types -- economic evidence suggesting that 

the defendants were not in fact competing, and noneconomic evidence suggesting that they 

were not competing because they had agreed not to compete.” In re High Fructose Corn Syrup 

Antitrust Litig., 295 F.3d 651, 655 (7th Cir. 2002).

b. Complaint Counsel’s conspiracy theory

Complaint Counsel posits a complex, multi-phase conspiracy among McWane, Sigma, 

and Star (hereafter, the “Suppliers”8

), engineered by McWane, to raise and stabilize Fittings 

prices by curtailing certain discounting practices and increasing price transparency. Complaint 

Counsel argues that this agreement manifested itself in three separate “episodes.” CCB at 107. 

The first “episode” claimed by Complaint Counsel is that in or around January 2008, McWane, 

Sigma, and Star formed an agreement to “curtail” Project Pricing, a form of discounting off 

published multipliers that is common in the Fittings market. CCB at 107-108. The second 

“episode,” according to Complaint Counsel, is that in or around May 2008, in an effort to 

further increase the transparency of Fittings prices, McWane, Sigma, and Star “unlawfully 

exchanged assurances related to” the formation of the Ductile Iron Fittings Research 

Association (“DIFRA”) and the “exchange of” certain Fittings tons-shipped data. CCB at 108. 

The third “episode,” charged by Complaint Counsel, is that in or around April 2009, McWane 

and Star exchanged mutual assurances to adhere to McWane’s newly announced price list. 

CCB at 108. Complaint Counsel seeks to prove the single, overall price fixing conspiracy by 

proving one or more of the foregoing “sub-agreements.” Id.

McWane responds that: there is no direct evidence of conspiracy and the circumstantial

evidence fails to demonstrate any agreement involving McWane; the evidence at best

 8 The capitalized term “Suppliers” refers only to McWane, Sigma, and Star. In instances where the term is used to 

encompass other manufacturers of Fittings, the lowercase term “suppliers” is used. 
257

demonstrates oligopolistic conscious parallelism, which is legal; the evidence shows McWane 

acted independently and competitively at all times and it did not engage in any pricing 

discussions with its competitors; the economic evidence shows the Fittings market was 

competitive during the relevant time period; and prices were neither “raised” nor “stabilized” in 

the Fittings market. 

In determining whether the behavior at issue in this case “stemmed from independent 

decision or from an agreement, tacit or express,” Theatre Enterprises v. Paramount Film 

Distrib. Corp., 346 U.S. 537, 540 (1954), the duty of the fact finder is “to look at the whole 

picture and not merely at the individual figures in it.” Continental Ore Co. v. Union Carbide & 

Carbon Corp., 370 U.S. 690, 699 (1962). “[C]ircumstantial evidence alone cannot support a 

finding of conspiracy when the evidence is equally consistent with independent conduct. In 

such a case, the evidence of conspiracy would not preponderate.” Re/Max Int’l, Inc. v. Realty 

One, Inc., 173 F.3d 995, 1009 (6th Cir. 1999). Thus, “an inference of a conspiracy to restrain 

trade must be more probable than the inference of independent action in order for the inference 

of conspiracy to be drawn.” Kreuzer v. American Academy of Periodontology, 735 F.2d 1479, 

1488 n.14 (D.C. Cir. 1984). Indeed, where “taken as a whole, the evidence points with at least 

as much force toward unilateral actions . . . as toward conspiracy,” a fact finder cannot reach 

the latter conclusion without engaging in “impermissible speculation,” and such evidence is 

“insufficient as a matter of law to support a finding of conspiracy.” Venture Technology, Inc. v. 

National Fuel Gas Co., 685 F.2d 41, 48 (2d Cir. 1982) (reversing jury verdict). Before 

analyzing the evidence and applicable law in more detail, a preliminary discussion of the nature 

of oligopolies is set forth below.

c. Oligopoly

The Fittings market is an oligopoly. F. 362. The term “oligopoly” means few sellers. 

Areeda, ¶ 1429a at 221. An oligopoly has been further defined as “an economic condition 

where only a few companies sell substantially similar or standardized products.” Blomkest 

Fertilizer, Inc. v. Potash Corp. of Saskatchewan, 203 F.3d 1028, 1031 n.3 (8th Cir. 2000) 

(quoting Black’s Law Dictionary 1086 (6th ed. 1990)); see also Areeda, ¶ 404a at 9 (“An 
258

oligopoly market is one in which a few relatively large sellers account for the bulk of the 

output.”). 

An oligopoly is distinctly characterized by “recognized interdependence” among the 

firms in the oligopoly. Areeda, at ¶ 404a; see also Rebel Oil, 51 F.3d at 1443 (“[b]y definition, 

oligopolists are interdependent . . .” (citation omitted)). The term, “‘interdependent’ merely

describes the phenomenon of sequential pricing decisions that are each made (1) in response to 

the ones preceding it and (2) in hope or expectation of the ones that follow it.” In re Petroleum 

Products Antitrust Litig., 906 F.2d 432, 442 n.5 (9th Cir. 1990). A participant in an oligopoly 

market dominated by a small number of firms is aware that “any single firm’s ‘price and output 

decisions will have a noticeable impact on the market and on its rivals.’” Flat Glass, 385 F.3d 

at 359 (citation omitted). It follows, according to the theory of interdependence, that a rational 

oligopolist “must take into account the anticipated reaction” of its rivals when making 

decisions about price and other issues. Id. As the Areeda treatise further explains:

In a market inhabited by 1,000 small firms, for example, a single firm could 

double its output without any expectation that total supply would be so affected 

as to cause any price change; the effects of the firm’s increased sales would be 

so diffused among its numerous competitors that they would not be aware of any 

change. By contrast, in a market served by three large companies, each firm 

must know that if it reduces its price and increases its sales at the expense of its 

rivals, they will notice the sales loss, identify the cause, and probably respond.

In short, each firm is aware of its impact upon the others. Though each may 

independently decide upon its own course of action, any rational decision must 

take into account the anticipated reaction of the other two firms. Whenever 

rational decision making requires an estimate of the impact of any decision on 

the remaining firms and an estimate of their response, decisions are said to be 

“interdependent.”

Id. ¶ 1429a at 221-222.

It is possible for sellers in an oligopoly to “in effect share monopoly power, setting their 

prices at a profit-maximizing, supracompetitive level by recognizing their shared economic 

interests and their interdependence with respect to price and output decisions.” Brooke Group

v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993). “An oligopolist can 

increase market price, but only if the others go along.” Rebel Oil, 51 F.3d at 1443 (citation 

omitted). Through “recognizing their shared economic interests and their interdependence with 
259

respect to price and output decisions’ . . . , [e]ach producer may independently decide that it 

can maximize its profits by matching one or more other producers’ price, on the hope that the 

market will be able to maintain high prices if the producers do not undercut one another.” 

White, 635 F.3d at 576 (quoting in part Brooke Group, 509 U.S. at 227). However, because 

such conduct, variously referred to as “conscious parallelism,” “tacit collusion,” or 

“oligopolistic price coordination,” may stem from independent decision making, it is well 

established that the Sherman Act does not prohibit it. Brooke Group, 509 U.S. at 227; see E.I. 

du Pont de Nemours & Co., v. FTC, 729 F.2d 128, 139 (2d Cir. 1984) (“[T]he mere existence 

of an oligopolistic market structure in which a small group of manufacturers engage in 

consciously parallel pricing of an identical product does not violate the antitrust laws.”); 

Twombly, 550 U.S. at 553-54 (reiterating rule of Brooke Group that evidence of parallel 

behavior or even conscious parallelism alone, without more, is insufficient to establish a 

Section 1 violation); Baby Food, 166 F.3d at 122 (“In an oligopolistic market, . . . 

interdependent parallelism can be a necessary fact of life but be the result of independent 

pricing decisions.”); Flat Glass, 385 F.3d at 359 (“[A]ccording to the theory of 

interdependence, . . . firms in a concentrated market may maintain their prices at 

supracompetitive levels, or even raise them to those levels, without engaging in any overt 

concerted action.”).

“Because of their mutual awareness, oligopolists’ decisions may be interdependent 

although arrived at independently.” Areeda, ¶ 1429 at 221. Accordingly, as the court stated in 

Clamp-All Corp. v. Cast Iron Soil Pipe Inst., 851 F.2d 478 (1st Cir. 1988): “Courts . . . have 

almost uniformly held, at least in the pricing area, that . . . individual pricing decisions (even 

when each firm rests its own decision upon its belief that competitors will do the same) do not

constitute an unlawful agreement under section 1 of the Sherman Act. . . . That is not because 

such pricing is desirable (it is not), but because it is close to impossible to devise a judicially 

enforceable remedy for ‘interdependent’ pricing. How does one order a firm to set its prices 

without regard to the likely reactions of its competitors?” Id. at 484 (italics in original).

The particular analytical challenge when evaluating an alleged conspiracy in an 

oligopolistic market, such as is presented in this case, is to distinguish between mere tacit 

collusion, on the one hand, which is a function of interdependence, and is not unlawful, Brooke 
260

Group, 509 U.S. at 227, and an agreement, which requires finding a “conscious commitment” 

to a common, unlawful plan. See Areeda, ¶ 1410a at 68; Monsanto, 465 U.S. at 764. Although 

the language of Section 1 is broad enough to encompass a “tacit agreement,” i.e., an agreement 

that is reached through conduct rather than express words, “tacit coordination” is not unlawful. 

See High Fructose Corn Syrup, 295 F.3d at 654-55. Tacit coordination in an oligopoly market

“need not imply even a weak commitment or prior understanding as to how each will behave. 

The price leader may assume that others have made a similar calculation about which price will 

maximize profits. Or the leader may simply proceed by trial and error: raise the price and see 

what happens, especially where reversing an unfollowed price rise is not very costly.” Areeda, 

¶ 1410b at 71. “Notwithstanding the many difficulties in appraising the sufficiency of 

circumstantial evidence, we know what we are looking for: some level of commitment to a 

common course of action.” Areeda, ¶ 1410c at 72. Conduct indicating an agreement, 

particularly in the context of conscious parallelism, is “‘conduct [that] indicates the sort of 

restricted freedom of action and sense of obligation that one generally associates with 

agreement.’” Twombly, 550 U.S. at 557 n.4 (quoting with approval Blechman, Conscious 

Parallelism, Signalling and Facilitating Devices: The Problem of Tacit Collusion Under the 

Antitrust Laws, 24 N.Y.L.S. L. Rev. 881, 899 (1979)). Where interdependence seems likely, 

the finder of fact must “weigh all the evidence in the actual business context to decide whether 

a traditional agreement emphasizing commitment is more probable than not.” Id. At all times, 

“the ultimate burden of persuading the factfinder that a conspiracy exists is on the plaintiff.” 

Kreuzer, 735 F.2d at 1488.

2. Alleged agreement to curtail Project Pricing (Complaint Counsel’s 

“episode one”)

Complaint Counsel’s “episode one” of the alleged conspiracy to raise and stabilize 

prices is an asserted agreement among McWane, Sigma, and Star to “curtail” Project Pricing. 

Complaint Counsel seeks to prove this agreement to curtail Project Pricing by proving parallel 

conduct and certain “plus” factors, which, according to Complaint Counsel, demonstrate that 

the parallel conduct was the result of an agreement to curtail Project Pricing. This agreement, 

according to Complaint Counsel, began in January 2008 and “largely fell apart in the fall of 
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2008.” CCB at 114. Respondent denies any such agreement and contends that Complaint 

Counsel has failed to meet its burden of proving any agreement involving McWane. 

A summary of the material facts regarding the asserted agreement to curtail Project 

Pricing follows. Thereafter, the facts are analyzed in relation to the parties’ detailed arguments, 

in which additional facts are addressed as necessary. Finally, the evidence is weighed to 

determine whether, viewed as a whole, the inference of an agreement to curtail Project Pricing 

is more likely than not. 

a. Summary of Facts

i. Fittings Pricing

(a) Published pricing

The published prices for Fittings have two components: a nationwide list (or catalog) 

price, and a regional “multiplier” that reduces the list price. F. 413, 418-419. The “published 

price” or “standard price” for a given Fittings item in a given state is the list price multiplied by 

the then-applicable multiplier for that state. For example, if a Fitting has a $1,000 list price, 

and the Texas multiplier is .28, the published price for that individual Fitting in Texas will be 

$1,000 x .28, or $280. F. 414. Multipliers vary from state to state, based upon the prevailing 

competitive environment in each state. F. 420.

McWane, Sigma, and Star each publish their list prices in price books or catalogs that 

are widely disseminated to all of their customers (Distributors). F. 560. List prices are also 

posted on their public websites. F. 560. Any changes in multipliers are widely disseminated 

through letters sent from the Suppliers to Distributor customers, via fax or email, either on an 

individual state or region basis, or, in the case of the large national Distributors, via “multiplier 

maps” that identify local multipliers for each state across the United States. F. 423, 561.

McWane is an industry leader with respect to pricing, and the other Suppliers try to 

follow McWane as best they can. F. 555. Historically, when McWane announces new list 

prices, Sigma and Star generally follow with substantially matching list prices. F. 556. Sigma 

and Star generally also try to match new multipliers published by McWane. F. 556. Any 
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published price increase by one Supplier that is not adopted by the other Suppliers will not be 

accepted in the market and will not be sustained. F. 557. As Mr. Daniel McCutcheon, then 

Vice President of Sales and Operations of Star explained: “[I]f you’re the highest-priced fitting 

in a commodity market, you’re not going to sell a lot of fittings.” F. 557. 

(b) Project Pricing

“Job prices,” “special prices,” or “project prices” are discounts off the published 

multiplier that are offered to Distributors bidding on a project (“Project Pricing”). F. 428, 430. 

Project Pricing, which is typically expressed in the form of a multiplier that is lower than the 

published multiplier, is generally negotiated in relation to a specific job and is a reaction to the 

competitive environment.9

 F. 431, 440. Most waterworks projects are individual projects 

subject to a bidding process. F. 331. For a specific project, Distributors commonly seek bids 

from multiple Fittings suppliers, including McWane, Sigma, and Star. F. 562. Distributors 

play the Suppliers off one another in an attempt to procure a lower price, by calling each of 

them, contending that another Supplier has offered a particular discount, and trying to get 

Suppliers to match or beat each other’s offers. F. 368-369, 565. Distributors consider price, 

service, relationship, financial stability, warranty, and product quality when selecting a Fittings 

supplier. F. 391. Price competition among Fittings suppliers takes place principally through 

Project Pricing, and to a lesser extent, through other price concessions such as rebates, 

reductions in freight charges, and/or extensions of credit or payment terms.10 F. 442. 

Project Prices are not published, and the Suppliers do not want their competitors to 

know when a Project Price is being offered, or the amount of any other price concessions, for 

fear that their competitors will offer a lower price and take the project. F. 435-436, 563-564. 

Thus, the Suppliers each work to gather competitive information from the field, typically 

through their sales persons, who attempt to learn from Distributors and then report back, prices 

 9 For example, in a state with a published multiplier of .30, the Supplier and Distributor may agree that, for a 

particular project, the multiplier will be .27.

10 In addition to its published multipliers and Project Pricing, McWane and the other Suppliers have historically 

offered customers a variety of other price concessions including freight concessions, cash discounts, extended 

payment terms, cash-backs, corporate rebates, and branch rebates. F. 430. The alleged conspiracy does not 

involve these other discounts.
263

being bid in the market. F. 571-573. However, the Suppliers may not trust information 

provided by the Distributor, because the Distributor has a financial incentive to “trick” 

Suppliers into offering a lower price. F. 565, 573. 

When one Supplier learns of a Project Price, the other Suppliers seek to match or beat it. 

F. 457. In addition, when Distributors in a given region learn of a Project Price being offered, 

other Distributors demand the same discount, so as to be competitive on their bids to the End 

User for the same job. F. 457. Furthermore, if a Supplier offers a special price to one 

Distributor, then the Supplier needs to be prepared to offer that special price to all Distributors 

bidding on that project. F. 459. Those Distributors then expect that lower price in later 

projects, and the spiral of declining prices can lead to zero gross margin. F. 459. To the extent 

that spiraling Project Pricing leads to price erosion and squeezed profits, Project Pricing is not 

good for a supplier’s long-term health. F. 457, 459-460. Therefore, suppliers would prefer not 

to offer Project Pricing. F. 460. Moreover, Project Pricing in the “auction” environment 

described above creates greater price instability and a loss of “visibility” as to where the true 

competitive price level is. F. 566. As described by McWane’s Fittings division Vice President 

and General Manager, Mr. Richard Tatman, bidding in this environment is “shooting in the 

dark.” F. 566. McWane prefers to have greater visibility into where the true competitive 

market level is, i.e., the actual selling prices, so it can know what price it is “shooting at.” As 

Mr. Tatman stated: “If I can see it, I can shoot it.” F. 567. Notwithstanding the problems with 

Project Pricing, described above, Project Pricing has been a standard practice in the Fittings 

market. F. 429. 

ii. Economic conditions in 2007

During 2007, with the economic decline, the Fittings industry experienced a period of 

declining demand, which resulted in increased price competition to the point of price erosion, 

and increased costs. F. 581. The price erosion in the Fittings market occurred not in published 

list prices or published multipliers, but in the effective or “actual” multiplier, which is the 

average weighted multiplier at which Fittings products are sold in a given area and includes 

Project Pricing, but not other discounts, such as rebates. F. 584. In summary, beginning in 

2007, demand for Fittings was falling because of the economic downturn and decreased 
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demand for new housing, which is the principal driver in Fittings demand. F. 579, 582. Rather 

than scaling back production and reducing inventory in the face of declining demand, the thenmanager of McWane’s Fittings business, Mr. David Green (F. 42), increased production to 

spread fixed costs over a higher production volume, thereby creating the appearance of 

reducing manufacturing costs in the short term. F. 590. Thus, as of late 2007, when Mr. 

Tatman replaced Mr. Green as general manager of McWane’s Fittings business (F. 21-23, 42), 

McWane had excess inventory and a need to increase volume. F. 591-593. 

With the economic decline, the Fittings market became more price competitive, as 

Distributors demanded discounts off published multipliers in order to compete for the limited 

number of jobs available with contractors. F. 583. Star, in particular, was known to be 

especially aggressive with its Project Pricing prior to 2008. F. 568-570. Project Pricing had 

been a key method through which Star, as the smallest of the Suppliers, grew its business and 

its market share. F. 568. At the same time as demand was declining and prices were eroding, 

the costs of doing business overseas, particularly in China, were increasing. F. 586. The 

acceleration of cost inflation overseas was greater than the cost inflation for domestic 

production, and thus was poised to affect importers, such as Sigma and Star, more severely than 

McWane and, to this extent, gave McWane a cost advantage. F. 588-589. McWane also found 

itself losing share in this market because McWane’s sales force was smaller than that of Sigma 

and Star, which inhibited McWane’s ability to detect and respond to Project Prices being 

offered in the field. F. 594-595. Due to this lack of visibility, and Sigma’s and Star’s more 

“aggressive” sales force, McWane was getting “beat at the pricing game.” F. 595-596. 

iii. McWane’s pricing strategy for 2008

On October 23, 2007, Sigma announced in a letter to its customers that, due to a 

difficult market and increased costs, it planned to implement a published multiplier increase on 

Fittings of “two or three” points, effective November 5, 2007, and a list price increase for all 

Sigma’s products, to be effective January 2, 2008, which would be “a minimum of 6%.” 

F. 602. On November 30, 2007, Star announced in a letter to its customers that Star would be 

publishing a new price list, effective January 1, 2008, although Star did not state a percentage 

increase. F. 603. McWane obtained copies of Sigma’s and Star’s customer letters. F. 617; see 
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CX 0627 at 010, 013 (F. 626).11 In late 2007, McWane needed to decide what its competitive 

strategy would be going forward, including how to react to the pricing information contained in 

Sigma’s and Star’s earlier customer letters, described above. F. 617, 625. 

As part of the decision making process within McWane, Mr. Tatman undertook a 

detailed analysis, which included the preparation of a spreadsheet in which he assessed and 

compared, for every state, McWane’s then-published multiplier, McWane’s “effective” 

multiplier (i.e., the multipliers at which McWane’s Fittings were being actually sold); a 

proposed new multiplier; and the percentage change and effect on revenue from the proposed 

multiplier. F. 627. Mr. Tatman included data for both blended Fittings (i.e., imported or U.S. 

made Fittings sold into open specification jobs (F. 349-351)) and Domestic Fittings (U.S. made 

Fittings sold into domestic-only specification jobs (F. 347)). F. 627. In addition, Mr. Tatman 

entered Sigma’s proposed new list prices, obtained from Sigma’s website, into a spreadsheet 

and applied them to the mix of products and volume McWane would likely sell, and 

determined that the weighted average of Sigma’s announced list price increase amounted to a 

25% increase. F. 628-629.

On December 22, 2007, Mr. Tatman sent an internal email to Mr. Leon McCullough, 

Executive Vice President of McWane in charge of the Fittings division (F. 28), with a copy to 

Mr. Thomas Walton, then Senior Vice President overseeing the Fittings division (F. 44),

notifying them that Sigma had recently posted its new list prices, to be effective January 2, 

2008, and that Sigma was “pulsing sources” to see if McWane would follow. F. 617. Mr. 

Tatman further noted that Star had not yet published its new list prices and had delayed any 

implementation to February 4, 2008, and that he believed Star was “waiting to see” what 

McWane was going to do before it posted new prices or printed any new list price books. 

F. 617. The internal email continued:

Given both the change in the Tyler/Union leadership structure and the 

accelerated inflation in China compared to Domestic cost, I believe we’re in a 

unique position to help drive stability and rational pricing with the proper 

communication and actions. 

 11 There is no allegation or proof that McWane obtained any of customer letters at issue in this case directly from 

Sigma or Star, and the evidence demonstrates that these letters were typically provided to a supplier by its 

Distributor customers, and then circulated internally at the supplier. F. 558. 
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I have a concept that I believe will work if properly executed. There are some 

additional data points to review, but I should be in a position to discuss with you 

in detail during the sales meeting or potentially before if needed. 

F. 617. An unstable market to Mr. Tatman means a market in which, based upon a weighted 

average of all the jobs sold over a period time, there is a high variation between the published 

multiplier and the average, actual multiplier at which jobs are being sold. F. 618. Mr. Tatman 

believes that a market begins to become unstable when the average weighted multiplier is 10% 

or more below the published multiplier. F. 458, 618.

Mr. Tatman prepared and transmitted a PowerPoint Presentation to Mr. Walton and Mr. 

McCullough on December 25, 2007 (“December 25, 2007 PowerPoint Presentation”). F. 620. 

Mr. Tatman’s transmittal email referred to the PowerPoint Presentation as a “draft 

presentation,” reflecting “a concept we might want to discuss in regards to our pricing strategy 

for utility fittings.” F. 620. The email continued:

Our past attempts to drive stable pricing haven’t been too successful. However, 

our new leadership structure coupled with China inflation out pacing domestic 

costs may provide a unique opportunity for success provided our strategy and 

execution is correct.

Please let me know if this concept is something you want me to scope further.

F. 620. 

Based on his analysis of the competitive environment and the available pricing data, 

summarized above, Mr. Tatman recommended to his bosses that McWane not follow Sigma’s 

proposed 25% list price increase, but instead publish an average multiplier increase of 

approximately 8% over McWane’s then-effective multiplier levels. F. 631. Mr. Tatman 

believed that following Sigma’s 25% increase would result in even less visibility as to the true 

competitive level of prices in the market. F. 630. Mr. Tatman’s strategy was to publish a lower 

multiplier increase, which was closer to the true market price. F. 634-635. If Sigma and Star 

followed McWane’s published multipliers, which they historically did, F. 555-557, 679, this 

would compress the “headroom” between published prices and actual market prices, and result 

in a narrower range in which Sigma and Star could maneuver to undercut McWane on price. 
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F. 630-634. To the extent this strategy increased “visibility” and “stability” of Fittings prices, 

McWane would thereby be in a better position to detect and beat Sigma’s and Star’s pricing in 

the marketplace, and, hopefully, gain sales volume and market share. F. 566-567, 592-594, 

630-636. Mr. Tatman’s pricing strategy for McWane was designed to put financial pressure on 

Sigma and Star, who Mr. Tatman believed were more desperate for a price increase than 

McWane. F. 633, 638; see also F. 586, 588-589 (accelerated cost inflation for China 

production was outpacing domestic production costs). As Mr. Tatman explained, reduced 

“wiggle room” affects the amount of discounting the competitor can do because if it “is making 

50 percent profit on something, he’s got a lot of things he can do. If he’s making 20 percent 

profit on something, he doesn’t have near the amount of flexibility.” F. 632-633. Accordingly, 

if Sigma and Star followed McWane’s lead, then McWane would benefit competitively. 

Mr. Tatman’s strategy, summarized above, was reflected in his December 25, 2007 

internal PowerPoint Presentation. F. 626. Mr. Tatman, Mr. McCullough, and Mr. Walton 

discussed the various points of the strategy, including what specifically would be stated in the 

customer letter that would ultimately announce McWane’s new published multipliers. F. 625; 

see CX 0627 at 006-007 (draft customer letters (F. 626)). McWane knew that its competitors, 

Sigma and Star, would obtain and review McWane’s customer letter and make their decisions 

about what they each would do, in part, based on the information contained in McWane’s 

customer letter. F. 558-559, 574, 647. The Suppliers read each other’s letters with a critical 

eye, however, and do not necessarily believe that what is said in a customer letter with respect 

to pricing will necessarily be implemented in the market. F. 573. McWane’s January 11, 2008 

Customer Letter, described in more detail below, was the result of McWane’s internal 

discussions, including the resolution of what message to send to the market and its competitors. 

F. 646. 

Also in late 2007 or early 2008, McWane created a position at the company, referred to 

as “pricing coordinator” or “pricing manager,” and gave the job to Mr. Vince Napoli, an 

accountant and McWane employee whose then-position with McWane was being eliminated. 

F. 656. Mr. Napoli’s responsibilities included, among others, keeping track of, and verifying, 

individual job prices as stated on submitted orders, and, in this way, serving as a middleman 

between the sales persons and the order entry people. F. 656. Mr. Napoli also had limited 
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authority to approve pricing adjustments, in the range of one to three discount points off the 

multiplier. F. 656. McWane created forms for sales persons to use when requesting pricing 

approval that sales persons were supposed to complete and submit to Mr. Napoli; however, not 

all sales persons complied. F. 657. The degree of control that was exerted over sales persons 

at McWane with respect to Project Pricing varied depending on the extent to which the 

individual sales person could be trusted to exercise good judgment. F. 849.

iv. McWane’s January 11, 2008 Customer Letter

On January 11, 2008, McWane issued a letter to its customers announcing new pricing. 

(“January 11, 2008 Customer Letter”). The January 11, 2008 Customer Letter stated in 

pertinent part:

Dear Valued Customers

Due to continued rising costs, especially within our off-shore operations, we 

find it necessary to increase pricing on Utility Fittings and Accessories.

As per our prior letter of October 5, 2007, we will adjust pricing by increasing 

multipliers while retaining our current List Price, LP-5072. Letters stating the 

new region specific multipliers will be mailed January 18, 2008. The increase 

will be 10% to 12% above the current prevailing multiplier levels on Blended 

Fittings . . . effective February 18, 2008.

To help our distribution customers better manage their Inventory valuations and 

compete on a more level playing field, it is our intention going forward to sell all 

products only off the newly published multipliers. We will continue to monitor 

the competitive environment and adjust regional multipliers as required to 

provide you with competitive pricing.

All annual municipal bid contracts will be honored per the terms of the contract. 

Jobs quoted prior to this announcement will be honored through March 1, 2008 

. . . .

If the current inflationary trends continue as forecasted, we anticipate the need 

to announce another multiplier increase within the next six months. However, 

we will only do so as conditions require.

F. 645. 
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McWane knew that in order to meet its objectives of increasing volume and gaining 

market share it would have to engage in Project Pricing. F. 647. Mr. Tatman also believed that 

Sigma and Star were more desperate for a price increase than McWane was. F. 586, 588-589, 

638. Thus, according to Mr. Tatman, the hope was that by declaring a purported intent to stop 

Project Pricing, McWane might lull (or “head fake,” as Mr. Tatman called it) Star and Sigma 

into temporarily reducing their Project Pricing, leaving McWane to price however it deemed 

appropriate, and thereby gain a competitive advantage. F. 647.

McWane communicated its new region-specific multipliers, effective February 18, 

2008, in letters to its customers dated January 18, 2008. F. 651. For most states, McWane’s 

new published multipliers, for non-domestic Fittings, reflected an increase over McWane’s 

then-effective multipliers. F. 627, 631, 652-654. Compared to McWane’s 2007 published 

multipliers, however, the new 2008 published multipliers constituted reductions in 28 states and 

no change in 8 states. F. 655. Overall, the new published multipliers reflected an approximate 

8 percent increase over McWane’s then-effective multipliers. F. 627, 631, 652.

v. Sigma’s reaction after McWane’s January 11, 2008

Customer Letter

After learning of McWane’s January 11, 2008 Customer Letter, the letter was reviewed 

and discussed among the regional managers and the sales team at Sigma. F. 661. Mr. Larry 

Rybacki, then Vice President of Sales for Sigma, with responsibilities for Fittings sales to 

Distributors (F. 76), consulted with others at Sigma to discuss what McWane was doing with 

multipliers and to address how to respond. F. 661. Mr. Rybacki interpreted McWane’s pricing 

changes to “squeeze . . . the multipliers [making] it very difficult for [Sigma] to make very 

much margin.” F. 670. 

A spreadsheet was prepared within Sigma for the purpose of analyzing whether 

McWane’s newly published multipliers would provide any real price improvement for Sigma, 

compared to Sigma’s then-current, actual multipliers. F. 663. Using the data from all Fittings 

sales in December 2007, the spreadsheet identified the multiplier for each sale, to see the price 

“spread,” and further computed the weighted average multiplier for each territory. F. 663. On 

January 24, 2008, Mr. Victor Pais, then President and CEO of Sigma (F. 67), sent an internal 
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email to his “M20” management team, comprising Sigma’s top managers, and attached the 

spreadsheet. F. 663-664. Mr. Pais noted that, based on the spreadsheet, most of Sigma’s sales 

were at “very, very, low multipliers!” F. 663. Mr. Pais further concluded that when McWane’s 

new published multipliers were compared to Sigma’s multipliers “apples to apples,” McWane’s 

new multipliers did not provide much improvement in many areas, with “reasonable 

improvement” in just eight states and territories, “marginal to no improvement” in many other 

territories, and “even a lowering” of multipliers in some areas. F. 663. Mr. Pais referred to 

McWane’s new multipliers as “discouraging.” F. 664.

Mr. Pais surmised in his email that while McWane may have wanted to make an 

improvement to multiplier levels, McWane “may have” based their multiplier choices on the 

“actual documented competitive pricing that they are known to procure proof for, from the 

customers.” F. 664. Mr. Pais’ email continued:

Unfortunately, the illogical pricing approach used by Star -- and hence SIGMA 

-- for ‘Plant quotes’ with lower ‘special’ multipliers may have biased 

[McWane’s] decisions in pegging the NEW multipliers at where they are. 

Though Tyler is beginning to pay attention to PW [plant work] jobs too[12]

, they 

just don’t understand why PW jobs need to be given LOWER pricing -- when in 

fact, for Soil Pipe, Tyler and CP are known to offer HIGHER prices, since they 

feel the Distributors don’t commit their resources to stock and usually order 

direct job-site shipments!

I HAVE URGED LARRY [RYBACKI] TO INITIATE A NEW COMMITTED 

AND SERIOUS EFFORT TO NORMALIZE ALL PRICING FOR FITTINGS 

-- AT SAME LEVELS -- PW AS WELL AS OTHER ORDERS, TO 

ELIMINATE THE CONFUSION WE ARE CREATING WITH CUSTOMERS 

AND COMPETITORS, LEADING TO LOWER OVERALL PRICING 

LEVELS.

Though Tyler’s NEW multipliers are discouraging, this is both a lesson and an 

opportunity [for] Sigma and Star to develop a patient and disciplined Marketing 

approach and demonstrate to [McWane] that we are capable of being part of a 

stable and profitability conscious industry. 

F. 664. 

 12 “Plant work” refers to waterworks projects for water treatment plants, pumping stations, or wastewater treatment 

plants. Plant work projects generally use the largest sized Fittings. F. 283, 665.
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Mr. Pais explained that sales persons, anxious to make sales and not to lose business 

from regular customers, can “lower prices too aggressively,” which causes competitors to react 

in a “vicious cycle” of price erosion, and keeps prices at a depressed level. F. 668. Thus, Mr. 

Pais was encouraging his sales force to try to minimize the practice. F. 668. Further, Mr. 

Rybacki interpreted Mr. Pais’ email to be asking the sales team to pull back on Project Pricing. 

F. 669. Mr. Rybacki did not disagree with Mr. Pais that Sigma needed to pull back on Project 

Pricing. F. 669. However, Sigma had always been trying to curtail Project Pricing, including 

in 2008. F. 671-672. Since Mr. Rybacki joined Sigma in 1990, Project Pricing was an 

“ongoing battle within Sigma, within the industry.” F. 672. Sigma was trying to be more 

consistent and disciplined in pricing “every year, every day to today” and was “always trying” 

to curtail Project Pricing. F. 672. After receiving Mr. Pais’ January 24, 2008 email, Mr. 

Rybacki told his regional managers “once again that we needed to try to . . . make us more 

profitable because it was getting to the point where we couldn’t make any money at the prices 

we’re selling at.” F. 896. Despite this directive, there was no special effort made in 2008 at 

Sigma to reduce Project Pricing. F. 895, 897-898.

On or about January 29, 2008, Sigma sent a letter to its customers, signed by Mr. 

Rybacki, notifying them that, because one of its competitors chose not to have a list price 

increase and instead to implement a multiplier increase, Sigma would “follow suit” and 

implement a multiplier increase for “almost every territory” on February 25, 2008. F. 674. 

Sigma’s January 29, 2008 customer letter explained: “The key word is ‘almost’ as a few of 

[the] territory multipliers are below what you currently receive from us and some are in fact 

well below. . . . We think it’s unwise and irresponsible to lower multipliers and devalue your 

inventory, so your Regional Managers will send you new multipliers in the next few days as 

long as they exceed your current ones.” F. 674. The letter also included the language: “We 

apologize for the confusion and lack of discipline our segment of the Industry has shown as we 

at SIGMA Corporation are committed to make this a more profitable business for all.” F. 674.

On or about February 1, 2008, Sigma sent letters to its customers announcing new 

region-specific multipliers, effective February 18, 2008, pursuant to its January 29, 2008 

Customer Letter. F. 678. These letters noted that: “All municipal bids will be honored through 

the length of the contract,” and that “[j]obs quoted prior to this announcement will be honored 
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through March 1, 2008.” F. 678. Sigma did not follow all of McWane’s multipliers. F. 677. 

Sigma’s announced changes to its multipliers matched some of McWane’s January 2008 

multiplier changes, but Sigma did not match those that would result in a multiplier lower than 

Sigma’s then-existing published multipliers. F. 677. Sigma “could not afford to follow 

[McWane] down.” F. 677. 

vi. Star’s reaction after McWane’s January 11, 2008

Customer Letter

Star became aware of McWane’s January 11, 2008 Customer Letter through a customer. 

F. 659. Star’s then National Sales Manager, Mr. Matthew Minamyer (F. 126), read McWane’s 

statement that “it is our intention going forward to sell all products only off the newly 

published multipliers” to mean that McWane was telling its customers that McWane wanted to 

stop Project Pricing, although Mr. Minamyer acknowledged that it was possible this was a 

communication to Sigma and Star as well. F. 682. Historically, Star followed McWane’s price 

increases, and it was normal procedure for Star to get ready to follow McWane as quickly as 

possible. F. 679-680. 

On January 22, 2008, Mr. Minamyer sent an internal email to Star’s division managers 

advising them that McWane’s “multiplier letters [were] hitting the streets. . . . We need to be 

able to react quickly to be at the right prices.” F. 686. Mr. Minamyer’s email addressed plans 

and procedures with respect to putting into place new multipliers and with respect to Project 

Pricing. F. 686. With respect to multiplier changes, the email stated in pertinent part: “Once 

we know what a state or area’s multiplier is, if it goes up, we will change to that number. If it 

goes down, we will discuss it. Later today we will E-mail the procedure for multiplier 

changes.” F. 686. 

With respect to Project Pricing, Mr. Minamyer’s January 22, 2008 email advised the 

division managers, with bold letter emphasis, that Star’s “goal” was “to take a price increase 

and to stop project pricing.” F. 686. Mr. Minamyer knew that a price increase would not hold, 

or “stick,” despite an increase in published multipliers, if Star or any of its competitors 

undercut such increase with Project Pricing. F. 688. At the same time, Mr. Minamyer’s 

January 22, 2008 email set out the procedures by which Project Pricing would be approved, 
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notwithstanding the stated “goal” to take a price increase and “stop” Project Pricing. F. 686. 

The described procedure was that “[a]ll project pricing” was to “go through” Mr. Minamyer; 

and that the sales persons in the field, known as territory managers, must obtain from their 

customers, and provide in support of the Project Pricing request, “solid,” written documentation 

of the competing bid, before Star would “move off the buy plan” with the customer. F. 686. In 

addition, the email advised that Star would follow McWane in honoring existing pricing 

through March 1, 2008, and that, therefore, the territory managers should “clean up” their 

Project Pricing and get orders in and shipped before March 1, 2008. F. 686. 

Mr. Minamyer’s January 22, 2008 internal email to the division managers also included 

language indicating that Star was taking the foregoing steps regarding Project Pricing not 

because Star needed a price increase, but because disciplined pricing was “good for the 

industry”; that Star could weather any price wars; and that although “this will take a major 

effort,” “that is where we need to be focused until the crazy pricing levels out.” F. 686. 

In letters and emails to its customers, Star advised that it would be matching McWane’s 

multipliers effective February 18, 2008, and that Star would no longer offer Project Pricing 

after March 1, 2008. F. 702, 704. 

As noted above, Star had been perceived to be the most “aggressive” discounter in the 

marketplace, and Star used Project Pricing in the years prior to 2008 in order to gain market 

share. F. 568-570. Prior to 2008, Mr. Minamyer or Mr. McCutcheon were responsible for 

approving Project Pricing, although sometimes the discretion to approve Project Pricing was 

delegated to Star’s divisional managers. F. 875. There were instances where Mr. Minamyer 

would “push down” approval to the division managers, and sometimes even to the territory 

managers, if Mr. Minamyer had faith in them to make the correct judgment. F. 875. Prior to 

Mr. Minamyer’s January 22, 2008 email to the division managers, Mr. McCutcheon had asked 

Mr. Minamyer to be more involved and diligent in the future with regard to the Project Pricing 

approval process because Star was experiencing dramatic cost increases. F. 684, 697. Indeed, 

Mr. McCutcheon had been “all over” Mr. Minamyer to stop delegating authority for Project 

Pricing and, because Star was facing dramatic cost increases, told Mr. Minamyer that he 

needed to “tighten up” the Project Pricing process. F. 685, 697. Although Mr. McCutcheon 
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had previously encouraged Mr. Minamyer to minimize Project Pricing by tightening up his 

sales force and being more involved in the Project Pricing process, Mr. McCutcheon thought it 

was “bizarre” for Mr. Minamyer to tell Star’s customers that Star was going to “stop” Project 

Pricing. F. 703. Further, Mr. McCutcheon thought it was not “logical or reasonable” for Star 

to even think that Project Pricing would actually stop. In Mr. McCutcheon’s view, “stopping”

Project Pricing would “shut [Star] down.” F. 697. In Mr. McCutcheon’s view, Mr. 

Minamyer’s language that Star’s goal was to “stop” Project Pricing was too strong and 

“irrational.” F. 698. However, it was “normal” after a price increase to communicate to the 

division managers the message that Project Pricing needed to be minimized. F. 698. As Mr. 

McCutcheon stated, this “happens every time there’s a [price] increase.” F. 698.

Notwithstanding the language in Mr. Minamyer’s January 22, 2008 email regarding a 

goal to “stop” Project Pricing, Star’s plan was to try to limit its Project Pricing to those 

situations where there was firm documentation from a customer that Star’s competitors were 

Project Pricing below Star. F. 694. Thus, Mr. Minamyer’s email made clear that Star planned 

to engage in Project Pricing, so long as there was “firm” documentation of a competitor’s bid, 

and further made clear that, provided there was such documentation, Star would price as 

necessary to obtain the job. F. 686. The procedure of requiring documentation before Star 

gives a Project Price had been Star’s policy for at least ten years prior to January 2008. F. 695. 

In Mr. McCutcheon’s view, Mr. Minamyer’s email reflected Mr. Minamyer’s attempt to 

minimize Project Pricing by the sales force, and was more of a change in monitoring and 

managing the Project Pricing process, rather than a direction to “stop” Project Pricing. F. 695. 

That Star’s plan was to engage in Project Pricing, so long as there was “firm” documentation of 

a competitor’s bid, is also evidenced by Mr. Minamyer’s email dated February 23, 2008, in 

which he reminded the division managers that “documentation and justification” were required 

in order to obtain pricing approval. “I have always been clear that we will always keep our 

customers at the right price but we need to be diligent at finding out the right price or shipping 

restrictions . . . . So go get it and you can have your pricing.” F. 687; see also F. 688 (May 5, 

2008 email from Star Western Division Manager Mr. Michael Berry noting with respect to 

upcoming price increase: “There is some flexibility [with pricing after a price increase] but here 

is the problem. The more flexible we are the less it holds and it won’t work. That said, if you 
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document that the competition is not holding, then match and don’t lose the orders.”). 

Furthermore, on August 25, 2008, in an email with the subject line “Pricing in the Market,” Mr. 

Minamyer observed, among other things, that Sigma and McWane were contributing to 

“pricing pressure” in the market with special pricing. F. 913. Mr. Minamyer advised his 

divisional sales managers, “[d]on’t let anyone take your JR [Joint Restraint] (or fittings) 

business on price. Confirm the price and match it to get it back. . . . Do the same thing to 

[McWane] that they do to you. Maybe it will get back to them and they will stop.” F. 913.

Additional material facts and evidence pertaining to the asserted agreement to curtail 

Project Pricing will be addressed in the context of the parties’ arguments, in the analysis that 

follows.

b. Analysis

i. Introduction

Complaint Counsel’s asserted “episode one” of the alleged price fixing conspiracy 

among McWane, Sigma, and Star, is an “agreement to curtail Project Pricing” formed in 

January 2008. To prove this agreement, Complaint Counsel contends that McWane, Sigma,

and Star engaged in parallel conduct by curtailing project pricing (the asserted “parallel 

conduct”) and that this conduct was the result of an agreement. CCB at 107-110. As noted 

above, proof of parallel conduct, including conscious parallel conduct, can constitute 

“circumstantial evidence from which an agreement, tacit or express, can be inferred but . . . 

such evidence, without more, is insufficient . . . .” Bogosian v. Gulf Oil Corp., 561 F.2d 434, 

446 (3d Cir. 1977). This is because tacit collusion, achieved in an oligopoly through 

consciously parallel conduct, without any preceding agreement, is not unlawful. White, 635 

F.3d at 576 n.3 (noting that tacit coordination, which is legal, should not be “conflated” with an 

unlawful “tacit agreement”); see Twombly, 550 U.S. at 556-57. To ensure that the law punishes 

only unlawful agreements by competitors, Complaint Counsel must prove that the asserted 

parallel behavior was the result of an actual, manifest agreement. High Fructose Corn Syrup, 

295 F.3d at 661; Flat Glass, 385 F.3d at 360; see also Blomkest Fertilizer, 203 F.3d at 1032-33; 

City of Tuscaloosa, 158 F.3d at 570. This requires Complaint Counsel to prove certain “plus” 
276

factors, which are designed to serve as “proxies for direct evidence of an agreement.” Flat 

Glass, 385 F.3d at 360. 

Respondent contends that the evidence fails to show parallel pricing conduct among 

McWane, Sigma, and Star; that Complaint Counsel’s inferences of a conspiracy involving 

McWane are not supported by the greater weight of the evidence; and that the greater weight of 

the evidence shows that McWane made its pricing decisions independently and for 

procompetitive reasons. Specifically, Respondent argues that the Supplier witnesses denied 

any agreement to curtail Project Pricing, and that the evidence shows that all Suppliers 

continued to provide Project Pricing, as well as other discounts, such as freight, payment terms,

and rebates, throughout the alleged conspiracy period. RB at 66-68. Respondent contends that 

Complaint Counsel’s theory requires assigning nefarious interpretations to selected conduct, 

and selected language, in selected documents, contrived to fit into Complaint Counsel’s 

conspiracy hypothesis, and that the record is filled with evidence that is consistent with 

competition and/or inconsistent with an inference of conspiracy, which Respondent refers to as 

“minus” factors. RB at 70-77. According to Respondent, the inference of independent, or 

merely interdependent, conduct is just as likely, if not more likely, than the inference of 

conspiracy. RB at 75. 

As more fully discussed below, the greater weight of the evidence fails to show an 

agreement among McWane, Sigma, and Star to curtail Project Pricing. Accordingly, 

Complaint Counsel has failed to prove its “episode one” of the alleged price fixing conspiracy. 

ii. Parallel pricing related conduct

In support of its claim that McWane, Sigma, and Star engaged in parallel conduct in 

curtailing Project Pricing, Complaint Counsel cites to the following: (1) McWane’s January 11, 

2008 Customer Letter stating, inter alia, its “intention going forward to sell all products only 

off the newly published multipliers”; (2) a January 24, 2008 email by Sigma’s then President 

and CEO Mr. Pais to Sigma’s management team, stating, among other things, that Mr. Pais had 

urged Mr. Rybacki to “initiate a new and committed and serious effort to normalize all prices 

for fittings . . .”; (3) a January 22, 2008 email by Star’s then National Sales Manager, Mr. 

Minamyer, to Star’s division managers, stating, among other things, that Star’s “goal” going 
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forward was “to take a price increase and to stop project pricing”; and (4) Star’s emails in 

January and February 2008 to its major customers notifying them of Star’s coming multiplier 

increases and that there would be “no more” Project Pricing. CCB at 111-114.

The foregoing documents, read in their entirety, and summarized in Section 

III.D.2.a.(iv-vi), supra, fail to show that the Suppliers engaged in parallel conduct by curtailing 

Project Pricing, as Complaint Counsel argues. These documents show, at best, that in early 

2008, McWane, Sigma, and Star each had some level of intent to stop or minimize Project 

Pricing. Complaint Counsel also alludes to parallel “steps” or “efforts” taken by McWane and 

Star in early 2008 that Complaint Counsel infers were taken in order to “curtail” Project 

Pricing. Complaint Counsel cites no authority for the proposition that parallel “intentions” or 

“steps” related to pricing policy is the type of parallel conduct from which an unlawful 

agreement can be inferred.

In this regard, it must be noted that Complaint Counsel’s conspiracy theory has evolved 

from the time of the Complaint, especially with regard to the particular parallel conduct upon 

which the government relies as circumstantial evidence of an unlawful agreement. The 

Complaint alleged a relatively straightforward conspiracy to raise and stabilize prices 

beginning in January 2008, Complaint ¶ 30, involving two parallel price increases by the 

Suppliers, in January 2008 and June 2008, Complaint ¶¶ 31, 33, that were alleged to be the 

“result of” an agreement. Complaint ¶¶ 32, 34. Complaint Counsel’s Post Trial Brief appears 

no longer to rely on any alleged parallel price increases. Instead, Complaint Counsel 

deemphasizes any parallel pricing, and relies instead upon parallel “pricing related” conduct, 

i.e., parallel “curtailment” of Project Pricing, as circumstantial evidence of an agreement to 

curtail Project Pricing. CCB at 111-114.13 However, Complaint Counsel provides little 

guidance to define what constitutes a “curtailment,” of Project Pricing, either factually or 

legally. Complaint Counsel did not proffer any expert (or other) testimony as to how a 

 13 Although Complaint Counsel clearly asserts that the Suppliers engaged in parallel conduct by curtailing Project 

Pricing, Complaint Counsel simultaneously argues that it need not prove that McWane, Sigma, and Star engaged 

in parallel curtailment of Project Pricing, because it need not prove that the agreement to curtail Project Pricing 

was “successful” or “effective.” CCB at 144-145. Given that Complaint Counsel is endeavoring to prove an 

agreement to curtail Project Pricing based upon circumstantial evidence of parallel conduct in curtailing Project 

Pricing, this position is curious, at best. See 16 C.F.R. § 3.43(a) (“[T]he proponent of any factual proposition shall 

be required to sustain the burden of proof with respect thereto.”). 
278

“curtailment” in Project Pricing should be measured, nor did Complaint Counsel offer any 

expert analysis of pricing data to show that McWane, Sigma, and Star engaged in a parallel 

curtailment of Project Pricing. Further, Complaint Counsel does not cite a case where a 

conspiracy finding has been based on similarly vague and undefined parallel conduct.

(a) Parallel “intentions” or “steps” regarding

Project Pricing

To the extent Complaint Counsel is arguing that circumstantial evidence of parallel 

“intentions” proves actual parallel curtailment of Project Pricing, or otherwise constitutes 

circumstantial evidence of an agreement to curtail Project Pricing, the argument is rejected. It 

will not be presumed that intentions resulted in corresponding conduct. Moreover, McWane 

denied having any actual intent to stop or restrict its Project Pricing, notwithstanding the 

statement in its January 11, 2008 Customer Letter indicating an intent to price only off 

published multipliers. F. 645, 647. 

With respect to asserted parallel “steps” or “efforts” to curtail Project Pricing, 

Complaint Counsel relies on the fact that McWane hired Mr. Napoli in late 2007 or early 2008 

to oversee, among other things, the Project Pricing approval process. CCB at 26 n.110; CCFF 

925; see F. 656-657. The evidence shows that McWane’s goal in having a central location for 

the Project Pricing approval process was to have someone with a “national view” involved in 

McWane’s discounting decisions. F. 658. As Mr. Walton explained: 

“[I]f we have a salesperson in California making a pricing decision, it may not 

be in our best interest for what -- how that affects Texas or Missouri or Florida 

or New York, . . .[O]ftentimes when somebody makes a local decision here, it 

has effects in other places that may or may not be in our best interest.” 

F. 658; see also F. 656 (Mr. Napoli testifying that “there’s nothing wrong with [giving a 

discount] except you sure want to know what -- when it’s happening, or you like to know 

before it happens, because they [the sales persons] don’t know what the ramifications are as far 

as profitability”). Some sales persons did not use the approval process put in place, however, 

and the degree of authority given to sales persons regarding Project Pricing varied depending 

upon the extent to which the sales person could be trusted to exercise good judgment. F. 657, 
279

849. Complaint Counsel’s inference that hiring Mr. Napoli was a “step” taken by McWane to 

“curtail” Project Pricing is unsupported and is no more likely than the inference of a legitimate 

effort to interject a national view on discounting decisions. Thus, the evidence fails to support 

Complaint Counsel’s requested inference. 

The evidence shows that Star took steps in early 2008 to tighten up and manage its 

Project Pricing process, including by requiring Mr. Minamyer to review and approve all Project 

Pricing and by requiring firm documentation of competitor pricing before a Project Price would 

be approved. F. 686-687, 694. However, the evidence fails to show any steps taken by Sigma 

to implement a curtailment of Project Pricing, including any “centralization” of Project Pricing 

authority. See F. 895, 898 (Sigma regional managers retained authority to approve Project 

Pricing throughout 2008). Rather, the uncontradicted evidence is that Sigma was “always” 

trying to curtail Project Pricing (F. 671-672, 896); and that notwithstanding Mr. Pais’ internal 

“announcement” that he had asked Mr. Rybacki to make a “new effort” to ”normalize” pricing 

between plant work and other work, Sigma made no special efforts to reduce its Project Pricing 

in 2008. F. 895, 897-898. Furthermore, the evidence fails to show that Sigma “announced” to 

its customers any intention to stop or curtail Project Pricing, as argued by Complaint Counsel. 

CCB at 3, 25. Sigma’s January 29, 2008 customer letter said nothing about “normalizing” 

Fittings prices between plant work and other work, as alluded to in Mr. Pais’ January 24, 2008 

internal email to Sigma’s management team.14 See F. 674. Accordingly, regardless of what the 

evidence may show as to Star’s intentions and efforts to reduce its Project Pricing in 2008, the 

evidence that McWane or Sigma had similar “parallel” intentions or took “parallel” steps is 

lacking. Similarly, evidence of “intentions” or “steps” do not justify Complaint Counsel’s 

broad assertion that the Suppliers’ conduct amounted to “significant” or “complex and 

historically unprecedented changes” in the pricing structure of the Fittings market. CCB at 

113. 

Based on the foregoing, to the extent Complaint Counsel is arguing that parallel

“intentions,” “steps,” or “efforts” to “curtail” Project Pricing constitute circumstantial evidence 

 14 Mr. Pais made another “push” to implement a single track Fittings price structure for plant work and other work 

in Mr. Pais’ internal email to M20 in April 2008 (F. 799; see CX 1138 at 001), indicating that his prior ideas in 

this regard had not been implemented. 
280 

of parallel curtailment of Project Pricing, or of an agreement to curtail Project Pricing, the 

evidence fails to demonstrate that the Suppliers had parallel intentions or took parallel steps or 

made parallel efforts to curtail Project Pricing.

(b) Parallel conduct by McWane, Sigma, and Star 

 in curtailing Project Pricing

It is undisputed that Project Pricing did not “stop” in 2008. See CCB at 36, 144. 

McWane had used Project Pricing to sell Fittings prior to January 2008, and continued to offer 

its customers Project Pricing as well as other price concessions throughout 2008, 2009, 2010 

and to the present time. F. 848, 850. The evidence shows, for example, that McWane provided 

several hundreddifferent job prices to its customers in 2008. F. 861 (approximately { }). 

The material issue is whether this is a “curtailment” by McWane, which along with a parallel 

curtailment by Sigma and Star, constitutes circumstantial evidence of a conspiracy with respect 

to Project Pricing.

(c) McWane’s Pricing Protection Log

In support of a finding that several hundred (approximately { }) different instances of 

Project Pricing by McWane in 2008 constitute a “curtailment” of McWane’s Project Pricing, 

Complaint Counsel relies on McWane’s “pricing protection log.” CCB at 145. By way of 

background, beginning in 2008, McWane kept a pricing protection log, on which it tracked, in 

the normal course of business, instances of price protection (i.e., where McWane quotes a price 

to a customer and agrees to hold that price for a customer for some period of time, thereby 

“protecting” the price against increases) and Project Pricing. F. 852. Mr. Napoli, McWane’s 

pricing “coordinator” or “manager,” F. 656, was responsible for maintaining the pricing 

protection log. F. 852. McWane’s pricing protection log shows, among other things: the 

Fittings multiplier that McWane bid; the expiration date of the bid; and McWane’s published 

multiplier when the bid was issued. F. 855. There is also a “comments” field in the pricing 

protection log. F. 859. In some cases, the comments field states “to match Star” or “to match 

Sigma.” F. 859. Such a comment indicates that the sales person reported that the customer 

advised of a particular discounted multiplier being quoted by Sigma or Star, and that 

McWane’s quoted multiplier was discounted to match the competing quote. F. 859; see also
281 

F. 854 (pricing protection log is based upon information received from sales persons in the 

field).

Complaint Counsel argues that it should be inferred that McWane curtailed Project 

Pricing in 2008 because the comments appearing in the comments field of the pricing 

protection log reflect more instances of McWane offering a multiplier “to match Star or Sigma” 

in the fourth quarter of 2008 (between { }), and 

the first quarter of 2009 (between { }), compared 

to the second and third quarters of 2008 (between { 

 }). CCB at 145; see F. 863. These time frames selected by 

Complaint Counsel appear designed to support its theory that the alleged agreement to curtail 

Project Pricing “fell apart” beginning in the fall of 2008, which then lead to increased Project 

Pricing. However, this does not answer the question whether Project Pricing was “curtailed” 

by McWane in the 2008 time period prior to the fall of 2008. Complaint Counsel points to 

nothing identifying the extent of Project Pricing by McWane in 2007, which would be a more 

significant benchmark against which to determine whether McWane’s instances of Project 

Pricing were “reduced” or “curtailed” in 2008.15 To be clear, the fact that Complaint Counsel 

may have shown that Project Pricing increased from 2008 to 2009 does not demonstrate that 

Project Pricing decreased from 2007 to 2008. Logic dictates that one cannot prove a 

curtailment or reduction in Project Pricing without proof of a starting point for comparison. 

See In re Graphics Processing Units Antitrust Litig., 527 F. Supp. 2d 1011, 1024 (N.D. Cal. 

2007) (dismissing conspiracy complaint and holding that allegations of conduct occurring after 

alleged conspiracy were insufficient where plaintiff failed to allege how it differed from 

conduct prior to alleged conspiracy). In addition, the information in the comments field 

concerning competitor pricing comes from sales persons in the field and from the customers. 

F. 854, 859. Customers have a motive to “auction” suppliers against one another, F. 565, and 

the sales person has an incentive to close the sale. F. 668. Although the information in the 

comments field is not necessarily unreliable evidence, as shown above, the comments field 

reflects multiple levels of unverified and potentially inaccurate information, which detracts 

from its weight in proving a curtailment of Project Pricing by McWane. 

 

15 Complaint Counsel states, without citation to any supporting evidence, that McWane did not keep a pricing 

protection log in 2007 because it did not offer a price protection program until 2008. CCB at 145. 
282

Moreover, there is evidence in the record that the Fittings market experienced a 

significant downturn in the second half of 2008, which would also contribute to increased 

discounting as Suppliers chased ever-decreasing volume. F. 931, 933; see also F. 1026 (Mr. 

Pais testifying that “2008 was a tale of two halves, if you will. The first half was respectable. 

And the second half was very poor, because most of the problems we faced from the poor 

market and the increasing costs and the reduced lower prices, all coalesced into the second half, 

and especially the last quarter”). It is no more likely that an increase in Project Pricing by 

McWane during the time period selected by Complaint Counsel, from the fourth quarter of 

2008 through the first quarter of 2009, was due to a “collapse” of a “conspiracy” than for other 

reasons attributable to the competitive environment in the second half of 2008 going into 2009. 

Indeed, to accept Complaint Counsel’s inference that any increase in Project Pricing during this 

period was the result of a collapsed conspiracy, rather than a common reaction to the 

competitive environment, would require presuming the existence of the conspiracy in the first 

instance, which is improper. See Blomkest Fertilizer, 203 F.3d at 1033 (“[A] litigant may not 

proceed by first assuming a conspiracy and then explaining the evidence accordingly.”). 

(d) “Observations” of McWane curtailing Project

Pricing

Complaint Counsel also relies on what it refers to as “observations” by Star and by 

Sigma of a reduction of Project Pricing by McWane, allegedly contained in various internal 

documents of Star and Sigma. CCB at 37-38. However, none of the cited documents address 

Project Pricing by McWane. For example, Complaint Counsel cites a Star internal email dated 

March 11, 2008 from Star’s Southwestern Division Manager, Mr. Shaun Smith. F. 905. Mr. 

Smith was responding to an email from Mr. Minamyer asking for any reports on any issues 

with Sigma “handling the Mult increases.” F. 904. Mr. Smith responded that: “It seems as 

though they have been pretty discipline[d] in my Division” and “everyone seems to be playing 

fair.” F. 904-905. Regardless of what Mr. Smith’s “observation” from the field might say 

about whether Star and Sigma were curtailing Project Pricing in March of 2008, Mr. Smith’s 

vague, ambiguous language on its face does not imply McWane was curtailing Project Pricing. 

Mr. Smith was not called as a witness at trial, nor was any deposition testimony from Mr. 
283

Smith offered into evidence to explain what he meant, and it will not be assumed that he was

referring to McWane, especially given that Mr. Minamyer’s email requested information about 

Sigma, not McWane. F. 904. Similarly, Complaint Counsel relies on a Star internal email

from Mr. Minamyer to Mr. McCutcheon and to Star’s division managers dated August 25, 

2008, in which Mr. Minamyer stated: “I know we have been very careful on special pricing and 

it seems to be working pretty good.” F. 892. This document does not on its face reflect 

anything other than Star’s observation of its own unilateral behavior, and does not imply a 

curtailment of Project Pricing by any other Supplier. Finally, Complaint Counsel cites a Sigma 

internal email from Mr. Pais dated December 7, 2008 regarding his belief that relatively steady 

market shares among the Suppliers through October 2008 “should bode well for a more mature 

and responsible pricing strategy for 09 which focuses on realizing higher prices and hence 

better GMs to offset the loss of volume, which is inevitable for most of 09.” CX 1174 at 001. 

Mr. Pais’ belief about the future of Fittings demand and prices “for 09” implies nothing about 

McWane (or any other Supplier) curtailing Project Pricing in 2008. 

(e) Evidence regarding Star and Sigma curtailing

Project Pricing

The evidence shows that both Star and Sigma continued to provide Project Pricing 

throughout 2008. F. 873, 881, 897-898. To show that the extent of Project Pricing by Sigma 

and Star was “curtailed,” Complaint Counsel first relies on Mr. Tatman’s statement in his April 

2008 Executive Report for the first quarter of 2008, that: “Based on our competitive feedback 

log, the level of multiplier discounting by both Star and Sigma appears to have died down 

significantly.” F. 868. Mr. Tatman’s statement is equivocal and based on unexplained 

statements from sales persons in the field that may not be accurate. F. 565, 668, 868-869. 

For Star, in addition to Star’s own “observation” of its Project Pricing, referred to 

above, Complaint Counsel points to a summary document, based upon records of Star’s special 

pricing requests (“Star SPR data”), which shows that that the overall number of instances in 

which Star engaged in Project Pricing on all products, including Fittings, was 3,226 in 2007, 

but that in 2008 there were 2,669, which constitutes an overall drop. CCB at 146; F. 881-883, 

887. A month-by-month comparison, however, presents a “mixed bag” of both comparative 

increases and decreases in relation to 2007. F. 888-891. In addition, Complaint Counsel points 
284

to a November 25, 2008 internal email written by Mr. Minamyer (F. 893), which Complaint 

Counsel interprets as an instruction to “resume” Project Pricing, thereby implying that it had 

been “curtailed” previously. CCB at 147 n.552. In this email, Mr. Minamyer noted that “Star 

had been diligent in protecting the stability of its pricing,” but that Star’s competitors, mostly 

Sigma, had been pricing beneath Star. F. 893. Feeling Star’s market share being threatened, 

Mr. Minamyer instructed the sales force to get more aggressive on pricing to get more orders. 

F. 893. Even if it is inferred that Star had been making an effort to limit Project Pricing prior to 

November 25, 2008 to those situations where it could document Project Pricing by the 

competition, Mr. Minamyer’s November 25, 2008 internal email is also evidence that the 

marketplace was competitive and that Star’s efforts had not been in parallel to McWane or 

Sigma. As Mr. Minamyer stated, Star was attempting to “hold” its prices, but McWane and 

Sigma were not. F. 893.

Complaint Counsel further argues that the evidence demonstrates Sigma curtailed 

Project Pricing in 2008 based upon data indicating that Sigma’s average, actual transactional 

multipliers increased for various products in various regions during the period February 2008 to 

October 2008. CCB at 147; see F. 985-993. An “average” multiplier has limited probative 

value, however, given the additional evidence that the actual day-to-day multipliers differed “a 

lot” from region-to-region, product-to-product, and day-to-day. F. 994. To conclude, based on 

this evidence, that Sigma curtailed Project Pricing in 2008 would require improper speculation.

(f) Evidence inconsistent with curtailment of

Project Pricing

There is substantial evidence in the record that is inconsistent with a conclusion of a 

parallel curtailment of Project Pricing by McWane, Sigma, and Star. Mr. Sheley, of Illinois 

Meter, a Distributor customer of McWane, testified that McWane was “extremely aggressive” 

with Project Pricing in 2008. F. 851. Moreover, a McWane internal September 2008 

presentation noted, inter alia, that McWane’s market share was down approximately 8 points 

since 2006 and that “[l]eading price stability has been detrimental to share.” F. 866. This 

statement indicates that, even if McWane was curtailing Project Pricing in 2008, McWane 

perceived that it was being underpriced by its competitors, which is both inconsistent with a 

conclusion of a parallel curtailment of Project Pricing, and consistent with a competitive 
285

market. Similarly, on May 6, 2008, Mr. Minamyer stated in an email to his division managers, 

with a copy to Mr. McCutcheon: “I see [pricing] getting a little looser and am concerned that 

we won’t hold this increase. Don’t let our competitors[’] practices force us to fail. One 

competitor is being pretty strong and one is being pretty weak on pricing.” F. 909. This 

document is also inconsistent with a conclusion that the Suppliers, in parallel, curtailed Project 

Pricing, and is further indicative of non-parallel, independent pricing conduct by the Suppliers.

Also inconsistent with a conclusion that the Suppliers engaged in parallel conduct by 

curtailing Project Pricing is a data analysis provided by Respondent’s economic expert, Dr. 

Normann, who analyzed actual transaction prices as shown by invoices kept by the Suppliers in 

the ordinary course of business. F. 937. The price on the invoice reflects the price at which the 

products were sold, and includes any discounts off the published multiplier, but does not 

include any additional concessions, such as rebates, payment terms, freight terms, and cash 

discounts. F. 937. Dr. Normann opined that if there were a parallel reduction in Project 

Pricing by McWane, Sigma, and Star, their data would show an increase in the amount of 

product sold at the published multiplier and a decrease in the amount of product sold under 

special pricing, as well as a decrease in the “variation” of pricing, i.e., the dispersion of price 

points. F. 845. To test this hypothesis, Dr. Normann calculated the standard deviation in price 

for McWane, Sigma, and Star for the most common products sold, from 2007 to 2010, based on 

the Suppliers’ invoice data for these products. F. 846. Dr. Normann concluded from this data 

that McWane’s price variation was largely unchanged until late 2008, while Star’s price 

variation increased. F. 846. In addition, Dr. Normann concluded that price variation during 

2008 was “generally higher” than any other time from 2007 to 2010. F. 846. This economic 

data, according to Dr. Normann, contradicts a conclusion that there was a parallel curtailment 

of Project Pricing in 2008. F. 847.

Complaint Counsel attacks Dr. Normann’s reliance on invoice data in general because, 

as noted above, the invoice price does not reflect discounts on top of Project Pricing, such as 

rebates, payment terms, freight terms, and cash discounts. However, the material issue is 

whether McWane, in parallel with Sigma and Star, curtailed Project Pricing in 2008, not 

whether it curtailed other discounts. The selling price as shown by the invoice reflects the 

discount associated with Project Pricing and is therefore precisely the correct measure of 
286

changes in the relevant discount. F. 938. Accordingly, the fact that the invoice prices did not 

include such other discounts does not detract from the probative value of the data for purposes 

of determining whether there was a parallel curtailment of Project Pricing. Similarly, 

Complaint Counsel contends that there is a time lag between the time a price is agreed to (price 

formation) and the date of the invoice, which is generally the date of shipment. This criticism 

also does not detract from the weight to be given to Dr. Normann’s opinion regarding parallel 

curtailment of Project Pricing, because Dr. Normann examined data from a broad time period, 

before and after 2008, which effectively captures the alleged time lag between the date of price 

formation and the invoice date. F. 941. 

In conclusion, regardless of what the evidence might show as to a curtailment of Project 

Pricing by Star and Sigma in 2008, Complaint Counsel’s proof that McWane curtailed Project 

Pricing in 2008, much less in “parallel” with Sigma and Star, is weak at best, and fails to 

outweigh other competent and reliable evidence summarized herein, including the data analysis 

provided by Respondent’s expert, indicating that McWane, Sigma, and Star did not engage in 

parallel conduct by curtailing Project Pricing in 2008, in comparison to earlier periods. In any 

event, the existence of parallel conduct is but one piece of a totality of the evidence, all of 

which must be weighed to determine whether the preponderance of evidence demonstrates an 

agreement to curtail Project Pricing. Accordingly, any evidence of parallel conduct will be 

considered, infra, as part of the totality of the evidence to determine whether the preponderance 

of evidence demonstrates an agreement to curtail Project Pricing.

iii. “Plus” factors

As noted above, “plus” factors are designed to serve as “proxies for direct evidence of 

an agreement” in a circumstantial case based upon parallel pricing conduct and, therefore, to 

constitute a “plus” factor, the evidence must be probative of an agreement. See Flat Glass, 385 

F.3d at 360. There is no exhaustive list of “plus” factors. Id. Such evidence is generally 

grouped into the following three categories: “(1) evidence that the [alleged conspirator] had a 

motive to enter into a price fixing conspiracy; (2) evidence that the [alleged conspirator] acted 

contrary to its interests; and (3) ‘evidence implying a traditional conspiracy.’” Id. (citations
287

omitted); see also Re/Max Int’l, 173 F.3d at 1009 (listing plus factors); Apex Oil Co. v. 

DiMauro, 822 F.2d 246, 254 (2d Cir. 1987) (same). 

It must first be noted that in the context of parallel pricing behavior in an oligopoly, 

evidence of “motive” and “actions against interest” typically only demonstrate interdependence

among the oligopolists. Flat Glass, 385 F.3d at 360-61. “[M]ere interdependence unaided by 

an advance understanding among the parties” does not suggest an unlawful agreement. See 

Twombly, 550 U.S. at 557 n.4 (discussing what allegations are necessary to state a claim under 

Section 1 and quoting 6 Areeda & Hovenkamp ¶ 1425). The court in Flat Glass explained:

In the context of parallel pricing, the first two factors largely restate the 

phenomenon of interdependence. We candidly acknowledged as much in In re 

Baby Food, 166 F.3d at 122. See also Areeda, supra, P 1434c1, at 245 

(“‘Conspiratorial motivation’ and ‘acts against self-interest’ often do no more 

than restate interdependence.”); Posner, supra, at 100. Evidence that the 

defendant had a motive to enter into a price fixing conspiracy means evidence 

that the industry is conducive to oligopolistic price fixing, either 

interdependently or through a more express form of collusion. In other words, it 

is “evidence that the structure of the market was such as to make secret price 

fixing feasible.” In re High Fructose Corn Syrup Antitrust Litigation, 295 F.3d 

651, 655 (7th Cir. 2002). Evidence that the defendant acted contrary to its 

interests means evidence of conduct that would be irrational assuming that the 

defendant operated in a competitive market.

385 F.3d at 360-61. 

Because the factors of motive and actions contrary to interest may only restate the 

theory of interdependence among oligopolists, evidence under the third factor above, evidence 

indicating an “actual, manifest agreement,” is the key to a proper determination. High Fructose 

Corn Syrup, 295 F.3d at 661; Flat Glass, 385 F.3d at 361. As explained in Section III.D.1., 

supra, an “agreement” for purposes of Section 1, and particularly in the context of an oligopoly 

market, is revealed by evidence of a prior understanding or commitment, Areeda, ¶ 1410c at 

71-74, or “the sort of restricted freedom of action and sense of obligation that one generally 

associates with agreement.” Twombly, 550 U.S. at 557 n.4. Moreover, Twombly instructs that 

the purported agreement must precede the parallel conduct at issue. See id. at 557 (holding that 

allegations of parallel conduct, for purposes of stating a Section 1 claim “must be placed in a 
288

context that raises a suggestion of a preceding agreement, not merely parallel conduct that 

could just as well be independent action”).

Complaint Counsel relies on the following as “plus” factors to prove that the asserted 

parallel curtailment of Project Pricing was pursuant to an agreement, rather than independent 

conduct, or mere conscious parallelism unaided by an agreement: (1) the Suppliers had a 

motive to conspire; (2) curtailing Project Pricing was against the alleged conspirators’ 

unilateral business interests, absent assurances that their competitors would also curtail Project 

Pricing; (3) the parallel curtailment of Project Pricing was pursuant to a “written plan” for 

conspiracy; (4) the Suppliers participated in an “information exchange” through their trade 

association, DIFRA; (5) the Suppliers complained to one another about pricing and “cheating”; 

(6) the Suppliers monitored their competitors’ pricing, in order to detect “cheating”; and (7) 

interfirm communications. CCB at 114-144. The dispositive issue for determination is 

whether the greater weight of the credible and probative evidence, with respect to the 

demonstrated parallel conduct and the demonstrated “plus” factors, makes the inference of a 

preceding agreement more likely than not. In this regard, pursuant to the legal authorities set 

forth above, particular attention, and weight, is accorded to whether or not the evidence shows: 

(1) a prior understanding among the Suppliers, including McWane, that each Supplier would 

curtail Project Pricing; (2) a commitment to one another to curtail Project Pricing; (3) a 

restricted freedom of action and sense of obligation to one another to curtail Project Pricing. 

Moreover, consistent with the applicable burden of proof, conduct “that is equally consistent

with collusion as with lawful competition . . . cannot represent a plus factor.” Williamson Oil 

Co. v. Phillip Morris USA, 346 F.3d 1287, 1313 (11th Cir. 2003).

(a) Motive

Complaint Counsel contends that the Suppliers’ parallel curtailment of Project Pricing 

occurred in the context of a Fittings market that is “susceptible” or “conducive” to “collusion” 

which, according to Complaint Counsel, shows a motive to conspire. CCB at 114. In support 

of this argument, Complaint Counsel relies on oligopoly theory, as relayed by Complaint 

Counsel’s proffered economic expert, Dr. Laurence Schumann, which provides that firms in a 

market with few sellers and a commodity product subject to inelastic demand can, by 
289

recognizing their mutual interdependence, achieve supracompetitive prices and profits, and 

then sustain them through systems that build trust and detect cheating on the consensus price. 

CCFF 651-662. According to Dr. Schumann, the Fittings market has these characteristics and 

therefore is conducive to collusion. CCFF 663-665. Complaint Counsel argues that “[t]hese 

market features make conspiracy allegations more plausible . . . .” CCB at 115. Whether the 

conspiracy “allegations” in this case are “plausible” is beside the point. “Plausibility” refers to 

the pleading requirements that must be met to avoid dismissal of a conspiracy complaint. 

Requiring plausibility in order to infer an agreement from circumstantial evidence “simply calls 

for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of 

illegal agreement.” Twombly, 550 U.S. at 556. “Plausibility” is not the standard of proof for 

purposes of prevailing on the merits. Rather, Complaint Counsel’s burden is to prove that the 

asserted “plus factor” evidence tends to make the inference of an agreement more likely than 

not. Flat Glass, 385 F.3d at 360 (holding that “plus” factors are designed to serve as “proxies 

for direct evidence of an agreement”). 

Complaint Counsel’s assertions regarding the characteristics of the Fittings market 

largely restate the theory of interdependence, and the ability of interdependent firms to tacitly 

coordinate. See Brooke Group, 509 U.S. at 238 (“Tacit coordination is facilitated by a stable 

market environment, fungible products, and a small number of variables upon which the firms 

seeking to coordinate their pricing may focus.”); see also Petruzzi’s IGA Supermarkets, Inc. v. 

Darling-Delaware Co., 998 F.2d 1224, 1232 (3d Cir. 1993) (requiring further allegations of 

“plus” factors, in addition to allegations of oligopolistic characteristics of homogenous service 

and inelastic demand). The features of the Fittings market relied upon by Complaint Counsel 

to support an inference of an illegal agreement, are the “same market features [that] make the 

market susceptible to conscious parallelism. See, e.g., H. Hovenkamp § 4.6a, at 179-80 

(‘Factors such as high concentration on the seller’s side and diffusion on the buyer’s side, . . . 

a standardized product and publicly announced prices and terms, suggest that a market is 

conducive to express or tacit collusion, as well as non-cooperative oligopoly.’).” In re Florida 

Cement & Concrete Antitrust Litig., 746 F. Supp. 2d 1291, 1317 (S.D. Fla. 2010). An 

agreement is not necessary to achieve conscious parallelism in a market with these 

characteristics. White, 635 F.3d at 576-77. Thus, Complaint Counsel’s contention that the 
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Fittings market is “conducive to collusion,” adds little, if anything, to the inquiry into whether 

the totality of the evidence proves an unlawful conspiracy. Rather, accepting Complaint 

Counsel’s position that oligopolistic interdependence is a “plus” factor would, in effect, foist a 

nefarious motive upon the Suppliers merely because they conduct their business within an 

oligopoly market. This is not the law. See du Pont, 729 F.2d at 139 (stating that “[t]he mere 

existence of an oligopolistic market structure in which a small group of manufacturers engage 

in consciously parallel pricing of an identical product does not violate the antitrust laws”).

Complaint Counsel further argues that each Supplier had a motive to conspire because 

Fittings prices had eroded in 2007 as a result of Project Pricing; that in 2007, McWane had a 

problem of excess capacity and inventory, was incurring idle plant charges, and was losing 

volume and market share to its competitors; and because all Suppliers had declining profits and 

wanted a price increase. Thus, Complaint Counsel argues, McWane had a motive to reduce 

Project Pricing. CCB at 115-116. 

First, as a factual matter, the evidence cited by Complaint Counsel does not show that 

“all suppliers had declining profits and wanted a price increase,” as argued by Complaint 

Counsel. CCB at 115 & n.427; CCFF 879-883, 917. In addition, Mr. Tatman credibly testified 

that McWane’s goal going into 2008 was primarily to increase volume, rather than price. 

F. 592-594. Even if McWane was motivated in part to increase profits, this is still a free 

country and “[i]n a free capitalistic society, all entrepreneurs have a legitimate understandable 

motive to increase profits,” which does not, on its own, constitute a “plus factor” indicating an 

unlawful agreement. Baby Food, 166 F.3d at 137. See Burtch v. Milberg Factors, Inc., 662 

F.3d 212, 229 (3d Cir. 2011) (affirming dismissal of complaint and holding that defendants’ 

alleged motive to minimize their risks and costs, maintain and stabilize pricing structures, and 

stabilize market shares did not constitute a “plus” factor).16 It is also noteworthy in this regard, 

however, that Fittings are a small segment of McWane’s business, representing about 5% of 

 16 Complaint Counsel’s reliance on In re Blood Reagents Antitrust Litig., 756 F. Supp. 2d 623, 631 (E.D. Pa. 

2010), is misplaced. In that case, allegations that one defendant “was losing so much money before the conspiracy 

that it broke bank covenants, and that [another defendant] was losing so much money it considered leaving the 

market altogether,” pled sufficient motive to make the other allegations of conspiracy claim “plausible” and 

survive a motion to dismiss. At this stage of the instant case, where Complaint Counsel has a burden of proving a 

conspiracy, proof that Complaint Counsel’s claims are “plausible” substantially misses the mark. Moreover, to the 

extent Blood Reagents holds that a desire to increase profits, without more, constitutes a “plus” factor evincing an 

agreement, the holding conflicts with that of its governing Circuit Court of Appeals in Baby Food. 
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McWane’s overall business; Fittings typically represent only 5% of the total cost of a 

waterworks project in which they are used and only 1.5% to 2% of the cost of the materials in a 

typical underground waterworks (“line”) job; and the price of Fittings is not a major factor in 

determining whether a Distributor wins a bid. F. 13, 285, 326-327. These facts weigh against a 

conclusion that McWane would be sufficiently motivated to enter into an unlawful conspiracy 

in order to increase its Fittings profits.

(b) Actions contrary to interest

Complaint Counsel asserts that curtailing Project Pricing was against the Suppliers’ 

unilateral business interests, absent assurances that their competitors would also curtail Project 

Pricing. As noted above, actions contrary to interest by an alleged participant in a conspiracy 

means “conduct that would be irrational assuming that the defendant operated in a competitive 

market.” Flat Glass, 385 F.3d at 360-61. To constitute a “plus” factor, asserted “actions 

contrary to interest” means proof that “each defendant,” in this case McWane, “would have 

acted unreasonably in a business sense if it had engaged in the challenged conduct unless that 

defendant had received assurances from the other defendants that they would take the same 

action.” Bolt v. Halifax Hosp. Med. Ctr., 891 F.2d 810, 826-27 (11th Cir. 1990). Proof of 

actions contrary to interest for “plus” factor purposes means “showing that the defendants’ 

behavior would not be reasonable or explicable (i.e., not in their legitimate economic selfinterest) if they were not conspiring to fix prices or otherwise restrain trade - that is, that the 

defendants would not have acted as they did had they not been conspiring in restraint of trade.” 

Harcros Chemicals, 158 F.3d at 572. Put another way, in order to constitute “actions against 

interest,” and therefore be probative of an agreement, the parallel conduct at issue “must be so 

unusual that in the absence of an advance agreement, no reasonable firm would have engaged 

in it.” Baby Food, 166 F.3d at 134-35 (quoting Coleman v. Cannon Oil Co., 849 F. Supp. 

1458, 1467 (M.D. Ala. 1993)). 

Complaint Counsel argues that McWane, Sigma, and Star each knew that if any one of 

them “unilaterally stopped” Project Pricing, that company would lose business to the others, yet 

McWane nevertheless announced an intention to sell only off its new multipliers, i.e., to, in 

effect, stop Project Pricing in its January 11, 2008 Customer Letter. As Complaint Counsel
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frequently points out in other contexts, the parallel conduct at issue in this case is not a parallel 

“stopping” of Project Pricing, which, it is undisputed, did not occur, but an asserted parallel 

“curtailment,” or reduction, of Project Pricing.

In fact, contrary to the government’s position, there is substantial evidence 

demonstrating that McWane’s pricing strategy was designed to further its own legitimate 

business interests of increasing volume and market share in the Fittings market. McWane 

needed greater visibility of actual market pricing in order to beat prices being offered by its 

competitors, which is a procompetitive purpose. F. 566-567; 595. Mr. Tatman’s concept was 

to narrow the range between the published prices and actual prices being charged in the market, 

which would give Sigma and Star less “headroom” within which to maneuver to undercut 

McWane on price. F. 632-635. McWane’s pricing strategy was to “compress” the range of 

pricing by implementing a published multiplier that was within approximately 8% of the true 

competitive level (i.e., the actual market price, or “effective” multiplier), F. 631, 635, and not 

follow the large 25% list price increase that had been announced by Sigma the previous 

October. F. 630-631. It was rational for McWane to hope or expect that Sigma and Star would 

follow McWane’s published multipliers because Sigma and Star historically followed 

McWane. F. 555-557, 679. If Sigma and Star did choose to follow, then this would serve 

McWane’s legitimate procompetitive, rather than unlawful anticompetitive, goals. In addition, 

McWane’s January 11, 2008 Customer Letter indicating that it intended to, in effect, stop 

Project Pricing was part and parcel of its strategy of trying to increase the visibility of Star’s 

and Sigma’s pricing, in order to enable McWane to undercut its competitors’ pricing. F. 646-

647. If Sigma and Star “took the bait” and “stopped” Project Pricing in order to follow 

McWane’s apparent move, then McWane would be in an even better position to compete with 

pricing by Sigma and Star, and thereby potentially increase its volume and market share. 

F. 647.

The evidence upon which Complaint Counsel relies, at best, shows that McWane 

devised its strategy, in part, based on what it believed or hoped its competitors would do in 

reaction to McWane’s pricing move. This merely restates the doctrine of interdependence. 

Flat Glass, 385 F.3d at 360-61. The greater weight of the evidence fails to show that it would 

be irrational for McWane to proceed with its pricing strategy absent advance assurances from 
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Sigma and Star that they would follow. McWane was the price leader in the Fittings market 

and Sigma and Star historically followed McWane. F. 555-556, 679. If Sigma and Star 

declined to adopt McWane’s new multipliers, the new multipliers could be easily withdrawn or 

revised. See F. 615, 674 (Sigma withdrew an October 23, 2007 announced list price increase 

when McWane did not follow); F. 797, 803, 809, 840, 843-844 (Sigma and Star rescinded 

multiplier increases announced in April and May 2008 after McWane did not follow). Even if 

the evidence proved that McWane’s announced intent to, in effect, stop Project Pricing by 

selling only off of its new published multipliers was bona fide, as opposed to a “head fake,” if 

Sigma and Star failed to follow McWane, McWane could easily and quickly resume Project 

Pricing. See White, 635 F.3d at 579 (noting that a price leader in an oligopoly risks little in 

announcing a pricing move). 

Where, as here, a pricing decision can be easily changed if competitors do not follow, it 

is not irrational to proceed without advance assurances of competitor compliance. As Areeda 

explains:

If each defendant can easily alter its decision as a physical and contractual 

matter, and can do so with little or no loss of actual or potential profit, then the 

defendant may feel comfortable in acting without advance agreement with its 

rivals. It can act, or it can wait and revise its behavior after seeing what the 

others do. Otherwise, unilateral action will be very uncomfortable. At some 

point, the discomfort will be so great that no rational businessperson will take 

the challenged step without advance agreement.

Areeda, ¶ 1425a at 183. 

Moreover, Complaint Counsel makes no argument as to why or how Sigma acted 

contrary to its self-interest with respect to Project Pricing. Indeed, the evidence fails to show 

that Sigma took any special actions with regard to Project Pricing. F. 895, 897-898. Complaint 

Counsel focuses principally on Star, arguing that Project Pricing enabled Star to grow its 

market share and stopping Project Pricing would constitute an abrupt departure from Star’s 

prior business practices. CCB at 125. As noted above, an announced intention is not 

“irrational” absent advanced assurances, where the decision can be easily changed based on the 

behavior of competitors. Furthermore, it appears that Star did not stop Project Pricing, and 

continued to Project Price throughout 2008, including when necessary to respond to its 
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competitors’ pricing. F. 873, 881, 912; see also F. 687 (Mr. Minamyer instruction: “[G]o get 

[documentation] and you can have your pricing”); F. 694 (Star’s plan was not to “stop” Project 

Pricing, but to first require documentation from a customer that Star’s competitors were Project 

Pricing below Star). In any event, because Complaint Counsel has failed to demonstrate that 

the announced intention of McWane, the Respondent in this case, to, in effect, stop Project 

Pricing was contrary to its own interest, absent advance assurances that its competitors would 

follow, this Initial Decision need not, and does not, decide whether Star’s announced intention 

to stop Project Pricing was contrary to Star’s self-interest.

Regardless of what the evidence might show as to the interests of Sigma and Star, 

McWane is the respondent in this case, and Complaint Counsel has failed to show that 

McWane’s pricing strategy was contrary to its economic self-interest, absent advance 

assurances that Sigma and Star would follow. 

(c) A “written plan for conspiracy”

Complaint Counsel contends that the evidence shows that the actions of McWane, 

Sigma, and Star, “comported” with a “written plan,” namely, Mr. Tatman’s internal December 

25, 2007 PowerPoint Presentation. CX 0627; see F. 626. Indeed, Complaint Counsel argues 

that this PowerPoint Presentation constitutes McWane’s “blueprint” for conspiracy. Complaint 

Counsel argues that evidence that conspirators are acting pursuant to a written plan is a 

“significant” “plus” factor because it is “suggestive” of conspiracy. CCB at 116-122. 

Respondent asserts that Mr. Tatman’s December 25, 2007 PowerPoint Presentation testimony 

establishes that the document was a “brainstorming” document,” that was prepared 

independently by Mr. Tatman, based upon his own data analysis, and that it is undisputed that 

the document was not shared with Sigma or Star. Moreover, Respondent contends, the “core 

tenets” of the strategy indicated by the PowerPoint Presentation were not communicated in 

McWane’s January 11, 2008 Customer Letter, as Complaint Counsel contends. 

Contrary to Complaint Counsel’s argument, to constitute a “plus” factor evincing a 

conspiracy, evidence must be more than “suggestive” of conspiracy. The inference of 

conspiracy must be more likely than not. Having evaluated the document in its entirety, in the 

context of all the surrounding circumstances, the inference that Mr. Tatman’s December 25, 
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2007 PowerPoint Presentation was a “blueprint for conspiracy” is rejected. As more fully 

explained below, Complaint Counsel has failed to prove that Mr. Tatman’s internal December 

25, 2007 PowerPoint Presentation was a “written plan” for conspiracy or that the conduct of 

Sigma and Star with respect to Project Pricing in 2008 was pursuant to, or in “compliance 

with,” McWane’s “plan.” Rather, the evidence shows that Mr. Tatman’s December 25, 2007 

PowerPoint Presentation was an internal McWane discussion document that was not shared 

with Sigma or Star and, at best, represented an internal plan for McWane’s own competitive 

pricing strategy. In addition, the inference that the conduct of Sigma and Star regarding Project 

Pricing was in furtherance or “compliance” with an agreement is no more likely than the 

inference of independent – albeit consciously interdependent – conduct. Accordingly, the 

December 25, 2007 PowerPoint Presentation does not constitute a “plus” factor evincing a 

conspiracy in this case.

Although not a “written plan” for conspiracy, the December 25, 2007 PowerPoint 

Presentation does provide an informative context for evaluating the conduct that followed it. 

Mr. Tatman testified, credibly and at length, regarding his independent data analysis 

undertaken to prepare the document, and the meaning of the language in the document. That 

testimony, as well as other evidence, demonstrates that Mr. Tatman’s December 25, 2007 

PowerPoint Presentation was an internal document, prepared independently by Mr. Tatman for 

the purpose of McWane’s internal strategy discussions. F. 620, 625-629. Mr. Tatman’s pricing 

strategy for McWane was to narrow the range between the published price and actual prices 

being charged in the market and thereby give Sigma and Star less “headroom” within which to 

maneuver to undercut McWane on price. F. 632-634. Accordingly, based on his independent 

analysis of available data (F. 627-629), Mr. Tatman recommended, and McWane decided, not 

to follow Sigma’s and Star’s large list price increase, and instead to take advantage of 

McWane’s relative cost advantage over Sigma and Star by implementing a lower multiplier 

increase. F. 620, 630-633. If Sigma and Star followed McWane’s new multipliers, which 

McWane recognized was likely given the market dynamics, F. 555, 679, 638 (PowerPoint slide 

stating that “due to their now more desperate need for price, I believe that Sigma and Star will 

mimic and verbally follow any program we publish . . . ”), this would potentially increase 

stability in the range of prices in the market. F. 635. Accordingly, McWane would gain a 
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competitive advantage in detecting and beating its competitors’ prices, thereby helping to meet 

McWane’s goal of increasing volume and market share, and put financial pressure on 

McWane’s competitors. F. 632-636. This is competitive, not unlawful, conduct by McWane. 

Complaint Counsel’s argument relies principally on inferences it draws from language 

from one slide from the December 25, 2007 PowerPoint Presentation, titled “Message to 

Market and Competitors”; in particular, the statements that: McWane “will be consistent and 

follow through with what we’ve formally communicated”; McWane “will encourage/drive both 

price stability and transparency”; McWane will adjust multipliers as required to remain 

competitive within any given market area, and “[c]onsistent Job Pricing will be met with 

general market actions”; and that, for 2008, “we will support net price increases but will do so 

in stepped or staged increments. A prerequisite for supporting the next increment of price is 

reasonable stability and transparency at the prior level.” F. 638. Complaint Counsel interprets 

the points listed on this slide as the four “prongs” of “the Tatman Plan.” CCB 118-119. On its 

face, the foregoing language refers only to unilateral conduct by McWane. F. 638. However, 

Complaint Counsel further notes the statement that one of the four “keys” to “success” of 

McWane’s strategy is “Sigma & Star’s [management] pulling price authority away from front 

line sales . . . to add discipline to the process.” CCB at 119; F. 638. This language is at least as 

reflective of McWane recognizing its interdependence with Sigma and Star as it is with 

McWane “planning” to procure an unlawful agreement with Sigma and Star. 

In re Sulfuric Acid Antitrust Litig., 743 F. Supp. 2d 827 (N.D. Ill. 2010), upon which 

Complaint Counsel relies, is readily distinguishable. In that case, the alleged co-conspirators, 

producers and suppliers of sulfuric acid, were parties to certain sales contracts. Plaintiffs 

contended that there were additional promises and understandings beyond the face of the sales 

contracts, pursuant to which sulfuric acid producers were required to shut down or curtail acid 

production as a condition of entering into the sales agreements, in order to stabilize prices, 

control industry output, and prevent competition. Id. at 835. The court denied the defendants’ 

motion for summary judgment on the plaintiffs’ claim, holding that “most damaging piece” of 

evidence was the defendant’s “Sulphuric Acid 1989 Plan,” in which the defendant clearly 

articulated a plan to “approach[] sulphur burning acid producers to purchase acid from 

[defendant] and thereby shutdown sulphur burning acid plants. It is a strategy of displacement 
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by agreement. This strategy is being followed so as not to force an oversupply into a balanced 

market with predictable price disruption and to minimize the risk of inviting trade action by 

U.S. authorities.” 743 F. Supp. 2d at 858 (emphasis in original). This direct evidence of a clear 

plan to enter into an unlawful, anticompetitive agreement, under the cover of an ordinary sales 

contract, is far from the sequential inferences Complaint Counsel seeks to have drawn from 

Mr. Tatman’s December 25, 2007 PowerPoint Presentation, which, on its face, outlined 

unilateral conduct by McWane, albeit, and understandably, with consideration of the potential 

reactions by competitors. 

Complaint Counsel further asserts an inference that the actions of McWane, Sigma, and 

Star beginning in January 2008 were taken to “comport” or “comply” with McWane’s “plan.” 

This inference is further based on yet other inferences that Complaint Counsel urges be drawn 

from McWane’s January 11, 2008 Customer Letter, which was an outgrowth of McWane’s 

internal pricing discussions in connection with the December 25, 2007 PowerPoint 

Presentation. F. 646. Complaint Counsel argues that McWane’s January 11, 2008 Customer 

Letter “communicated” the “substance” of McWane’s “plan” allegedly shown by the “Message 

to Market and Competitors” slide in Mr. Tatman’s December 25, 2007 PowerPoint 

Presentation. Specifically, according to Complaint Counsel, McWane’s January 11, 2008 

Customer Letter communicated that “McWane was increasing its prices, did not intend to offer 

Project Pricing, and would support future increases in prices only if pricing had stabilized, i.e., 

only if Sigma and Star also curtailed Project Pricing.” CCB at 119. Complaint Counsel’s 

interpretation of the January 11, 2008 Customer Letter is unsupported by the greater weight of 

the evidence. Regardless of what McWane might have discussed internally about what 

“message” to send to the “market and competitors” (F. 638; see also CX 0627 at 006-007 (draft 

customer letters announcing multiplier increase), McWane’s January 11, 2008 Customer Letter 

did not include any language indicating that McWane would support future increases in prices 

only if Sigma and Star curtailed Project Pricing, as argued by Complaint Counsel. F. 645. The 

vague and ambiguous paragraph in the January 11, 2008 Customer Letter upon which 

Complaint Counsel relies in this regard states: “If the current inflationary trends continue as 

forecasted, we anticipate the need to announce another multiplier increase within the next six 

months. However, we will only do so as conditions require.” F. 645. The January 11, 2008 
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Customer Letter also did not include any language concerning Sigma’s and Star’s “pulling 

price authority away from front line sales,” which was also referenced on the “Message to 

Market and Competitors” slide upon which Complaint Counsel relies.17 

As proof that Sigma and Star “complied” with McWane’s alleged plan, Complaint 

Counsel asserts that after McWane’s January 11, 2008 Customer Letter was sent, Sigma and 

Star “announced” that they would curtail Project Pricing, and “centralized their pricing 

authority away from the front lines of their sales force,” in order to “please” McWane. CCB at 

120-122. As noted above, the evidence fails to show Sigma “announced” that it would curtail 

Project Pricing. Mr. Pais’ email of January 24, 2008, upon which Complaint Counsel relies, in 

which he “urged” Mr. Rybacki to renew efforts to “normalize all pricing for fittings” between 

plant work and other work, was an internal Sigma document, and Sigma’s January 29, 2008 

customer letter said nothing about “normalizing” Fittings prices between plant work and other 

work, as alluded to in Mr. Pais’ January 24, 2008 internal email. F. 664, 674. Even if Mr. Pais 

believed that curtailing Project Pricing would “please” McWane, this is not proof that Sigma 

had any prior understanding with McWane, or that there was any commitment by McWane to 

Sigma, to raise prices in the future. The inference that Sigma, recognizing its oligopolistic 

interdependence with McWane, hoped it could influence McWane’s conduct, is at least as 

likely as any inference of an agreement involving McWane. Moreover, Complaint Counsel’s 

evidence that Sigma “centralized” its pricing authority consists of statements by Mr. Tatman in 

his Executive Report for the first quarter of 2008 that: “As we understand it, both [Sigma and 

Star] have removed pricing authority from the front line sales team and pushed it up higher 

within their organizations. Discounting is still available, but it now requires a more structured 

decision process.” CCB at 122 & n.457; CCFF 1054; see F. 1068. These statements have little 

probative value in determining whether Sigma, in fact, “centralized” pricing authority in 2008, 

as they were based on reports from sales persons in the field of information gleaned from 

discussions with customers, rather than upon any personal knowledge of Mr. Tatman. F. 571, 

869. Moreover, any evidentiary value of Mr. Tatman’s “understanding” of Sigma’s conduct in 

 17 In addition, Complaint Counsel argues that McWane “complied” with its strategy by hiring a pricing 

coordinator. CCB at 122. As noted in Section III.D.2.b.ii.(a) above, the purpose of the pricing coordinator 

position was to get a national view of pricing, and was not an element of the strategy referenced in the December 

25, 2007 PowerPoint Presentation. Moreover, even if it were, McWane’s complying with its own pricing strategy 

scarcely gives rise to an inference of conspiracy.
299

this regard is outweighed by direct evidence from Mr. Rybacki that Sigma undertook no special 

efforts to curtail Project Pricing in 2008, and that Sigma’s regional managers retained authority 

to approve Project Pricing throughout 2008. F. 895, 897-898. 

With respect to Star, the evidence shows that Star announced to its sales force, and to its 

customers, an effort to stop or curtail Project Pricing, and that Star worked to tighten up and 

better manage its process for approving Project Pricing. F. 686-687, 695, 702, 704, 873. 

However, the inference that it did so because Star believed that, in exchange for these actions, 

McWane would reward Star with a price increase in the future, in accordance with the “Tatman 

plan,” is rejected. To support this inference, Complaint Counsel cites an internal email dated 

January 23, 2008 from Mr. Minamyer to his divisional sales managers noting that McWane 

“said in its multiplier increase letter that they will require all project priced orders to be shipped 

by March 1” and directed the division managers to start working on doing the same because 

otherwise “[McWane] won’t be able to figure it out and think we didn’t take the increase.” 

CCB at 121 n.452 citing CX 0847. However, this language, which is ambiguous, is 

inconsistent with the inference of any prior understanding or commitment between McWane 

and Star with respect to future pricing. 

Moreover, contrary to Complaint Counsel’s argument, the evidence fails to show that 

McWane communicated its “plan” to Sigma and Star in meetings or telephone calls. See CCB 

at 21-22. The evidence shows that on December 3, 2007, several weeks before the alleged 

conspiracy was formed in January 2008, Mr. Page, President and CEO of McWane (F. 39), met 

with Mr. Pais of Sigma in Birmingham, Alabama. F. 604. Mr. Page and Mr. Pais both testified 

that their December 3, 2007 meeting concerned international opportunities for McWane. 

F. 608. Mr. Pais testified that they discussed Sigma potentially supplying McWane with metric 

sized fittings that were needed for international markets that McWane did not have. F. 605. 

Mr. Pais and Mr. Page denied discussing domestic Fittings; prices being charged in the 

marketplace; pricing discipline; McWane’s or Sigma’s costs; or ways they could work together 

in the marketplace in this regard. F. 608. Where there is an independent business justification 

for a defendant’s behavior, an inference of conspiracy is not easily drawn. Todorov v. DCH 

Healthcare Authority, 921 F.2d 1438, 1456 (11th Cir. 1991). Even if the testimony of Mr. Pais 

and Mr. Page is rejected, mere disbelief of testimony does not “rise to the level of positive 
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proof of agreement . . . .” Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309, 

1313 (3d Cir. 1975). It strains credulity to suggest that mere proof of a meeting, together with 

evidence that pricing was not discussed, equates to proof that McWane’s alleged “plan” was 

discussed. Rather, such a conclusion would be unsupported speculation. 

Complaint Counsel also relies upon four telephone calls placed between a cell phone 

issued to Mr. Tatman and a cell phone issued to Mr. Rybacki, as follows: a three minute call 

from the Rybacki cell phone to the Tatman cell phone at 10:15 a.m. on December 27, 2007; a

six minute call from the Tatman cell phone to the Rybacki cell phone at 12:11 p.m. on 

December 27, 2007; a three minute call from the Rybacki cell phone to the Tatman cell phone 

at 11:03 a.m. on January 3, 2008; and a nine minute call from the Tatman cell phone to the 

Rybacki cell phone at 4:30 p.m. on January 4, 2008. CCB at 120 & n.448; CCFF 923; see 

F. 621-622, 639-640. The short duration of two of the foregoing calls indicates that the 

inference that a brief voice mail message was left is just as likely as the inference that an actual 

conversation took place. In any event, Mr. Rybacki and Mr. Tatman both denied having any 

recollection of the telephone calls and/or denied any recollection of what was discussed. 

F. 623-624; 639-640. It would be pure speculation on this record to simply assume that Mr. 

Tatman and Mr. Rybacki discussed McWane’s pricing “plan.”

Finally, Complaint Counsel points to testimony by Mr. McCutcheon regarding a dinner 

meeting between Mr. McCutcheon of Star and Mr. Pais of Sigma after an initial meeting of the 

Ductile Iron Fittings Manufacturers Association (“DIFRA”) in Birmingham, Alabama. 

Specifically, Mr. McCutcheon testified at an investigational hearing in this matter that Mr. Pais 

proposed that Sigma and Star agree “to stay within two to three” discount points of McWane; 

that if Sigma and Star did so, McWane would “not be so overbearing towards” Sigma and Star; 

and that “if we were good, then they would be good – they would treat us better and we could 

live happily ever after.” CX 2538 (McCutcheon, IHT (Vol. 2) at 227-228); see also 

McCutcheon, Tr. 2373-2374. Complaint Counsel argues this evidence shows that Sigma and 

Star knew “aspects” of McWane’s pricing “plan” and urges that it should be inferred that 

McWane must have communicated its plan to Sigma and/or Star. Complaint Counsel’s 

argument is based only on unsupported inferences and overreaches. First, Complaint Counsel 

points to nothing in Mr. Tatman’s internal December 25, 2007 PowerPoint Presentation 
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regarding Sigma and Star staying “within two or three points” of McWane. See CX 0627;

F. 638. In addition, Mr. Pais denied the statements attributed to him by Mr. McCutcheon, and 

Complaint Counsel cites no reason why Mr. McCutcheon should be believed over Mr. Pais. 

See Pais, Tr. 1957-1959. Even if Mr. McCutcheon’s testimony is credited, the initial meeting 

of DIFRA took place on March 27, 2008 (F. 727), and therefore, the alleged conversation took 

place more than two months after Sigma and Star had already, ostensibly, “agreed” to 

McWane’s “plan” in January 2008, according to Complaint Counsel. See Complaint ¶¶ 2, 29, 

32. Moreover, the substance of the conversation is inconsistent with the notion that Sigma and 

Star had a prior understanding with or commitment from McWane regarding curtailing Project 

Pricing. Therefore, regardless of what the alleged conversation between Mr. Pais and Mr. 

McCutcheon says about the conduct of Sigma and Star, this alleged conversation fails to prove 

that McWane, who is the Respondent in this case, communicated its “plan” to Sigma and Star, 

or that McWane was party to an agreement to curtail Project Pricing.

For the foregoing reasons, and having fully reviewed and weighed all the evidence on 

the issue, the evidence fails to demonstrate that Mr. Tatman’s December 25, 2007 PowerPoint 

Presentation constituted a “written plan” for conspiracy, with which McWane, Sigma, and Star 

all complied, as argued by Complaint Counsel. This internal document is not evidence of the 

asserted agreement to curtail Project Pricing involving McWane, and therefore does not 

constitute a “plus” factor in this case. 

(d) DIFRA as a “plus” factor

Complaint Counsel next contends that McWane, Sigma, and Star participated in an 

“information exchange” in order to “detect cheating” on the asserted agreement to curtail 

Project Pricing, and that, therefore, this constitutes a “plus” factor. CCB at 126-127. 

Importantly, however, for this evidence to be material under Complaint Counsel’s argument, it 

must first be assumed that there was, in fact, an agreement to curtail Project Pricing, and that 

McWane was a party to it. An unlawful agreement will not be presumed. See Blomkest 

Fertilizer, 203 F.3d at 1033 (“[A] litigant may not proceed by first assuming a conspiracy and 

then explaining the evidence accordingly.”). 
302

In summary, DIFRA is a trade association with four members, McWane, Sigma, Star, 

and U.S. Pipe. F. 8. Around the same time as DIFRA’s incorporation in January of 2007, 

DIFRA engaged the accounting firm, Sellers Richardson, of Birmingham, Alabama, as the 

association’s auditor. F. 715, 718. As part of its duties, Sellers Richardson would “compile on 

a monthly basis, the data submitted by the members reporting their respective sales of ductile 

iron fittings” in the form of total tons-shipped “and will prepare and issue to the members 

monthly reports” showing the aggregate tons of ductile iron fittings shipped during the 

reporting period (hereafter, “DIFRA tons-shipped data reports”). F. 718. On or about April 25, 

2008, the members of DIFRA approved a tons-shipped reporting format, which would set forth 

industry-wide, short-tons of fittings shipped within the United States in the previous month for 

the following six categories: 2”-12” Flanged; 2”-12” All Other; 14”-24” Flanged; Greater than 

24” Flanged; Greater than 24”; and “All Other.” F. 732-734. These broad product size ranges 

contain thousands of different SKUs – all with unique physical attributes and pricing points –

and mirror the major size groupings of pipe. F. 742. Members’ initial submissions included

annual data for 2006, monthly data for 2007, and monthly data for January through April 2008. 

F. 734. After the members submitted their data to DIFRA’s accountants, the accountants

aggregated the members’ tons-shipped data and disseminated the aggregated totals to DIFRA 

members. F. 838. The first DIFRA tons-shipped report was issued by the accountants on June 

17, 2008. F. 738. The last DIFRA tons-shipped report was circulated in January 2009. F. 739.

Complaint Counsel’s DIFRA “plus” factor argument asserts, but fails persuasively to 

explain, how historic, aggregated, tons-shipped data reports would disclose the pricing of the 

Suppliers in such a way as to enable them to “detect cheating” on the presumed agreement to 

curtail Project Pricing, even if the Suppliers could glean their own individual market share from 

the data, as Complaint Counsel asserts. CCB at 126. Moreover, the conclusion that the reports 

would allow the Suppliers to “detect cheating” on the presumed agreement to curtail Project 

Pricing is not readily apparent. The submitted tons-shipped data was aggregated, and the report 

did not reveal the tons shipped or market shares of the individual Suppliers. See CX 0052 at 

005; F. 748-749, 756, 758. No DIFRA member was permitted to review the tons-shipped data 

of any other member. F. 748. Neither DIFRA nor its accountants, Sellers Richardson, 

collected sales price data. F. 745. The DIFRA reports provided by Sellers Richardson did not 
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include or reveal any sales prices, or report any dollar figures. F. 746-747. It is far less 

indicative of a price fixing conspiracy when the information allegedly exchanged pertains to 

volume rather than prices. Williamson Oil Co., 346 F.3d at 1313. See also In re Citric Acid 

Litig., 191 F.3d 1090, 1098 (9th Cir. 1999) (holding that gathering information about pricing 

and competition in the industry is “standard fare” for trade associations and does not warrant an 

inference of conspiracy).

Also, the fact that the DIFRA members opted to include data for several historic time 

periods, including all of 2006 and 2007, in addition to a time period during the alleged 

conspiracy (January through April 2008), is inconsistent with the conclusion that the purpose of 

the data reporting was to police the alleged conspiracy.

The cases upon which Complaint Counsel relies do not support a holding that the 

DIFRA tons-shipped data reporting system constitutes a “plus” factor evincing an unlawful 

agreement. In In re Petroleum Products, the issue was whether the defendants conspired to 

restrict supply, and in this context, the court held that evidence that the defendants, through a 

trade association, obtained detailed supply projections for individually identifiable suppliers, 

combined with evidence that the defendants also individually exchanged their own detailed 

supply forecasts, among other evidence, made the inference of conspiracy plausible. 906 F.2d 

at 460-462. In the instant case, in contrast, Complaint Counsel alleges an agreement to curtail 

Project Pricing, not an agreement to restrict supply, and unlike Petroleum Products, the tonsshipped data reported through DIFRA contained only aggregated totals of volume, for broad 

categories of fittings, and did not set forth the volume of each member. F. 741-744, 748-749. 

Furthermore, the court in Petroleum Products held only that the information exchanges 

between the defendants contributed to making the inference of conspiracy “plausible.” Id. at 

462. As noted previously, at this stage of the proceedings, Complaint Counsel’s burden is to 

prove that the inference of conspiracy is more likely than not, rather than merely “plausible.” 

Todd v. Exxon Corp., 275 F.3d 191 (2d Cir. 1991), upon which Complaint Counsel also 

relies, is distinguishable. In Todd, the plaintiff alleged that defendants violated Section 1 of the 

Sherman Act by regularly exchanging detailed information regarding the compensation they 

paid to their non-union managerial, professional, and technical employees and using this 
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information to set the salaries of these employees at artificially low levels. 275 F.2d at 195-97. 

The court specifically noted that the plaintiff was not alleging an agreement among defendants 

to fix salaries, but an unlawful information exchange, based on the exchange’s allegedly 

“facilitating” the fixing of salaries, which claim the court recognized as a distinct Section 1 

action. Id. at 198. Whether Complaint Counsel’s alleged “information exchange” constitutes 

an unlawful “facilitating practice” (as opposed to a “plus” factor) is the subject of Count Two 

of the Complaint in this case, and is addressed infra in the analysis of that Count. 

Accordingly, the evidence fails to support Complaint Counsel’s assertion that 

participation in the DIFRA tons-shipped data reporting system is probative of an agreement to 

curtail Project Pricing. Therefore, the DIFRA reporting system does not constitute a “plus” 

factor in this case.18

(e) “Monitoring” of the market for “cheating”

Complaint Counsel argues that internal documents show that the Suppliers were 

“tracking” the marketplace for “cheating” on the asserted agreement to curtail Project Pricing. 

The documents upon which Complaint Counsel relies to support this argument have been 

thoroughly reviewed and examined, and the documents, as discussed below, do not implicate 

McWane in an agreement to curtail Project Pricing. The inference that McWane was 

monitoring the market for “cheating” on an agreement with Sigma and Star to curtail Project 

Pricing is no more likely than the inference that McWane was gathering competitive 

information from the field, in the ordinary course of business, to enable it to compete against 

the prices of its competitors, including with Project Pricing. Therefore, these documents fail to 

constitute circumstantial evidence of an agreement to curtail Project Pricing involving 

McWane.

 18 Complaint Counsel’s assertion that mere membership in a trade association is a “plus” factor evincing 

agreement is without merit. In re Blood Reagents, 756 F. Supp. 2d at 632, upon which Complaint Counsel relies, 

held that a complaint alleging “common membership in trade associations, . . . while not enough by itself to confer 

plausibility on an allegation of conspiracy, is yet another feature of the factual background,” which together with 

the many other allegations in that case, raised a reasonable expectation that discovery would reveal evidence of an 

illegal agreement, and therefore the defendants’ motion to dismiss was denied. This is not a holding that proof of 

membership in a trade association constitutes a “plus” factor evincing an unlawful agreement. 
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Complaint Counsel argues that McWane monitored the market for “cheating” on the 

alleged agreement to curtail Project Pricing because it “tasked its sales representatives with 

logging instances of Project Pricing in its ‘price protection log’ and reporting instances of 

cheating in its ‘competitive feedback log’,” which Mr. Tatman used to conclude in an April 

2008 quarterly Executive Report that “the level of multiplier discounting by both Star and 

Sigma appears to have died down significantly.” CCB at 129. The evidence shows that 

McWane’s pricing protection log tracked, in the normal course of business, instances of price 

protection (i.e., where McWane quotes a price to a customer and agrees to hold that price for a 

customer for some period of time, thereby “protecting” the price against increases) and 

instances of Project Pricing, as reported by sales persons in the field. F. 852, 854. The 

“competitive feedback log” is a summary of competitive information learned in the field and 

reported by McWane’s sales persons in weekly narrative “competitive feedback reports.” 

F. 571. Complaint Counsel cites no evidence to support Complaint Counsel’s nefarious 

inference from these facially legitimate, internal business reporting devices, that the pricing 

protection log and competitive feedback reports were devices for “tracking” “cheating” on a 

(presumed) prior agreement, and therefore should constitute a “plus” factor evincing an 

agreement involving McWane.

In re High Fructose Corn Syrup, upon which Complaint Counsel relies, is not 

analogous. In that case, there was extensive, explicit evidence of an agreement through the 

defendants’ own statements and documents, including a statement by one of the defendant’s 

managers that: “We have an understanding within the industry not to undercut each other’s 

prices,” and a document that referred to “support[ing] efforts to limit” competitors’ pricing. 

295 F.3d at 662. This evidence is not, as argued by Complaint Counsel, “similar” to the 

evidence upon which Complaint Counsel relies here to show the alleged agreement involving 

McWane.

To support its “monitoring” for “cheating” inference against McWane, Complaint 

Counsel relies principally on statements in internal documents of Sigma and Star. In particular, 

Complaint Counsel cites to several internal documents of Star that use the term, “cheat,” or 

“cheating” in reference to the prices being offered by its competitors in the marketplace. 

According to Complaint Counsel, these documents are admissions of Star, and these 
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admissions are further attributable to McWane as Star’s “co-conspirator.” See CCB at 127-

128. Having fully reviewed and considered all the documents upon which Complaint Counsel 

relies, Complaint Counsel’s argument is unpersuasive. For example, Complaint Counsel relies 

heavily on one internal document of Star, an email exchange from September 17, 2008 between 

Star Divisional Sales Manager, Ramon Prado, and Star’s then National Sales Manager, Mr. 

Minamyer, regarding the status of business in the southeast (CX 1691). The relevant passage, 

in context, reads: 

[Mr. Minamyer] What the heck can we do? [Ramon Prado] We have climbed 

our way back into contention and Ferguson attrition should be mostly gone now. 

Are we being aggressive enough? [Ramon Prado] I think we are doing better 

since figuring out that Sigma was cheating on the fitting deal.

Looks like Ryan is doing OK. Is that from the Lynn deal? [Ramon Prado] Yes 

primarily.

Are [your] guys on the projects? [Ramon Prado] Yes. Are they project pricing 

to get every order? [Ramon Prado] Yes.

CX 1691. 

Complaint Counsel has failed to show that the statement regarding “cheating” on the

“fitting deal,” upon which it relies, is an “admission” of Star of an agreement to curtail Project 

Pricing. See also F. 902 (Mr. Prado’s statement in internal “competition update” dated March 

6, 2008: “It is still early, but it doesn’t appear that Sigma or Tyler is cheating on the new fitting 

multipliers being quoted after 2/18.”). Mr. Prado was not called as a witness at trial, nor was 

any deposition testimony from Mr. Prado offered into evidence, to explain what he meant by 

the term “cheating” or “the fitting deal” or “the Lynn deal.” Under Complaint Counsel’s 

theory, it must be inferred that Mr. Prado was referring to “cheating” on an agreement to curtail 

Project Pricing, which is an admission of Star, and which should further constitute evidence of 

an agreement involving McWane. Mr. Minamyer’s testimony, which is not contradicted, was 

that “cheating” is an internal Star term used by Star to refer to any pricing that was below the 

published multiplier, including among other things, Project Pricing. F. 903. There is no 

evidence that the term had any particular usage for Fittings. Complaint Counsel’s daisy chain 

of assumptions fails to support or justify an evidentiary inference of any unlawful agreement 
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involving McWane, and the multilayered inference is rejected. In addition, it is unlikely that 

the existence of any unlawful agreement to curtail Project Pricing would be known below the 

executive level at Star, down to the level of a divisional sales manager, such as Mr. Prado. For 

this reason as well, the inference that Mr. Prado was referring to an unlawful agreement in his 

email is unsupported and unpersuasive.

In addition, the email exchange (CX 1691), set forth above, further states that Star was 

using “project pricing to get every order,” which is inconsistent with the existence of an 

agreement among McWane, Sigma, and Star to curtail Project Pricing. The document also is 

evidence that Star was Project Pricing to “get every order” as of September 17, 2008, which is 

inconsistent with Complaint Counsel’s theory that Star sales persons only began using Project 

Pricing to “get every order,” when allegedly instructed to do so by Mr. Minamyer in his email 

of November 25, 2008 (F. 893) over two months later. CCB at 6, 35-36. Other Star documents 

upon which Complaint Counsel relies are also consistent with the conclusion that Star 

continued to use Project Pricing throughout 2008 to compete in the marketplace, which is 

inconsistent with the inference of a conspiracy to restrain price competition by curtailing 

Project Pricing. E.g., F. 908 (CX 1696 at 001 (weekly activity report from Mr. Smith for week 

ending April 18, 2008 stating, “You know the gig, ask them why?” If they give you proof the 

other guys are cheating, then we will match!”)); F. 912 (CX 1695 at 001 (email from Mr. Smith 

to his sales force regarding a weekly report, stating: “[L]et’s be as diligent as we can gathering 

the proper data needed if the other suspects are cheating. We will react, just need to make sure 

it is real.”)).

Furthermore, the September 17, 2008 email exchange, reflected in CX 1691, above, 

refers to Sigma and does not mention McWane, thereby requiring the further inference that 

McWane was part of whatever “deal” Mr. Prado meant. Accordingly, Complaint Counsel has 

failed to prove that this document constitutes an admission of Star of a conspiracy with 

McWane to curtail Project Pricing. 

The remaining Star documents upon which Complaint Counsel relies suffer from the 

same or similar defects discussed above. For example, Complaint Counsel relies upon 

documents containing statements of a Star divisional sales manager, Mr. Shaun Smith. At the 
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end of a 3-page Star internal email exchange among Mr. McCutcheon, Mr. Minamyer, and Mr. 

Smith on October 22, 2008, regarding “Quote 10707007,” and whether to offer a customer a 

lower multiplier than Sigma had offered, Mr. Smith stated: “I’m not sure about the market 

being already there. . . . I really only think this will affect the Houston market, but I am 

catching Sigma cheating more and more.” F. 916; see also F. 917 (statement by Mr. Smith in 

weekly activity report for the week ending October 24, 2008, under the heading “Competition,” 

noted “My team is in major attack mode – as reported, we are seeing cheating all over from 

Sigma – they have been instructed not to lose any orders.”). As in the case of Mr. Prado, as 

previously noted, Mr. Smith did not testify at trial, nor is there any deposition testimony in the 

record from Mr. Smith, as to what he meant by the above statements. Furthermore, as noted 

above with regard to statements by Mr. Prado, it is unlikely that the existence of any unlawful 

agreement to curtail Project Pricing would be known below the executive level at Star, down to 

the level of a divisional sales manager, such as Mr. Smith, which weighs against any inference 

that Mr. Smith was referring to an unlawful agreement. In addition, this Star internal email 

refers only to Sigma. It will not be assumed that Mr. Smith was referring to a conspiracy with 

McWane to curtail Project Pricing. Moreover, the document is evidence of active price 

competition between Sigma and Star, and is inconsistent with an agreement to curtail Project 

Pricing.19 

Complaint Counsel next argues that Sigma was “monitoring the market for cheating” by 

using DIFRA reports. CCB at 128. The statement upon which Complaint Counsel relies, from 

an internal Sigma email authored by Mr. Pais on May 4, 2009, shows that Mr. Pais believed 

DIFRA data enabled him to track Sigma’s own market share. F. 772 (CX 0319 at 002). The 

inference that Sigma’s purpose in tracking market share was to find “cheating” on an 

agreement to curtail Project Pricing presumes a preexisting agreement, and is rejected for the 

same reasons set forth in Section III.2.b.iii.(d), supra. At a minimum, the inference that Sigma 

was tracking its market share for legitimate business purposes is at least as likely as the 

inference that it was “tracking cheating” on an agreement with McWane and Star to curtail 

Project Pricing.

 19 Complaint Counsel also uses the Star documents referred to herein as evidence that the conspiracy was “falling 

apart” beginning in the fall of 2008. However, this assertion presumes the existence of a prior conspiracy, which 

has not been shown. 
309

In summary, regardless of what the evidence may imply as to the conduct of Sigma and 

Star, the inference that McWane, who is the Respondent in this case, was “monitoring” the 

market for “cheating” on an agreement with Sigma and Star to curtail Project Pricing is 

unproven. The inference urged by Complaint Counsel is no more likely than the inference that 

McWane was gathering competitive information from the field, in the ordinary course of 

business, to enable it to compete against the prices of its competitors, including by using 

Project Pricing. Because the evidence upon which Complaint Counsel relies does not merit an 

inference of an agreement involving McWane, Complaint Counsel has failed to prove the 

existence of this asserted “plus” factor.

(f) “Complaints” about “cheating”

Complaint Counsel also argues that the evidence shows the Suppliers “complained” to 

each other about low prices or “cheating” and that this constitutes a “plus” factor evincing an 

agreement to curtail Project Pricing involving McWane. CCB at 129-132. Complaints about 

“cheating,” Complaint Counsel argues, suggest the breach of an agreement, rather than 

independent action. However, the cases upon which Complaint Counsel relies held that 

complaints about cheating implied a breach of an agreement, where there was independent 

proof of the underlying agreement allegedly “breached.” Thus, in United States v. Giordano, 

261 F.3d 1134 (11th Cir. 2001), evidence that the appellant “on at least one occasion” 

complained that a co-conspirator was “cheating” contributed to the totality of the evidence that 

made the inference of conspiracy reasonable, and therefore supported the jury’s verdict finding

a price-fixing conspiracy. Id. at 1139-40. However, in Giordano, unlike the instant case, there 

was also substantial direct evidence that the appellant had met with the purported coconspirators and agreed to jointly lower prices. Id. at 1136-38. There was also direct evidence 

that one co-conspirator decided afterward not to comply with the agreement and did not lower 

prices, which prompted the “complaints.” Id.

Similarly, in United States v. Beaver, 515 F.3d 730 (7th Cir. 2008), cited by Complaint 

Counsel, there was direct evidence of a meeting between appellant and other co-conspirators 

where they discussed ways to raise and stabilize prices on concrete and that attendees left the 

meeting with the “firm understanding that an agreement to limit . . . discounts had been 
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reached.” Id. at 734. In Beaver, there was also direct evidence that, after it appeared that some 

of the participants were not complying with the agreement, the alleged co-conspirators had 

more meetings where they “reaffirmed” their agreement, and expressly agreed that if any 

member of the conspiracy detected discounting, they would confront that member about “his 

cheating.” Id. In those circumstances, subsequent complaints about cheating contributed to the 

legal sufficiency of the evidence of conspiracy. See also In re Scrap Metal Antitrust Litig., 

2006 U.S. Dist. LEXIS 75873, at *6-9, *41 (N.D. Ohio 2006) (holding that direct testimony of 

“unwritten” agreements by scrap metal resellers, inter alia, not to compete with each other by 

selling to accounts that “belonged” to another reseller, along with evidence of complaints about 

those that failed to comply, as well as other evidence of agreement, was legally sufficient to 

support jury verdict). The evidence of an agreement, found in the foregoing cases, 

distinguishes them from the instant case, in which the probative value of Complaint Counsel’s 

“cheating complaints” first requires an assumption that an agreement existed, which is contrary 

to the government’s burden of proof.

Complaint Counsel relies on an internal Star email dated April 2, 2008, in which Mr. 

Minamyer reported to Mr. McCutcheon, regarding a bid for the “Tulsa Bid Sleeves Project,” 

that Star had lost because Star had not given the customer a “special price” but Sigma did. 

F. 906. Mr. Minamyer stated, among other things: “They should be very careful if they want to 

hold this price increase as we will not lose our partners or any more orders because they are not 

responsible in the market.” F. 906. On its face, this is an internal Star email and not a 

complaint to a competitor about anything, much less about “cheating” on an agreement. 

However, Complaint Counsel apparently contends that it should nevertheless be inferred that 

Mr. McCutcheon complained to Sigma about its Project Pricing, which Complaint Counsel 

further infers is a complaint about “cheating” on an agreement, based on the timing of certain 

telephone calls placed on April 3, 2008 between a cell phone issued to Mr. McCutcheon of Star

and a cell phone issued to Mr. Rybacki of Sigma. CCB at 131. Although there is no evidence 

in the record indicating what, if anything, Mr. McCutcheon and Mr. Rybacki discussed, 

Complaint Counsel urges that Sigma’s “cheating” was “surely discussed at some point during 

these conversations.” CCB at 131. Complaint Counsel’s invitation to speculate and assume 
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that there was a conversation between Mr. McCutcheon and Mr. Rybacki, in which Mr. 

McCutcheon “complained” to Mr. Rybacki about “cheating” on an unlawful agreement, is 

declined. Moreover, whatever this may imply about a possible agreement between Sigma and 

Star, the evidence does not refer to McWane or implicate any involvement by McWane, who is 

the Respondent in this case. 

Complaint Counsel also refers to an internal Sigma email dated March 5, 2008, in 

which Mr. Jim Stohr, Sigma’s Operations Manager in Houston, Texas, reported a discounted 

multiplier being offered by a “rogue” McWane sales person that Sigma had refused to match. 

CX 1726; see CCB at 27. Mr. Stohr asked: “Can Larry [Rybacki] make a call and see if this 

can be stopped?” CX 1726 at 001. This was followed by a Sigma manager responding: “Jim 

should not write that last sentence!” Id. Mr. Stohr was not called to testify at trial, nor was any 

deposition testimony from Mr. Stohr offered into evidence, to explain what he meant. There is 

insufficient evidence to support an inference that Mr. Stohr was complaining about McWane’s 

cheating on an agreement to curtail Project Pricing. Complaint Counsel also fails to 

demonstrate that Mr. Rybacki made the requested call to McWane to “see if this can be 

stopped.” Although Complaint Counsel cites a call three weeks later from a cell phone issued 

to Mr. Rybacki to a cell phone issued to Mr. Jansen on March 26, 2008, Mr. Rybacki testified 

that he has no idea what they spoke about, and Complaint Counsel does not point to any 

testimony from Mr. Jansen regarding the phone call. CCFF 1034; see CX 1621-A at 096, in 

camera (Rybacki telephone records); Rybacki, Tr. 3634. Mr. Stohr’s unexplained request for a 

phone call, accompanied by an unexplained phone call occurring three weeks after Mr. Stohr’s 

request, is not evidence that Mr. Rybacki complained to McWane about McWane’s “cheating.” 

To conclude that Mr. Rybacki in fact complained to McWane about McWane’s “cheating” on 

an unlawful agreement, based on this evidence, would require improper speculation.

Complaint Counsel also cites a November 24, 2008 internal email from Mr. Pais of 

Sigma to his management staff, which included the language that “our two main competitors in 

Fittings seem to see SIGMA as ‘leading’ [the] recent price decline in the market.” CCB at 132; 

see RX 116 at 001. Without citing any support from the record, Complaint Counsel then 

concludes that Mr. Pais’ equivocal statement about “the state of mind of ‘our two main 
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competitors’ can only be the result of complaints from McWane and Star to Sigma about its 

discounting practices.” CCB at 132. However, the record shows that the Suppliers learned 

information regarding competitors principally from sales persons in the field and Distributors. 

F. 571-573, 869, 854. It will not be presumed that Mr. Pais’ statement was based on 

complaints by McWane and Star to Sigma, as Complaint Counsel urges.

Complaint Counsel also relies upon two internal emails authored by Sigma’s OEM 

(original equipment manufacturer) business manager, Mr. Mitchell Rona, who was Mr. 

Tatman’s contact at Sigma for McWane’s sales of Fittings to Sigma. CCB at 130, 132. In the 

first email, dated March 10, 2008, Mr. Rona forwarded to Mr. Pais and others at Sigma an 

email from Mr. Tatman regarding Sigma’s purchase of “3”-8” [Fittings] from Tyler/Union.” 

F. 922. Mr. Rona reported in his email a number of points from a conversation he had with Mr. 

Tatman, including that Mr. Tatman “said he hears that some of the new prices in the market are 

being compromised with deals. He hopes the market will improve and hopes [sic] do our part.” 

F. 922. Mr. Tatman did not recall the conversation with Mr. Rona, and Mr. Rona recalled 

nothing more than that which he wrote in his internal email. F. 923, 925. 

Mr. Tatman’s statement, as reported by Mr. Rona in his March 10, 2008 internal email, 

while arguably suspicious, is vague and ambiguous, and far from compelling evidence of 

McWane “complaining” of a breached “agreement.” Mr. Tatman’s encouraging Sigma to “do 

[its] part” in helping the new published multipliers implemented in February 2008 to “stick” 

could be interpreted as a request that Sigma avoid or minimize Project Pricing. At the same 

time, however, expressing a “hope,” which is the precise word used, that Sigma would “do [its] 

part” is inconsistent with the notion that Mr. Tatman or McWane had any prior understanding 

with or commitment from Sigma that Sigma would curtail Project Pricing and, to this extent, is 

inconsistent with the inference of an existing agreement. The inference that the statement 

attributed to Mr. Tatman is a “complaint” about Sigma “breaching” an agreement is no more 

likely than the inference that there was no agreement between Sigma and McWane to refrain 

from Project Pricing. 
313

Mr. Rona’s second email, dated August 22, 2008, which was sent to the OEM5 

management group at Sigma, with the subject line, “Short talk with Rick Tatman,” stated that 

“Rick was upset by the numbers in Florida and California based on what he has seen from us 

and Star. He said the .26 and .30 respectively were available from us both without any second 

thought.” F. 924. This statement attributed to Mr. Tatman by Mr. Rona is also troublesome 

because Mr. Tatman’s apparent displeasure with the multipliers offered by Sigma and Star 

“without a second thought” could be interpreted as evidence that Mr. Tatman believed Sigma 

and Star had some obligation to refrain from offering those prices, which is indicative of a prior 

agreement. However, Mr. Tatman’s reported statement also indicates that Sigma and Star, in 

offering the stated prices “without a second thought,” did not perceive any restricted freedom 

of action with regard to their Project Pricing or perceive any commitment to McWane, or to 

each other, to refrain from Project Pricing, which is inconsistent with an agreement among 

McWane, Sigma, and Star, to curtail Project Pricing. Complaint Counsel’s conspiracy 

inference drawn from this document is no more likely than the inference that there was no such 

agreement. 

Complaint Counsel also notes that Mr. Rybacki of Sigma testified that, even though he 

did not remember seeing Mr. Rona’s email regarding Mr. Tatman’s being “upset,” Mr. Rybacki 

“already knew that” and also recalled telling Mr. Rona: “Mr. Tatman needs to look in the 

mirror because pricing from McWane was a little inconsistent as well.” CCB at 132, see

Rybacki, Tr. 3577-3578. Complaint Counsel did not inquire of Mr. Rybacki as to what he 

specifically knew, or how he knew it, and it will not be presumed that Mr. Rybacki’s 

knowledge was obtained from Mr. Tatman. It is at least as likely that Mr. Rybacki obtained his 

information from sales persons in the field. See F. 572-573.

Out of all the evidence upon which Complaint Counsel relies, the statements attributed 

to Mr. Tatman by Mr. Rona in the two cited emails, above, stand out as perhaps the only 

evidence arguably implicating McWane in any improper pricing discussions. However, the full 

context of Mr. Tatman’s statements described in Mr. Rona’s emails is unknown. See F. 923, 

925. Ultimately, however, Complaint Counsel has failed to persuade that the inference that Mr. 

Tatman was “complaining” about Sigma “breaching an agreement” with McWane and Star to 
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curtail Project Pricing is more likely than not. Because Complaint Counsel has not 

demonstrated that either the Rona emails, or the other Sigma and Star documents upon which 

Complaint Counsel relies, constitute “complaints” between McWane and its competitors about

“cheating” on an agreement to curtail Project Pricing, Complaint Counsel has failed to prove 

this “plus” factor.20

(g) Inter-firm communications

Complaint Counsel argues that “a high volume of communications among top level 

executives [is] a ‘plus’ factor . . . because this type of evidence provides ‘proof that the 

defendants got together and exchanged assurances of common action or otherwise adopted a 

common plan[.]’” CCB at 132-133 (quoting Flat Glass, 385 F.3d at 361). Complaint Counsel 

argues that the “record is overflowing with evidence that McWane, Sigma, and Star executives 

were communicating frequently with each other.” CCB at 133. The evidence upon which 

Complaint Counsel relies fails to support this assertion.

Complaint Counsel’s “inter-firm communications” evidence largely consists of: (1) 

unexplained telephone calls placed between Sigma and Star (CCB at 141-143); (2) 

conversations between Sigma and Star allegedly regarding Fittings pricing (CCB at 133-135), 

including conversations that were denied by either Sigma or Star; and (3) purported 

communication between Sigma and McWane in 2009 allegedly for the purpose of Sigma 

“influencing” McWane to retract McWane’s April 2009 announced price list restructuring 

(CCB at 135-138), which is not related to the asserted agreement to curtail Project Pricing that, 

according to Complaint Counsel, “fell apart” by the end of 2008. Regardless of what the 

foregoing communications may imply about the conduct of Sigma and/or Star, these 

 20 In addition, the authority upon which Complaint Counsel relies to support the argument that a complaint about 

“low pricing” is a “plus” factor is inapplicable. Complaint Counsel cites to Areeda, ¶1419a, for the proposition 

that complaints to a competitor about low pricing are properly interpreted as an effort to induce a higher price. 

The cited paragraph deals with “solicitations” of an agreement, and not whether such a complaint is evidence of an 

existing agreement or a breach of an agreement, which is the relevant “plus” factor inquiry. Flat Glass, 385 F.3d 

at 360 (holding that “plus” factors are designed to serve as “proxies for direct evidence of an agreement” in a 

circumstantial case based upon parallel pricing conduct). 
315

communications do not implicate McWane, the Respondent in this case, in the alleged 

agreement to curtail Project Pricing.21 Those communications that do involve McWane and 

that took place during the relevant time period, further discussed below, do not constitute 

evidence that McWane, Sigma, and Star “got together and exchanged assurances” on an 

agreement to curtail Project Pricing, as argued by Complaint Counsel. 

Complaint Counsel first points to two meetings between Mr. Page of McWane and Mr. 

Pais of Sigma in September 2007 and December 2007. CCB at 140. Complaint Counsel relies 

on Mr. Pais’ statements in an October 19, 2007 internal email to show what was discussed at 

Mr. Pais’ September 2007 meeting with Mr. Page. See CX 2118. According to the email, the 

discussion included “changes that [Mr. Page] has initiated to respond to the weak market 

conditions” which were “publicly known in the AWWA industry,” including that Mr. Green 

had been removed as part of a restructuring at McWane “to be more efficient and manage their 

overall capacity more effectively” and that Mr. Green would be replaced by Mr. Tatman. 

F. 601. None of the foregoing indicates any discussion about Fittings prices, Project Pricing, or 

an agreement to curtail Project Pricing. Complaint Counsel also highlights a statement by Mr. 

Pais in a subsequent internal Sigma email by Mr. Pais regarding his September 2007 meeting 

with Mr. Page, that Mr. Page was “disappointed at our failure to get a better landscape.” 

F. 601. Even if Mr. Pais’ perception of Mr. Page’s “disappointment” in the “landscape” 

constitutes evidence of Mr. Page’s state of mind, the statement is vague and ambiguous and 

does not refer to Fittings, Fittings prices, Project Pricing, or any agreement to curtail Project 

Pricing. As to a meeting between Mr. Pais and Mr. Page on December 3, 2007, as noted in 

Section III.D.2.b.iii.(c), supra, Mr. Page and Mr. Pais both testified that their meeting 

concerned international opportunities for McWane. F. 608. Mr. Pais testified that they 

discussed Sigma potentially supplying McWane with metric sized fittings that were needed for 

 21 For example, Complaint Counsel reasserts an alleged meeting in March 2008 between Mr. Pais of Sigma and 

Mr. McCutcheon of Star, at which, according to Mr. McCutcheon’s investigational hearing testimony, Mr. Pais 

told Mr. McCutcheon that “Sigma and Star should agree to stay within two or three points of McWane” so that 

McWane would “treat” Sigma and Star “better.” CCB at 134, see CCFF 1036-1037, citing CX 2538 

(McCutcheon, IHT (Vol. 2) at 227), in camera. As noted in Section III.D.2.b.iii.(c), supra, Mr. Pais denies the 

statements attributed to him, and in any event, the conversation does not indicate any agreement involving 

McWane.
316

international markets and that McWane did not have. F. 605. Mr. Pais and Mr. Page denied 

discussing domestic Fittings; prices being charged in the market place; pricing discipline; 

McWane’s or Sigma’s costs; or ways they could work together in the marketplace in this 

regard. F. 608.22 

Complaint Counsel next points to four telephone calls placed between a cell phone 

issued to Mr. Tatman of McWane and a cell phone issued to Mr. Rybacki of Sigma in late 

December 2007 and early January 2008, in the same general time frame that Mr. Tatman was 

working on McWane’s pricing strategy for 2008. CCB at 142. As noted in Section 

III.D.2.b.iii.(c), supra, however, the evidence fails to show what was discussed, if anything, in 

these cell phone calls and it will not be assumed that Mr. Rybacki and Mr. Tatman discussed 

Fittings pricing, Project Pricing, or an agreement to curtail Project Pricing. F. 623-624; 639-

640. Similarly, Counsel Counsel points to five telephone calls placed between a cell phone 

issued to Mr. Tatman and a cell phone issued to Mr. Rybacki in April 2008. CCB at 142; see 

also CCB at 143 (four minute phone call to a number at McWane occurring May 16, 2008). 

Again, however, there is no evidence showing what Mr. Tatman and Mr. Rybacki discussed, 

and it will not be presumed that they discussed Fittings pricing, Project Pricing or an agreement 

to curtail Project Pricing. F. 790-791, 795, 826. Moreover, it is not immediately apparent that 

the telephone calls in April or May 2008 even demonstrate an opportunity to agree to curtail 

Project Pricing, since, under Complaint Counsel’s theory, that agreement was already formed 

through the conduct of McWane, Sigma, and Star in January and February 2008.

Finally, Complaint Counsel relies on evidence that in late 2007 and early 2008, 

McWane and Sigma negotiated the sale of certain Fittings by McWane to Sigma. According to 

Complaint Counsel, the evidence shows that the sale was made at a low price, and that this 

communicated to Sigma that McWane had a “cost advantage.” CCB at 138-140. Respondent 

contends that the evidence shows that the sale of Fittings to Sigma by McWane was in 

 22 Complaint Counsel alludes to additional meetings between Mr. Page of McWane and Mr. Pais of Sigma 

“between August 2007 and May 2009” but cites to a range of proposed findings, including proposed findings 

unrelated to meetings between Mr. Page and Mr. Pais. Moreover, Complaint Counsel’s cited proposed findings 

state nothing about the substance of these meetings. CCB at 153, citing CCFF 788-804.
317

McWane’s competitive interest, because McWane had excess capacity of the types of Fittings 

sold and that, because the price was above its variable costs, the tonnage would absorb a 

portion of the fixed plant costs, and thereby make a positive impact to McWane’s “bottom 

line.” RRCCFF 1074-1087. Complaint Counsel fails to persuasively explain or prove how an 

arms-length buy-sell agreement evinces an agreement to curtail Project Pricing merely because 

the negotiated price may have indirectly communicated McWane’s position as the low-cost 

Fittings producer. 

In conclusion, the evidence shows some communications between McWane and Sigma 

during the relevant time period. The evidence fails to show that McWane and Sigma discussed 

Fittings pricing, Project Pricing, or an agreement to curtail Project Pricing. In these 

circumstances, a further inference that these communications constitute evidence that McWane, 

Sigma, and Star, “got together and exchanged assurances” on an agreement to curtail Project 

Pricing is unwarranted and unjustified, and is rejected. At best, Complaint Counsel has proven 

an opportunity to conspire; however, “communications between competitors do not permit an 

inference of an agreement to fix prices unless ‘those communications rise to the level of an 

agreement, tacit or otherwise.’” Baby Food, 166 F.3d at 126; see Blomkest Fertilizer, 203 F.3d 

at 1036 (holding that opportunity to conspire is not necessarily probative evidence of 

conspiracy). “[I]t remains the plaintiff’s burden to prove that the defendant succumbed to 

temptation and conspired. It is not enough to point out the temptation and ask that the 

defendants bear the onerous, if not impossible, burden of proving the negative – that no 

conspiracy occurred.” Areeda, ¶ 1417b at 115.

c. Summary and conclusion as to asserted agreement to curtail

Project Pricing

The totality of the evidence, given due weight and viewed as a whole, fails to 

demonstrate that McWane, together with Sigma and Star, had an agreement to curtail Project 

Pricing in the Fittings market, as asserted by Complaint Counsel. As analyzed in detail above, 

Complaint Counsel’s evidence of parallel conduct consists principally of arguably similar 

expressed “intentions” to stop (McWane and Star) or minimize (Sigma) Project Pricing, 

followed by Star putting systems in place to authorize Project Pricing only when necessary to 

beat a competing Project Price. Complaint Counsel cites no case in which this sort of pricing-
318

related conduct has constituted “parallel pricing conduct” probative of a conspiracy. Moreover, 

the greater weight of the evidence fails to show that McWane, Sigma, and Star, engaged in 

parallel conduct by curtailing Project Pricing, as claimed by Complaint Counsel. Evidence 

that, according to McWane’s pricing protection log, McWane quoted a Project Price “to match” 

Sigma or Star less frequently in certain periods of 2008 compared to later periods in 2008 and 

2009 fails to persuasively demonstrate that McWane “curtailed” Project Pricing beginning in 

2008. Moreover, this evidence does not outweigh other evidence that is inconsistent with the 

inference of an agreement to curtail Project Pricing, including the reliable, persuasive, expert 

opinion of Dr. Normann, based upon the actual price data kept by McWane, Sigma, and Star 

from 2007 through 2010, indicating that there was no parallel curtailment of Project Pricing in 

2008 among McWane, Sigma, and Star. 

Complaint Counsel has also failed to prove the existence of “plus” factors indicating 

that the asserted parallel conduct was the result of an agreement, rather than independent, or 

merely interdependent, conduct, as analyzed above. In summary, Complaint Counsel’s 

inferences of an agreement depend largely on interpreting McWane’s January 11, 2008 

Customer Letter as a “message” to Sigma and Star that if they curtailed Project Pricing, which 

McWane’s Customer Letter indicated McWane was, in effect, doing, then McWane would 

support a price increase in the future; however, the evidence fails to show that this message was 

conveyed by McWane to Sigma and Star by the January 11, 2008 Customer Letter, or by any 

other claimed communications by McWane to Sigma or Star. Evidence that McWane took into 

account how Sigma and Star might react to McWane’s January 11, 2008 Customer Letter, 

when making their own pricing decisions, reflects only recognized pricing interdependence in 

the Fittings market, which is not illegal. “How does one order a firm to set its prices without 

regard to the likely reactions of its competitors?” Clamp-All Corp., 851 F.2d at 484 (holding 

that individual decisions do not constitute an unlawful agreement even when the decisions rest 

upon a belief that competitors will do the same).

In addition, the evidence fails to demonstrate that any decisions by Sigma and Star with 

respect to Project Pricing were made because of any understanding with McWane, or perceived 

commitment to or from McWane; or that any Supplier felt a restricted freedom of action with 
319

respect to offering Project Pricing when necessary to compete. These are the evidentiary 

hallmarks for proving the required “actual, manifest agreement,” especially in an oligopolistic 

market characterized by pricing interdependence, such as the Fittings market. See Twombly, 

550 U.S. at 557 n.4 (quoting with approval commentator’s example of “conduct [that] indicates 

the sort of restricted freedom of action and sense of obligation that one generally associates 

with agreement” as conduct allegations that would state a claim under Section 1); Flat Glass, 

385 F.3d at 361; Areeda, ¶¶ 1410b, 1410c. The conduct of Sigma and Star in response to 

McWane’s January 11, 2008 Customer Letter is at least as consistent with oligopolistic, 

“follow the leader” behavior, which is not illegal, as it is with an unlawful agreement. “A firm 

in a concentrated industry typically has reason to decide (individually) to copy an industry 

leader. After all, a higher-than-leader’s price might lead a customer to buy elsewhere, while a 

lower-than-leader’s price might simply lead competitors to match the lower price, reducing 

profits for all.” Clamp-All Corp., 851 F.2d at 484; accord Reserve Supply Corp. v. OwensCorning Fiberglas Corp., 971 F.2d 37, 53 (7th Cir. 1992); see Florida Cement & Concrete 

Antitrust Litig., 746 F. Supp. 2d at 1310 & n.14 (noting that price following is natural and

rational in a concentrated market). 

As explained above, the internal documents upon which Complaint Counsel relies as 

evidence of an agreement among McWane, Sigma, and Star either fail to implicate McWane in 

the purported agreement; require multiple, unsupported inferences to implicate McWane in an 

agreement to curtail Project Pricing; are inconsistent with a conclusion of restricted freedom, or 

a mutual commitment or understanding among the Suppliers with respect to Project Pricing; 

and/or are at least as consistent with independent, or merely interdependent, conduct as with an 

agreement. Moreover, much of the circumstantial “plus” factor evidence upon which 

Complaint Counsel relies requires that the underlying agreement first be presumed in order for 

the evidence to be probative of an agreement, which does not satisfy Complaint Counsel’s 

burden of proof.

Further weighing against a finding of an agreement to curtail Project Pricing is sworn 

testimony from the Suppliers that they made pricing decisions independently and did not 
320

discuss and agree to stop or curtail Project Pricing. E.g., Tatman, Tr. 1005-1006, in camera; 

Rybacki, Tr. 3661; Pais, Tr. 2130-2131; McCutcheon, Tr. 2524-2525, 2554, 2689-2690. This 

is direct evidence contrary to the asserted agreement to curtail Project Pricing and is entitled to 

weight. Complaint Counsel urges that these denials be dismissed as “self-serving”; however,

“[a] plaintiff cannot make his case just by asking the [fact finder] to disbelieve the defendant’s 

witnesses . . . .” High Fructose Corn Syrup, 293 F.3d at 655. “[M]ere disbelief [does] not rise 

to the level of positive proof of agreement” sufficient to meet Complaint Counsel’s burden of 

proof. Venzie, 521 F.2d at 1313; Tose v. First Pennsylvania Bank, N.A., 648 F.2d 879, 894 (3d 

Cir. 1981); accord Alvord-Polk, Inc. v. F. Schumacher & Co., 37 F.3d 996, 1014 (3d Cir. 1994)

(noting that mere disbelief of contrary testimony does not prove agreement). In addition, as 

noted above, Respondent presented reliable and persuasive expert opinion, based on pricing 

data, that the Suppliers did not engage in a parallel curtailment of Project Pricing.

As the Supreme Court noted in Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 

574 (1986), mistaken inferences that arise from circumstantial evidence are costly, because 

they chill competitive conduct – “the very conduct the antitrust laws are designed to protect.” 

Id. at 594 (citing Monsanto, 465 U.S. at 763-64). “‘[We] must be concerned lest a rule or 

precedent that authorizes a search for a particular type of undesirable pricing behavior end up 

by discouraging legitimate price competition.’”). Id. (quoting Barry Wright Corp. v. ITT 

Grinnell Corp., 724 F.2d 227, 234 (1st Cir. 1983)). Where the evidence points equally to two 

or more inferences, an objective fact finder would not decide the inference in favor of the party 

with the burden of proof, in this instance, the government. See Venture Technology, 685 F.2d 

at 48 (holding that where “taken as a whole, the evidence points with at least as much force 

toward unilateral actions . . . as toward conspiracy,” a fact finder cannot reach the latter 

conclusion without engaging in “impermissible speculation”).

Having fully reviewed and weighed the totality of the evidence, Complaint Counsel has 

failed to meet its burden of proving that it is more likely than not that McWane, together with 

Sigma and Star, had an agreement to curtail Project Pricing. At best, the evidence shows 

interdependent or consciously parallel conduct, unaided by any agreement, which is not illegal. 
321

Brooke Group, 509 U.S. at 227; Twombly, 550 U.S. at 557 & n.4.23

The analysis now turns to Complaint Counsel’s claimed “episode two” of the alleged 

price fixing conspiracy, an asserted agreement among McWane, Sigma, and Star to exchange 

DIFRA tons-shipped data in exchange for a price increase by McWane.

3. Alleged agreement by McWane to increase prices only if Sigma and 

Star submit DIFRA tons-shipped data (Complaint Counsel’s 

“episode two”)

Complaint Counsel argues that McWane’s May 7, 2008 Customer Letter (F. 809) 

communicated an “offer” from McWane to Sigma and Star that McWane would increase prices 

in exchange for Star and Sigma submitting their tons-shipped data to DIFRA’s accountants for 

aggregation into the DIFRA tons-shipped data report expected on May 20, 2008.24 Complaint 

Counsel further argues that Sigma and Star understood and “accepted” the “offer” by their

conduct in thereafter submitting their tons-shipped data. CCB at 148-150. Complaint Counsel 

further characterizes this implied agreement as an exchange of assurances, or a quid pro quo, 

whereby McWane traded its support for a price increase in exchange for Sigma and Star

submitting their tons-shipped data, when McWane “rewarded” them with a price increase in 

June 2008. CCB at 148-150, 156-157. To prove this theory, Complaint Counsel relies 

 23 Complaint Counsel asserts that proof of parallel conduct and at least one “plus” factor entitles it to a 

“presumption” of an unlawful agreement. CCRB at 31, citing Baby Food, 166 F.3d at 122. As shown above, 

Complaint Counsel has failed to prove parallel conduct in curtailing Project Pricing, and has failed to prove the 

existence of any “plus” factors. Even if Complaint Counsel did meet this minimal burden, Respondent produced

ample credible and probative evidence that McWane, Sigma, and Star, acted independently, even though with 

consciousness of how their competitors may react, sufficient to rebut a presumption of conspiracy. Unlike Baby 

Food, in which the plaintiffs needed only to produce sufficient evidence to create a dispute of fact sufficient to 

defeat summary judgment, this case requires a weighing of all the evidence, and a determination of whether or not 

Complaint Counsel has met its burden of proving that a conspiracy is more likely than not, which burden remains 

on Complaint Counsel at all times. Moreover, even if Complaint Counsel proved parallel curtailment of Project 

Pricing and one or more plus factors, this would not mandate a finding of an unlawful agreement. “[T]he court 

may still conclude, based upon the evidence before it, that the defendants acted independently of one another, and 

not in violation of antitrust laws.” Baby Food, 166 F.3d at 122 (quoting Balaklaw v. Lovell, 822 F. Supp. 892 

(N.D.N.Y. 1993)). 

24 As summarized in Section III.D.2.b.iii.(d), the Suppliers were members of DIFRA, a trade association. F. 8. 

The members agreed to participate in a data reporting system, pursuant to which the members would provide the 

amount of Fittings tons shipped in the previous month, separated by relevant product categories, to accountants 

who would then aggregate all the member data and return a report. F. 715, 718, 732-734. The aggregated data 

that was reported enabled a supplier to see the size of the total market, and was a reference point for determining a 

supplier’s own market share. F. 756, 758, 807.
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principally on inferences drawn from the text of McWane’s May 7, 2008 Customer Letter and a 

June 5, 2008 email from Mr. McCutcheon of Star to DIFRA’s President, Mr. Brakefield of 

Sigma. 25 

Respondent asserts that there was no agreement among McWane, Sigma, and Star, and 

that the evidence fails to support Complaint Counsel’s theory.

a. Background – Sigma’s “big, bold” price increase

The evidence shows that in a customer letter dated April 24, 2008, Sigma notified its 

customers of an increase in published multipliers of “up to 10 multiplier points,” effective May 

19, 2008, citing “rising costs in transportation, labor, medical benefits, raw materials, etc.”

(“April 24, 2008 Customer Letter”). F. 797. This amounted to a price increase of 

approximately 25 percent to as much as 40 percent over Sigma’s then-published multipliers, 

depending on the region. F. 796, 798, 804. Mr. Pais believed that Sigma’s attempt to lead a 

price increase of this magnitude, which he proposed internally on April 11, 2008, was a “big, 

bold, move” by Sigma that was necessary to boost its margins, and was one of the biggest onetime increases Sigma had ever had. F. 792, 796. Sigma did not know whether or not Star and 

McWane would follow Sigma’s lead, although Sigma hoped they would. F. 794, 796, 801. 

Star learned of Sigma’s April 24, 2008 Customer Letter on April 25, 2008. F. 802. On 

May 7, 2008, Star sent a letter to its customers announcing a multiplier increase of a similar 

magnitude to that announced by Sigma, effective May 19, 2008. F. 803. 

McWane also learned of Sigma’s April 24, 2008 Customer Letter on April 25, 2008. 

F. 804. On May 5, 2008, Mr. Tatman forwarded internally to Mr. McCullough and Mr. 

 25 Complaint Counsel also constructs a complex web of inferences, based largely on the timing of the Suppliers’ 

various pricing moves between mid-April and mid-June 2008 in relation to various DIFRA-related events. For 

example, Complaint Counsel contends that Sigma sent a price increase letter to its customers on April 25, 2008 

because it was the same day as the April 25, 2008 DIFRA conference call (F. 732) and that Sigma and Star must 

have “misunderstood” that the “quid pro quo” required actual submission of data, not just an agreement to submit. 

See CCB at 150-154. Complaint Counsel’s inferences and the evidence upon which it relies to draw these 

supposed connections have all been thoroughly evaluated and considered and they are unpersuasive and/or 

immaterial to the issue of whether McWane, Sigma, and Star entered into a pricing “quid pro quo” involving 

Sigma’s and Star’s DIFRA data. Accordingly, the evidence is not probative of the alleged quid pro quo, contrary 

to the argument of Complaint Counsel.
323

Walton, Mr. Tatman’s proposal for new McWane multipliers, which reflected an approximate 

increase of 8 to 12 percent. F. 805. According to Mr. Tatman, Mr. McCullough believed that it 

was important to first review the DIFRA tons-shipped data report, which was expected by May 

20, 2008, before McWane took any price actions. F. 733, 735, 806. Mr. McCullough believed 

the tons-shipped data would be a more accurate reference point for assessing McWane’s market 

share than other reference points, such as statistics from the Ductile Iron Pipe Research 

Association (“DIPRA”) and the Valve Manufacturers Association (“VMA”). F. 807. Although 

following Sigma’s large price increase could help provide higher prices for McWane, Mr. 

Tatman recommended against following Sigma, regardless of what the DIFRA data showed. 

F. 805, 830. Mr. Tatman believed, as he did with respect to Sigma’s large list price increase 

proposed in October 2007, that such a large price increase would not “stick” and would lead to 

price “instability,” which was contrary to McWane’s competitive strategy of publishing

multipliers that were closer to the true competitive price level in the marketplace. F. 804-805, 

830. Accordingly, Mr. Tatman proposed that McWane publish a smaller multiplier increase in 

the range of 8% to 12%. F. 805. 

b. McWane’s May 7, 2008 Customer Letter

In accordance with Mr. McCullough’s instructions, McWane determined to wait for the 

DIFRA tons-shipped data report before issuing any price increases. F. 806. Thus, on May 7, 

2008, McWane sent the following customer letter, which stated in full: 

Dear Valued Customer, 

You have likely heard or read about continued increases in factors of production 

impacting both domestic and global operations. The foundry industry has been 

hit particularly hard with sharp increases in scrap iron, alloys and transportation 

costs.

While the financial impact to our business is real, we also recognize there are 

restrictions as to the level and timing at which pricing can be accommodated in 

the market.

We are sending this general communication to our waterworks distribution 

customers to more clearly define our intention in regards to future pricing 

actions.
324

Before announcing any price actions, we carefully analyze all factors including: 

domestic and global inflation, market and competitive conditions within each 

region, as well as performance against our own internal metrics. We anticipate 

being able to complete our analysis by the end of May. At that point, we will 

send out letters to each specific region detailing changes, if any, to our current 

pricing policy.

For planning purposes only, we expect for regions with a change that multipliers 

will increase in the range of 6% up to 16% effective June 16th.

F. 809 (“May 7, 2008 Customer Letter”). The plain language of the May 7, 2008 Customer 

Letter does not show the “offer” regarding a price increase for DIFRA data that Complaint 

Counsel asserts. 

Complaint Counsel argues that McWane’s alleged offer to increase prices in exchange 

for submittal of DIFRA data should be inferred from the language in the third paragraph,

quoted above, that: “Before announcing any price actions, we carefully analyze all factors 

including: domestic and global inflation, market and competitive conditions within each region, 

as well as performance against our own internal metrics. We anticipate being able to complete 

our analysis by the end of May.” (Hereafter referred to at times as the “factors” language). To 

support its requested inference, Complaint Counsel argues that DIFRA members were aware 

that the DIFRA report was expected by May 20; McWane’s May 7, 2008 Customer Letter did 

not announce a price increase (only a range for planning purposes); and points to testimony that 

the “factors” language did not communicate something “meaningful” or “helpful” to 

distributors. CCB at 154-155 & n.551, citing, e.g., Sheley, Tr. 3424-3425, 3441-3442; 

CX 2516 (Sheley, Dep. at 153); see also CX 2544 (Coryn, Dep. at 125); CX 2510 (Groeniger, 

Dep. at 233-234), in camera; CX 2514 (Webb, Dep. at 105) CX 2504 (Thees, Dep. at 96). 

These assertions, even if true, do not warrant accepting the further inference that the factors 

language in fact communicated an offer to Sigma and Star: (1) that McWane would follow 

Sigma’s price increase, or even increase prices at all, and/or (2) that McWane wanted to review 

the DIFRA tons-shipped data for any reason other than as a reference point for assessing 

McWane’s own market share, which is not unlawful. The DIFRA tons-shipped data reporting 

system did not disclose the market share or prices of any member, but disclosed only 

aggregated, tons-shipped data. F. 733-734, 745-748, 756, 758. 
325

Complaint Counsel’s inference that the “factors” language constituted an offer to trade a 

price increase in exchange for Sigma and Star submitting their tons-shipped data is against the 

greater weight of the evidence. The evidence shows that, as stated in the letter, Mr. Tatman did 

plan to review various “factors” before announcing McWane’s price action. F. 812. In 

addition to the anticipated May 2008 DIFRA report, Mr. Tatman wanted to review and analyze 

McWane’s monthly financial data for April 2008, as set forth in McWane’s monthly financial 

reports known as “blue books,” which are prepared by McWane’s accountants on a monthly 

basis for management purposes. F. 812. Mr. Tatman expected to receive this report by midMay and be able to prepare a spreadsheet analysis by the end of May. F. 812. Also, Mr. 

Tatman wanted to review all of the competitive inputs collected from the field. F. 812. In an 

email transmitting the May 7, 2008 Customer Letter to one of its customers, Mr. Tatman 

explained McWane’s position consistently with the language of the customer letter, stating: 

“Given the market environment, we feel any pricing action warrants careful consideration and 

analysis. We simply needed more time beyond the competitive May 19th [effective] date 

[stated by Sigma] to feel comfortable that we properly considered all factors.” F. 813. While 

Mr. Tatman acknowledged that it was unusual to send out a letter that stated intentions as to a 

future price increase, but not the actual price increase, he explained: “It’s not too often that you 

have to respond to a competitor putting out a 40 percent price increase, so these are unusual 

times.” F. 810. Mr. Tatman denied that the point of McWane’s May 7, 2008 Customer Letter 

was to communicate to Sigma and Star that they needed to submit their DIFRA data. F. 811. 

Complaint Counsel contends that the May 7, 2008 Customer Letter was a “message” to 

Sigma and Star that McWane was going to wait for the DIFRA data. CCB at 154-155; see 

also, CCFF 1192, 1201. Complaint Counsel quotes from a May 23 and May 24, 2008 internal 

email exchange among Mr. Tatman, Mr. Walton, and Mr. McCullough, in which Mr. Tatman 

reported that according to DIFRA’s accountants, two of the four DIFRA members had not yet 

submitted their tons-shipped data, in response to which Mr. McCullough reiterated that he “still 

believe[d] we stand pat until market share info is available.” CCFF 1229; see F. 829. Mr. 

Tatman concurred stating: “Although somewhat painful to the bottom [line] in the short term, 

that would re[i]nforce the message we’ve been trying to drill in which when successful will pay 

long term dividends.” F. 829. Complaint Counsel fails to persuasively explain how the 
326

message that McWane was waiting for the DIFRA report to finalize its price decision, even if 

conveyed to Sigma and Star, warrants the further inference of an offer of a “quid pro quo” of a 

price increase. In any event, Mr. Tatman denied that the “message” was a message to DIFRA 

members that they must get their DIFRA data in before McWane would announce a price 

increase. F. 830. Mr. Tatman explained further: 

If someone announced a 40 percent price increase and I follow it, I’m going to 

get a lot of price in the short term. That’s going to be a significant benefit in the 

short term to my bottom line. But do I believe that is in my best interest of my 

longer-term goal, which is gaining volume and gaining share? No.

So if I have a competitor that announces a 40 percent price increase, if I want to 

put money in my pocket for the next three months or the next six months, I’m 

going to jump on that.

So that is painful to the bottom line, on a relative basis, that I’m not going to 

jump on and support a 40 percent price increase because you’re going to get 

some traction off of that. It’s not like you’re -- you might not get 38-39 percent, 

but you’re going to get some traction on that.

And what I’m saying here is consistent with what we said all along, was we 

were not going to lose visibility of where the competitive marketplace is, and 

our primary focus at this point in time is volume [and], share.

F. 830. 

For all the foregoing reasons, the inference that the language in McWane’s May 7, 2008 

Customer Letter was a legitimate effort to explain its intentions to its customers is at least as 

likely as the inference that McWane was communicating a “quid pro quo” offer to Sigma and 

Star of a price increase in exchange for Sigma’s and Star’s submitting their tons-shipped data 

for the DIFRA data report. Accordingly, Complaint Counsel has failed to prove that the May 

7, 2008 Customer Letter was such an offer.26

 26 Complaint Counsel also asserts that the “factors” language had not been used in a McWane customer letter 

before or since. See CCFF 1187. However, McWane’s June 17, 2008 Customer Letter, discussed infra, included 

very similar “factors” language, noting that “we will continue to [assess] market & competitive conditions in 

addition to our internal operating metrics and advise you if additional actions will be required before year end.” 

F. 841. 
327

c. Sigma’s and Star’s interpretation of McWane’s May 7, 2008

Customer Letter

The evidence also fails to show that Sigma understood McWane’s May 7, 2008 

Customer Letter to communicate anything with regard to DIFRA, much less an offer of a price 

increase contingent on submission of DIFRA data, as argued by Complaint Counsel. 

Upon reviewing McWane’s May 7, 2008 Customer Letter, Mr. Rybacki of Sigma 

thought the language regarding McWane’s “carefully analyzing all factors including: domestic 

and global inflation, market and competitive conditions within each region, as well as 

performance against our own internal metrics” was notable because the language looked “a 

little quirky for [the signer of the Customer Letter, McWane National Sales Manager] Jerry 

Jansen” and not Mr. Jansen’s “style.” F. 820. Mr. Rybacki had “no idea” what it meant. 

F. 820. Moreover, Mr. Rybacki did not interpret McWane’s May 7, 2008 Customer Letter to 

be promising a price increase, finding the Customer Letter ambivalent in this regard. F. 821. 

When Mr. Pais of Sigma was questioned at his deposition whether he understood that McWane 

was not going to increase prices on Fittings until all of the DIFRA members submitted their 

data and DIFRA issued the report, or that McWane was waiting to increase prices until after it 

had the DIFRA data and the DIFRA report, Mr. Pais responded: “It is so farfetched and 

ridiculous, what can I say? No, no.” F. 822.

Mr. Minamyer of Star received a copy of McWane’s May 7, 2008 Customer Letter, via 

its customer HD Supply, on the afternoon of May 7, 2008. F. 815. Mr. McCutcheon of Star 

found the wording of McWane’s May 7, 2008 Customer Letter to be “odd,” “arrogant,” and 

“humorous.” F. 817. Moreover, regarding the above quoted third paragraph containing the 

“factors” language, Mr. McCutcheon testified at the investigational hearing in this matter: “I 

don’t know why [McWane] did it. I mean, it looks like a -- I took it as being a minor poke at 

us, because we weren’t going to do careful analyzing -- we did our own analysis and we 

quickly determined that we were getting ready to lose money if we didn’t take an increase. . . . 

Other than an attempt to try to look more sophisticated . . . I don’t know.” F. 817. In addition, 

when Mr. McCutcheon was questioned about the language in his deposition prior to the hearing

in this case, he specifically testified that he had not seen any connection between McWane’s 

Customer Letter and DIFRA, stating: “Absolutely none. As a matter of fact, the first time that 
328

. . . I’ve even ever heard that was today. Of linking that to [the need to submit Star’s] DIFRA 

[data]? . . . No, sir.” F. 818.

To show that Star “understood” McWane’s “offer” that was allegedly conveyed in 

McWane’s May 7, 2008 Customer Letter, Complaint Counsel relies on the fact that on the 

same day that McWane sent the Customer Letter, Mr. McCutcheon responded to an email 

regarding DIFRA. CCB at 155-156; see F. 735. The evidence shows that on April 25, 2008, 

DIFRA’s attorney, Mr. Long, sent an email to the DIFRA members summarizing the results of 

their conference call of the same day, including the agreed format for tons-shipped data 

reporting and the agreed date of May 15 for the members’ first submissions. F. 734. On May 

5, Mr. Long sent an email to the DIFRA members noting that he had not heard back from the 

DIFRA members in response to his April. 25, 2008 email summary, and asked them to confirm 

their concurrence with the agreed procedures and parameters he outlined in his April 25, 2008 

email. F. 735. McWane, Sigma, and Star each replied to the May 5 email, confirming their 

prior agreement, but because Star replied on May 7, instead of on May 5, as did Sigma and 

McWane, F. 735, Complaint Counsel infers that this is evidence of Star’s “understanding” that 

McWane was requiring Star to submit its tons-shipped data as a condition to McWane’s issuing 

a price increase. CCB at 33, 155-156. The far more likely inference is that Mr. McCutcheon, 

in the ordinary course of business, was responding to a recent email, which had specifically 

requested a response. 

Furthermore, Complaint Counsel’s assertion that Star was “reluctant” to participate in 

the DIFRA tons-shipped reporting system in May 2008 and needed to be “induced” to actually 

provide the data by McWane’s “offer” of a price increase, CCB at 33, 155, is not supported by 

the greater weight of the evidence. Star had already agreed to join DIFRA by January 2007, 

having overcome some initial reluctance, and Star had already agreed on April 25, 2008 to 

submit its tons-shipped data in accordance with the agreed DIFRA tons-shipped data reporting 

system. F. 712, 714-715, 727, 732-734. A Star employee was tasked with assembling the data. 

F. 816, 828. On May 16, 2008, Mr. McCutcheon of Star sent an email to Mr. Brakefield of 

Sigma, DIFRA’s President, affirming that Star would be submitting its data and apologizing for 

the delay. F. 827. Mr. McCutcheon denied that there was a delay in submitting Star’s tonsshipped data due to a “reluctance” to participate in the DIFRA tons-shipped data reporting 
329

system, stating: “Once we decided that Star was going to join, I had every intention of being a 

member. I do remember it taking us a while to figure out how to do it, running it back through 

our purchasing people. I know that took a couple of weeks, easy. F. 837. 

Star submitted its ton-shipped data to DIFRA’s accounting firm on June 5, 2008, and at 

the same time advised Mr. Brakefield of Sigma, DIFRA’s President, that the submission had 

been made. F. 834-835. Complaint Counsel argues that Mr. McCutcheon demonstrated Star’s 

understanding and “acceptance” of McWane’s “offer” to raise prices in exchange for Star’s 

submission of tons-shipped data, because Mr. McCutcheon’s email to Mr. Brakefield quoted 

McWane’s May 7, 2008 Customer Letter, as follows:

Good morning Mr. President. I just sent our info in. Sorry it took so long, but 

we were “carefully analyzing all factors including: domestic and global 

inflation, market and competitive conditions within each region, as well as 

performance against our own internal metrics.” (Does that look familiar?).

F. 835; see CCFF 1222-1225; CCB at 156.

According to Complaint Counsel, it should be inferred from Mr. McCutcheon’s 

repetition of the “factors” language in connection with Star’s submission of its tons-shipped 

data that Mr. McCutcheon was aware that “the price increase that was the subject of McWane’s

May 7, 2008 Customer Letter was contingent upon Star and Sigma participating in the DIFRA 

information exchange.” CCFF 1225. The greater weight of the evidence fails to support this 

inference. The evidence shows that Mr. McCutcheon thought McWane’s “factors” language 

was arrogant and was “poking” at Star for Star’s attempting to lead a price increase with 

Sigma, and not using a “careful analysis.” F. 817. Mr. McCutcheon testified that he quoted the 

language to “poke fun” at McWane. F. 836. This is a logical and credible explanation for Mr. 

McCutcheon’s statement. Complaint Counsel’s inference from Mr. McCutcheon’s email is not 

more likely than Mr. McCutcheon’s explanation.

d. McWane’s June 17, 2008 Customer Letter

McWane and the other DIFRA members received the first DIFRA aggregated tonsshipped report from DIFRA’s accounting firm at 2:41 p.m. on June 17, 2008. F. 838. As of 

May 29, 2008, more than two weeks before receiving the DIFRA tons-shipped report, Mr. 
330

Tatman had already concluded, based on his review of other reference points, that McWane had 

lost market share. F. 832. Mr. Tatman had already prepared a customer letter announcing a 

weighted average increase in published multipliers for blended Fittings of approximately 8 

percent. F. 832. Upon receiving the DIFRA report, Mr. Tatman conducted an analysis to 

determine McWane’s market share using the DIFRA data. F. 839. Mr. Tatman spent 

approximately 40 minutes reviewing the DIFRA tons-shipped data, comparing it to other 

reference points for assessing McWane’s market share that he had already collected, such as 

McWane sales data, and DIPRA and VMA statistics, and prepared a spreadsheet of relevant 

data points. F. 839. Mr. Tatman transmitted the DIFRA report and his spreadsheet analysis 

internally to Mr. McCullough, Mr. Walton, and Mr. Jansen. F. 839. He notified them, among 

other things, that McWane’s share loss for 2007 and through April 2008 was “actually larger 

than what [he] expected.” F. 839. Accordingly, in the early evening of June 17, 2008, 

approximately four hours after receiving the DIFRA aggregated tons-shipped report from 

DIFRA’s accountants, McWane sent a customer letter dated June 17, 2008, notifying 

McWane’s customers of an increase in Fittings multipliers effective July 14, 2008, and stating 

that the weighted average increase on blended Fittings and accessories would be

“approximately 8%.” F. 840 (“June 17, 2008 Customer Letter”). This was the lower range of 

the 8 to 12 percent increase Mr. Tatman originally considered, in order to account for the lower 

market share numbers. F. 777, 805. Thereafter, Sigma and Star rescinded their previously 

announced high multiplier increases and instead followed McWane’s lower multiplier increase. 

F. 843-844.

Complaint Counsel argues that this price increase was McWane’s “reward” to Sigma 

and Star for submitting their DIFRA data and represents McWane upholding its part of the 

bargain. CCB at 156-157. The strained inferences required to accept this argument are 

rejected. First, the notion that an 8 percent increase from McWane is a “reward,” when Sigma 

and Star were seeking an increase as high as 40 percent is not logical or persuasive. Complaint 

Counsel further argues that McWane’s rejection of Sigma’s and Star’s large price increase, in 

favor of a smaller increase, was all part of Mr. Tatman’s “plan” to support “small” and “staged” 

increases. CCB at 157; CCRRFF 135; see also CCB at 119; CCRRFF 100 (same argument 

regarding McWane’s January 2008 rejection of Sigma’s and Star’s large list price increase, 
331

announced in October and November 2007, in favor of smaller, 8% effective multiplier 

increase). McWane’s acting consistently with its own price strategy does not imply an 

agreement with Sigma and Star, and the inference that Mr. Tatman’s December 25, 2007 

PowerPoint Presentation was a “plan” to conspire with Sigma and Star has already been 

thoroughly reviewed and rejected as unsupported by the greater weight of the evidence. See

III.D.2.b.iii.(c), supra.

In addition, Complaint Counsel attaches undue significance to the facts that McWane 

sent its June 17, 2008 Customer Letter within just a few hours of receiving the aggregated tonsshipped data report from DIFRA’s accountants, and that McWane had already drafted a

customer letter announcing the increase. As previously noted, McWane had already internally 

determined that it would not follow Sigma’s “big, bold” price increase, regardless of what the 

DIFRA data showed, and Mr. Tatman had already recommended a price increase in the range 

of 8 to 12 percent as better serving McWane’s competitive goals. F. 805, 829-830. At the time 

McWane received the June 17, 2008 DIFRA report, Mr. Tatman had already reviewed many 

sources of data that indicated that McWane was losing market share; had already concluded 

that a price increase in the amount of 8 percent was advisable; and had already drafted a 

customer letter pending review of the DIFRA data. F. 805, 807, 832. In this context, there is 

nothing suspicious or conspiratorial in the fact that it did not take an extended period to 

compile a spreadsheet, confer internally, and send the June 17, 2008 Customer Letter. F. 839.

For all the foregoing reasons, Complaint Counsel has failed to prove that McWane’s 

May 7, 2008 Customer Letter was an offer to trade a price increase for Sigma’s and Star’s 

submitting their tons-shipped data for inclusion in the DIFRA report; that Sigma and Star 

understood the Customer Letter to be making such an offer; that Sigma and Star were 

“accepting” McWane’s “offer” by their conduct in submitting their tons-shipped data; or that 

McWane’s June 17, 2008 Customer Letter was a reward or other “quid pro quo” for conduct by 

Sigma and Star.
332

4. Spring 2009 telephone conversation between Mr. McCutcheon of 

Star and Mr. Tatman of McWane (Complaint Counsel’s “episode 

three”)

As the third “episode” of the alleged conspiracy among McWane, Sigma, and Star to 

raise and stabilize Fittings prices, Complaint Counsel argues that in April 2009, McWane and 

Star reached an illegal agreement through an exchange of mutual assurances that McWane and 

Star would each adhere to McWane’s new list prices, announced April 13, 2009 to be effective 

May 1, 2009 (hereafter “spring 2009 telephone conversation”). CCB at 157-163 (citing Sugar 

Institute v. United States, 297 U.S. 553, 601-02 (1936)). In support of this claim, Complaint 

Counsel relies on evidence of a telephone conversation that took place on an unspecified date 

in April or May 2009 between Mr. Tatman of McWane and Mr. McCutcheon of Star, described 

more fully infra. Respondent argues that the spring 2009 telephone conversation occurred after 

the alleged conspiracy terminated at the end of 2008; that the evidence shows that McWane 

acted independently in issuing its April 2009 list price changes; that Star acted independently 

when it determined to follow McWane’s new price list; and that the telephone conversation 

between Mr. Tatman and Mr. McCutcheon does not constitute an agreement under applicable 

law. RB at 26-28.

For the following reasons, Complaint Counsel’s argument that the spring 2009 

telephone conversation constituted an unlawful exchange of mutual assurances to adhere to 

published prices and constitutes evidence of the “overall” conspiracy to raise and stabilize 

prices is rejected.

a. Timing of the spring 2009 telephone conversation in relation 

to alleged conspiracy

McWane contends that the asserted agreement between McWane and Star to adhere to 

McWane’s list prices, allegedly occurring in April 2009, should not be considered in this case. 

McWane asserts that the Complaint does not contain any allegations regarding this agreement;

that Complaint Counsel denied at the August 30, 2012 final prehearing conference that it was 

attempting to prove a separate conspiracy occurring in the spring of 2009; and that Complaint 
333

Counsel’s expert concluded that the alleged conspiracy began to “collapse” in the fall of 2008 

and terminated by the end of 2008. RB at 8-11.27 

Complaint Counsel’s proffered expert, Dr. Schumann, opined that the conspiracy to 

raise and stabilize prices alleged in this case started to “collapse” in the fourth quarter of 2008 

and ended by the end of 2008. Schumann, Tr. 4200-4201, 4298, 4304; see also CX 2260-A 

(Schumann Rep. at 38-39), in camera (describing conspiracy to raise and maintain prices, 

which subsequently collapsed due to “cheating”). Complaint Counsel endeavors to distance 

itself from the record opinion of its own expert, and takes the position that the conspiracy that 

ended in the fall of 2008 was a conspiracy to “curtail Project Pricing,” CCB at 114, (Complaint 

Counsel’s “episode one”) and not the “overall” conspiracy to raise and stabilize prices, which, 

Complaint Counsel implies, has yet to end. Jan. 24, 2013 (closing argument) Tr. at 16-17; see 

also CCRB at 44. This argument is unpersuasive. Complaint Counsel should be bound by the 

conclusions of its proffered expert as an admission that the alleged conspiracy to raise and 

stabilize prices collapsed by the end of 2008. “By the time the trial begins, we may assume that 

those experts who have not been withdrawn are those whose testimony reflects the position of 

the party who retains them.” Glendale Fed. Bank, FSB v. United States, 39 Fed. Cl. 422, 424-

25 (Fed. Cl. 1997) (further noting that “[a]t the beginning of trial we may hold the parties to a 

final understanding of their case and hence an authorization of their expert witnesses who have 

not been withdrawn. At this point when an expert is put forward for trial it is reasonable and 

fair to presume they have been authorized”); see also Collins v. Wayne Corp., 621 F.2d 777, 

782 (5th Cir. 1980). Moreover, Complaint Counsel did not discredit its own expert’s 

conclusions as to the end of the alleged conspiracy when Dr. Schumann testified at trial. The 

telephone conversation upon which Complaint Counsel relies took place in late April or early 

May 2009. F. 1017-1018. Complaint Counsel offers no authority to support the proposition 

 27 This issue was previously addressed in Respondent’s August 24, 2012 prehearing Motion to Exclude. Making a 

substantially similar argument, Respondent urged that evidence pertaining to the spring 2009 conduct, as well as 

evidence raised by Complaint Counsel in its Pretrial Brief regarding alleged improper pricing communications by 

McWane, Sigma, and Star in June 2010, be excluded. Complaint Counsel opposed the motion, arguing that the 

2009 and 2010 conduct did not constitute separate claims or conspiracies, but constituted “events” tending to 

prove the “overall” conspiracy; that the Complaint did not allege an end date to the conspiracy; and that 

Respondent had adequate notice of the evidence and conducted discovery on the evidence. Respondent’s Motion 

to Exclude was denied, inter alia, because Respondent had failed to demonstrate that it lacked adequate notice of 

the 2009 or 2010 conduct, or of its relevance to the case, and therefore the evidence should not be excluded. Order 

Denying Respondent’s Motion to Exclude, September 7, 2012.
334

that conduct occurring at least four to five months after the conclusion of an alleged conspiracy 

is probative evidence that such earlier conspiracy existed; nor does Complaint Counsel 

adequately persuade that such a proposition is even logical.28 

Even if the spring 2009 telephone conversation is considered in connection with the 

conspiracy to raise and stabilize prices, as further explained below, the evidence fails to show 

that McWane and Star “exchanged mutual assurances,” and therefore agreed, to adhere to 

McWane’s list prices, as argued by Complaint Counsel.

b. Asserted “agreement to adhere” to McWane’s list prices

The evidence shows that on April 13, 2009, McWane, unilaterally and for its own 

competitive reasons, announced that it would begin using a new price list, to be effective May 

1, 2009. F. 995, 998-999, 1001-1003. McWane’s new price list would increase prices for 

small diameter fittings (where McWane’s market share was highest), and lower prices 

substantially for medium and large diameter Fittings (where McWane had little or no market 

share and Sigma and Star were stronger). F. 1001. The purpose of McWane’s 2009 list price 

restructuring was to try to win back market share that it had been losing to Star and Sigma and 

to compete in the segments of the market where Sigma and Star were strongest. F. 1003. Prior 

to this time, McWane had conducted a product weight analysis and designed its pricing strategy 

to (1) realign its prices among different Fittings size ranges in order to better align McWane’s 

prices with its production costs; (2) squeeze its competitors’ margins and give less “wiggle 

room” to its competitors for Project Pricing on larger diameter Fittings, where Star and Sigma 

had significantly larger market shares; and (3) serve the goal of compressing the range between 

published pricing and actual market pricing, to give McWane better visibility of pricing. 

F. 999, 1002. McWane did not consult with Star or Sigma in connection with the restructuring 

of McWane’s list prices in 2009. F. 1000, 1004. Complaint Counsel does not argue, nor does 

 28 Complaint Counsel further alludes to conduct from June 2010 as constituting improper “signaling” 

communications. CCB at 41-42; CCRB at 31; CCFF 1556, 1566-1571. As with conduct allegedly occurring in 

April 2009, this June 2010 evidence is not probative of a conspiracy ending in 2008. Complaint Counsel fails to 

persuasively articulate why or how conduct occurring in 2010 makes the alleged 2008 conspiracy more likely than 

not.

 
335

the evidence demonstrate, that McWane’s April 13, 2009 price list restructuring announcement 

was anything other than a unilateral, procompetitive move by McWane. 

The evidence further shows that as of April 23, 2009, after learning of McWane’s new 

price list, Star determined that it would also issue a new price list, and that Star would likely 

follow McWane, which was Star’s usual behavior. F. 556, 679, 1005-1006. On or about April 

23, 2009, Star sent a customer letter stating that it would be implementing a new price list, 

effective May 19, 2009, although the letter did not state that Star’s new price list would follow 

McWane’s. F. 1005. Actions by Sigma created some uncertainty about how Star would 

proceed when, on April 27, 2009, Sigma, upset about the adverse impact that McWane’s 

restructured price list would have on Sigma competitively and hoping to dissuade McWane 

from implementing the change, announced in a customer letter dated April 27, 2009 that Sigma 

would stick to its existing price list. F. 1010-1011.29 McWane assumed that Star would follow 

McWane, although it did not know this for a fact. F. 1020-1021. 

In late April or early May 2009, Mr. Pais of Sigma conveyed the impression to Mr. 

McCutcheon of Star that McWane might change its mind about implementing McWane’s 

previously announced new price list. F. 1016. Mr. McCutcheon advised Mr. Pais that Star had 

already decided to follow McWane’s price list, because McWane was the market leader and 

that was what Star’s customers require. F. 1016. Nevertheless, this communication with Mr. 

Pais created some doubt in Mr. McCutcheon’s mind regarding whether McWane would stick 

with its previously announced price list, and Mr. McCutcheon wondered whether Star should 

move ahead with printing its own new price lists, which would cost Star approximately 

$25,000. F. 1017-1018; see also F. 422 (printing price list books can cost tens of thousands of 

dollars), 996 (printing price list can cost $30,000).

Mr. McCutcheon testified:

 29 Complaint Counsel’s proposed findings of fact refer to internal Sigma emails of Mr. Pais tending to show that 

Mr. Pais may have intended to try to influence McWane into withdrawing its new price list, at meetings that were 

planned with McWane regarding McWane’s selling private-label, domestically-manufactured Fittings to Sigma. 

See, e.g., CCFF 1509-1510. However, whatever this evidence may imply as to the intentions or conduct of Sigma,

the evidence does not demonstrate that anyone from McWane discussed the new price list with anyone from 

Sigma. F. 1012-1014. 
336

It cost[s] us about $25,000 to print a new price list. So, I picked up the phone 

and I called Rick Tatman. And I said, I’m only going to ask you one 

question, are you guys going to come out with a new price list, because I’m 

getting ready to approve it and spend $25,000 to do it. And he said, we 

absolutely are, and he says, I’m so sure that I’ll pay the $25,000 if we don’t. 

And I said, I appreciate that, nice talking to you, and hung up the phone.

F. 1018 (emphasis added). 

The evidence of the complete telephone conversation, quoted above, does not prove an 

agreement to adhere to published prices, within the rule of Sugar Institute v. United States, 297 

U.S. 553, and its progeny, upon which Complaint Counsel relies. CCB at 157-158. Sugar 

Institute stands for the proposition that an agreement to adhere to published prices is unlawful 

under Section 1 of the Sherman Act. 297 U.S. at 601-03. However, unlike the instant case, 

there was no factual issue presented in Sugar Institute, or the other cases upon which 

Complaint Counsel relies, as to whether such an agreement already existed. In Sugar Institute, 

the unlawful “agreement” was an ethical rule jointly issued by members of a trade association, 

requiring that “sugar should be sold only upon open prices and terms publicly announced.” 297 

U.S. at 579. Similarly, in Energex Lighting Indus. v. North American Philips Lighting Corp., 

765 F. Supp. 93 (S.D.N.Y. 1991), the court assumed the existence of an agreement to adhere to 

published prices, but because such an agreement would be illegal under Sugar Institute, the 

court refused to enforce it and dismissed a claim for its breach. Id. at 106-09. The alleged 

unlawful “agreement” in TFWS, Inc. v. Franchot, 572 F.3d 186 (4th Cir. 2009), also cited by 

Complaint Counsel, arose from actual state requirements that liquor wholesalers post with the 

comptroller, and adhere to, a schedule of prices and offer every retailer the same price for any 

given product, regardless of volume. Id. at 189-90; see also Costco Wholesale Corp. v. 

Maleng, 522 F.3d 874, 895-96 (9th Cir. 2007) (addressing “post and hold” rules issued by state 

liquor control board). 

The foregoing cases are clearly factually distinguishable from the instant case and shed 

no light on whether the telephone call between Mr. Tatman and Mr. McCutcheon, as an 

evidentiary matter, demonstrates an agreement to adhere to published prices, which would be 

illegal under the rule of Sugar Institute. Moreover, even if Mr. Tatman’s communication to 

Mr. McCutcheon is read as an “assurance” that McWane would proceed to implement the new 
337

price list that it had previously announced, this does not equate to a commitment to adhere to 

those list prices in McWane’s sales, as was the case in Sugar Institute. 

Complaint Counsel argues that it should be inferred that Mr. McCutcheon provided Mr. 

Tatman with “assurances” that Star would adhere to McWane’s published prices, based upon 

evidence that Mr. Tatman stated in an email dated April 28, 2009 that “there is now some 

probability that Star may change their direction and retract their list price change,” but that later 

that same day, in an internal email to Mr. McCullough, Mr. Tatman reported that he was “now 

highly confident that Star will follow our List Price.” CCB at 159-160; see F. 1020. According 

to Complaint Counsel, “only the phone call explains” the asserted “change” in Mr. Tatman’s 

confidence level as to what Star would do, and therefore, Mr. McCutcheon “must have 

provided assurances to McWane.” CCB at 160. However, Complaint Counsel fails to point to 

any evidence demonstrating that the date of the telephone conversation between Mr. Tatman 

and Mr. McCutcheon was, in fact, April 28, 2009, and the date cannot, and will not, be 

assumed. Rather, the evidence shows only that the telephone conversation took place 

sometime in late April or early May 2009. F. 1016-1018. Thus, the inference proposed by 

Complaint Counsel is not sufficiently logical or persuasive to outweigh the direct evidence, 

summarized above and set forth in detail at Section II.H., supra, that Mr. McCutcheon did not 

“assure” Mr. Tatman that Star would adhere to McWane’s price list and that Star had 

previously made its own independent decision to follow McWane. F. 1006, 1018. In 

addition, in an internal email dated April 30, 2009, Mr. Tatman noted that there was continuing 

uncertainty as to whether Star was following McWane’s new price list, which is inconsistent 

with the inference that Mr. Tatman received “assurances” from Star on April 28, 2009, as 

Complaint Counsel argues. F. 1021.

Moreover, at best, the substance of the telephone conversation upon which Complaint 

Counsel relies is more akin to an after-the-fact “verification” of a previous price, than to an 

“agreement to adhere” to prices within the meaning of Sugar Institute. See Blomkest Fertilizer, 

203 F.3d at 1034 (affirming summary judgment in defendants’ favor, and holding that calls 

between competitors that served to verify prices the companies had already charged on 

particular sales, which did not cause alleged price increases, failed to constitute a plus factor in 

support of an alleged conspiracy to fix prices). In addition, as in Blomkest Fertilizer, the 
338

evidence in the instant case fails to demonstrate that the telephone communication between Mr. 

Tatman and Mr. McCutcheon had any effect on either McWane’s or Star’s decisions regarding

price list changes; rather, the evidence shows that McWane and Star each proceeded in 

accordance with plans they formed independently, prior to the spring 2009 telephone 

conversation. F. 995, 999, 1001-1004, 1006, 1016, 1022-1023. 

For all the foregoing reasons, Complaint Counsel has failed to prove that the spring 

2009 telephone conversation constituted an agreement to adhere to published prices, and the 

greater weight of the evidence does not support an inference that McWane, Sigma, and Star 

conspired to raise and stabilize prices, as alleged in the Complaint.

5. Economic evidence

As the court noted in In re High Fructose Corn Syrup Antitrust Litigation,

circumstantial evidence to prove a conspiracy to restrain trade will “usually be . . . of two types 

-- economic evidence suggesting that the defendants were not in fact competing, and 

noneconomic evidence suggesting that they were not competing because they had agreed not to 

compete.” 295 F.3d at 655. Complaint Counsel’s conspiracy theory rests overwhelmingly on 

inferences drawn from noneconomic, circumstantial evidence. There is no direct evidence to 

support, and no a priori reason to believe, that the hypothesis of a conspiracy to raise and 

stabilize prices in the Fittings market is more likely than the hypothesis of independent conduct 

or oligopolistic conscious parallelism unaided by an agreement. Therefore, given that 

Complaint Counsel bears the burden of persuasion, it was incumbent upon Complaint Counsel 

to present economic evidence to bolster the claim of conspiracy. See In re Brand Name 

Prescription Drugs Antitrust Litig., 186 F.3d 781, 787 (7th Cir. 1999). 

Complaint Counsel did not offer any expert opinion that there was economic evidence 

indicating a conspiracy to raise and stabilize Fittings prices. Rather than offer its own expert 

testimony analyzing economic data, Complaint Counsel chose an “attack-the-other-expert” 

strategy. Complaint Counsel argues that it has no burden to prove that prices in the Fittings 

market were “raised” and/or “stabilized” during the conspiracy period, which itself has resisted 
339

any definition in this case,30 because it is not legally necessary to show that a conspiracy was 

“successful.” Regardless of whether Complaint Counsel has a legal burden to prove that a 

conspiracy was “successful,” Complaint Counsel still has the burden of proving that the alleged 

conspiracy existed. In this regard, the absence of persuasive economic evidence that prices in 

the Fittings market were “raised” and/or “stabilized” and/or otherwise coordinated by the 

Suppliers, as further explained below, undermines the persuasiveness of Complaint Counsel’s 

circumstantial case. 

a. Complaint Counsel’s economic evidence

While arguing that it need not prove that the alleged conspiracy to raise and stabilize 

prices was successful, Complaint Counsel nevertheless argues that the economic data shows the 

conspiracy was “successful.” Specifically, Complaint Counsel argues that Project Pricing was 

in fact curtailed (i.e., prices were “stabilized”) and Fittings prices did in fact increase, resulting 

in higher profits for all. CCB at 36-39, 145-147; see also Complaint ¶ 7 (alleging that

Respondent’s conduct “led to higher prices for both imported and domestically produced” 

Fittings).

With regard to proof of curtailment of Project Pricing, as discussed in Section 

III.D.2.b.ii., supra, the evidence upon which Complaint Counsel relies to show that Project 

Pricing was curtailed in 2008 is hardly persuasive. Complaint Counsel relies principally on 

inferences drawn from unverified statements of McWane’s sales persons in the field, as 

recorded in McWane’s pricing protection log, and from statements in McWane’s internal 

documents regarding McWane’s “leading price stability” and using “pricing discipline.” This 

does not constitute persuasive economic data. Complaint Counsel’s economic evidence of a 

“curtailment” of Project Pricing by Sigma and Star is also hardly persuasive. See Section 

III.D.2.b.ii., supra. In comparison, Respondent offered credible and persuasive expert opinion, 

based on actual prices as recorded by the Suppliers’ invoice documents, kept in the ordinary 

 30 The complaint alleges that the conspiracy began in January 2008, and was “upset” sometime around the time of 

the enactment of ARRA in early 2009. Complaint, ¶¶ 2-3. Complaint Counsel’s expert opined that the conspiracy 

began to fall apart in the fall of 2008 and terminated by the end of 2008. Complaint Counsel now argues that only 

the agreement to curtail Project Pricing (episode “one” of the “overall” conspiracy) terminated by the end of 2008.

CCB at 114, and that the “overall” conspiracy has yet to end. Jan. 24, 2013 (closing argument) Tr. at 16-17; see 

also CCRB at 44.
340 

course of business, that there was no curtailment of Project Pricing during the period from 

January 2008 through February 2009 and that pricing was far from stable during this period. 

F. 845-847, 937-938. 

Complaint Counsel relies on McWane’s internal “variance analysis” reports of sales 

volume and profit figures, prepared periodically by McWane’s controller, as evidence that 

McWane raised prices during the alleged conspiracy period. CCB at 38-39. Complaint 

Counsel relies on a variance analysis comparing McWane’s 2008 aggregate price-per-ton for 

fittings in 2007 to 2008, which noted an increase in the price-per-ton for non-domestic Fittings 

from { } per ton in 2007 to { } per ton in 2008, and an increase price-per-ton for 

Domestic Fittings from { } per ton in 2007 to { } per ton in 2008. F. 969. As Mr. 

Tatman explained, however, the aggregate price-per-ton figure is a revenue measure that does 

not break down the “product mix,” and says nothing about whether prices in fact increased in 

the Fittings market: 

[The figures show] a big ball of iron that you sold that quarter. It doesn’t say 

what the mix is. We just said before that -- remember before we restructured 

the list price. There’s a huge variance, 250 percent, between the dollar-per-ton 

list price on a large-diameter fitting versus a small-diameter fitting[.] . . . [A]nd 

this also doesn’t say what area this was closed in. If you look at the multiplier 

map, . . . the Pacific Northwest is 30 or 40 percent higher in price than what is 

Florida here. . . The year before, did you happen to sell more small diameter 

versus large diameter? That’s going to swing it. 

[T]he year before, did you have heavy sales in Florida and California and 

Arizona because those were the hot markets, and they were hot markets because 

they were growing in housing, and housing is small-diameter fittings? What 

that does on a dollar-per-ton basis, that drives that number down. Now you 

move forward here. If Arizona and California and Florida housing markets are 

falling off and you’re selling more product in the Pacific Northwest, it’s not a 

price increase with respect to the Pacific Northwest, but in aggregate it’s a price 

increase. Are you now selling more large-diameter product because the housing 

market has tanked and you’re selling into municipalities for lines? That’s going 

to switch it.

So you can’t jump to the inference that you have based on this simple 

number. . . . You just don’t have enough granularity in what you see here to 

make that judgment. 

. . . 
341 

It -- all it reflects is the big ball of iron that we sold the year prior and the big 

ball of iron we sold here went up – I’ll agree. It is what it is, but it doesn’t give 

you any insights as to what happened and why. 

F. 971. Mr. Tatman’s explanation is logical and credible and constitutes persuasive evidence 

that little, if any, weight should be given to the “price-per-ton” figures as evidence of price 

increases in the Fittings market. Moreover, Complaint Counsel has not rebutted Mr. Tatman’s 

explanation, including by any expert analysis of the price-per-ton figures. Further, 

Respondent’s expert, Dr. Normann, opined that price-per-ton is not a proper measure of price 

increases because selling a higher volume of higher priced items will create the illusion of an 

overall price increase. F. 972. For all the foregoing reasons, the aggregate price-per-ton 

figures upon which Complaint Counsel relies are entitled to, and given, little weight on the 

issue of whether prices increased in the Fittings market. 

 Complaint Counsel also points to evidence that McWane’s gross profits were higher in 

2008 as compared to 2007, despite a loss in volume, in part due to pricing gains, primarily on 

domestic product, and that profits were higher in 2008 than in 2009. CCB at 36-38, 147. 

However, the evidence further shows that McWane’s gross profit margin on non-domestically 

produced Fittings fell from { }% in 2007 to { }% in 2008, which Mr. Tatman attributed in 

part to Project Pricing, and fell further still in 2009, as volume continued to drop and prices 

continued to escalate. F. 964. Moreover, Respondent offered reliable and persuasive expert 

analysis that McWane’s average blended Fittings price (the price of imported or Domestic 

Fittings sold for open source jobs) actually declined throughout 2008, 2009, and 2010. F. 940. 

Thus, it is not apparent, absent speculation, that McWane’s financial performance improved 

because McWane was involved in an alleged conspiracy to raise and stabilize prices in the 

Fittings market, as argued by Complaint Counsel. 

Nor does an increase in gross profits, even if demonstrated, constitute persuasive 

evidence that prices increased, or that prices increased because of a conspiracy in the Fittings 

market, because many variables and factors influence profit levels from year to year. For this 

reason as well, the government’s evidence of higher profits for McWane, Sigma, and Star 
342

carries little if any weight in determining whether Fittings prices were increased. With regard 

to McWane’s profits in particular, Mr. Tatman explained:

Starting in about 2004 I believe is when we start sourcing product from 

overseas, started bringing in product. Sigma helped us out with that, so we had 

the ability now, rather than using a hundred percent domestic product to serve 

both the domestic-only spec market and the import market, we started having 

the ability to source product just like our competitors and sell that lower-cost 

Chinese product into open specs. [Mr. Tatman’s predecessor] David Green 

starts overproducing the plant, so you get an impact that helps you there. He’s 

running up the plants in 2005-2006. He’s overproducing compared to what 

demand is. Inventory levels go up. But when you do that, your gross margins 

get better because your manufacturing costs go down. I show up in 2007. We 

got an inventory problem. . . . In 2007 we had heavy substitution of domestic 

product in blended sales.

F. 974. Because of the higher cost of producing Domestic Fittings, providing Domestic 

Fittings for jobs with open specifications was, according to Mr. Tatman, like “wrapping a 

dollar bill around that fitting [because it is shipped] against an import price,” thereby 

depressing profits in 2007. F. 974-975. Accordingly, for the forgoing reasons, Complaint 

Counsel has failed to demonstrate that the relative change in profits from 2007 to 2008 was 

more likely due to an increase in prices than to other factors. 

b. Respondent’s economic evidence

In comparison to Complaint Counsel’s indirect and inferential economic evidence of 

price increases in the Fittings market, Dr. Normann, Respondent’s economic expert, analyzed 

the actual invoice prices charged by McWane, Sigma, and Star, over a multi-year period, 

including January 2008 through February 2009, as well as cost data and output data, and 

determined that the evidence is not consistent with the alleged conspiracy. F. 934. 

Dr. Normann’s findings and conclusions in this regard are reliable and probative, and outweigh 

Complaint Counsel’s proffered economic evidence. F. 959.

Dr. Normann was tasked with determining whether there was economic evidence 

consistent with the allegations of the Complaint; specifically, whether there was economic 

evidence consistent with collusive behavior among McWane, Sigma, and Star, to stabilize and 

increase prices for Fittings. F. 934. Dr. Normann analyzed whether there was reduced price 
343

variation and whether prices were increased, as part of an agreement, as alleged in the 

Complaint. F. 935; see Complaint ¶¶ 32-34 (alleging that January and June 2008 “price 

increase[s] w[ere] the result of a combination and conspiracy among the sellers”). In summary, 

and as further explained below, Dr. Normann concluded, based on his review and analysis, that 

there was no economic evidence that the price changes in January or June of 2008 were 

coordinated, or that there was an agreement to reduce job pricing as would be reflected in a 

decrease in price variance; that there was economic evidence that contradicted a conclusion of 

anticompetitive price increases in the Fittings market; and that the pattern of sales and 

inventory contradicts the notion of quantity withholding, as would be needed to effect a price 

increase. F. 934.

i. Published prices

Based upon the Complaint’s allegations that the announced price changes that occurred 

in January and June 2008 were coordinated “price increases,” Dr. Normann examined, inter 

alia, McWane’s multiplier maps associated with the January and June 2008 multiplier changes. 

F. 936. Dr. Normann found that McWane’s multipliers changed in different directions and by 

different amounts on a state-by-state basis, and concluded that this pattern is more consistent 

with competitive, independent decision-making by McWane than with concerted action. 

F. 936. In addition, Dr. Normann found that McWane’s published multipliers announced in 

January and June 2008 actually did not increase in most states, which is inconsistent with the 

Complaint’s allegation that the January and June 2008 price changes were coordinated “price 

increases.” F. 936. Complaint Counsel argues that Dr. Normann’s opinion in this regard 

should be rejected because Dr. Normann failed to consider evidence that McWane’s January 

2008 multiplier changes constituted an average 8% increase over McWane’s effective 

multipliers. CCRRFF 279; see F. 631, 652. Dr. Normann was charged with evaluating 

whether there was economic evidence supporting the allegations of the Complaint, and the 

Complaint in this case clearly alleges that the January and June 2008 published multiplier 

changes were “price increases” resulting from a conspiracy among McWane, Sigma, and Star. 

Complaint ¶¶ 32-34. These allegations are not supported by the greater weight of the economic 

evidence. Dr. Normann could not reasonably be expected to refute and deal with Complaint 
344 

Counsel’s constantly moving targets of when the alleged conspiracy took place and what 

constituted the alleged conspiracy. 

ii. Invoice prices

Dr. Normann also reviewed invoice data, kept in the ordinary course of business and 

produced by the Suppliers in this action. F. 937. The invoices record the sales price for the 

transaction in dollars, which includes any discounts off the published multiplier (i.e., Project 

Pricing), but does not include additional discounts that may arise from rebates, freight terms, or 

cash discounts. F. 937. To control for product mix when analyzing the Suppliers’ invoice data, 

Dr. Normann created an index of Fittings, consisting of a “basket” of the 24 most common 

Fittings that are sold by McWane, Sigma, and Star, as determined by volume. According to 

Dr. Normann, any conspiracy to raise Fittings prices would be reflected in the invoice prices 

for this basket of products. F. 939. 

Dr. Normann found, based on McWane’s invoice prices for McWane’s portion of the 

common Fittings basket, that McWane’s average prices for non-domestic Fittings (i.e., U.S. 

made or imported Fittings sold into open specification jobs, see F. 349-351) declined over the 

course of a multi-year period from January 2007 through November 2010, including before, 

during, and after the period from January 2008 to February 2009, which is the “conspiracy 

period” that Dr. Normann derived from his review of the Complaint and related materials in 

this case. F. 940. For the period from January 2008 through February 2009, Dr. Normann 

found that McWane’s average Fittings prices decreased by { } percent, Sigma’s average 

Fittings prices increased by { } percent, and Star’s average Fittings prices increased by { }

percent. F. 942. A price decline by McWane during the same period as price increases by

Sigma and Star is inconsistent with a conspiracy to raise prices involving McWane. F. 942. 

The decline in McWane’s prices shown by the invoice data is even more remarkable, 

given that there was a significant corresponding rise in input costs. F. 951. This is inconsistent 

with a conspiracy and consistent with independent pricing behavior. F. 955-956. Dr. Normann 

measured cost changes through an index he created of metal (such as scrap and pig iron) and 

energy costs. F. 945. As Dr. Normann explained, even when there is evidence of price 

increases, it is important in a conspiracy case to look at input costs to see if there are 
345

competitive explanations for the price increases, such as needing to keep up with rising costs. 

F. 944. Metal and energy costs are variable costs that constitute the primary cost inputs in the 

manufacture of Fittings. F. 945. These costs comprise about 30 percent of the total cost of 

McWane’s production of ductile iron pipe fittings. F. 945. Metal and energy input costs went 

up 40 to 50 percent during 2008, and were up 70 to 80 percent from 2007. This is a dramatic 

increase. F. 951. In a competitive environment, these cost increases would result in significant 

pressure to increase price. In a competitive environment, it would be expected to see some 

changes in price because of increases in cost. F. 952. Yet the invoice data for McWane

showed declining prices, and the invoice data for Sigma and Star show only modest price 

increases, that were not significantly more than their cost increases. F. 953. This is also 

inconsistent with a conclusion of a conspiracy to raise prices involving McWane, Sigma, and 

Star. F. 952-953, 955-956.

Dr. Normann also concluded that during the January 2008 through February 2009 time 

period the Suppliers’ price movements were not in parallel and that the Suppliers’ prices moved 

independently of one another. This is also not consistent with the allegations of conspiracy in 

this case. F. 954. 

Furthermore, Dr. Normann reviewed the Suppliers’ inventory data to see if there was 

any evidence of withholding, which would facilitate a cartel’s ability to raise prices. Dr. 

Normann found no evidence of withholding, and instead found an increase in output. F. 958.

Dr. Normann further opined that a price increase for imported Fittings would show up 

as an increase in the price of Fittings sold into open specification jobs relative to domestic-only 

jobs. F. 957. His data analysis showed that over a multi-year period, including the period from 

January 2008 through February 2009, the price of open specification Fittings declined relative 

to the price of domestic-only specification Fittings, which is also inconsistent with the alleged 

conspiracy. F. 957. 

c. Dr. Schumann’s rebuttal

Complaint Counsel criticizes Dr. Normann’s data and methodology through the rebuttal 

report and related testimony of Dr. Schumann. In general, Dr. Schumann contends that 
346

Dr. Normann’s conclusions should be disregarded because the invoice data is unreliable; 

Dr. Normann failed to control for material factors other than the alleged conspiracy that might 

affect prices, such as supply and demand changes; and Dr. Normann failed to “follow accepted 

practices” for statistical analysis. CCRB at 41-42; CCFF 1425-1435. As further explained 

below, Dr. Schumann’s opinions and the evidence upon which he relies to rebut Dr. Normann’s 

opinions and analyses are unpersuasive, and are therefore rejected.

Complaint Counsel argues that the invoice price data of McWane, Sigma, and Star, 

constitute an unreliable basis for determining actual selling prices because the invoice price 

includes any discounts off the published multiplier (i.e., Project Pricing), but does not reflect 

additional discounts that may arise from rebates, freight terms, or cash discounts. See CCFF 

1425; CX 2265 (Schumann Rebuttal Rep. at 10-11); Schumann, Tr. 5806. However, the 

alleged conspiracy in this case involves published multipliers and discounts from published 

multipliers given through Project Pricing, and there are no allegations involving other 

discounts. See Complaint ¶¶ 32-34. Given these circumstances, the invoice price is precisely 

the correct measure of selling price. F. 938. 

Complaint Counsel also argues that the invoice data is not a reliable basis for 

determining actual selling prices because there is a “non-systematic” time lag of a few days to a 

few months between the date a Supplier and a customer agree to a particular price, and the date

the order is invoiced at shipment. CCFF 1426; CX 2265 (Schumann Rebuttal Rep. at 5); 

Schumann, Tr. 5802-5805. The asserted “time lag” does not render the invoice data unreliable. 

The evidence shows that, although the time period between order and delivery varies, delivery 

typically takes place between two or three weeks to two months after the bid and order, and the 

prices reflected in invoice data typically reflect market pricing that is 30 to 60 days prior to the 

invoice. F. 344-345. In any event, any potential deficiency in this regard is adequately 

rectified by Dr. Normann’s use of a multi-year time series, which captures a rolling average 

and effectively captures such time lags. F. 941. For the same reason, Dr. Schumann’s 

contention that month-to-month differences in customer mix meaningfully affect the reliability 

of Dr. Normann’s conclusions is unpersuasive. See CCFF 1427; CX 2265 (Schumann Rebuttal 

Rep. at 12).
347

In addition, Complaint Counsel contends that the invoice data is unreliable because of 

alleged data entry errors totaling 4.27 percent in 2008, and 21 percent in January 2008. CCFF 

1428-1430; CX 2265 (Schumann Rebuttal Rep. at 9, 13-16); Schumann Tr. 5805.

31 Complaint 

Counsel’s argument and evidence in this regard, based on unexplained and unverified 

information, has been thoroughly examined, and these errors, to the extent they exist, are not 

fatal and are not sufficiently pervasive to warrant rejecting Dr. Normann’s pricing analysis.

Complaint Counsel further argues that there is no way to unambiguously identify 

domestically made Fittings sold at domestic-only prices versus domestically made Fittings sold 

at the open specification prices, resulting in errors in classification that “introduce uncertainty 

and randomness in that the data” that was not further analyzed. CCFF 1431; CX 2265 

(Schumann Rebuttal Rep. at 13); Schumann, Tr. 5825-5826. Dr. Schumann’s criticisms in this 

regard have been fully reviewed, and they are unpersuasive. Apart from his general assertions, 

Dr. Schumann does not quantify or otherwise analyze the extent to which the alleged errors 

affected Dr. Norman’s analysis. In addition, Complaint Counsel attacks the domestic-only 

price data as having a 9 percent error rate in 2008. CCFF 1432; CX 2265 (Schumann Rebuttal 

Rep. at 13-14); Schumann, Tr. 5823, 5824-5825. As in the case of the asserted errors in the 

open specification Fittings price data, to the extent such errors exist, these errors are not fatal 

and are not sufficiently pervasive to warrant rejecting Dr. Normann’s pricing analysis. 

Complaint Counsel also contends that Dr. Normann’s Fittings price analysis is flawed 

because he did not control for factors other than the alleged price fixing agreement that might 

impact prices, such as the 2008 recession. CCFF 1433; CX 2265 (Schumann Rebuttal Rep. at 

18-19). Dr. Schumann’s rebuttal report, upon which Complaint Counsel relies, argues that Dr. 

Normann cannot conclude whether or not the price data is consistent with a conspiracy to raise 

prices unless he can conclude what prices would have been absent the alleged conspiracy. Id. 

 31 The claim that McWane invoice data contains these errors is based upon Complaint Counsel’s extrapolation 

from correspondence between Respondent’s counsel and Complaint Counsel in May and June 2012. (CX 2552). 

Complaint Counsel sent an inquiry to Respondent’s counsel concerning the possible reasons for an entry in 

McWane’s sales data spreadsheet that showed an actual multiplier that was greater than the published multiplier 

stated on McWane’s applicable multiplier map. Counsel for Respondent replied that there was “no commercial 

reason” that an order would be entered above the published multiplier and that this was “most likely an order entry 

error. . . .” CX 2252 at 001. Instead of deposing a fact witness to discover the reasons for any data entry 

anomolies, such as an employee responsible for data entry, Complaint Counsel left the question unexamined and 

chose to follow the equivocal statement of an attorney for Respondent as “evidence.”
348 

at 23-24. The argument that Dr. Normann’s data and conclusions are rendered meaningless 

because he did not speculate as to what prices might have been, absent a presumed conspiracy, 

defies logic, is unpersuasive, and is rejected. 

In addition, Complaint Counsel argues that Dr. Normann’s analysis should be 

disregarded because, according to Dr. Schumann, Dr. Normann fails to report standard errors or 

confidence intervals of slopes for his hypothesis tests, (CX 2265 (Schumann Rebuttal Rep. at 

25); Schumann, Tr. 5801-5802, 5849, 5863, 5871) or report tests for robustness of his data 

analysis. CX 2265 (Schumann Rebuttal Rep. at 23, 29, 48); Schumann, Tr. 5831-5832. See 

CCFF 1434. These criticisms raised by Dr. Schumann have been thoroughly reviewed and do 

not constitute persuasive bases for disregarding Dr. Normann’s analyses and opinions in this 

case. Dr. Schumann fails to explain or quantify how these alleged shortcomings in Dr. 

Normann’s analysis so adversely affected Dr. Normann’s conclusions that they should be 

completely disregarded. 

 For all the foregoing reasons, and having fully evaluated Dr. Schumann’s rebuttal report 

and related testimony, Dr. Schumann’s opinion that Dr. Normann’s figures are unreliable, 

irrelevant or not useful for economic analysis, is rejected. 

Complaint Counsel argues in the alternative that if the invoice pricing data and Dr. 

Normann’s methodology for analyzing it is accepted, the data shows that during a period 

beginning February 1, 2008, the month in which the January 2008 pricing changes became 

effective, and ending October 1, 2008, when according to Complaint Counsel, the conspiracy 

began to “fall apart,” McWane’s Fittings prices increased by { } percent; Sigma’s increased 

by { } percent; and Star’s increased by { } percent. F. 943. Moreover, according to 

Complaint Counsel, “prices plunged after October 2008,” which is consistent with Complaint 

Counsel’s theory that the conspiracy “was losing traction at that time.” CCRB at 42. It is not 

enough for there to be evidence that can be interpreted in a way that is consistent with the 

government’s conspiracy theory – the inference of conspiracy must be more likely than not. 

Here, Complaint Counsel fails to demonstrate that the price increases in the selected period 

from February 1 through October 1, 2008 are more consistent with the inference of conspiracy 

than the inference of a legitimate response to dramatic cost increases. In addition, Complaint 
349

Counsel’s assertion that prices “plunged after October 2008” is not based upon any economic 

data. Rather, Complaint Counsel cites to various internal documents of the Suppliers referring 

to intense price competition in the later months of 2008. CCRB at 42; CCFF 1456-1466. In 

addition, as previously noted, there is evidence in the record that the Fittings market 

experienced a significant downturn in the second half of 2008, which would also contribute to 

increased discounting as Suppliers chased ever-decreasing volume. F. 931, 933; see also 

F. 1026. In any event, these “cherry-picked” time periods, while consistent with Complaint 

Counsel’s theory of when the agreement to curtail Project Pricing became “effective” and then

began to “fall apart,” fail to outweigh the overall findings and conclusions of Dr. Normann that

the totality of the economic evidence is not consistent with the alleged conspiracy.32 

d. Summary and conclusion as to economic evidence

Dr. Normann examined the available pricing data, analyzed it, and formed conclusions 

that the data is not consistent with the alleged conspiracy to raise and stabilize Fittings prices. 

Dr. Normann reviewed and analyzed actual data, instead of merely offering theories in lieu of 

using the data. Rather than proffer expert analysis of economic data to support the conspiracy 

allegations, Complaint Counsel chose simply to attack Respondent’s expert analysis.

In summary, Dr. Normann’s findings, conclusions, and opinions regarding price 

movements in the Fittings market during 2008 constitute substantial, probative economic 

evidence that is not consistent with an inference of a conspiracy among McWane, Sigma, and 

Star, to raise and stabilize prices in the Fittings market. F. 959. Complaint Counsel’s 

economic evidence fails to outweigh the economic evidence presented by Respondent. 

Therefore, the greater weight of the economic evidence fails to support the inference of 

conspiracy. Even if Dr. Normann’s opinions and pricing analyses were rejected, Complaint 

Counsel’s economic evidence is insufficiently probative of a conspiracy to raise and stabilize 

prices in the Fittings market, and is therefore unpersuasive on this issue.

 32 Complaint Counsel relies on evidence that Sigma’s average transactional multipliers increased in certain regions 

during the period from February 2008 through October 2008. However, the actual day-to-day multipliers differed 

“a lot” from region-to-region, product-to-product, day-to-day. F. 994. Moreover, as set forth above, this “cherrypicked” time period does not outweigh the totality of the evidence that is not consistent with the inference of a 

conspiracy to raise and stabilize prices in the Fittings market. In any event, regardless of what the evidence may 

show as to Sigma and Star, the greater weight of the economic evidence fails to justify an inference of a 

conspiracy involving McWane. 
350

6. Conclusion based on totality of the evidence

Complaint Counsel alleges a conspiracy among McWane, Sigma, and Star to stabilize 

and increase Fittings prices by curtailing project pricing and increasing price transparency. 

CCB at 105. As shown above, Complaint Counsel has failed to prove any of the three 

“episodes” which it contends prove the “overall” conspiracy. 

In addition, viewed as whole, the totality of the evidence fails to prove the alleged 

conspiracy. In this case, the evidentiary “whole” is no more probative or persuasive than its 

various parts. Accepting Complaint Counsel’s conspiracy theory depends on accepting 

numerous assertions, assumptions, and inferences that are not sufficiently grounded in 

evidence. In addition, the preponderance of the economic evidence is not consistent with the 

alleged conspiracy. Among other things, the evidence:

• fails to prove that Mr. Tatman’s December 25, 2007 internal PowerPoint 

Presentation was a “plan” for a “conspiracy” with Sigma and Star to raise 

and stabilize prices, through curtailing pricing and increasing price 

transparency, as opposed to an independently formed pricing strategy 

designed to make McWane more competitive, see Sections III.D.2.a.; 

III.D.2.b.iii.(c); 

• fails to prove that McWane “communicated” its pricing strategy to Sigma 

and Star, including through “offers” in the January 11, 2008 and May 7, 

2008 Customer Letters to raise prices in exchange for (a) Sigma’s and Star’s 

curtailing Project Pricing; and/or (b) participating in the DIFRA tonsshipped data reporting system, respectively, see Sections III.D.2.a.; 

III.D.2.b.iii.(c); III.D.3.; 

• fails to prove that the decisions or conduct of Sigma and Star with regard to 

Project Pricing or participating in DIFRA reflected an “understanding” with 

McWane of future price increases, or “acceptance” of an “offer” from 

McWane of such increases, or constituted acts of “compliance” with 

McWane’s “plan,” as opposed to independent conduct or lawful conscious 

parallelism, see Sections III.D.2.a.; III.D.2.b.iii.(c); III.D.3.;

• fails to prove that the DIFRA tons-shipped data reporting system was part of 

a conspiratorial “plan” to “enforce” compliance with the alleged price fixing 

agreement by increasing price transparency, see Section III.D.2.b.iii.(d);
351

• fails to prove that McWane, Sigma, and Star were “monitoring” the market 

for “cheating” on the alleged price fixing agreement, or “complained” to one 

another about “cheating” on the alleged price fixing agreement, see Sections 

III.D.2.b.iii.(e) and (f);

• fails to prove that the few unexplained contacts between McWane and 

Sigma, or McWane and Star, constituted anything more than mere 

opportunities to conspire, see Section III.D.2.b.iii.(g); and

• fails to prove Project Pricing was curtailed, or that prices were increased or 

stabilized or coordinated in the Fittings market among McWane, Sigma, and 

Star, see Sections III.D.2.a.; III.D.2.b.ii.; III.D.5.

Complaint Counsel’s conspiracy theory is not implausible; it is indeed “possible” that 

there is some truth in the story Complaint Counsel tells. But neither plausibility nor possibility 

is sufficient to prove a price fixing conspiracy. Furthermore, in evaluating the totality of the 

evidence, “it is not the quantity of the plaintiff’s evidence which is important, but its qualitative 

value in demonstrating that the parties actually entered into a conspiracy.” Venture 

Technology, 685 F.2d at 48. Despite the numerous pleas by the government for inferences to 

be made where proof is lacking, the fact that a conspiracy may be difficult to prove does not 

mean that it is fair or appropriate to fill in the blanks where evidence is missing to assist the 

government in winning its case. When fairly and objectively scrutinized and weighed, the 

evidence fails to prove that McWane conspired with Sigma and Star to raise and stabilize prices 

in the Fittings market, as alleged in the Complaint. At best, the evidence shows interdependent 

or consciously parallel conduct, unaided by any agreement, which is not illegal. Brooke Group, 

509 U.S. at 227; Twombly, 550 U.S. at 557 & n.4. 

“The line between lawful interdependent behavior and unlawful commitment is not 

sharp.” Areeda, ¶ 1410c at 72. “Although the line between coordination through recognized 

interdependence and some commitment is shadowy, the distinction is important so long as 

antitrust law allows the former but condemns the latter.” Areeda, ¶ 1410c at 74. Such cases 

therefore “must be resolved by rules of law allocating burdens of proof or creating 

presumptions that certain behavior will – or will not – be treated as an agreement.” Id. 

Accordingly, because the preponderance of the evidence in this case does not prove the alleged 

conspiracy, Count One is dismissed. See Re/Max Int’l, 173 F.3d at 1009 (holding that evidence 

of conspiracy does not preponderate where the evidence is equally consistent with independent 
352

conduct); see also Kreuzer, 735 F.2d at 1488 n.14 (holding that inference of conspiracy must be 

more likely than not); Venture Technology, 685 F.2d at 48 (holding that where evidence, taken 

as a whole, “points with at least as much force toward unilateral actions . . . as toward 

conspiracy,” inference of conspiracy cannot be drawn).

E. Count Two: Alleged Conspiracy to Exchange Competitively Sensitive Sales 

Information in Restraint of Trade

Count Two of the Complaint alleges that McWane, Sigma, and Star agreed to 

“exchange competitively sensitive sales information” and that this agreement constitutes an 

unreasonable restraint of trade. Complaint ¶ 64. Specifically, Complaint Counsel asserts that 

McWane, along with the other supplier-members of the Ductile Iron Fittings Research 

Association (“DIFRA”), a trade association, agreed to participate, and did participate, in the 

DIFRA tons-shipped data reporting system, discussed above and in more detail infra. CCB at 

166-167; see generally Section II.E., supra. Complaint Counsel argues that the DIFRA tonsshipped data reporting system constitutes an unlawful “information exchange” because the data 

provided has the tendency or effect of “facilitating price collusion,” in a market already 

susceptible to tacit coordination, without countervailing procompetitive justification, in 

violation of Section 1 of the Sherman Act. CCB at 166-177. 

Respondent argues that the DIFRA tons-shipped data reporting system did not 

“facilitate” price coordination, in theory or in practice, because no pricing data was collected or 

disseminated, and because the aggregated, tons-shipped data did not give McWane or any other 

DIFRA member any meaningful insight into competitor pricing or sales. RB at 23-26. 

Respondent argues that the tons-shipped data collected, aggregated, and disseminated in the 

DIFRA reports does not disclose sufficient price information to “facilitate” price coordination 

or collusion. RB at 23-26. Moreover, according to Respondent, the evidence shows that the 

DIFRA tons-shipped data reports served legitimate, procompetitive purposes by helping each 

DIFRA member to assess overall market trends, estimate its own market share, and better 

manage production schedules and inventory. RRB at 48. In addition, Respondent asserts, the 

only pricing decisions that McWane made after receiving the DIFRA aggregated, tons-shipped 

data reports, were procompetitive: On June 17, 2008, McWane implemented published 

multipliers that were lower than those that had been announced by Sigma and Star; and in April 
353

2009, McWane restructured its price list to lower prices in certain product segments where 

McWane’s volume was weak. RRB at 48-49.

In order to establish a Section 1 violation, the evidence must show (1) that the DIFRA 

tons-shipped data reporting system constitutes a contract, combination or conspiracy between 

McWane and the other DIFRA members (concerted action), (2) that unreasonably restrains 

competition. See, e.g., Valuepest.com of Charlotte, Inc. v. Bayer Corp., 561 F.3d 282, 286 (4th 

Cir. 2009); Law v. NCAA, 134 F.3d 1010, 1016 (10th Cir. 1998). 

1. The DIFRA tons-shipped reporting agreement

The evidence shows that all four DIFRA members, McWane, Sigma, Star, and U.S. 

Pipe, collectively approved and adopted the DIFRA tons-shipped data reporting system. 

F. 720, 732-734, 787. There was a meeting of the members on March 27, 2008, also attended 

by Mr. Wood Herren of the Alabama law firm that served as DIFRA’s attorneys, which 

addressed the system for reporting tons-shipped data, and at which it was resolved that the 

members’ initial submissions would report tons-shipped data for 2006, 2007, and January 

through March of 2008. F. 713, 725-727, 731. Thereafter, in a telephone conference on April 

25, 2008 among the available DIFRA members and DIFRA’s attorney, Mr. Thad Long, the 

DIFRA members approved a tons-shipped reporting format, which would include short-tons of 

Fittings shipped within the United States in the following six categories: 2”-12” Flanged; 2”-

12” All Other; 14”-24” Flanged; 14”-24” All Other; Greater than 24” Flanged; Greater than 24” 

All Other. F.734, 787. The DIFRA members also agreed to a method of reporting data back to 

the members. It was agreed that each DIFRA member would submit its fittings tons-shipped

data for 2006, 2007, and January through April of 2008 to DIFRA’s accounting firm by May 

15, 2008, which would then aggregate the data and provide reports to the DIFRA members,

reflecting industry-wide tons-shipped, by the 20th of the month. F. 733. In addition, the 

DIFRA members confirmed by email their agreement to the parameters and procedures agreed 

to in the April 25, 2008 conference call. F. 735. The evidence further shows that each Supplier 

jointly participated in the aggregated tons-shipped reporting system. F. 738-739, 788, 825, 

834. 
354

Accordingly, the evidence demonstrates that the DIFRA tons-shipped reporting system 

constitutes concerted action by the DIFRA members for purposes of Section 1 of the Sherman 

Act. See National Soc’y of Prof’l Engineers, 435 U.S. at 679; Indiana Fed’n of Dentists, 476 

U.S. at 447. Respondent does not argue to the contrary. Thus, the dispositive issue is whether 

the DIFRA tons-shipped data reporting system unreasonably restrains trade. 

2. Applicable standard for determining unreasonable restraint

In analyzing whether an agreement unreasonably restrains trade, the Supreme Court has 

explained that “a restraint may be adjudged unreasonable either because it fits within a class of 

restraints that has been held to be ‘per se’ unreasonable, or because it violates what has come to 

be known as the ‘Rule of Reason.’” Indiana Fed’n of Dentists, 476 U.S. at 457-58; Realcomp

II, Ltd. v. FTC, 635 F.3d 815, 825 (6th Cir. 2011). Complaint Counsel does not contend that 

the DIFRA tons-shipped data reporting agreement is a per se unreasonable restraint, and states 

that the alleged DIFRA “information exchange” is to be assessed under the rule of reason. 

CCB at166.

Whether an alleged “information exchange” unreasonably restrains trade is assessed 

under the rule of reason. See Todd v. Exxon, 275 F.3d at 198. A “full-blown” rule of reason 

analysis requires courts to engage in a detailed analysis of the relevant market and the effects of 

the restraint in that market. Realcomp, 635 F.3d at 825 (citing Ind. Fed’n, 476 U.S. at 461). 

Under this analytical approach, if the challenged restraint is shown to have actual 

anticompetitive effects, then the burden shifts to the proponent of the challenged restraint to 

provide procompetitive justifications for it. Id. Proof of “[m]arket power and the 

anticompetitive nature of the restraint” has been held “sufficient to show the potential for 

anticompetitive effects under a rule-of-reason analysis, and once this showing has been made, 

[the proponent of the policies] must offer procompetitive justifications.” Id. at 827. 

While there are varying modes of inquiry, the ultimate test of legality “‘is whether the 

restraint imposed is such as merely regulates and perhaps thereby promotes competition or 

whether it is such as may suppress or even destroy competition.’” In re Polygram Holding, 136 

F.T.C. 310, 327 n.14 (2003) (quoting Chicago Bd. of Trade v. United States, 246 U.S. 231, 238 

(1918)). “Whether the ultimate finding is the product of a presumption or actual market 
355

analysis, the essential inquiry remains the same -- whether or not the challenged restraint 

enhances competition.” California Dental Ass’n, 526 U.S. at 779-80 (quoting NCAA v. Bd. of 

Regents of Univ. of Okla., 468 U.S. 85, 104 (1984)).

3. Anticompetitive effects

Complaint Counsel does not argue that DIFRA tons-shipped data reporting system had 

actual anticompetitive effects.33 Rather, Complaint Counsel argues that the DIFRA tonsshipped data reporting system is likely to have anticompetitive effects because it has the nature 

or tendency to “facilitate non-competitive or collusive pricing.” CCB at 166, 168-169. Proof 

of such likely effects is sufficient, Complaint Counsel argues, because the DIFRA members 

have market power, with a collective market share of almost 97% during the relevant time 

period, in a market with high barriers to entry. CCB at 168-169. See Tempur-Pedic, Int’l Inc., 

626 F.3d at 1339-40 (“[M]arket share is frequently used in litigation as a surrogate for market 

power.” (internal quotation marks and citation omitted)); United States v. Microsoft Corp., 253 

F.3d 34, 54-56 (D.C. Cir. 2001). The evidence shows that, collectively, McWane, Sigma, and 

Star had a combined share of the Fittings market of approximately 90% to 95% in 2008. Sigma 

and Star are McWane’s primary competitors. F. 354-356, 359. The smaller suppliers making 

up the remaining share of the Fittings market do not affect the Suppliers’ ability to implement a 

price increase. F. 358-360. In addition, the Fittings market has high barriers to entry. See 

infra Section III.G.2.b.i.(b); F. 1050. On these facts, it is readily apparent that McWane, 

Sigma, and Star, have collective market power, and Respondent does not argue to the contrary. 

Accordingly, the DIFRA tons-shipped data reporting system is analyzed for its likely 

anticompetitive effects. 

a. Facilitating practice theory

As noted above, Complaint Counsel’s theory of likely anticompetitive effects rests on 

the assertion that the DIFRA tons-shipped data reporting system is a “facilitating practice.” A 

facilitating practice is one that “makes it easier for parties to coordinate price or other 

 33 To the extent Complaint Counsel asserts that the DIFRA tons-shipped data reporting system had the actual 

anticompetitive effect of enabling Suppliers to detect “cheating” on the alleged conspiracy to curtail Project 

Pricing, as noted in Section III.D., the evidence fails to show this conspiracy and thus fails to show that DIFRA 

“facilitated” such a conspiracy.
356

anticompetitive behavior in an anticompetitive way. It increases the likelihood of a 

consequence that is offensive to antitrust policy. The anticompetitive result may in fact ensue, 

but its actual occurrence is not necessary to the presence of a facilitating practice. The vice of a 

facilitating practice is its anticompetitive tendency in the circumstances rather than a proved 

anticompetitive result in the particular case. . . . [Where] the exchange itself is an agreement 

that may undesirably facilitate price coordination . . . , prospective injunctive relief may be 

warranted even though damages cannot be proven.” Areeda, ¶ 1407b1 at 38. However, an 

agreement to behave in a way that facilitates some undesirable result, such as price 

coordination, “cannot be found unreasonable without considering the offsetting economic or 

social benefits of the practice. Thus, the label ‘facilitating practice’ is only an invitation to 

further analysis, not a license for automatic condemnation.” Id. ¶ 1407b2 at 39. See also

Petroleum Products, 906 F.2d at 448 (‘“One may reluctantly tolerate interdependent pricing 

behavior as such and still condemn [those agreements involving] practices which unjustifiably 

facilitate interdependent pricing and which can be readily identified and enjoined.’” (quoting P. 

Areeda, Antitrust Analysis ¶ 325, at 381 (3d ed. 1981))). Pursuant to economic theory cited by 

Complaint Counsel, information exchanges that increase price transparency among oligopolists 

facilitate coordination by exposing, and thereby discouraging, “cheating” on consensus prices. 

In this way, according to the economic theory described by Complaint Counsel, the increased 

transparency can facilitate maintenance of a consensus price. See CCB at 171-172. 

In Todd v. Exxon, 275 F.3d 191, the plaintiff claimed that the defendants routinely gave 

each other their employees’ salary information and used the information to fix and maintain 

lower salaries for their combined work force. The court laid out the proper approach to 

analyzing whether an alleged information exchange among competitors is anticompetitive. 

First, it must be determined whether the structure of the industry is such that it is ‘“susceptible 

to the exercise of market power through tacit coordination.’” 275 F.3d at 207-08 (citation 

omitted); see United States v. U.S. Gypsum Co., 438 U.S. 422, 441 n.16 (1978) (holding that 

one of the two “most prominent” factors in the rule of reason analysis of a data exchange 

among competitors is “the structure of the industry involved”). This involves a determination 

of whether the market is oligopolistic, with fungible products subject to inelastic demand. 

Todd, 275 F.3d at 208. The evidence in this case demonstrates that the Fittings market has 
357

these characteristics. F. 322-328, 362. Second, “[a]longside the ‘structure of the industry 

involved,’ the other major factor for courts to consider in a data exchange case is the ‘nature of 

the information exchanged.’ Gypsum, 438 U.S. at 441 n.16.” Todd, 275 F.3d at 211. “There 

are certain well-established criteria used to help ascertain the anticompetitive potential of 

information exchanges,” including the time frame of the data; the specificity of the data; 

whether the data is made publicly available; and whether the data is discussed in meetings 

among the participants. Id. at 211-13. These factors are analyzed below. 

b. Nature of information exchanged

i. Time frame of the data

“The exchange of past price data is greatly preferred because current data ha[s] greater 

potential to affect future prices and facilitate price conspiracies. By the same reasoning, 

exchanges of future price information are considered especially anticompetitive.” Todd, 275 

F.3d at 211 (citing Am. Column & Lumber Co. v. United States, 257 U.S. 377, 398-99 (1921)). 

In Todd, the complaint was deemed sufficient where the plaintiff alleged that the defendants 

exchanged past and current salary information, as well as future salary budget information.

In the instant case, in contrast, the reporting format used by DIFRA’s accountants 

referred only to past tons-shipped, and did not include any price data. F. 745-747, 749, 752. 

The tons-shipped data, upon which the DIFRA reports were based, represented sales taking 

place at varying past times, from a few weeks, to many months previously in the case of large 

public works projects, which were particularly prone to delay. Private jobs varied, but most 

were shipped within a month of the sale. F. 752. Based on Todd, the time frame of the DIFRA 

tons-shipped data does not weigh in favor of concluding that the data reports would facilitate 

collusive pricing. 

ii. Specificity of the DIFRA tons-shipped data

(a) DIFRA data generally

“Price exchanges that identify particular parties, transactions, and prices are seen as 

potentially anticompetitive because they may be used to police a secret or tacit conspiracy to 

stabilize prices.” Todd, 275 F.3d at 212. The court in Todd further stated, “[c]ourts prefer that 
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information be aggregated in the form of industry averages, thus avoiding transactional 

specificity.” Id. Unlike the information exchange found sufficient to state a claim in Todd, the 

tons-shipped information exchanged through the DIFRA reports was aggregated, and had no 

transactional specificity. F. 741-744, 748-749. The DIFRA tons-shipped reports consisted of 

the aggregated totals of tons shipped in the United States during the reporting period, broken 

down by size categories (2” to 12”, 14” to 24”, larger than 24” in diameter, and flanged versus 

non-flanged). F. 741. These broad categories are commonly used in the industry and mirror 

the major size groupings of pipe. F. 741-742. They reflect product size ranges containing 

thousands of different SKUs – all with unique physical attributes and pricing points. F. 742. 

The reports did not break down the tonnage shipped by state. F. 744. The tons-shipped data 

gathered by DIFRA’s accountants did not distinguish between Domestic Fittings and nondomestic Fittings, and did not indicate whether the tonnage was sold into open preference or 

domestic preference jobs. F. 743. 

Moreover, neither DIFRA nor its accountants ever collected sales price data. F. 745. 

The DIFRA tons-shipped data reports did not include or reveal any sales prices. F. 746. The 

DIFRA reports did not show the timing of prior sales or dollar amount of any sales. F. 758. 

The DIFRA reports did not report any dollar figures. F. 747. However, to the extent the 

submitted data was accurate, by seeing the aggregated totals of tons shipped during the 

reporting period, the Suppliers were able to assess the total size of the Fittings market during 

the reporting period, in the various fittings categories. F. 756. Then, by further analyzing the 

total tons-shipped data in relation to internal sales information, as other references such as 

Ductile Iron Pipe Research Association (DIPRA) and Valve Manufacturers’ Association 

(VMA) data, a Supplier could determine its own market share during the reporting period. 

F. 757, 774-776, 778, 839. A Supplier could then track changes in its market share over time 

by referencing the monthly DIFRA tons-shipped reports. F. 776-778. Indeed, one of the 

purposes of the data reporting system was to help each member assess its own individual 

market share. F. 757. The data was not sufficiently detailed, however, to enable any DIFRA 

member to determine the respective market shares of any other DIFRA member. F. 758. The 

tons-shipped data report contained aggregated data, and no DIFRA member was permitted to 
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review the tons-shipped data of any other member. F. 748. Moreover, the evidence shows that 

there were at least some errors in the data submitted and reported. F. 754-755. 

(b) Market share information as “facilitating” 

price coordination

Complaint Counsel argues that the DIFRA tons-shipped data increases price 

transparency, notwithstanding the lack of any disclosure of prices, because the DIFRA tonsshipped data enables a Supplier to evaluate changes in market share against the total size of the 

market, and thereby further enables each Supplier to determine whether one’s loss of market 

share was due to a market decline, or to a loss of business to the competition. CCB at 171. The 

evidence fails to show that in the Fittings market a loss of business to the competition 

necessarily means the loss was due to “cheating” or “discounting” by the competition, as 

Complaint Counsel argues. In fact, the evidence shows, market share loss can be attributed to 

various factors. As Mr. Page, CEO of McWane, stated in a January 23, 2009 internal email 

reacting to McWane’s apparent loss of market share, as shown in part by the December 2008 

DIFRA aggregated, tons-shipped data report: “Trying to not be emotional about it. But these 

numbers are infuriating. We have serviced our customers I assume and have the product they 

need, we are just being discounted against?” F. 783. Mr. Page wanted further information: 

“Are . . . Leon, Rick and our salespeople not keeping our customers competitive and – or do we 

not have the right product? Why are we losing market share? The question is, are we 

overpriced? Do we have the wrong mix of products? We don’t have what people need? But 

I’m upset with our people for not managing their business.” F. 783; see also F. 391 

(Distributors consider price, service and relationship, among other things, when selecting a 

Fittings supplier). 

Complaint Counsel further asserts that each of the Suppliers, including McWane, based 

pricing decisions on its assessment of its market share. The argument that being able to assess 

one’s own market share, and use that information in determining whether to raise or lower 

one’s own price, unlawfully “facilitates” price coordination is without legal support, and is 

unpersuasive. Furthermore, the evidence supports a conclusion that using one’s own market 

share assessment to determine whether to raise or lower one’s own price is rational, 

competitive behavior, and is indicative of normal competition. As Mr. Pais of Sigma 
360

explained: “If the [DIFRA] data point to a significant loss of market share, then Sigma would 

generally use price to get share back. If Sigma wanted to grow volume, Sigma would also use 

price to attract sales.” F. 769; see also F. 759 (Mr. Bhutada of Star stating: “[I]f market share is 

going down, then you know that you’re on the wrong path. If it is stable or going up, then you 

know that you’re on the right path”). For example, the DIFRA aggregated tons-shipped report

in June 2008 helped McWane decide to choose the low end of the 8% to 12% range of 

multiplier increases that Mr. Tatman had been considering, because the DIFRA report 

confirmed his suspicion that McWane was continuing to lose market share, and showed that 

McWane’s market share loss was worse than Mr. Tatman had suspected. F. 777. In addition, 

the evidence shows that Mr. Tatman used the DIFRA tons-shipped data in McWane’s internal 

analysis of its pricing for Fittings, in connection with McWane’s restructuring of its price list

for medium and large diameter Fittings in early 2009. F. 784. Specifically, McWane was able 

to determine that McWane’s market share was strong or growing in some segments, but weak 

or falling in others, and changed its list prices accordingly. F. 784. 

In further support of the claim that the DIFRA tons-shipped data reports constitute an 

anticompetitive “facilitating practice,” Complaint Counsel relies on a letter dated February 9, 

2009 from Mr. Pais of Sigma to Sigma’s lender, Ares Capital, in which Mr. Pais stated his 

opinion that “monthly market size data produced by DIFRA” had the benefit of helping to 

“maintain the pricing discipline, as the market and market share data point to a relatively 

consistent and stable market pattern. It has helped [Sigma] not to allow the sharp market 

decline to be mistaken as a ‘loss of market share’, which mostly causes price reaction.” F. 768. 

The foregoing statements represented Mr. Pais’ “very broad assessment as [Mr. Pais] saw it of 

one of” the intangible benefits of DIFRA that he communicated to Ares Capital in order to 

reassure the lender, which was concerned about recent declines in Sigma’s pricing and volume, 

that DIFRA will provide visibility into market demand and help prevent panic selling based on 

misinformation. F. 768. A “mistaken diagnosis” about the reasons for a loss of market share 

makes it more difficult for Sigma to make the correct decision going forward, including 

decisions as to whether to lower price and/or to seek additional volume from existing 

customers. F. 769. It makes sense that Mr. Pais would want to communicate to Sigma’s lender 

his opinion that DIFRA data may help prevent Sigma from making a “misdiagnosis” of the 
361

competitive environment and pricing mistakes in reliance on such misdiagnosis. Moreover, the

evidence fails to show that Mr. Pais was referring to any ability to coordinate with others on 

price, or to anything other than Sigma’s own independent decision-making as to its own pricing 

conduct. Accordingly, the statements in Mr. Pais’ February 9, 2009 letter do not constitute 

evidence that the DIFRA reports facilitate price coordination.

In summary, the aggregated DIFRA tons-shipped data is far less specific than the 

individualized salary information allegedly exchanged in Todd. In that case, it was alleged that 

the defendant companies periodically compiled surveys that shared, for each company, the 

actual salaries paid in thirty different categories of jobs, or “job families,” classified according 

to the nature of the work. The information exchanged for each “family” was further broken 

down by the job level classification, experience level, and academic background of the 

employee. 275 F.3d at 196. By periodically updating the foregoing data, it was alleged, each 

defendant could determine whether the announced budgets of its competitors had been 

implemented, so that each could consider what adjustments should be made to coordinate 

salary levels. Id. Additional surveys collected further information on starting salaries at the 

companies for recent college graduates, as well as bonuses and other non-standard payments 

above base compensation that were not captured in the defendants’ other surveys. Id. at 197. 

Compare also Cason-Merenda v. Detroit Med. Ctr., 862 F. Supp. 2d 603, 612-15 (E.D. Mich. 

2012) (holding that evidence was sufficient to defeat summary judgment on alleged unlawful 

information exchange, where evidence showed, among other things, detailed salary surveys and 

exchanges of information at trade association meetings regarding salary ranges, planned raises, 

and the timing of annual increases). 

For all the foregoing reasons, the DIFRA aggregated data is insufficiently specific to 

facilitate price coordination, as argued by Complaint Counsel.

iii. Publicly available data

“Public dissemination is a primary way for data exchange to realize its procompetitive 

potential” and can help mitigate anticompetitive effects. Todd, 275 F.3d at 213. It was alleged 

in Todd that the defendants kept their salary surveys confidential, which impeded the ability of 
362

employees to bargain competitively with the defendants. Id. In the instant case, it is not 

alleged that the DIFRA tons-shipped data reports were kept confidential by the DIFRA 

members, nor does the evidence show whether or not the DIFRA tons-shipped data reports 

were kept confidential by the DIFRA members.

iv. Meetings concerning the data

In Todd, the court was troubled by the fact that the defendants “allegedly participated in 

frequent meetings to discuss the salary information, . . . accompanied by assurances that the 

participants would primarily use the exchanged data in setting their [employees’] salaries.” 275 

F.3d at 213. Such frequent meetings, the court explained, tend to “facilitate the policing” of 

conspiracies. Id. In the instant case, in contrast, there is no evidence of any meetings among 

the DIFRA members after the DIFRA tons-shipped reports were instituted, or of any 

discussions among the DIFRA members regarding the DIFRA tons-shipped data. The evidence 

shows that the last DIFRA meeting was a conference call on April 25, 2008, before any data 

was submitted or reported. F. 736-737. The first DIFRA tons-shipped report was distributed 

on June 17, 2008. F. 738. The last DIFRA tons-shipped report was circulated in January 2009. 

F. 739. This dearth of evidence similar to that in Todd further distinguishes this case from the 

alleged information exchange constituting a facilitating practice in Todd.

4. Conclusion

As shown above, the evidence fails to prove that the DIFRA tons-shipped data reporting 

system has the nature and tendency to facilitate price coordination, as argued by Complaint 

Counsel. Complaint Counsel has therefore failed to prove its theory of likely anticompetitive 

effects resulting from an information exchange by competitors. Accordingly, Complaint 

Counsel has failed to meet its burden of proving that the DIFRA tons-shipped data reporting 

system is an agreement in restraint of trade, as alleged in Count Two of the Complaint.34

 34 Because Complaint Counsel has not demonstrated actual anticompetitive effects, or likely anticompetitive 

effects, it is not necessary to assess whether Respondent has proved procompetitive justifications for the DIFRA 

tons-shipped data reporting system. Nevertheless, there is logical and credible evidence of procompetitive effects. 

As noted above, McWane used the DIFRA data to implement lower published prices in relation to its competitors. 

F. 777, 784. The evidence also shows that the DIFRA tons-shipped data identifies the extent to which various 

segments of the market are moving, including over time, which thereby helps each DIFRA member to assess 

overall market trends, and better manage production schedules and inventory. F. 760, 763, 773. 
363

F. Count Three: Alleged Invitation to Collude

Count Three of the Complaint charges that McWane engaged in an unfair method of 

competition in violation of Section 5 of the FTC Act by “inviting Sigma and Star to participate 

in a per se illegal price fixing conspiracy.” CCB at 90; Complaint ¶ 66. Specifically, 

Complaint Counsel argues that McWane’s January 11, 2008 and May 7, 2008 Customer 

Letters, each “unlawfully invited McWane’s primary competitors in the Fittings market to 

participate in a per se illegal price fixing agreement.” CCB at 92. McWane rejects Complaint 

Counsel’s interpretation of the foregoing customer letters and further argues that no court has 

held that an invitation to collude violates Section 5.35

1. Overview of relevant legal authorities

Although the Commission has previously challenged alleged “invitations to collude” as 

unlawful under Section 5, Complaint Counsel cites no litigated case that has found the 

existence of an “invitation to collude” within the purview of Section 5. See CCB at 90-105. 

Thus, the type of communications that will prove an unlawful “invitation to collude” is unclear.

36 

Areeda states that a solicitation to enter into an anticompetitive agreement can justify a 

remedy under Section 5, even if the solicitation does not result in an unlawful agreement under 

Section 1 of the Sherman Act: “Solicitation to a conspiracy is dangerous to competition even if 

it cannot be shown that an “offer” has been “accepted.” Areeda, ¶ 1419d at 141. “Unaccepted 

 35 Contrary to an argument raised by McWane, the fact that customer letters are public documents is not 

dispositive of whether these letters contained an unlawful invitation to collude. The evidence demonstrates that 

customer letters served to communicate to customers and competitors. F. 578.

36 Complaint Counsel cites to the Commission’s opinion denying Respondent’s motion for summary judgment on 

Count Three, which held that there were genuine disputes of fact as to whether the evidence demonstrated an 

“invitation to collude.” See In re McWane, Inc., No. 9351, 2012 FTC LEXIS 155, at *54 (Sept. 14, 2012). The 

Commission’s prehearing ruling has no bearing on the merits of the case as determined in this Initial Decision. 

Complaint Counsel also refers to an FTC statement supporting the consent order in In re U-Haul, Int’l Inc., FTC 

File No. 081 0157, published at 75 Fed. Reg. 35033 (June 21, 2010). FTC statements accompanying a consent 

order do not constitute regulatory law, which is made either by adjudication, 15 U.S.C. § 45(b); 5 U.S.C. § 556, or 

by promulgated regulation, 15 U.S.C. § 57b-3; 5 U.S.C. § 553. Consent decrees are not an adjudication, and 

moreover, “[t]he circumstances surrounding . . . negotiated [consent decrees] are so different that they cannot be 

persuasively cited in a litigation context.” United States v. E. I. du Pont de Nemours & Co., 366 U.S. 316, 331 

n.12 (1961).
364

solicitations can facilitate dangerous tacit coordination in oligopolistic markets, even though 

the solicitor and solicitee do not collectively control the market, and can increase the likelihood 

of actual price-fixing agreements in all markets.” ¶ 1419e at 143. See also Calkins, 

Counterpoint: The Legal Foundation of the Commission’s Use of Section 5 to Challenge 

Invitations to Collude is Secure, ANTITRUST Spring 2000 at 69 (“As a matter simply of the 

English language, intercepting attempted price fixing would seem the quintessential example of 

restraining a practice that otherwise would ripen into a Sherman Act violation, and of banning a 

practice that conflicts with the Sherman Act’s basic policies.”).

According to Areeda, highly ambiguous communications should not be actionable. 

Areeda, ¶ 1419e4 at 147. It has also been noted that the evidence “must be scrutinized closely 

to ensure that the communication is no more than a naked invitation to fix prices or divide 

markets.” Joseph Kattan, Facilitating Practices and Section 5: The Evidence of Life After 

Ethyl, ABA Section of Antitrust Law, Annual Symposium, at 20-21 (1992) (cited at CCB at 

92). The case of Liu v. Amerco, 677 F.3d 489 (1st Cir. 2012), is also instructive. In that case, 

the court upheld a complaint alleging an unsuccessful attempt to fix prices as stating a violation 

of the Massachusetts unfair competition statute, which is substantially similar to Section 5 of 

the FTC Act. Liu was a follow-on action against U-Haul International, which had entered into 

a consent order on a complaint issued by the FTC, and the allegations of the Complaint in Liu

were derived from the FTC’s summary of the complaint and consent order, published in the 

Federal Register. 677 F.3d at 491 (citing Federal Trade Commission, U-Haul Int’l, Inc. and 

AMERCO, 75 Fed. Reg. 35033 (June 21, 2010)). 

According to the FTC’s summary of the U-Haul allegations set forth by the court in Liu, 

U-Haul’s chief executive officer issued an instruction to U-Haul regional managers to contact 

U-Haul’s competitor, Budget, to inform Budget of U-Haul’s recent conditional truck rate 

increase, to encourage Budget to follow, and to advise that if Budget did not follow, U-Haul’s 

rates would be reduced to their prior level. In addition, U-Haul’s CEO instructed local U-Haul 

dealers to communicate with their counterparts at competitors Budget and Penske, to reinforce 

the message that U-Haul had raised its rates and urge that competitors’ rates should be raised to 

match the increased U-Haul rates. Liu, 677 F.3d at 491, citing 75 Fed. Reg. at 35034. The 

complaint further alleged that there were telephone calls from a U-Haul executive to 
365

representatives at three major Budget locations, in which the executive identified himself, 

advised those Budget representatives of U-Haul’s recent rate increases, and encouraged them to 

follow: “[I] told them who I am, I spoke about the [increase to] .40 per mile rates to SE Florida 

and told them I was killing them on rentals to that area and I am setting new rates to the area to 

increase revenue per rental. I encouraged them to monitor my rates and to move their rates 

up.” Id. In addition, the complaint there alleged that when Budget did not follow U-Haul’s 

rate increases, U-Haul held an earnings conference call, which U-Haul knew would be 

monitored by Budget representatives, and stated, among other things: that U-Haul was acting as 

the industry price leader, the company had recently raised its rates, and that its competitors 

should do the same; that Budget’s failure to date to match U-Haul’s higher rates was 

“unfortunate for the entire industry”; that U-Haul will wait a while longer for Budget to 

respond, “otherwise it will drop its rates”; that in order to keep U-Haul from dropping its rates, 

Budget does not have to match U-Haul’s rates precisely, and that a 3 to 5 percent price 

difference is acceptable; that for U-Haul, market share is more important than price; and that UHaul will not permit Budget to gain market share at U-Haul’s expense. Id.

With the foregoing legal authorities as reference points, the customer letters that are 

challenged as invitations to collude in this case are analyzed below. As shown infra, the 

“invitation to collude” alleged in the instant case bears little resemblance to the allegations 

upheld as stating such a claim in Liu.

2. January 11, 2008 Customer Letter

Complaint Counsel asserts that McWane’s January 11, 2008 Customer Letter, which 

notified McWane’s customers of upcoming multiplier changes and McWane’s intent to, in 

effect, stop Project Pricing (see F. 645), proposed an unlawful price fixing agreement to its 

competitors Sigma and Star by proposing a “quid pro quo.” Specifically, Complaint Counsel 

contends that the January 11, 2008 Customer Letter “offered” to Sigma and Star that McWane 

would “support a second price increase later in the year (quid) B but only if pricing had 

stabilized, i.e., Sigma and Star also curtailed Project Pricing (quo).” CCB at 93; see generally

CCB at 93-96. Complaint Counsel argues that the January 11, 2008 Customer Letter not only 

announced McWane’s intentions with regard to Project Pricing, but also “dangled the prospect” 
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that McWane would support another price increase in order to induce Sigma and Star to curtail 

Project Pricing along with McWane. CCB at 95. With respect to any future price increase, the 

January 11, 2008 Customer Letter stated:

If the current inflationary trends continue as forecasted, we anticipate the need 

to announce another multiplier increase within the next six months. However, 

we will only do so as conditions require.

F. 645. 

Complaint Counsel urges the inference that “as conditions require” meant “greater 

pricing stability and transparency in the Fittings market by curtailing project Pricing.” CCFF 

944. However, the phrase “as conditions require” is vague, highly ambiguous, and on its face

does not set forth the alleged “offer” of a second price increase in the future if Sigma and Star 

curtailed Project Pricing. See Areeda, ¶ 1419e4 at 147. To be sure, the letter is hardly a naked 

invitation to fix prices. See Kattan, supra, at 20-21. To support its desired inference, 

Complaint Counsel points to Mr. Tatman’s internal December 25, 2007 PowerPoint 

Presentation, which included a slide titled, “Desired Message to the Market & Competitors,” 

which stated that “[f]or 2008, we will support net price increases but will do so in stepped or 

staged increments. A prerequisite for supporting the next increment of price is reasonable 

stability and transparency at the prior level.” F. 638. Complaint Counsel also cites language in 

draft customer letters prepared in connection with the December 25, 2007 PowerPoint 

Presentation. CCB at 97-98, citing CX 0627 at 006-007; see F. 626.

McWane’s internal plans or goals as to when, why, or by how much, it might raise 

prices in the future are not probative or persuasive evidence that the January 11, 2008 Customer 

Letter, in fact, communicated an “offer” by McWane, to Sigma and Star, to raise prices in the 

future if Sigma and Star reduced Project Pricing, as contended by Complaint Counsel. 

Complaint Counsel’s argument ignores the fact that the evidence in this case fails to 

demonstrate that Mr. Tatman’s December 25, 2007 PowerPoint Presentation was anything 

other than an internal discussion document, which was not shared with Sigma or Star. See

Section III.D.2.b.iii.(c), supra. In essence, Complaint Counsel would have Respondent held 

liable for communicating an “invitation to collude” based upon what McWane may have 
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internally considered or discussed communicating. This is insufficient. If nothing else, the 

cases and authorities make clear that liability must be based upon the actual communication to 

a competitor, and not upon a communication that was only considered or discussed internally. 

Further, the cases and authorities do not support a conclusion that merely “dangling a prospect” 

of a price increase is the equivalent of an “invitation” to fix prices, as Complaint Counsel 

argues. E.g., Liu, 677 F.3d at 491 (allegations that defendant told competitor, inter alia, to 

increase prices to match defendant, and threatened a price decrease if the competitor did not do 

so); compare also In re Valassis Communs., 2006 FTC LEXIS 25, at *5 (2006) (complaint 

alleging communication to competitor that respondent “will quote all [competitor’s] first right 

of refusal customers at the floor price . . . [and] our net price after ancillary price discounts,

rebates, et cetera, will not go below $ 6 [per thousand] for a full page and $ 3.90 [per thousand] 

for a half page”); In re Precision Moulding Co., 1996 FTC LEXIS 386, at *3 (1996) (complaint 

alleging meeting with officer of competitor, in which respondent’s Chief Executive Officer 

stated that competitor’s price was “ridiculously low” and that competitor did not need to “give 

the product away,” and threatened a price war if competitor did not match respondent’s higher 

prices). 

It should also be noted, as discussed in Section III.D.2.b.iii.(c), supra, that Complaint 

Counsel points to no evidence supporting a finding that Sigma and Star “understood” the 

January 11, 2008 letter as an offer by McWane to raise prices in exchange for Sigma and Star 

curtailing Project Pricing. The evidence shows, at most, that Sigma and Star interpreted 

McWane’s letter to be communicating that McWane was raising multipliers from its theneffective multipliers (as opposed to published multipliers) and further announcing to its 

customers that McWane intended to, in effect, discontinue Project Pricing in the future. F. 663-

664, 682; but see F. 683 (Mr. McCutcheon of Star did not believe “for one second” that 

McWane would, in fact, stop Project Pricing, despite what was said in McWane’s January 11, 

2008 Customer Letter). The greater weight of the evidence does not support an inference that 

the letter “offered” to raise prices in the future in exchange for Sigma and Star curtailing their 

Project Pricing.
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3. May 7, 2008 Customer Letter

Complaint Counsel argues that McWane’s May 7, 2008 Customer Letter (F. 809) also 

invited Sigma and Star to fix prices. In support of this argument, Complaint Counsel asserts 

that this customer letter, in which McWane stated that it planned to raise multipliers between 6 

and 16 percent, but would not make its final determination until the end of May, was an “offer” 

by McWane to its competitors that McWane would raise prices in return for the competitors’ 

submitting their tons-shipped data to DIFRA’s accountants. CCB at 100-101. Complaint 

Counsel relies on the following language from the May 7, 2007 Customer Letter:

Before announcing any price actions, we carefully analyze all factors including: 

domestic and global inflation, market and competitive conditions within each 

region, as well as performance against our own internal metrics. We anticipate 

being able to complete our analysis by the end of May. At that point, we will 

send out letters to each specific region detailing changes, if any, to our current 

pricing policy.

F. 809. As in the case of McWane’s January 11, 2008 Customer Letter, the relevant language 

of the May 7, 2008 Customer Letter, upon which Complaint Counsel relies, is vague, highly

ambiguous, and on its face does not set forth the alleged “offer” of a price increase conditioned 

upon Sigma and Star submitting their tons-shipped data. See Areeda, ¶ 1419e4 at 147. The 

language is also far from “a naked invitation” to fix prices. See Kattan, supra, at 20-21.

Acknowledging that the alleged offer was not expressly made in the May 7, 2008 

Customer Letter, Complaint Counsel asserts that the offer was made “implicitly” in the abovequoted language. CCB at 101. Specifically, Complaint Counsel argues that McWane wanted 

to wait until after receiving and reviewing the DIFRA tons-shipped data before finalizing its 

decision on a price increase; the “factors” language, above, was not meaningful to customers, 

but was meaningful to Sigma and Star, because only they knew that, pursuant to the DIFRA 

agreement, tons-shipped data reports would not be issued before “the end of May”; Star 

understood the “offer” because Star quoted the “factors” language in an email regarding Star’s 

submittal of the DIFRA tons-shipped data; and McWane announced a price increase soon after 

receiving and reviewing the June 17, 2008 DIFRA tons-shipped data report. CCB at 102-105.
369

Complaint Counsel’s arguments that McWane’s May 7, 2008 Customer Letter was an 

illegal “offer” by McWane to its competitors to raise prices if the competitors submitted their 

tons-shipped data to DIFRA’s accountants, are materially identical to its arguments that 

McWane, Sigma, and Star reached an agreement to exchange a price increase by McWane for 

Sigma and Star submitting DIFRA tons-shipped data. See CCB at 148-157. Those arguments, 

and the evidence upon which those arguments were based, were addressed in detail and 

rejected in Section III.D.3., supra. For all the reasons set forth in that Section, the evidence 

fails to show that McWane’s May 7, 2008 Customer Letter was an “offer” by McWane to its 

competitors to raise prices in return for the competitors’ submitting their tons-shipped data to 

DIFRA’s accountants for inclusion in the DIFRA tons-shipped data report. Thus, the evidence 

fails to prove that McWane’s May 7, 2008 Customer Letter constituted an “invitation to 

collude” in violation of Section 5 of the FTC Act. 

4. Conclusion

For all the foregoing reasons, Complaint Counsel has failed to prove any “invitation to 

collude” by McWane and therefore has failed to meet its burden of proof as to Count Three of 

the Complaint. 

Counts One, Two, and Three, relating to McWane’s alleged unlawful conduct in the 

Fitting market, are dismissed. The Initial Decision next turns to McWane’s alleged unlawful 

conduct in the Domestic Fittings market. Counts Six and Seven, pertaining to McWane’s 

September 22, 2009 Full Support Program, are analyzed first. Counts Four and Five, pertaining 

to McWane’s September 17, 2009 MDA with Sigma, are analyzed second. 

G. Counts Six and Seven: Alleged Monopolization and Attempted 

Monopolization of the Domestic Fittings Market

1. Overview

Counts Six and Seven of the Complaint allege that McWane monopolized or attempted 

to monopolize the Domestic Fittings market through exclusionary acts and practices. 

Complaint ¶¶ 69-70. In particular, the Complaint alleges that McWane threatened to withhold 
370

rebates, delay deliveries, and refuse to deal with Distributors who purchased Domestic Fittings 

from Star. Complaint ¶ 57. 

Complaint Counsel asserts that, in response to ARRA’s allocation of $6 billion in funds 

for waterworks projects built with products made in the United States, Star announced at a June 

2009 American Water Works Association (“AWWA”) show that it would begin selling 

Domestic Fittings by the fall of 2009. CCB at 206. According to Complaint Counsel,

McWane, in response, implemented an exclusive dealing policy (discussed below) with the 

specific intent of deterring Distributors from dealing with Star and other rivals in the Domestic 

Fittings market. CCB at 206. 

Complaint Counsel charges that McWane has monopoly power in the Domestic Fittings 

market and that, by denying its competitors a sufficient network of Distributors to whom to sell 

their Domestic Fittings, McWane effectively prevented its rivals from reaching an efficient 

scale and, consequently, from constraining McWane’s monopoly prices. CCB at 206-07. In 

addition, Complaint Counsel asserts that no procompetitive efficiencies outweigh the harm 

caused by McWane’s challenged exclusive dealing policy. CCB at 207.

Respondent asserts that even if there is a separate market for Domestic Fittings, 

McWane did not have monopoly power in that market, as evidenced by McWane’s inability to 

control prices or exclude competition. RB at 89. Respondent further asserts that Star rapidly 

and effectively entered the Domestic Fittings market and thus McWane did not exclude Star 

from that market. RB at 90. Finally, McWane asserts that the challenged policy was simply a 

rebate policy, was not a contract, did not require any customer to buy Domestic Fittings from 

McWane, is presumptively lawful, and had procompetitive benefits. RB at 92-101, 107-108.

Monopolization requires proof of: “(1) the possession of monopoly power in the 

relevant market and (2) the willful acquisition or maintenance of that power as distinguished 

from growth or development as a consequence of a superior product, business acumen, or 

historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). Attempted 

monopolization requires proof: “(1) that the defendant has engaged in predatory or 

anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous 
371

probability of achieving [or obtaining] monopoly power.” Spectrum Sports, 506 U.S. at 456. 

These elements are analyzed below. 

2. Monopoly power in the relevant market 

a. Relevant market

Establishing the relevant market is the first step in assessing whether a respondent 

possesses monopoly power. Spectrum Sports, 506 U.S. at 456. As analyzed in Section III.C.3., 

supra, the relevant geographic market is the United States and, in addition to the relevant 

Fittings market, consisting of ductile iron pipe fittings of 24” and smaller in diameter, there is a 

separate market for Domestic Fittings, consisting of ductile iron pipe fittings of 24” and smaller 

in diameter that are made in the United States and sold for use on jobs with domestic-only 

specifications. Supra Section III.C.2.

b. Monopoly power or the dangerous probability of achieving 

monopoly power

Monopoly power is defined as “the power to control prices or exclude competition.” du 

Pont, 351 U.S. at 391. Monopoly power may be inferred or proven indirectly through proof of 

high market share in a market protected by barriers to entry. Microsoft, 253 F.3d at 51; 

Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 307 (3d Cir. 2007). Monopoly power may 

also be proven by direct evidence of a firm’s ability to control prices or exclude competitors. 

Microsoft, 253 F.3d at 51; Broadcom, 501 F.3d at 307. 

i. Market share in a market with high barriers

Complaint Counsel asserts that monopoly power can be inferred from McWane’s high 

Domestic Fittings market share and the existence of high entry barriers in that market. CCB at 

207-208. Respondent asserts that it is inappropriate to infer monopoly power from McWane’s 

share of the Domestic Fittings market where that share was thrust on it by historic accident and 

further asserts that barriers to entry into the Domestic Fittings market are not high. RB at 88-

89, RRB 60.
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(a) Market share

Generally, to support a finding of monopoly power, a market share of at least 70% to 

80% is sufficient. duPont, 351 U.S. at 379, 391 (finding 75% of a relevant market to constitute 

monopoly power); Grinnell Corp., 384 U.S. at 567, 571 (inferring monopoly power from 

“predominant share” (87%) of the market). Market share levels sufficient to support a 

monopolization claim are also sufficient to support an attempted monopolization claim.

McGahee v. Northern Propane Gas Co., 858 F.2d 1487, 1505 (11th Cir. 1988) (“Determining 

whether a defendant possesses sufficient market power to be dangerously close to achieving a 

monopoly requires analysis and proof of the same character, but not the same quantum, as 

would be necessary to establish monopoly power for an actual monopolization claim.”).

The market share statistics for the Domestic Fittings market must be viewed in the 

context of the overall Fittings market. The Fittings industry has changed dramatically over the 

last 30 years. See F. 462-476. The U.S. International Trade Commission, in December 2003, 

determined that Fittings from China were “being imported into the United States in such 

increased quantities or under such conditions as to cause market disruption” to domestic 

Fittings producers. F. 470. See also F. 471. As Mr. Tatman testified, “domestic-only specs 

have done nothing but erode over time.” F. 1027. Distributors confirmed this. For example, 

less than approximately 5% of municipalities in Illinois Meter’s service area have domesticonly specifications today. F. 1028. In the view of Illinois Meter, in the absence of a strong 

union and municipal push for domestic-only specifications, fewer municipalities require 

domestic-only Fittings. F. 1028. 

Prior to 2007, there were several other domestic manufacturers of Fittings in addition to 

McWane, including U.S. Pipe, Griffin, and ACIPCO. F. 462. These other domestic 

manufacturers either dramatically reduced or exited Domestic Fittings production in the face of 

cheap imports. F. 472. By late 2007, McWane was “the last guy standing producing fittings 

domestically” in the under 30-inch diameter segment of the Fittings market. F. 476. McWane 

admits that it was the only manufacturer of Domestic Fittings since at least 2006 until Star 

entered the Domestic Fittings market in late 2009. F. 1040. 

While End User preferences and legal requirements that waterworks projects use 
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Domestic Fittings in domestic-only specifications existed before the passage of ARRA (F. 519-

523), the passage of ARRA in 2009, with its Buy American provisions, temporarily increased 

the size of the Domestic Fittings market. F. 524, 526, 527, 1029-1030. During the period that 

ARRA funding was available, the total number of waterworks projects that were built, repaired, 

or otherwise commissioned in the United States increased and Distributors’ sales of Domestic 

Fittings increased. F. 1033-1035. The majority of the impact of ARRA and its resulting 

increase in the number of Domestic Fittings sales was felt in 2010. F. 1035. While ARRAfunded jobs were primarily serviced during the 2010 calendar year, some projects continued 

into 2011. F. 1036. 

Prior to the passage of ARRA in 2009, domestic-only Fittings projects comprised 

approximately 15% to 20% of the overall Fittings market. F. 1029. Domestic-only Fittings 

projects grew to 28% of the overall Fittings market in 2010. F. 1030. Following the end of 

ARRA funding for waterworks projects in 2011, the demand for Domestic Fittings reverted 

back to where it had been before “the ARRA period,”

37 approximately 15% to 20% of the 

overall Fittings market. F. 1031. 

Fittings suppliers agreed that ARRA had only a short-term impact on Domestic Fittings

sales. See F. 1037 (Electrosteel (by the third quarter of 2010, bidding on ARRA jobs had 

ceased); Backman Foundry (ARRA funded only “a finite amount of jobs.”)). Fittings 

Distributors also agreed that ARRA had only a short-term impact on Domestic Fittings sales. 

F. 1038. For example, HD Supply’s Mr. Webb testified that ARRA’s impact on the demand 

for Domestic Fittings was “mild, at best” and “very minimal and mostly played out in 2009 and 

2010”; and Illinois Meter’s Mr. Sheley testified that ARRA “had a small effect” on sales of 

Fittings. F. 1038; see also F. 1038 (“[I]n reality, I don’t believe that [ARRA has] impacted our 

business at all.”). Given ARRA’s limited effect, former Domestic Fittings manufacturers and 

specialty domestic Fittings manufacturers did not believe ARRA made it worthwhile for them 

to expand or return to production of a full line of Domestic Fittings. F. 1039. For example, 

Mr. Backman of Backman Foundry never considered expanding production as a result of 

 37 According to the EPA publication titled, “Implementation of the American Recovery and Reinvestment Act of 

2009,” all ARRA funded projects were to be under contract by February of 2010. As a result, Dr. Normann used 

March 2009 to February 2010 as “the ARRA period.” F. 1032. Industry participants use the term “the ARRA 

period” to refer to sales made through 2011. F. 1035-1036.
374 

ARRA, “when anybody and their dog can see that this market is going to end at some point.” 

F. 1039. 

Star, however, in reaction to ARRA’s passage in February 2009, began to develop plans 

to expand its product lines to include Fittings that satisfied the Buy American provisions of 

ARRA. F. 1094-1097. Star publicly announced at a June 2009 AWWA industry conference 

that it would offer Domestic Fittings starting in September 2009. F. 1095. To achieve this 

objective, Star contracted with multiple domestic foundries to produce castings for Domestic 

Fittings and expanded its Houston facility to perform the finishing process (drilling holes, 

adding lining, and painting the fittings). F. 1104-1106. Star decided that it would be a full line 

supplier and acquired patterns from China in the summer of 2009 that Star needed for a 

complete line. F. 1119-1121. By September 2009, Star recorded its first sales of domesticallymanufactured Fittings and began shipping Domestic Fittings to Distributors in late 2009. 

F. 1127-1128. Star had { } million dollars in Domestic Fittings sales in both 2010 and 2011, 

and, at the time of trial, expected to sell more Domestic Fittings in 2012. F. 1143. 

After Star entered the Domestic Fittings market, McWane’s share of the Domestic 

Fittings market in 2010 continued to be over 95%. In 2011, McWane’s share of the Domestic 

Fittings market continued to be over 90%, while Star’s share of the Domestic Fittings market 

rose from 0% in 2009 to almost 10% in 2011. F. 1042-1043. 

 “A court will draw an inference of monopoly power [based on market share] only after 

full consideration of the relationship between market share and other relevant market 

characteristics.” Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 98 (2d Cir. 1998). “These 

characteristics include the ‘strength of the competition, the probable development of the 

industry, the barriers to entry, the nature of the anticompetitive conduct and the elasticity of 

consumer demand.’” Id. (citation omitted). In Metro Mobile CTS, Inc. v. NewVector 

Communications, Inc., 892 F.2d 62, 63 (9th Cir. 1989), relied upon by Respondent (RB at 88), 

the court affirmed the district court’s refusal to infer monopoly power from defendant’s 100% 

share of the market where defendant, as successor-in-interest to the traditional wireline carrier 

in the Phoenix area, was permitted to enter the market as the exclusive supplier of wholesale 

service while the FCC solicited bids for the non-wireline carrier license. The court explained:
375

Blind reliance upon market share, divorced from commercial reality, [can] give 

a misleading picture of a firm’s actual ability to control prices or exclude 

competition. The commercial reality in this case is that the cellular telephone 

market in Phoenix is heavily regulated by the Federal Communications 

Commission (FCC) and the Arizona Corporation Commission (ACC). Reliance 

on statistical market share in cases involving regulated industries is at best a 

tricky enterprise and is downright folly where, as here, the predominant market 

share is the result of regulation. In such cases, the court should focus directly on 

the regulated firm’s ability to control prices or exclude competition. 

Id. Unlike the defendant in Metro Mobile, McWane did not gain its Domestic Fittings market 

share as a result of operating in a heavily regulated industry; instead, its predominant market 

share is the result of all other domestic manufacturers having exited the market in the wake of 

cheap imports. Then, there was suddenly increased demand for Domestic Fittings as a result of 

the Buy American provisions of ARRA. Nevertheless, under these circumstances, it is 

inappropriate to infer monopoly power based solely on McWane’s market share, as further 

explained below.

Monopoly power may not be inferred from a high market share in a market with low 

entry barriers or other evidence of a defendant’s inability to control prices or exclude 

competitors. United States v. Syufy Enterprises, 903 F.2d 659, 664 & n.6 (9th Cir. 1990); see 

also Eastern Food Servs., Inc. v. Pontifical Catholic Univ. Servs. Ass’n, 357 F.3d 1, 6 (1st Cir. 

2004) (“A defendant’s high share is only a presumptive basis for inferring market power (entry 

barriers to the market may be very low”)). The Initial Decision therefore turns next to the issue 

of whether there are low entry barriers and then evaluates whether there is other evidence of 

Respondent’s inability to control prices or exclude competitors. 

(b) Barriers to entry and expansion

“Barriers to entry are market characteristics which make it difficult or time-consuming 

for new firms to enter a market.” Colorado Interstate Gas Co. v. Natural Gas Pipeline Co.,

885 F.2d 683, 696 n.21 (10th Cir. 1989). “Entry barriers are ‘additional long-run costs that 

were not incurred by incumbent firms but must be incurred by new entrants,’ or ‘factors in the 

market that deter entry while permitting incumbent firms to earn monopoly returns.’” Chicago 

Bridge & Iron Co. v. FTC, 534 F.3d 410, 428 & n.8 (5th Cir. 2008) (citing Los Angeles Land 
376

Co. v. Brunswick Corp., 6 F.3d 1422, 1427-28 (9th Cir. 1993)). Examples of barriers to entry 

include the construction of large manufacturing plants, regulatory requirements, high capital 

costs, or technological obstacles. Colorado Interstate Gas Co., 885 F.2d at 696 n.21; 

Broadcom, 501 F.3d at 307.

In addition, a network of exclusive contracts or distribution arrangements designed to 

lock out potential competitors can be viewed as a barrier to entry. Syufy Enterprises, 903 F.2d 

at 667. See also United States v. Dentsply Int’l, Inc., 399 F.3d 181, 194 (3d Cir. 2005)

(“Entrants into the marketplace must confront Dentsply’s power over the dealers.”). However, 

successful, actual expansion by an existing competitor can preclude a finding that exclusive 

dealing is an entry barrier of significance. Omega Envtl. v. Gilbarco, Inc., 127 F.3d 1157, 1164 

(9th Cir. 1997). These considerations are addressed in the following section, on Respondent’s 

ability to exclude competitors. Infra Section III.G.2.b.(ii)(b).

Barriers to entry into the Domestic Fittings market for a de novo entrant include a 

significant capital investment. F. 1044. The evidence demonstrates that a new entrant must 

build its own foundry or develop a supply chain of foundries that can produce its Fittings and 

develop or purchase the hundreds of patterns or moldings necessary for making a full line of 

Fittings covering thousands of items. F. 1044, 1047. A new entrant would then have to have 

its products tested and certified to conform to AWWA standards and get on “approved” lists for 

engineers and municipalities. F. 1046. An entrant must also develop expertise in design 

engineering, and develop a marketing force and relationships with Distributors that will carry 

its products. F. 1045, 1048. All of these factors make entry into the market for the 

manufacturing of Fittings expensive, difficult, and time consuming. See F. 1044-1048; see also

F. 1049 (a new entrant would need three to five years to enter the market). Accordingly, there 

are high barriers to entry into the Fittings market.

There are, however, fewer barriers to entry for an existing supplier of imported Fittings 

that wishes to enter the Domestic Fittings market. As exemplified by Star’s entry into the 

Domestic Fittings market, a supplier of imported Fittings would have the necessary expertise 

from its import business to operate its own fittings foundry and ensure the quality of its 

products. F. 1051. In addition, a supplier of imported Fittings would have well-established 
377

relationships with major Distributors and could leverage its existing sales team, regional 

distribution centers, and back office support to distribute its products. F. 1052-1055. 

As discussed below, Star was able to and did enter the Domestic Fittings market. No 

other supplier of imported Fittings, with the exception of Sigma and SIP, and no pipe supplier

or domestic foundry, however, seriously considered entering the market for manufacturing and 

selling Domestic Fittings. F. 1056-1071. Indeed, each realized that to enter into the market for 

manufacturing Domestic Fittings would require an extremely expensive economic investment, 

including major equipment additions, such as molding machines, equipment for producing 

cored or hollow castings, and new furnaces. F. 1059, 1061-1064, 1067-1068. The factors that 

precluded SIP and Sigma, each suppliers of imported Fittings, from entering the Domestic 

Fittings market are further discussed infra Section III.G.3.a.(v-vi).38

“The fact that entry has occurred[,]” in this case, by Star, “does not necessarily preclude 

the existence of ‘significant’ entry barriers.” Rebel Oil, 51 F.3d at 1440. “If the output or 

capacity of the new entrant is insufficient to take significant business away from the predator, 

they are unlikely to represent a challenge to the predator’s market power.” Id. (citing Oahu 

Gas Serv., Inc. v. Pacific Resources, Inc., 838 F.2d 360, 367 (9th Cir. 1988); Department of 

Justice Merger Guidelines Par. 3.0 (1992) (entry must be “timely, likely, and sufficient in 

magnitude, character and scope to deter or counteract the anticompetitive effects of concern”)). 

As discussed below, Star’s entry is inadequate to take significant business away from 

Respondent and therefore does not represent a challenge to Respondent’s market power.

Monopoly power has been proven indirectly through proof of a high market share in a 

market protected by high barriers to entry. The ultimate focus, however, is not barriers to 

entry, but whether Respondent could exclude rivals. Oahu Gas, 838 F.2d at 367. Thus, “other 

evidence” (Syufy Enterprises, 903 F.2d at 664) of whether Respondent was able to control

prices or exclude competitors is next addressed.

 38 As explained infra Section III.H.1., Sigma entered into a Master Distribution Agreement with McWane on 

September 17, 2009, through which Sigma resold McWane’s Domestic Fittings (“MDA”).
378

ii. Ability to control prices or exclude competitors

Complaint Counsel asserts that direct evidence of McWane’s ability to control prices 

and to exclude Star confirms McWane’s power in the Domestic Fittings market. CCB at 209. 

Respondent asserts that even if ARRA created a temporary, separate domestic market, 

McWane’s inability to control prices or exclude competition over time precludes a finding of 

monopoly power in that market. RB at 89.

(a) Ability to control prices

Monopoly power is “the ability ‘(1) to price substantially above the competitive level 

and (2) to persist in doing so for a significant period without erosion by new entry or 

expansion.’” AD/SAT v. Associated Press, 181 F.3d 216, 227 (2d Cir. 1999) (citation omitted). 

If a defendant with a large market share is unable to control prices or exclude competitors, then 

it is not a monopolist. Tops Mkts., 142 F.3d at 99.

In support of its position that McWane has the ability to control prices, Complaint 

Counsel states that when McWane sells Domestic Fittings into domestic-only specifications, it 

charges prices that are significantly higher than prices for identical Fittings sold into open 

specification jobs. CCB at 209-210. The evidence at trial indeed shows that McWane’s 

Domestic Fittings sold into domestic-only specifications are generally sold at much higher 

prices than non-domestic Fittings. F. 1075. See also F. 1073. For example, McWane’s 

February 2008 price multipliers for domestically manufactured fittings sold into domestic-only 

specifications were substantially higher than its February 2008 “blended” multipliers (for a mix 

of Fittings sold into open specification projects). F. 1076. In McWane’s February 2008 price 

multipliers maps, whereas a given non-domestic Fitting would sell in Texas for $280, the 

corresponding Domestic Fitting would sell for $440, an approximately 57% higher price. 

F. 1076. However, McWane’s costs to produce Domestic Fittings were higher than its costs to 

produce imported Fittings. F. 1077-1078.

Complaint Counsel also points to evidence that, in 2008, McWane did not typically 

offer Project Pricing for Domestic Fittings because the less competitive Domestic Fittings

market did not require it. F. 1072 (McWane’s Pricing Coordinator’s email refusing a sales 
379 

person’s request for Project Pricing for Domestic Fittings because “We are the only one who 

makes the full line of 24” and down. No need to drop the price unless Star is an issue.”). See 

also F. 1074. 

Complaint Counsel next points to evidence that, since 2009, the first year for which 

McWane’s blue books report gross profits for Fittings sold into domestic-only projects, 

McWane has sold Domestic Fittings at prices that earn it significantly higher gross profits than 

it has earned in the same time period on the sale of non-domestic Fittings. CCB at 210. For 

year-end 2009, McWane reported gross profits for Domestic Fittings of { }% and reported 

gross profits for non-domestic Fittings of { }%. F. 1091. For year-end 2010, McWane 

reported gross profits for Domestic Fittings of { }% and reported gross profits for nondomestic Fittings of { }%. F. 1091. These margins are approximately { }% 

greater on the sale of its Domestic Fittings (sold into domestic-only specifications) than for 

comparable import Fittings. F. 1091. The significantly higher gross profits that McWane earns 

from Domestic Fittings, as compared to those it earns from non-domestic Fittings, bolsters 

Complaint Counsel’s argument that McWane has monopoly power in the Domestic Fittings 

market.

Lastly, Complaint Counsel points to evidence that on December 21, 2009, McWane 

sent a customer letter announcing multiplier increases for Domestic Fittings, effective January 

22, 2010. CCB at 210; F. 1083. Pursuant to the provisions of McWane’s Master Distribution 

Agreement with Sigma, entered into on September 17, 2009 (“MDA”), addressed in more 

detail infra Section III.H.1., when McWane announced these multiplier increases, McWane 

instructed Sigma that, per the MDA, McWane’s price increase announcement would impact 

Sigma’s orders. F. 1555. Sigma, as a distributor of McWane’s Domestic Fittings, enacted the 

same price increase as McWane did for Domestic Fittings. F. 1557. It should be noted, 

however, that when McWane issued the December 21, 2009 price increase for Domestic 

Fittings, it also issued a price increase for non-domestic Fittings, and, that McWane’s 

manufacturing costs for producing Domestic Fittings were also increasing at that time. 

F. 1084-1085. Nevertheless, McWane’s ability to increase prices and direct Sigma to do the 

same provides additional evidence for finding that McWane has monopoly power. 
380

Respondent posits that McWane never attempted to raise prices and that not a single 

Distributor or End User complained about prices of Domestic Fittings at trial. RRB at 60. The 

lack of customer complaints on prices for Domestic Fittings may be because the Domestic

Fittings market is such a small market (see F. 1030) and because Fittings usually comprise less 

than 5% of the total cost of a typical waterworks project. F. 326. Moreover, McWane did in 

fact raise prices on Domestic Fittings when it sent out customer letters on December 21, 2009, 

announcing multiplier increases for Domestic Fittings. F. 1083. Although Distributors may 

not have complained about prices of Domestic Fittings at trial, they did complain about 

McWane’s Full Support Program, announced September 22, 2009, which is discussed below.

Respondent’s expert, Dr. Normann, testified that McWane’s Domestic Fittings prices 

were essentially flat, even during the ARRA period. Normann, Tr. 4894-4895. In Figure 17 of 

his expert report, Dr. Normann applied a price series to the bucket of Domestic Fittings for his 

fixed basket of 24 Fittings (see F. 939) to generate an index of weighted average prices for 

Domestic Fittings. Figure 17 of Dr. Normann’s expert report showed that between January 

2008 and November 2011, McWane’s domestic prices increased about 15%, and that nearly 

half of that (a six or seven percent price increase) occurred during what Dr. Normann called the 

ARRA period. Normann, Tr. 5525-5529. Dr. Normann explained, however, that prices were 

largely unchanged for roughly the first half of the ARRA period and then rose slightly along 

with the upward trend in the cost index as primary input costs were increasing. RX 712A 

(Normann Rep. at 47); Normann, Tr. 5524-5530. 

Complaint Counsel challenges Dr. Normann’s opinion as unreliable on the basis that it 

is methodologically flawed and points out that, even using his data, Dr. Normann’s results 

show that McWane’s prices for Domestic Fittings increased. CCRRFF 600. In addition, 

Complaint Counsel contends that even if Dr. Normann reliably established that Domestic 

Fittings prices were flat during the ARRA period, Figure 17 does not address whether McWane 

had pricing power over Domestic Fittings sales independent of ARRA, or whether ARRA 

increased the size of the preexisting Domestic Fittings market. CCRRFF 600 (citing Normann, 

Tr. 5524-5525, 5538). Regardless of the economic expert testimony that was offered on this 

point, the record is replete with instances of Respondent’s exercise of monopoly power. 
381

Respondent also contends that McWane did not have the ability to charge monopoly 

prices for its Domestic Fittings because it knew that the impact of ARRA was limited and 

McWane did not want to abuse its position in the Domestic Fittings market for fear of losing 

market share in the Fittings market. Mr. Tatman testified, in reference to an internal McWane 

email dated June 5, 2009: “It has never been our intent to ‘over charge’ because of the [Buy 

American] provision [of ARRA],” and that McWane did not want to overcharge for Domestic 

Fittings in the short term, at the expense of harming its position in the overall Fittings market in 

the long term. F. 1086. Irrespective of whether McWane used its dominant position in 

Domestic Fittings market to overcharge, McWane did use its dominant position to exclude Star 

from the Domestic Fittings market, as discussed below. 

The greater weight of the evidence establishes that even prior to the ARRA period, 

McWane had increased Domestic Fittings prices to levels substantially higher than nondomestic Fittings prices (F. 1075-1076), that McWane recognized that it did not have to offer 

Project Pricing on Domestic Fittings to win bids (F. 1072-1074), that McWane was earning 

substantially higher gross profits from Domestic Fittings than it earned from non-domestic 

Fittings (F. 1091), and that McWane announced multiplier increases for Domestic Fittings and 

required Sigma, per the MDA, to do the same (F. 1555, 1557). Monopoly power is “the power 

to control prices or exclude competition.” du Pont, 351 U.S. at 391. Thus, Respondent had the 

ability to control prices, as well as the ability to exclude competitors, as addressed below.

(b) Ability to exclude competitors

Complaint Counsel charges that McWane’s ability to exclude Star through its Full

Support Program, discussed in detail infra Section III.G.3.a., is direct evidence of McWane’s 

monopoly power. CCB at 210. Respondent asserts that Star successfully expanded into the 

Domestic Fittings market, which disproves the allegation that McWane possessed monopoly 

power. RB at 90-91.

In reaction to ARRA’s passage in February 2009, Star determined it would expand into 

the Domestic Fittings market. F. 1094. In June 2009, Star publicly announced at an AWWA

industry conference and sent a letter announcing to its customers that it would offer Domestic 

Fittings starting in September 2009. F. 1095-1096. 
382 

Star considered three possible courses of action in order to manufacture Fittings in the 

United States: (1) building a foundry from “ground zero”; (2) buying an existing foundry in the 

United States; or (3) contracting with existing domestic foundries to produce the desired 

Fittings. F. 1097. In order to get its product to the marketplace in the shortest amount of time, 

Star elected to pursue contract manufacturing. F. 1098. Because no single foundry could make 

the entire size range of Domestic Fittings, Star utilized multiple foundries in different locations 

to produce castings. F. 1104, 1106. Star then shipped the castings to its Houston facility for 

the finishing process. F. 1106. 

Star decided that it would be a full line supplier and, in the summer of 2009, Star 

acquired the patterns from China that Star needed for a complete line. F. 1119. By June 2010, 

Star had a Domestic Fittings pattern stock comparable to McWane’s Domestic Fittings items. 

F. 1125. 

By September 2009, Star recorded its first sales of domestically manufactured Fittings 

to customers. F. 1127. Since its entry in 2009, Star has sold Domestic Fittings every month 

and every year. F. 1134. Star sold Domestic Fittings to many Distributors during the last 

quarter of 2009, 2010 and 2011, including HD Supply, Ferguson, Hajoca, WinWater, and Dana 

Kepner. F. 1136. Star had { } million dollars in Domestic Fittings sales in both 2010 and 

2011, and expected to sell more Domestic Fittings in 2012. F. 1143. As stated above, since its 

determination in 2009 to enter the Domestic Fittings market, Star’s market share went from 

zero to almost 10% in 2011. F. 1042-1043. 

Clearly, Star entered the Domestic Fittings market. However, Star’s entry was 

insufficient to constrain McWane’s monopoly power. As discussed below, McWane’s Full 

Support Program impeded Star’s sales, which made it unprofitable for Star to purchase its own 

domestic foundry. Because it had to produce Domestic Fittings through independent foundries 

rather than its own dedicated foundry, Star’s production costs were { } percent higher 

than they would have been if Star owned its own foundry. F. 1419. Although Star was an 

aggressive discounter in the overall Fittings market, McWane did not need to respond to price 

competition from Star in the Domestic Fittings market because Star had a higher cost structure 
383

and correspondingly higher prices in that market. See F. 1419-1420. Thus, Star’s entry was 

not of sufficient scale to constrain Respondent’s monopoly power in the Domestic Fittings 

market, where McWane has over 90% market share and there are high barriers to entry.

Furthermore, as discussed below, Star’s access to Distributors was impeded by 

McWane’s Full Support Program, which further limited Star’s ability to constrain McWane’s 

monopoly power. A similar course of conduct was addressed in United States v. Dentsply 

International, Inc. There, in a market where the defendant held 75 to 80 percent of the market 

selling artificial teeth for use in dentures through a network of dealers, the evidence showed 

that the defendant operated under a policy that discouraged its dealers from adding its 

competitors’ teeth to their lines of products. 399 F.3d at 185. The Court held that because of 

Dentsply’s blocking of access to the key dealers, its competitors were excluded from the 

market, which thus demonstrated Dentsply’s monopoly power. Id. at 189. As analyzed below, 

McWane’s Full Support Program impeded Star’s access to Distributors, which demonstrates 

McWane’s ability to exclude competitors and thus demonstrates McWane’s monopoly power.

Complaint Counsel has met its burden of proving that Respondent has monopoly power 

through both indirect evidence – high market share in a market with high barriers to entry – and 

direct evidence – Respondent’s ability to control prices or exclude competitors.

3. Willful maintenance of monopoly power

Having determined that Respondent possesses monopoly power in the Domestic 

Fittings market, the next step in a monopolization charge requires proof of “the willful 

acquisition or maintenance of that power as distinguished from growth or development as a 

consequence of a superior product, business acumen, or historic accident.” Grinnell Corp., 384 

U.S. at 570-71. Although Respondent acquired its monopoly power as a consequence of 

“historic accident” – namely that it was the last remaining domestic manufacturer after other 

domestic manufacturers exited the market in the wake of cheap imports – Complaint Counsel’s 

challenge here is to the steps that Respondent took to “maintain” that power. CCB at 210-246. 
384

The alleged exclusionary conduct challenged in Counts Six and Seven of the Complaint 

is based on the letter that McWane sent to Distributors on September 22, 2009 that stated as 

follows:

[E]ffective October 1, 2009, McWane will adopt a program whereby our 

domestic fittings and accessories will be available to customers who elect to

fully support McWane branded products for their domestic fitting and accessory 

requirements. This applies whether these products are purchased through Tyler 

Union, Clow Water or through Sigma.39

Exceptions are where Tyler Union or Clow Water products are not 

readily available within normal lead times or where domestic fittings and 

accessories are purchased from another domestic pipe and fitting manufacturer 

along with that manufacture’s [sic] ductile iron pipe.

Customers who elect not to support this program may forgo participation 

in any unpaid rebates for domestic fittings and accessories or shipment of their 

domestic fitting and accessory orders of Tyler Union or Clow Water products 

for up to 12 weeks. 

F. 1173 (“Full Support Program”).

Complaint Counsel charges that the Full Support Program was a deliberate effort by 

McWane to maintain its monopoly power by impeding Star’s entry. CCB at 210. Respondent 

maintains that the Full Support Program was “simply a letter [sent by McWane] asking 

customers to support its last domestic foundry . . . fully and offering a rebate in exchange.” RB 

at 93. 

Before analyzing whether Respondent engaged in anticompetitive conduct to maintain 

its monopoly power or acted with specific intent to monopolize, with a dangerous probability 

of success, evidence on the development of McWane’s Full Support Program, the 

communication of McWane’s Full Support Program to Distributors, and the effects the Full 

Support Program had on Distributors and on Fittings suppliers who considered entering the 

Domestic Fittings market is summarized below. 

 39 Pursuant to the MDA between McWane and Sigma, Sigma agreed to resell McWane’s Domestic Fittings to 

Distributors on the condition that the Distributor agreed to purchase Domestic Fittings exclusively from McWane 

or Sigma. Infra Section III.H.
385

a. Summary of the facts

i. Development of McWane’s Full Support Program 

In reaction to ARRA’s passage in February 2009, Star began to develop plans to expand 

its product lines to include Domestic Fittings. F. 1094. Numerous emails and draft documents 

generated and discussed internally within McWane demonstrate that McWane was concerned 

about the effect that entry by Star in the Domestic Fittings market would have on McWane’s 

market share and profits and that McWane developed a strategy in response to Star’s 

announced entry. Findings on these issues are set forth in more detail in Section II.J.1-2 supra. 

The most relevant evidence on these points is summarized below.

Mr. Rick Tatman, Vice President and General Manager in charge of McWane’s 

Tyler/Union division, recognized that “any competitor” seeking to enter the Domestic Fittings 

market could face “significant blocking issues” if it was not a “full line” domestic supplier. 

F. 1155. On June 24, 2009, Mr. Leon McCullough, Executive Vice President of McWane, sent 

an internal email to Mr. Tatman, with a copy to Mr. Thomas Walton, Senior Vice President 

overseeing the Fittings division, raising questions regarding McWane’s “position short 

term/long term on sharing distribution of our domestic fitting line” and writing, “[j]ust because 

we share our blended fittings does not require us to share our domestic. . . .” F. 1148. Mr. 

Walton responded to Mr. McCullough’s email on June 24, 2009, stating:

Whether we end up with Star as a complete or incomplete domestic supplier my 

chief concern is that the domestic market gets creamed from a pricing standpoint 

just like the non-domestic market has been driven down in the past. That would 

dramatically [a]ffect our profit potential. . . . I do agree whole heartedly that we 

need to evaluate our options and plot a comprehensive strategy going forward.

F. 1149.

Mr. Tatman responded to the above emails on June 24, 2009 stating:

I agree that at this stage the chance for profitable cohabitation with Star owning 

a pc of the Domestic market is slim. Their actions in soil pipe are a good 

indication. . . . If their claims are ahead of their actual capabilities we need to 
386

make sure that they don’t reach any critical market mass that will allow them to 

continue to invest and receive a profitable return. . . .

F. 1150.

On or about June 29, 2009, Mr. Tatman drafted and sent an internal PowerPoint 

Presentation (“June 29, 2009 PowerPoint Presentation”) to Mr. McCullough and Mr. Walton 

intended as a brainstorming document. F. 1156. Described by Mr. Tatman as topics for 

discussion were three potential options for McWane’s response to Star’s entry: employ a “Wait 

and See approach,” “Handle on a Job by Job basis,” or “Force Distribution to Pick their Horse.” 

F. 1159. With respect to the “Force Distribution to Pick their Horse” approach, the advantages 

listed as topics for discussion by Mr. Tatman included:

• It “[a]voids the job by job auction scenario within a particular distributor”

• It “[p]otentially raises the level of supply concern among contractors” and

• It “[f]orces Star/Sigma to absorb the costs associated with having a more full 

line before they can secure major distribution.”

F. 1162.

Under the “Pick your Horse” option, Mr. Tatman identified two alternatives: a “Soft 

Approach,” whereby a domestic rebate would require exclusivity, and a “Hard Approach – Full 

Line or No Line,” whereby access to McWane’s domestic product line would “require[] 

exclusivity for Domestic fitting items we manufacture” – i.e., if a customer did not support 

McWane’s full Domestic Fittings line, McWane would not sell to them. F. 1163. Also under 

the “Pick your Horse” option, under both the “Soft Approach” and the “Hard Approach,” listed 

as a topic for discussion, was: “Applied on a corporate not branch by branch basis.” F. 1164. 

In his cover email transmitting the June 29, 2009 PowerPoint Presentation, Mr. Tatman stated 

that if Star is the only Domestic entrant, then “the appropriate response to distribution is 

probably a fairly hard line approach like a full line or no line approach.” F. 1157. See also

F. 1165 (July 2, 2009 email from Mr. Tatman to Mr. Walton (“[f]rom the information currently 

available, a Full Line or No Line approach would be the preferred approach and certainly the 

best option against Star.”)). 
387

In the same September 22, 2009 letter through which McWane announced its Full 

Support Program, McWane also announced to its Distributors that it had entered into a Master 

Distribution Agreement with Sigma, through which Sigma would sell McWane Domestic 

Fittings, and informed Distributors that the Full Support Program applies to McWane’s 

Domestic Fittings, whether purchased from McWane or through Sigma. F. 1174, 1538. 

Pursuant to the MDA, discussed in detail infra Section III.I., McWane and Sigma agreed that 

Sigma would not sell McWane Domestic Fittings to any customer listed by McWane as having 

purchased Domestic Fittings from a source other than McWane, or to any other customer who 

Sigma actually knows has purchased Domestic Fittings from a source other than McWane at 

any time during the previous 60 days. F. 1558.

ii. Communication of McWane’s Full Support Program to

Distributors

Respondent argues that the Full Support Program “made it clear that customers were 

free to choose another supplier, and simply noted that if they did so, they ‘may’ forego any 

unpaid rebates for domestic Fittings or shipments for a short period of time (‘up to 12 weeks’).” 

RB at 93. To that end, Respondent points out that Mr. Tatman purposefully included the “soft” 

language “may” and “or” in the Full Support Program and explained that his use of the terms 

“may” and “or” in the Full Support Program is “a weak stance . . . because I know when I write 

this letter [to Distributors] that I’m a Chihuahua barking at Rottweiler and I know who has the 

power here.” F. 1178. 

Despite the soft language of “may” and “or” in the Full Support Program letter to 

Distributors, McWane communicated a “hard approach” to its Distributors. See, e.g., F. 1179-

1183. In preparation for the rollout of the Full Support Program, McWane’s National Sales 

Manager, Mr. Jerry Jansen, led an internal conference call with the McWane sales force on 

August 28, 2009, where he explained to his sales force the “new policy on Star Domestic” as 

follows:

• What are we going to do if a customer buys Star domestic? We are not 

going to sell them our domestic. . . .
388

o This means the customer will no longer have access to our domestic. 

They can still buy [non-Domestic] from us.

o Once they use Star, they can’t EVER buy domestic from us. . . .

o For companies with multiple branches (HD, Ferguson, Winwater, 

Hajoca, etc) - if one branch uses Star, every branch is cut off.

. . .

• Make sure you are discussing our stance with all customers, every day.

F. 1179. 

McWane executives met with various Distributors to explain McWane’s Full Support 

Program. For example, through conversations between Mr. Roy Pitts, Director of Vendor 

Relations at Hajoca, and Mr. Tatman and Mr. Jansen of McWane, Hajoca believed that, despite 

the terms “may” and “or” in the Full Support Program, Hajoca would lose its rebates or be cut 

off from purchasing Domestic Fittings from McWane if Hajoca purchased from Star. F. 1184, 

1197-1199. Mr. Dennis Sheley, President and owner of Illinois Meter, believed from his 

conversations with Mr. Tatman and Mr. Jansen that if Illinois Meter purchased Domestic 

Fittings from anyone but McWane, Illinois Meter “would lose the right to buy [McWane’s 

Domestic Fittings] completely” and would also lose its rebate from its purchases of nondomestic Fittings. F. 1357. Mr. Thomas Morton, U.S. Pipe’s Vice President of Purchasing, 

was told by Mr. Tatman that U.S. Pipe would be required to purchase 100% of its domestic 

requirements from McWane, and not purchase Domestic Fittings from Star, unless McWane 

did not have the needed items or its lead times were too long, and that U.S. Pipe could not 

“cherry pick” “A” or “B” items, or high volume Domestic Fittings from Star and expect 

McWane to supply the balance. F. 1298-1300. 

In an internal McWane document describing the Full Support Program, Mr. Tatman 

stated: “Although the words ‘may’ and ‘or’ were specifically used, the market has interpreted 

the communication in the more hard line ‘will’ sense. . . . Access to McWane or Sigma

[through Sigma’s reselling of McWane’s Domestic Fittings under the MDA] requires

distributors to exclusively support McWane where products are available with normal lead 

times. Violations will result in: Loss of access, loss of accrued rebates.” F. 1183. 
389

iii. Enforcement of McWane’s Full Support Program

McWane enforced its Full Support Program against only one of the Distributors who 

was called to testify either at trial or by deposition – Hajoca Corporation. Hajoca is a national 

waterworks distributor with several locations, two of which purchase Domestic Fittings 

regularly: Tulsa, Oklahoma (“Tulsa”) and Lansdale, Pennsylvania (“Lansdale”). F. 239-240, 

1193-1194. Each of Hajoca’s branches makes its own vendor selection decisions, including 

those regarding Domestic Fittings purchases. F. 1195. Prior to announcing the Full Support 

Program, Mr. Jansen met with Hajoca’s Mr. Pitts. F. 1197. Mr. Pitts reported on that meeting 

as follows:

I had heard from Jerry Jansen last week that [McWane] would be taking a hard 

stance regarding domestic fittings manufactured for Star. . . . 

Jerry had told me last week that if any PC [profit center or branch of Hajoca] in 

the US purchases domestic fittings from Star, all PCs would lose access to 

McWane’s fittings and possibly lose rebates.

F. 1197. 

Mr. Pitts asked Mr. Tatman to modify McWane’s Full Support Program so that 

McWane would not hold all Hajoca branches responsible if a single branch purchased 

Domestic Fittings from Star. F. 1200. In a November 3, 2009 email to Mr. Sean Kelly and 

Mr. Pitts of Hajoca, Mr. Jansen reiterated the all-or-nothing nature of McWane’s Full Support 

Program:

[I]f any Hajoca location chooses to buy another domestic fitting supplier[’s] 

product Hajoca will not have direct access to the McWane ductile iron water 

main fittings for a period of time as well as loss of any accrued rebate to date.

F. 1201-1202. 

In November 2009, Hajoca’s Tulsa branch began placing orders for Domestic Fittings 

from Star. F. 1206. On November 23, 2009, Mr. McCullough of McWane informed Mr. Kelly 

of Hajoca that McWane would “discontinue selling Hajoca domestic fittings since they are 

supporting Star’s domestic line.” F. 1208. As a consequence of Hajoca’s Tulsa branch 

ordering Domestic Fittings from Star, McWane discontinued selling Domestic Fittings to 
390

Hajoca’s Lansdale branch also. F. 1209. In an internal McWane email, Mr. Tatman confirmed 

to Mr. McCullough and Mr. Walton, on November 23, 2009, that all Hajoca orders had been 

placed on hold. F. 1210. McWane did allow Hajoca’s Lansdale branch to place orders to cover 

existing commitments and to enable Hajoca’s Lansdale branch to place orders to satisfy the 

known requirements of an existing contract with a municipality. F. 1212, 1214. Apart from

those exceptions, between December 4, 2009 and April 13, 2010, Hajoca’s Lansdale branch 

was unable to place Domestic Fittings orders with McWane. F. 1219. 

In addition to refusing to sell Domestic Fittings to Hajoca from December 4, 2009 to 

April 13, 2010, McWane withheld the rebate due to Hajoca based on its non-domestic Fittings 

purchases from McWane in the fourth quarter of 2009. F. 1224. In a February 4, 2010 email to 

Mr. Pitts, Mr. Tatman confirmed that McWane had withheld Hajoca’s fourth quarter 2009 

rebate as a result of the Tulsa branch’s decision to purchase Domestic Fittings from Star. 

F. 1225. With the exception of the fourth quarter of 2009, McWane continued to pay rebates to 

Hajoca, as Hajoca’s Lansdale branch resumed purchasing McWane’s Domestic Fittings, even 

though its Tulsa branch purchased Domestic Fittings from Star. F. 1227. 

Hajoca is the only Distributor against whom McWane’s Full Support Program was 

enforced. No other Distributor was cut off by McWane after purchasing Domestic Fittings 

from Star or had its rebate withheld. E.g., F. 1250 (HD Supply); F. 1278-1279 (Ferguson); 

F. 1312 (U.S. Pipe); F. 1319-1320 (Groeniger); F. 1344-1345 (WinWholesale). 

iv. Impact of McWane’s Full Support Program on Distributors’

purchases from Star

The evidence at trial demonstrates that, besides Hajoca, Distributors, with some 

exceptions, complied with McWane’s Full Support Program, as summarized below. 

(a) HD Supply

In September 2009, executives of McWane met with executives of HD Supply. 

F. 1231. In an internal September 8, 2009 email to Mr. McCullough and Mr. Jansen, Mr. 

Tatman suggested to Mr. McCullough that HD Supply’s CEO, Mr. Jerry Webb, should send an 

internal communication within HD Supply that HD Supply had elected to use McWane 
391

Domestic Fittings as its sole supply source through 2010. F. 1233. On September 22, 2009, 

Mr. Glenn Fielding, HD Supply’s Director of Sourcing and Price Management, sent an internal 

email to Mr. Webb, and Mr. Darrin Anderson, Vice President of Sourcing and Operations of 

HD Supply, forwarding the text of the Full Support Program and recounting a conversation 

with Mr. Tatman in which Mr. Tatman informed Mr. Fielding that the policy “must be adhered 

to by entire company -- if one branch buys domestic from someone else it affects the whole 

compan[y’s] program.” F. 1234. Mr. Fielding expressed concern about a reduction in rebate 

dollars as a result of McWane’s Full Support Program and even greater concern about the 

impact on customer satisfaction in the event that McWane cut off HD Supply’s access to 

McWane’s Domestic Fittings. F. 1235. 

HD Supply interpreted McWane’s Full Support Program to require HD Supply to 

purchase all of its Domestic Fittings from McWane, except where McWane was unable to 

supply the Domestic Fittings desired. F. 1238. HD Supply also interpreted McWane’s Full 

Support Program to mean that if HD Supply purchased Domestic Fittings from Star, HD 

Supply “would lose the rebate on the domestic fittings and potentially lose access to the 

domestic line . . . [which] could be a significant event.” F. 1240.

On or about September 23, 2009, Mr. Webb, sent a letter to HD’s branch managers, 

district managers, and operations managers stating that they needed “to adhere to this mandate 

and purchase all of our American made fittings through [McWane] or Sigma.” F. 1239-1240 

(explaining that the “mandate” was McWane’s Full Support Program). Without McWane’s 

September 22, 2009 Full Support Program, Mr. Webb would not have issued this companywide policy requiring HD Supply managers to purchase Domestic Fittings only from McWane. 

F. 1241. 

With the exception of items that McWane did not have available or that had been 

committed to prior to September 22, 2009, HD Supply cancelled its then-pending Domestic

Fittings orders with Star. F. 1242. According to Mr. McCutcheon of Star, Mr. Webb informed 

Mr. McCutcheon that HD Supply could not purchase Domestic Fittings from Star because 

McWane’s Full Support Program required HD Supply to buy 100% of its Domestic Fittings 

requirements from McWane. F. 1244. Two HD Supply regional vice presidents and two HD 
392 

Supply district or branch managers each relayed to Mr. Michael Berry, a general manager of 

Star, that they could not purchase Domestic Fittings from Star because of McWane’s Full 

Support Program and that they did not have the discretion to do so under the HD Supply 

corporate policy. F. 1246. 

While McWane’s Full Support Program made HD Supply less willing to do business 

with Star, there are also numerous other reasons why HD Supply did not purchase Domestic 

Fittings from Star. HD Supply believed that Star did not have the capacity to service HD 

Supply’s needs for Domestic Fittings in the fall of 2009 because HD Supply believed that Star 

did not have a full line of Domestic Fittings to offer (F. 1252-1253); HD Supply had concerns 

about Star’s use of various foundries, as opposed to use of one central foundry, to manufacture 

its Domestic Fittings in the fall of 2009 (F. 1254); and HD Supply views McWane as a known, 

full line Fittings supplier with a good track record (F. 1256). 

Notwithstanding McWane’s Full Support Program, HD Supply purchased some 

Domestic Fittings from Star. F. 1257. However, although HD Supply is Star’s largest 

customer and Star estimates that it has greater than a { }% share of HD Supply’s nondomestic Fittings business, Star estimates that it has less than a { }% share of HD Supply’s 

Domestic Fittings business. F. 1258. 

(b) Ferguson 

When Ferguson received notice of the Full Support Program from McWane in 

September 2009, its concerns pertaining to the possibility of foregoing unpaid rebates from 

McWane were secondary to the concerns Ferguson had about Star’s ability to produce 

Domestic Fittings. F. 1260. When Mr. William Thees, Vice President of the Waterworks 

Division at Ferguson, received notice of McWane’s Full Support Program, he thought it was 

unlikely that McWane would withhold rebates from Ferguson and believed that the rebate 

terms and lead times stated in the Full Support Program could be negotiated. F. 1268. 

After receiving notice of the Full Support Program, Mr. Thees called his district 

managers to ensure that Ferguson communicated support for McWane’s Domestic Fittings by 

continuing to purchase Domestic Fittings from McWane and not purchasing Domestic Fittings 
393 

from Star. F. 1261. To Mr. Thees’ knowledge, Ferguson’s district managers followed his 

instruction. F. 1261. 

After McWane’s Full Support Program was announced, based on conversations that 

Star’s Mr. Berry had with Ferguson managers, Star believed that there was a Ferguson 

corporate edict that no Ferguson employees were to purchase Star Domestic Fittings unless 

McWane did not have the Domestic Fittings. F. 1262. 

At the time Ferguson received notice of McWane’s Full Support Program, Ferguson 

was already planning to purchase all of its Domestic Fittings from McWane, regardless of the 

Full Support Program. F. 1266. Ferguson was reluctant to purchase Domestic Fittings from 

Star because Ferguson was concerned about Star’s ability to produce a complete line of 

Domestic Fittings without having its own manufacturing facility. F. 1272. Ferguson was also 

reluctant to purchase Domestic Fittings from Star because Ferguson was concerned that Star 

was using jobber facilities with extra capacity to produce Domestic Fittings for them, Star 

would not disclose to Ferguson which foundries it was using, and Ferguson was concerned that 

any of these domestic foundries could abandon Star, leaving Star unable to supply Ferguson 

with Domestic Fittings. F. 1273. In addition, at the time Star began producing Domestic 

Fittings, Star did not have the depth and breadth of inventory to supply Ferguson with all of 

Ferguson’s Domestic Fittings needs. F. 1274. 

In 2011, Ferguson purchased hundreds of thousands of dollars’ worth, but less than a 

million dollars’ worth, of Domestic Fittings from Star. F. 1277. Ferguson is Star’s second 

largest customer. Star estimates that it has a { }% share of Ferguson’s non-domestic 

Fittings business, but less than a { }% share of Ferguson’s Domestic Fittings business. 

F. 1280. According to records maintained by Ferguson, in the first four months of 2010, 

Ferguson purchased { }% of its Domestic Fittings from Star, while purchasing 

approximately { }% from McWane and { }% from Sigma. F. 1281. 
394

(c) U.S. Pipe

In September 2009, U.S. Pipe began discussions with Star relating to potential 

purchases of Domestic Fittings by U.S. Pipe from Star. F. 1291. Star initially proposed to U.S. 

Pipe pricing for 3” to 12” diameter Domestic Fittings that matched McWane’s Domestic 

Fittings multipliers. F. 1295. In response to U.S. Pipe’s statement to Star that Star needed to 

incentivize U.S. Pipe to leave McWane, Ms. Susan Schepps of Star committed to U.S. Pipe that 

Star would offer Domestic Fittings pricing significantly below McWane’s in exchange for a 

major portion of U.S. Pipe’s volume. F. 1295. 

On October 13, 2009, in a meeting between Mr. Morton of U.S. Pipe and Mr. Tatman of

McWane, Mr. Tatman explained that U.S. Pipe would be required to purchase 100% of its 

domestic requirements from McWane, and not purchase Domestic Fittings from Star, unless 

McWane did not have the needed items or its lead times were too long. F. 1299. Because U.S. 

Pipe needed access to a full line of Domestic Fittings, not just the “A” and “B” items initially 

being offered by Star, Mr. Morton’s recommendation to his boss after meeting with Mr. 

Tatman in October 2009 was to continue to look for alternative sources. F. 1301. Mr. Morton 

also wrote that, unless U.S. Pipe was convinced that those sources could provide 100% of U.S. 

Pipe’s requirements for Domestic Fittings, U.S. Pipe needed to take the notification from Mr. 

Tatman very seriously and buy its Domestic Fittings from McWane. F. 1301. Mr. Morton 

instructed his purchasing manager not to purchase Domestic Fittings from Star unless McWane 

could not provide the needed Domestic Fittings. F. 1302. 

In a meeting between Mr. Morton and Mr. Stephen Gables of U.S. Pipe and 

Mr. McCutcheon and Ms. Schepps of Star in November 2009, U.S. Pipe informed Star that, 

according to McWane, if U.S. Pipe purchased any of its Domestic Fittings requirements from 

anyone other than McWane, then McWane would not sell U.S. Pipe any Domestic Fittings. 

F. 1303. In 2009, U.S. Pipe also had concerns about Star’s ability to provide a full line of 

Domestic Fittings and had concerns about the lead times it would take for Star to fulfill certain 

orders. F. 1307. In addition, U.S. Pipe was concerned that Star would not commit to putting 

the tooling in place in advance of getting a requirement for volume. F. 1308. 
395

With the exception of minor purchases falling within the limited exceptions to 

McWane’s Full Support Program (e.g., where McWane’s lead time to supply the requested 

Fitting was too long, or if McWane did not make a particular Fitting configuration) F. 1309, 

U.S. Pipe purchased only minor amounts of Domestic Fittings from Star until September of 

2010. F. 1310. In September 2010, U.S. Pipe “decided as an executive team that the risk of 

[McWane] not selling us [Domestic Fittings] even if [U.S. Pipe] bought from Star, given the 

announced FTC investigation, would be significantly less . . . .” F. 1311. In September 2010, 

U.S. Pipe was purchasing “a significant portion” of its Domestic Fittings from Star. F. 1310. 

(d) Groeniger

Prior to the announcement of McWane’s Full Support Program, Groeniger gave Star 

Domestic Fittings business on two sizeable projects. F. 1313. After McWane’s Full Support 

Program was announced, Groeniger was reluctant to purchase additional Domestic Fittings 

from Star “[b]ecause of the inherent threats of retaliation” from McWane. F. 1315. In 2009, 

Groeniger needed access to McWane’s Domestic Fittings in order to service customers with 

McWane-only Domestic Fitting requirements. F. 1316. Groeniger was concerned about 

“[b]eing shut out” from McWane if Groeniger purchased Domestic Fittings from Star. F. 1317. 

After McWane announced its Full Support Program, Mr. Berry of Star had at least three 

conversations with representatives of Groeniger, including Mr. Michael Groeniger, President of 

Groeniger. F. 1323. Based on these conversations, Star perceived that Groeniger had fears that 

it would not be able to purchase Domestic Fittings from McWane if Groeniger purchased 

Domestic Fittings from Star. F. 1324. See also F. 1328 (reporting that Groeniger wanted to 

buy from Star, but had committed to McWane because of the Full Support Program). Star 

documents also note, however, that on one order, Groeniger did not purchase from Star because 

Star could not meet the delivery dates. F. 1326. 

Notwithstanding McWane’s Full Support Program, Groeniger did purchase Domestic 

Fittings from Star, but not frequently. F. 1329. Mr. Groeniger testified that in 2010, Groeniger 

would have given Star 50% of its Domestic Fittings business if McWane had not initiated the 

Full Support Program. F. 1330. 
396

(e) WinWholesale

In September 2009, WinWholesale had an interest in potentially purchasing Domestic 

Fittings from Star. F. 1331. On September 22, 2009, Mr. Eddie Gibbs, Vice President of 

Vendor Relations, for WinWholesale, which does business as WinWater Works (“WinWater”), 

received notice of McWane’s Full Support Program from Mr. Tatman. F. 1332. 

WinWholesale had some concerns that if the WinWater local companies purchased Domestic 

Fittings from Star on a consistent basis, those companies would lose their rebate; however, 

WinWholesale was not concerned about the overall WinWater locations being able to get 

product from McWane if an individual WinWater local company purchased Domestic Fittings 

from Star. F. 1338-1340. 

Upon receiving notification from McWane of the Full Support Program, WinWholesale 

“accepted the terms” of it and listed Star’s status as a vendor as “not approved.” F. 1334. See 

also F. 1335. At WinWholesale, if a vendor receives “not approved” status, the local 

companies are not to buy from that vendor under any circumstances unless they seek board 

approval. F. 1337. 

Star was verbally notified of WinWholesale’s intention to place Star on its “not 

approved” list for Domestic Fittings in early December 2009 and received written notice on 

February 5, 2010 in the form of WinWholesale’s 2010 Preferred Vendor letter listing Star as 

“not approved.” F. 1336. WinWholesale had reasons other than the Full Support Program for 

placing Star on its list of not approved vendors, including concerns about Star’s capacity, 

quality, and timeliness in delivery. F. 1342. 

After McWane initiated its Full Support Program, Star did have some sales of Domestic 

Fittings to WinWater local companies. F. 1343. 

(f) Illinois Meter

Mr. Sheley of Illinois Meter was informed by Mr. Tatman and Mr. Jansen that if Illinois 

Meter purchased Domestic Fittings from anyone but McWane, Illinois Meter “would lose the 

right to buy [McWane’s Domestic Fittings] completely” and would also lose its rebate from its 

purchases of non-domestic Fittings. F. 1357. Losing access to McWane’s Domestic Fittings 
397 

would be a serious consequence for Illinois Meter. F. 1358. Regardless of McWane’s Full 

Support Program, however, when Star first announced its Domestic Fittings line, Illinois Meter 

probably would have purchased around 90 percent of its Domestic Fittings from McWane. 

F. 1359. Illinois Meter had previously had a negative experience with Star’s reliability as a 

supplier when Star first entered the joint restraint business. F. 1361. Illinois Meter was not 

willing to give Star any Domestic Fittings orders in early 2010 until Star had demonstrated it 

had sufficient inventory, because Illinois Meter was not willing to risk coming up short on a 

project if it could not turn to McWane to meet its needs. F. 1361-1362. 

In the summer of 2010, Illinois Meter was interested in purchasing Domestic Fittings 

from Star for an ARRA-funded water treatment plant in Winchester, Illinois, and for a 

Domestic specification job in Macomb, Illinois. F. 1362. Both projects required smallerdiameter Domestic Fittings that Illinois Meter believed Star could provide. F. 1362. Illinois 

Meter did purchase a half dozen Domestic Fittings from Star to evaluate their quality. F. 1363. 

Although Illinois Meter found the quality of Star’s Domestic Fittings to be very good, Illinois 

Meter is not buying them or supplying them. F. 1363. Illinois Meter does not buy Domestic 

Fittings from Star because it does not want to lose the ability to buy McWane’s Domestic 

Fittings. F. 1364. 

v. Impact of McWane’s Full Support Program on SIP’s 

 evaluation of whether to enter the Domestic Fittings market

Serampore Industries Private (“SIP”) supplies Fittings in the United States that it 

imports from China, India, and Mexico, and currently sells to approximately 50 to 60 

Distributors in approximately 35 states. F. 1365. From May 2009 to September 2009, SIP 

evaluated entering the Domestic Fittings market. F. 1366. SIP estimated that manufacturing 

Domestic Fittings would require a 5 to 10 million dollar investment. F. 1373. To be viable in 

the Domestic Fittings market, SIP estimated that it needed a minimum gross margin of 

approximately { } percent, and a minimum net margin of about { } percent. 

F. 1374. 

In evaluating whether to enter the Domestic Fittings market, SIP viewed the 

implications of McWane’s Full Support Program as significant to the Distributors who were 
398

SIP’s potential Domestic Fittings customers. F. 1376. SIP believed that McWane’s Full 

Support Program would deter Distributors from purchasing Domestic Fittings from SIP 

because forgoing Domestic Fittings shipments from McWane for up to 12 weeks, thus delaying 

an End User’s project, was a significant penalty. F. 1376. SIP’s determination to not enter the 

Domestic Fittings market was based on numerous reasons, including the fact that ARRA 

presented a very short time window, that SIP believed it needed to offer a full line of fittings to 

be considered a viable supplier, that it had taken SIP three years to develop a full line of 

imported fittings, the uncertainties of success, the high cost of developing patterns for a full 

line of fittings, the fact that there was not one single foundry available to make all the fittings, 

the vagaries of long term supply given the changing capacity of jobber foundries, the 5 to 10 

million dollar estimated cost to develop the line, the need/cost to develop drilling and 

machining capabilities, the uncertainties of the ARRA demand, and the uncertainties about the 

post-ARRA domestic demand. F. 1378. While there were numerous reasons behind SIP’s 

decision to not enter the Domestic Fittings market, McWane’s Full Support Program was “the 

straw that broke the camel’s back.” F. 1379-1380. 

vi. Impact of McWane’s Full Support Program on Star’s entry

into the Domestic Fittings market

As summarized above, after McWane announced its Full Support Program on 

September 22, 2009, numerous Distributors pulled their requests for quotes, cancelled orders, 

or decided not to purchase Domestic Fittings from Star. F. 1381-1382. Based on those actions 

and conversations Star had with Distributors, Star believed that Distributors would not 

purchase from Star because of McWane’s Full Support Program. F. 1383. 

With respect to HD Supply, based on conversations between Mr. McCutcheon of Star 

and Mr. Webb of HD Supply, Mr. McCutcheon believed that HD Supply could not buy Star’s 

Domestic Fittings because of the Full Support Program. F. 1383. Star’s General Sales 

Manager, Mr. Berry, was advised by several HD Supply regional vice presidents, district 

managers and branch managers that they could not purchase Domestic Fittings from Star 

because of McWane’s Full Support Program and that they did not have the discretion to do so 

under the HD Supply corporate policy. F. 1246. Mr. Berry believed that HD Supply refused to 

purchase Domestic Fittings from Star for various projects because of the HD Supply corporate 
399 

policy to not purchase from Star. F. 1246. With respect to Ferguson, after McWane’s Full 

Support Program was announced, Star’s Mr. Berry had negotiations with district managers and 

a general manager of Ferguson. F. 1262. Based on those conversations, Mr. Berry believed 

that there was a corporate edict that no Ferguson employees were to purchase Star Domestic 

Fittings unless McWane did not have the Domestic Fittings. F. 1262. See also F. 1384. Star 

also believed that Distributors Custom Fab, Dana Kepner, Prescott Supply, Illinois Meter, C.I. 

Thornburg, WinWater, Western Water Works and Wells Supply would not purchase Star’s 

Domestic Fittings because of McWane’s Full Support Program. F. 1385-1390. Even when 

Star offered a rebate program to TDG Distributors that was more generous than McWane’s 

rebate program, some TDG members were still unwilling to buy from Star. F. 1391. Star 

believed that these Distributors were unwilling to purchase from Star because of the “all-ornothing domestic fitting policy from McWane.” F. 1391. As Star’s Regional Sales Manager 

explained in his deposition: 

Every distributor -- every customer distributor that we talked to or that I talked 

to after this letter came out, wanted to talk about it. And they all wanted to 

know what I had seen in other parts of the countr[y] or if any distributors were 

purchasing our domestic. And if so, had Tyler punished them. And -- and I had 

not seen anywhere or heard from anybody that -- that there was any 

repercussions for people buying our fittings anywhere from anybody. But the 

fear that something could happen in -- in areas that actually buy domestic 

fittings, customers are afraid. They don’t want to take the chance of the what-if.

F. 1392. 

Star estimated that, absent McWane’s Full Support Program, Star would have { 

} million dollars in sales of Domestic Fittings in 2010, potentially rising to an annual rate of 

{ } million dollars in 2011. F. 1394. Star’s estimated lost sales due to McWane’s Full 

Support Program were based in part on 10 million dollars in requests for quotes for Domestic 

Fittings that Star received between June 15, 2009, when it announced its Domestic Fittings 

entry, and September 22, 2009, when McWane announced its Full Support Program. F. 1395. 

The requests for quotes included requests by HD Supply, Ferguson, Mainline, WinWater, and a 

variety of other independent customers. F. 1395. See also F. 1382. 

As summarized above, the evidence shows that there were reasons for Distributors 
400 

choosing not to purchase Domestic Fittings from Star other than McWane’s Full Support 

Program, including concerns about Star’s inventory, the quality of fittings produced at several 

different foundries, and the timeliness of delivery. Thus, these estimates by Star are viewed 

somewhat skeptically. However, it is quite clear that Star believed that because of McWane’s 

Full Support Program, Star would not be able to generate a sufficient volume of sales from 

Domestic Fittings to purchase its own foundry. 

In 2009, Star estimated that it needed between { } million dollars in sales of 

Domestic Fittings to justify purchasing its own domestic foundry. F. 1400. Since then, Star 

has estimated that it needs between { } million dollars to justify purchasing its own 

foundry. F. 1400. { 

 }. 

F. 1399. Star was not able to generate a sufficient volume of sales of Domestic Fittings to 

realize cost efficiencies or justify operating a foundry of its own. F. 1401. 

Rather than owning its own foundry, Star contracted with six foundries to produce raw 

castings for Domestic Fittings for Star, which Star then shipped to its Houston facility for the 

finishing process. F. 1409. Independent foundries are more costly and less efficient than a 

foundry owned and operated by Star would be because using independent foundries involves: 

less specialized and less efficient equipment; smaller batch sizes; additional logistical costs 

associated with inventory, finishing, and freight; less control over inventory levels; less ability 

to expedite orders; and inefficiencies resulting from dealing with multiple foundries. F. 1410. 

b. Exclusionary Conduct Law 

A firm violates Section 2 of the Sherman Act when it maintains or attempts to maintain 

a monopoly by engaging in exclusionary conduct. Microsoft, 253 F.3d at 58. Exclusionary 

conduct is “behavior that not only (1) tends to impair the opportunities of rivals, but also (2) 

either does not further competition on the merits or does so in an unnecessarily restrictive 

way.” Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 605 n.32 (1985) 

(citation omitted). “Exclusive dealing can have adverse economic consequences by allowing 

one supplier of goods or services unreasonably to deprive other suppliers of a market for their 

goods[.]” Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 45 (1984) (O’Connor, J., 
401

concurring), abrogated on other grounds by Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 

(2006); Barry Wright Corp., 724 F.2d at 236 (explaining that “under certain circumstances[,] 

substantial foreclosure might discourage sellers from entering, or seeking to sell in, a market at 

all, thereby reducing the amount of competition that would otherwise be available”). 

“Exclusive dealing arrangements are of special concern when imposed by a 

monopolist.” ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254, 271 (3d Cir. 2012) (cert. 

pending) (citing Dentsply, 399 F.3d at 187 (“Behavior that otherwise might comply with 

antitrust law may be impermissibly exclusionary when practiced by a monopolist.”)). The 

court in ZF Meritor provided the following example:

[S]uppose an established manufacturer has long held a dominant position but is 

starting to lose market share to an aggressive young rival. A set of strategically

planned exclusive-dealing contracts may slow the rival’s expansion by requiring 

it to develop alternative outlets for its product, or rely at least temporarily on 

inferior or more expensive outlets. Consumer injury results from the delay that 

the dominant firm imposes on the smaller rival’s growth.

Id. (citing Phillip Areeda & Herbert Hovenkamp, Antitrust Law ¶ 1802c, at 64 (2d ed. 2002)). 

Due to the potentially procompetitive benefits of exclusive dealing agreements, their 

legality is judged under the rule of reason. Twin City Sportservice, Inc. v. Charles O. Finley & 

Co., 676 F.2d 1291, 1304 (9th Cir. 1982); see also Tampa Electric, 365 U.S. at 327-29. The 

legality of an exclusive dealing arrangement depends on whether it will foreclose competition 

in such a substantial share of the relevant market so as to adversely affect competition. ZF 

Meritor, 696 F.3d at 271 (citing Tampa Electric, 365 U.S. at 328; Barr Labs. v. Abbott Labs.,

978 F.2d 98, 110 (3d Cir. 1992)). “In conducting this analysis, courts consider not only the 

percentage of the market foreclosed, but also take into account ‘the restrictiveness and the 

economic usefulness of the challenged practice in relation to the business factors extant in the 

market.’” Id. (citing Barr Labs., 978 F.2d at 110-11). As the Supreme Court has explained:

[I]t is necessary to weigh the probable effect of the contract on the relevant area 

of effective competition, taking into account the relative strength of the parties, 

the proportionate volume of commerce involved in relation to the total volume 

of commerce in the relevant market area, and the probable immediate and future 

effects which pre-emption of that share of the market might have on effective 

competition therein.
402

Tampa Electric, 365 U.S. at 329. “In other words, an exclusive dealing arrangement is 

unlawful only if the ‘probable effect’ of the arrangement is to substantially lessen competition, 

rather than merely disadvantage rivals.” ZF Meritor, 696 F.3d at 271 (citations omitted).

The court in ZF Meritor further explained:

There is no set formula for evaluating the legality of an exclusive dealing 

agreement, but modern antitrust law generally requires a showing of significant 

market power by the defendant, substantial foreclosure, contracts of sufficient 

duration to prevent meaningful competition by rivals, and an analysis of likely 

or actual anticompetitive effects considered in light of any procompetitive 

effects . . . . Courts will also consider whether there is evidence that the 

dominant firm engaged in coercive behavior, and the ability of customers to 

terminate the agreements. 

Id. at 271-72 (citations omitted). With these legal principles in mind, the Initial Decision next 

analyzes whether the challenged conduct engaged in by McWane was an unlawful exclusionary 

dealing arrangement.

c. The Full Support Program was an all-or-nothing policy imposed 

upon Distributors

Respondent characterizes the Full Support Program as a mere rebate program. RB at 

98-101. Respondent argues that McWane “did not have any contracts that required its 

customers to buy its domestic Fittings exclusively” and that “[w]hen a customer is free to walk 

away from even a monopolist’s discounts at any time, no violation of the antitrust laws exists.” 

RB at 92-93. These arguments mischaracterize the nature and effects of the Full Support 

Program.

Although the September 22, 2009 Full Support Program did contain a provision relating 

to withholding rebates, it also contained an “all or nothing” component. Specifically, the Full 

Support Program explicitly stated that customers who did not buy 100% of their Domestic 

Fittings from McWane “may forgo shipment of their domestic fitting and accessory orders of 

Tyler Union or Clow Water products for up to 12 weeks.” F. 1173. Although the word “may” 

was used in the Full Support Program, McWane communicated to Distributors that if they 

purchased Domestic Fittings from Star, they would lose the ability to buy Domestic Fittings 
403

from McWane, unless those purchases fell into two narrow exceptions: they were part of a 

bundled sale with pipes, or McWane did not have the Domestic Fitting available for timely 

delivery. F. 1173, 1179-1183. 

Extensive evidence – including contemporaneous documents surrounding the formation 

of the Full Support Program (F. 1155-1167); McWane’s communication and application of the 

Full Support Program to U.S. Pipe, which did not participate in any McWane rebate program

(F. 1297-1300); and McWane’s termination of Hajoca as a Distributor when one of its branches 

purchased Domestic Fittings from Star (F. 1207-1219) – confirms that McWane’s Full Support 

Program was an all-or-nothing exclusive dealing arrangement.

Respondent argues that the Full Support Program “had about as much force as the piece 

of paper on which it was written” and argues that McWane paid rebates and shipped Domestic 

Fittings to various Distributors, despite the fact that those Distributors bought Domestic 

Fittings from Star. RB at 94. Respondent further argues that the Full Support Program “was 

not only not a contract, but was enforced weakly – if at all – at one customer (Hajoca) for a 

period of 12 weeks at the most.” RB at 101.

The evidence does show that many Distributors bought Domestic Fittings from Star and 

that McWane never withheld rebates from or refused to sell to these Distributors. F. 1250, 

1257 (HD Supply); F. 1277-1279 (Ferguson); F. 1320 (Groeniger); F. 1344 (WinWholesale). 

However, the evidence also shows that some Distributors’ purchases of Domestic Fittings came 

under the exceptions allowed in the Full Support Program. F. 1242 (HD Supply); F. 1305 (U.S. 

Pipe); see also F. 1137 (Some of Star’s sales of Domestic Fittings were made in circumstances 

in which McWane could not provide Domestic Fittings in a timely fashion (e.g., large-diameter 

Fittings), or where the End User needed a special coating such as “Protecto 401” that Star 

specialized in.). 

Regarding Illinois Meter, Respondent asserts that McWane paid rebates and shipped 

Domestic Fittings to Illinois Meter in 2010 and 2011, despite the fact that Illinois Meter bought 

Domestic Fittings from Star. RB at 94. The evidence shows that Illinois Meter purchased only 

“a half dozen” Domestic Fittings from Star to evaluate their quality and because it had a couple 
404

of engineers who wanted to see what Star’s Domestic Fittings looked like. F. 1363. With the 

exception of these limited purchases, Illinois Meter does not buy Domestic Fittings from Star 

and has been unwilling to stock or ship Star’s Domestic Fittings because it does not want to 

lose the ability to buy McWane’s Domestic Fittings. F. 1364. 

With the exception of Hajoca, Respondent did not need to enforce the Full Support 

Program because Distributors acceded to heavy economic pressure and, with minor exceptions, 

purchased all their Domestic Fittings from McWane. F. 1239-1240 (HD Supply’s CEO sent a 

letter to HD’s branch managers, district managers, and operations managers stating that they 

needed “to adhere to this mandate and purchase all of our American made fittings through 

[McWane] or Sigma.”); F. 1261 (Ferguson’s Vice President of the Waterworks Division called 

district managers to ensure that Ferguson continued to purchase Domestic Fittings from 

McWane and not purchase Domestic Fittings from Star); F. 1302 (U.S. Pipe’s CEO instructed 

his purchasing manager not to purchase Domestic Fittings from Star unless McWane could not 

provide the needed Domestic Fittings.); F. 1324 (Groeniger purchased Star’s Domestic Fittings 

indirectly through Griffin Pipe Products Co. (“Griffin”), a manufacturer of ductile iron pipes 

who also resells Fittings as part of packaged sales of pipes and Fittings.); F. 1334-1336 

(WinWholesale informed McWane that it “accepted” the terms of McWane’s Full Support 

Program and subsequently placed Star Pipe on the list of vendors who are “not approved” for 

sales of Domestic Fittings unless McWane was not able to provide the required Domestic 

Fittings.). Thus, even though McWane did not enforce the Full Support Program against 

Distributors other than Hajoca, McWane’s Full Support Program nevertheless harmed 

competition. See ZF Meritor, 696 F.3d at 282-83 (concluding that defendant’s agreements with 

customers constituted an unlawful exclusionary dealing arrangement where, “despite the fact 

that [the defendant] did not actually terminate the agreements on the rare occasion when [a 

customer] failed to meet its [market-penetration] target, the [customers] believed that it 

might”).

With respect to Hajoca, Respondent argues the policy was “enforced weakly . . . for a 

period of 12 weeks at the most.” RB at 101. From December 4, 2009 to April 13, 2010, a 

period of 18 weeks, McWane refused to sell Domestic Fittings to Hajoca. F. 1219. 

Respondent’s “weak enforcement” of the Full Support Program must be placed in context. In 
405

November 2009, McWane informed Hajoca: “[I]f any Hajoca location chooses to buy another 

domestic fitting supplier[’s] product[,] Hajoca will not have direct access to the McWane 

ductile iron water main fittings for a period of time as well as loss of any accrued rebate to 

date.” F. 1201. Subsequent to receiving notification on January 22, 2010 that the FTC was 

investigating McWane, Hajoca and McWane negotiated regarding McWane’s Full Support 

Program and came to an agreement in April 2010, whereby McWane agreed to allow Hajoca’s 

Lansdale branch, but not its Tulsa branch, to resume purchasing Domestic Fittings from 

McWane. F. 1220-1221. Prior to those negotiations, on March 27, 2010, Mr. McCullough sent 

an internal email within McWane asking, “[h]ow our potential FTC action might [a]ffect how 

we do business with [Hajoca].” F. 1220. 

Actions that may have been taken to improve one’s litigating position are entitled to 

little or no weight. Hospital Corp. of America v. FTC, 807 F.2d 1381, 1384 (7th Cir. 1986); 

see also United States v. General Dynamics Corp., 415 U.S. 486, 504-05 (1974) (Because 

“violators could stave off [government enforcement] actions merely by refraining from 

aggressive or anticompetitive behavior when such a suit was threatened or pending,” probative 

value of evidence of actions taken post-acquisition was found to be extremely limited.). Thus, 

in the instant case, Respondent’s argument that its “rebate policy” was “enforced weakly . . . 

for a period of 12 weeks at the most” (RB at 101) is entitled to little or no weight.

Furthermore, the Full Support Program is not a mere rebate from which Distributors can 

walk away at any time, as argued by Respondent. RB at 93 (citing Concord Boat Corp. v. 

Brunswick Corp., 207 F.3d 1039, 1062-63 (8th Cir. 2000) (“[Defendant’s] discount programs 

were not exclusive dealing contracts . . . [because customers] were free to walk away from 

[Defendant’s] discounts at any time.”). Instead, with the exception of Ferguson, Distributors 

consistently testified that they could not risk McWane refusing to supply them with their 

Domestic Fittings requirements. F. 1238 (HD Supply interpreting McWane’s Full Support 

Program to mean that if HD Supply purchased Domestic Fittings from Star, HD Supply “would 

lose the rebate on the domestic fittings and potentially lose access to the domestic line[, which] 

could be a significant event.”); F. 1301 (Because U.S. Pipe needed access to a full line of 

Domestic Fittings, not just the “A” and “B” items initially being offered by Star, U.S. Pipe 

needed to take the notification from Mr. Tatman very seriously and buy its Domestic Fittings 
406

from McWane.); F. 1317 (Groeniger needed access to McWane’s Domestic Fittings in order to 

service customers with McWane-only Domestic Fitting requirements and was concerned about 

“[b]eing shut out” from McWane if it purchased Domestic Fittings from Star. ); F. 1358 

(Losing access to McWane’s Domestic Fittings was a serious consequence for Illinois Meter 

because Illinois Meter needs to have access to a full line of Domestic Fittings in certain 

locations and only McWane carried a complete line in 2009.). But see F. 1260 (Ferguson’s 

concerns about the possibility of the potential to lose access to McWane’s Domestic Fittings or 

foregoing unpaid rebates from McWane were only secondary concerns and Ferguson believed 

it unlikely that McWane would withhold rebates from Ferguson and that the rebate terms and 

lead times stated in the Full Support Program could be negotiated.). Thus, the evidence 

demonstrates that, overwhelmingly, Distributors viewed McWane’s Full Support Program as an 

all-or-nothing exclusive dealing arrangement and acted accordingly.

Respondent also argues that the Full Support Program was not a contract, did not 

require any customer to buy Domestic Fittings from McWane, and was short lived. RB at 92, 

98-101. A similar argument was rejected in Dentsply, where the Court of Appeals for the Third 

Circuit concluded that “an exclusivity policy imposed by a manufacturer on its dealers 

violate[d] Section 2 of the Sherman Act . . . based on . . . the nature of the relevant market and 

the established effectiveness of the restraint despite the lack of long term contracts between the 

manufacturer and its dealers.” Dentsply, 399 F.3d at 184. There, the defendant operated “on a 

purchase order basis with its distributors and, therefore, the relationship [with distributors was]

essentially terminable at will.” Id. at 185. The court found the policy of terminating any dealer 

that carried its competitor’s products (artificial teeth) exclusionary because “the economic 

elements involved – the large share of the market held by Dentsply and its conduct excluding 

competing manufacturers – realistically ma[de] the arrangements . . . as effective as those in 

written contracts.” Id. at 193-94 (“[I]n spite of the legal ease with which the relationship 

[could] be terminated, the dealers [had] a strong economic incentive to continue carrying 

Dentsply’s teeth.”); see also ZF Merritor, 696 F.3d at 278 (upholding jury verdict that rebate 

policy was de facto exclusive dealing and noting, “even if [a customer] decided to forgo the 

rebates and purchase a significant portion of its requirements from another supplier, there 
407

would still have been a significant demand from truck buyers for [the defendant’s] products. 

Therefore, losing [the defendant] as a supplier was not an option.”). 

In this case, in contrast, McWane’s Full Support Program was unilaterally imposed on 

Distributors; there was no competition to become the exclusive supplier, and McWane did not 

offer any additional discount, rebate or other consideration to Distributors in exchange for

exclusivity. Indeed, McWane threatened to revoke accrued rebates under preexisting rebate 

agreements with Distributors who chose to violate the Policy. 

Distributors viewed McWane’s Full Support Program as a threat, and one that they took 

seriously because of the significant negative impact that losing access to McWane’s Domestic 

Fittings would have on their business. E.g., F. 1192 (“When I read the letter that [McWane] 

sent out . . . I interpreted that as a threat.”); F. 1187 (“We were informed that they [McWane] 

were going to pull everything away from us, a threat.”). Thus, Distributors complied with 

McWane’s Full Support Program because they determined that they could not afford to switch 

to a competing Domestic Fittings supplier on an all-or-nothing basis – the risk to their business 

was simply too large. See Dentsply, 399 F.3d at 195 (holding similar “all-or-nothing” 

ultimatum to be exclusionary when it “created a strong economic incentive for dealers to reject 

competing lines in favor of Dentsply’s teeth”). Accordingly, McWane’s Full Support Program 

– even absent long term contracts – significantly foreclosed the Domestic Fittings market to 

potential competitors.

d. The Full Support Program foreclosed Star from a substantial share 

of the market

An exclusive dealing arrangement is not unlawful under the antitrust laws unless it is 

likely to “‘foreclose competition in a substantial share of the line of commerce affected.’” 

Microsoft, 253 F.3d at 69 (quoting Tampa Electric, 365 U.S. at 327); see Dentsply, 399 F.3d at 

191 (“The test is . . . whether the challenged practices bar a substantial number of rivals or 

severely restrict the market’s ambit.”). Foreclosure occurs when, pursuant to the exclusive 

dealing, “‘the opportunities for other traders to enter into or remain in that market [are] 

significantly limited.’” Microsoft, 253 F.3d at 69 (quoting Tampa Electric, 365 U.S. at 328).
408

As summarized above, McWane communicated to Distributors that its Full Support 

Program was an all-or-nothing deal and Distributors understood the policy as such. Because 

Star did not have a complete line of Fittings when it entered the Domestic Fittings market and 

Distributors could not risk being unable to supply all required Domestic Fittings and not being 

able to purchase them from McWane, Distributors were reluctant to purchase Domestic Fittings 

from Star. This scenario is similar to the agreements found to unlawfully foreclose competition 

in ZF Meritor, where the evidence showed that due to defendant’s “position as the dominant 

supplier, no OEM could satisfy customer demand without at least some [of defendant’s] 

products, and therefore no OEM could afford to lose [defendant] as a supplier.” ZF Meritor, 

696 F.3d at 283. 

For a Fittings supplier, Distributors are an important link in the supply chain and access 

to Distributors is essential for effectively reaching the End Users. Virtually all Fittings are sold 

through Distributors because they offer numerous advantages. F. 373-374. For example, 

Distributors maintain inventories of Fittings, which reduces the need for Fittings suppliers to 

have local warehouses and distribution facilities across the United States. F. 400, 402-404. 

Distributors lower Fitting suppliers’ costs by handling billing and invoicing to End Users, and 

by assuming the credit risk from dealing with End Users. F. 407, 411. Distributors also 

provide one-stop shopping for End Users to purchase the entire bundle of waterworks products 

(pipe, valves, Fittings, hydrants, and accessories), which allows Fittings suppliers to specialize 

in one or more product lines and not be at a competitive disadvantage relative to a supplier that

may have a broader waterworks products line. F. 400, 409. For these and other reasons,

McWane agrees that Distributors are “critical to [its] success” as a Fittings supplier. F. 401. 

Distributors are likewise critical to Star’s success. F. 402. 

McWane’s Full Support Program substantially foreclosed Star from this key distribution 

channel. Before McWane’s September 22, 2009 announcement, Star had received Distributor 

requests for quotes for Domestic Fittings worth approximately $10 million. F. 1395. Those 

requests were from the two largest waterworks distributors in the country, HD Supply and 

Ferguson, important regional distributors, and from a variety of independent waterworks 

distributors. F. 1395. Almost immediately after McWane announced its Full Support Program, 

those Distributors withdrew their requests for quotes from Star and informed Star that they 
409 

were no longer interested in purchasing Domestic Fittings from Star. F. 1382. Other 

Distributors who had intended to purchase some of their Domestic Fittings from Star decided 

not to submit requests for quotes to Star after McWane’s announcement. F. 1382. 

In United States v. Microsoft Corp., the government challenged Microsoft’s exclusive 

dealing agreements with the top Internet Access Providers (IAPs) in North America, 

accounting for a majority of all IAP subscribers. Microsoft, 253 F.3d at 70. Similar to 

Distributors in this case, IAPs were one of the most efficient channels for distributing browsing 

software. Id. at 70-71. The excluded rival, Netscape, was compelled to use more costly means 

for reaching consumers. Id. The evidence showed that Microsoft’s exclusive dealing 

arrangements diminished Netscape’s ability to obtain the critical mass of users needed to 

constrain Microsoft’s operating system monopoly. Id. at 60, 70-71 (“Microsoft’s deals with the 

IAPs clearly have a significant effect in preserving its monopoly; they help keep usage of 

[Netscape’s] Navigator below the critical level necessary for Navigator or any other rival to 

pose a real threat to Microsoft’s monopoly.”). Here, too, McWane’s Full Support Program has 

a significant effect in preserving its monopoly by keeping Distributors’ purchases of Domestic 

Fittings from Star below the critical level for Star to pose a real threat to McWane’s monopoly.

It is undisputed that Star’s Domestic Fittings sales represent a small portion of the 

relevant market, rising to less than 10% in 2011. F. 1042-1043. HD Supply and Ferguson are 

Star’s largest and second largest customers, respectively, for overall Fittings. Star estimates 

that while it has greater than a { }% share of HD Supply’s and a { }% share of 

Ferguson’s non-Domestic Fittings business, it has less than a { }% share of its largest 

customers’ Domestic Fittings business. F. 1258, 1280; see also F. 1281. 

Respondent argues that Star was not foreclosed, but competed very successfully, 

quickly grabbing 130 customers after entering the Domestic Fittings market. RB at 90, 93-94. 

In counting the number of customers to whom Star sold Domestic Fittings, Respondent’s 

expert, Dr. Normann, counted each Distributor that may have purchased only a single Domestic 

Fitting from Star, or whose purchases fell into one of the limited exceptions to McWane’s Full 

Support Program. F. 1142. The number of customers, without more information on the nature 

and extent of their purchases, is not entitled to substantial weight. See Insignia Systems v. 
410

News Am. Mktg. In-Store, Inc., 661 F. Supp. 2d 1039, 1049, 1064-65 (D. Minn. 2009) (plaintiff 

produced sufficient evidence to survive summary judgment on claim that plaintiff had been 

foreclosed even though plaintiff sold its services to nearly 60 customers). 

Importantly, “[t]he test is not total foreclosure, but whether the challenged practices bar 

a substantial number of rivals or severely restrict the market’s ambit.” Dentsply, 399 F.3d at 

191; Microsoft, 253 F.3d at 68-71 (condemning exclusive agreements because they prevented 

rivals from “pos[ing] a real threat to Microsoft’s monopoly”); see also Tampa Electric, 365 

U.S. at 328 (holding that exclusive dealing arrangement need not cover 100% of the buyer’s 

needs, but only that it forecloses “a substantial share of the relevant market”). In other words, 

foreclosure does not mean that the rival was prevented from making any sales. E.g., ZF 

Meritor, 696 F.3d at 265, 283-84 (exclusive dealing arrangements can be unlawful even where

monopolist permitted customers to purchase up to 20 percent of their requirements from the 

rival); Insignia Systems, 661 F. Supp. 2d at 1064-65. 

By threatening to cut off Distributors’ access to McWane’s Domestic Fittings, thereby 

materially contributing to Distributors’ reluctance to purchase from Star, McWane’s Full 

Support Program severely limited Star’s ability to enter the Domestic Fittings market. 

Accordingly, Star was substantially foreclosed from competing in the Domestic Fittings 

market.

e. The Full Support Program impaired Star’s ability to compete 

effectively

“In some cases, a dominant firm may be able to foreclose rival suppliers from a large 

enough portion of the market to deprive such rivals of the opportunity to achieve the minimum 

economies of scale necessary to compete.” ZF Meritor, 696 F.3d at 271. See Microsoft, 253

F.3d at 70-71 (stating that defendant’s exclusionary conduct kept Navigator “below the critical 

level necessary for Navigator or any other rival to pose a real threat to Microsoft’s monopoly”); 

Dentsply, 399 F.3d at 190-91 (competitive harm established when defendant’s excluded rivals 

failed to achieve “the critical level necessary for any rival to pose a real [competitive] threat”). 

In LePage’s, following the introduction of defendant’s rebate program, the plaintiff lost a 

significant amount of sales and lost key large volume customers and as a result, LePage’s 
411 

manufacturing process became less efficient. LePage’s Inc. v. 3M, 324 F.3d 141, 158-59, 161 

(3d Cir. 2003). 

As summarized above, Star estimated in 2009 that it needed between { } million 

dollars in sales of Domestic Fittings to justify purchasing its own domestic foundry. F. 1400. 

Although Star had received Distributors’ requests for quotes for Domestic Fittings worth 

approximately $10 million prior to McWane’s announcement of the Full Support Program 

(F. 1395), Distributors subsequently withdrew their requests for quotes from Star. F. 1382. In 

each of 2010 and 2011, Star’s Domestic Fittings sales were only { } million dollars. F. 1396-

1397. Thus, Star did not generate a sufficient volume of sales of Domestic Fittings to purchase 

and operate its own foundry. F. 1401. Instead, Star contracted with independent foundries, 

which was more costly and less efficient. F. 1409-1410. Star estimated that the cost of 

producing Domestic Fittings at its own foundry would be { }% lower than the cost of 

contracting with independent foundries. F. 1419. Respondent agrees that Star is “a less 

efficient supplier of domestic Fittings than McWane because of its use of multiple jobber

factories, rather than its own, dedicated foundry, like McWane.” RB at 62. Star also estimated 

that if Star owned its own foundry that produced its Domestic Fittings, Star could have lowered 

its Domestic Fittings prices by { }%. F. 1420. 

Without sufficient sales volume, Star was unable to purchase its own foundry. Without 

its own foundry, Star’s costs were higher, and therefore its prices were higher. In this respect 

also, the Full Support Program hindered Star’s ability to compete effectively.40 

f. Other issues affecting Star’s ability to compete

Respondent correctly asserts that Star was unable to capture more business for reasons 

entirely unrelated to McWane’s Full Support Program. RB at 50. For example, Ferguson was 

reluctant to purchase Domestic Fittings from Star because Ferguson was concerned about Star’s 

ability to produce a complete line of Domestic Fittings without having its own manufacturing 

facility. F. 1272. Ferguson was reluctant to purchase Domestic Fittings from Star also because 

 

40 Similarly, Fittings supplier SIP concluded that McWane’s Full Support Program would deter Distributors from 

purchasing Domestic Fittings from SIP and thus SIP would not be able to generate sufficient sales necessary to 

cover its estimated costs to enter the Domestic Fittings market. F. 1376-1377. 
412

it was concerned that Star was using jobber facilities with extra capacity to produce Domestic 

Fittings for them, Star would not disclose to Ferguson which foundries it was using, and 

Ferguson was concerned that any of these domestic foundries could abandon Star, leaving Star 

unable to supply Ferguson with Domestic Fittings. F. 1273. U.S. Pipe, too, had concerns about 

Star’s ability to provide a full line of Domestic Fittings early in Star’s domestic development 

process, and was concerned that Star would not commit to putting the tooling in place in 

advance of getting a requirement for volume. F. 1307-1308. In addition, WinWholesale had 

concerns in 2010 about Star’s reliability as a Domestic Fittings supplier that were independent 

of McWane’s Full Support Program. F. 1341. WinWholesale was concerned about whether 

Star had the capacity, about the quality of Star’s Domestic Fittings, whether Star could ship the 

product, and whether the product would be consistent. F. 1341. Similarly, Illinois Meter had 

previously had a negative experience with Star’s reliability as a supplier when Star first entered 

the joint restraint business, and was not willing to give Star any Domestic Fittings orders in 

early 2010 until Star had demonstrated it had sufficient inventory to meet Illinois Meter’s 

needs. F. 1361. 

Star acknowledged that it lost Domestic Fittings bids due to reasons other than 

McWane’s Full Support Program. For example, an internal Star email acknowledged that its 

Domestic Fittings were excluded on an order by Groeniger because Star could not meet the 

delivery dates. F. 1326. 

In its “domestic quote log,” used to track won and lost Domestic Fittings bids, Star

indicated that between September 22, 2009 and February 22, 2010, Star lost various Domestic 

Fittings jobs for which Star submitted a quote to a Distributor, but where the Distributor

purchased from McWane or Sigma (pursuant to the MDA, infra) rather than from Star. 

F. 1247. To the extent that comments provided by sales persons regarding the reasons for lost 

jobs are reliable, the domestic quote log fails to resolve the dispositive issue. Complaint 

Counsel points to entries in the “status/update” field of the domestic quote log on some of these 

jobs with the following comments: “HD mandate letter,” “letter directing fitting purchases,” 

“Tyler-Sigma announcement,” “letter threatening to cut off if they use Star domestic,” or 

“Ferguson will not buy domestic from Star currently.” F. 1248 (HD Supply); F. 1264 

(Ferguson). Respondent points to entries in the “status/update” field on other jobs with the 
413

following comments: “lost due to delivery times,” “lost due to delivery requirement,” or “lost, 

lead times were too long.” F. 1249 (HD Supply); F. 1265 (Ferguson). Thus, the domestic 

quote log is inconclusive regarding the reasons Star did not gain a greater share of the Domestic 

Fittings market. 

As of March 2010, although Star could supply most of the fast-moving items in a timely 

manner, it still had some problems supplying the very slow-moving items for which Star might

not have developed a pattern yet. F. 1133. In addition, Star was still building inventory in 

March 2010. F. 1129. Although Star had set a target in November 2009 to develop a full line 

of Domestic Fittings equal to the stock offered by McWane, by June 2010 Star had come close 

to that goal, but there were still quite a few odd patterns that Star did not offer. F. 1130. 

It cannot be disputed that Star was unable to capture more Domestic Fittings sales for 

reasons other than McWane’s Full Support Program. However, such evidence does not 

preclude a finding that McWane’s Full Support Program substantially foreclosed Star from the 

Domestic Fittings market. In ZF Meritor, the Third Circuit upheld a jury verdict finding 

exclusionary conduct notwithstanding evidence that the plaintiff’s products required frequent 

repairs and had incurred millions of dollars in warranty claims during the relevant time period. 

ZF Meritor, 696 F.3d at 266. The plaintiff itself acknowledged “poor product quality image” 

as one reason for its failures; that it had lost deals due to “lack of product availability”; and that 

it had refused to lower prices despite requests from customers. Id. at 308-09, 334-35 

(Greenberg, J., dissenting). Yet, the Third Circuit focused on the defendant’s efforts to exclude

the plaintiff from the relevant market, and found that there was substantial foreclosure despite 

evidence that the plaintiff could have competed more effectively. Id. at 285-86. See also 

LePage’s, 324 F.3d at 158-59 (upholding jury verdict notwithstanding evidence that plaintiff 

did not “try hard enough” to retain its large customer).

In Dentsply, the Third Circuit rejected the district court’s evaluation of defendant’s two 

main rivals’ business practices as a cause of their failure to secure more of the market, finding 

it “not persuasive,” and focused, instead on defendant’s actions. Dentsply, 399 F.3d at 189. 

“The reality is that over a period of years, because of Dentsply’s domination of dealers, direct 

sales have not been a practical alternative for most manufacturers. It has not been so much the 
414

competitors’ less than enthusiastic efforts at competition that produced paltry results, as it is the 

blocking of access to the key dealers.” Id. See also Rome Ambulatory Surgical Ctr. v. Rome 

Mem’l Hosp., 349 F. Supp. 2d 389, 405 (N.D.N.Y. 2004) (denying defendant’s motion for 

summary judgment on exclusive dealing claim despite evidence of plaintiff’s incompetence 

because there was evidence that the defendant had “acted to foreclose competition altogether 

through improper exclusive dealing,” rather than “continuing to compete for patients by simply 

lowering its rates or offering a better facility”). 

Here, as in ZF Meritor and Dentsply, evidence that Star lost orders due to delays in 

delivery and did not have that same depth and breadth of inventory as McWane does not 

preclude a finding of exclusionary conduct where McWane’s efforts were indeed effective in 

reducing competitive opportunities for Star. See Dentsply, 399 F.3d at 189, 196 (“The apparent 

lack of aggressiveness by competitors is not a matter of apathy, but a reflection of the 

effectiveness of Dentsply’s exclusionary policy.”).

g. Proffered procompetitive justifications

The greater weight of the evidence shows that Respondent’s Full Support Program 

foreclosed competition in such a substantial share of the Domestic Fittings market so as to 

adversely affect competition. As analyzed above, Respondent held significant market power 

and was able to substantially foreclose Star from the Domestic Fittings market. 

Before concluding that the Full Support Program is an unlawful exclusive dealing 

arrangement, the likely or actual anticompetitive effects must be considered in light of any 

procompetitive effects. See ZF Meritor, 696 F.3d at 288 (citing Barr Labs., 978 F.2d at 111

(explaining that courts must “evaluate the restrictiveness and the economic usefulness of the 

challenged practice in relation to the business factors extant in the market”)). “[E]ven if a 

company exerts monopoly power, it may defend its practices by establishing a business 

justification.” Dentsply, 399 F.3d at 196. Once the government demonstrates harm to 

competition, the burden shifts to Respondent “to show that [the challenged conduct] promotes a 

sufficiently pro-competitive objective.” Id. (citing United States v. Brown Univ., 5 F.3d 658, 

669 (3d Cir. 1993)).
415

Respondent asserts that the purpose of the Full Support Program was to generate 

sufficient volume to support its foundries. RB at 47, 59, 74, 107; F. 1175 (Mr. McCullough 

explaining that the purpose of the Full Support Program was to generate enough business to 

operate its foundries). In November 2008, faced with high inventory levels and insufficient 

demand for Domestic Fittings, McWane had closed its Tyler South plant. F. 477. See also 

F. 18, 478. Because its last remaining domestic foundry had high inventory levels and 

insufficient demand, McWane was concerned that if Star entered the Domestic Fittings market, 

McWane would not be able to generate enough business to operate its last foundry. F. 1145-

1146. Another proffered purpose of McWane’s Full Support Program was to persuade 

McWane’s customers to support McWane’s full line of Domestic Fittings. F. 1147, 1173. 

McWane was concerned that customers might “cherry pick” by purchasing the highest-selling, 

fastest-moving items (the “A” and “B” items) from Star, while purchasing from McWane only 

the slower-moving, infrequently-needed and higher-cost “C” and “D” items. F. 1147, 1175. 

“[A] defendant’s assertion that it acted in furtherance of its economic interests does not 

constitute the type of business justification that is an acceptable defense to § 2

monopolization.” LePage’s, 324 F.3d at 163. As explained by one court of appeals:

In general, a business justification is valid if it relates directly or indirectly to the 

enhancement of consumer welfare. Thus, pursuit of efficiency and quality 

control might be legitimate competitive reasons . . . , while the desire to 

maintain a monopoly market share or thwart the entry of competitors would not.

Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1183 (1st Cir. 1994) (citing 

Eastman Kodak Co. v. Image Tech. Servs., 504 U.S. 451, 483 (1992); Aspen Skiing, 472 U.S. at 

608-11)).

McWane’s desire to increase sales for its last remaining United States foundry may be a 

laudable business objective. It is not, however, a valid justification for exclusionary conduct. 

As explained by the D.C. Circuit in Microsoft when it rejected a similar defense, the desire to 

increase sales “is not an unlawful end, but neither is it a procompetitive justification.” 253 F.3d 

at 71-72 (characterizing the objective as a “competitively neutral goal”). Respondent has 

proffered no explanation as to how its Full Support Program benefits consumers rather than 

merely itself. Furthermore, as explained below, there is considerable evidence in the record 
416

that McWane implemented the Full Support Program in order to thwart Star from entering the 

Domestic Fittings market. “Maintaining a monopoly is not the type of valid business reason 

that will excuse exclusionary conduct.” LePage’s, 324 F.3d at 164.

Because there is no procompetitive justification that outweighs the harm to competition, 

Respondent’s Full Support Program constitutes unlawful exclusionary conduct. Accordingly, 

Complaint Counsel has established the second step in a monopolization claim: willful 

maintenance of Respondent’s monopoly power.

4. Intent

“The Supreme Court has made clear that intent is relevant to proving monopolization, 

Aspen Skiing, 472 U.S. at 602, and attempt to monopolize, Lorain Journal, 342 U.S. at 154-

55.” LePage’s, 324 F.3d at 163. “[K]nowledge of intent may help the court to interpret facts 

and to predict consequences.” Chicago Bd. of Trade, 246 U.S. at 238. Cf Aspen Skiing, 472 

U.S. at 602 (“[E]vidence of intent is merely relevant to the question whether the challenged 

conduct is fairly characterized as ‘exclusionary’ or ‘anticompetitive’ . . .”); Microsoft, 253 F.3d 

at 59 (“Evidence of the intent behind the conduct of a monopolist is relevant only to the extent 

it helps us understand the likely effect of the monopolist’s conduct.”). Thus, the evidence 

discussed below, which places McWane’s decision to implement its Full Support Program in 

context, is considered in evaluating whether Respondent’s conduct is fairly characterized as 

exclusionary.

The evidence surrounding McWane’s decision to issue the Full Support Program is also 

evidence of specific intent to monopolize. Whereas for monopolization “the mere intent to do 

the act” is sufficient, United States v. Aluminum Co. of America, 148 F.2d 416, 431-32 (2d Cir. 

1945), attempted monopolization requires proof that the defendant had a “specific intent to 

destroy competition or build monopoly.” Times-Picayune Publ’g Co. v. United States, 345 

U.S. 594, 626 (1953); accord Spectrum Sports, 506 U.S. at 456. “[S]pecific intent may be 

established not only by direct evidence of unlawful design, but by circumstantial evidence, 

principally of illegal conduct.” William Inglis & Sons Baking Co. v. ITT Cont’l Baking Co., 

668 F.2d 1014, 1027 (9th Cir. 1981) (citations omitted).
417

McWane recognized that if Star entered the Domestic Fittings market, prices for 

Domestic Fittings would decrease. E.g., F. 1149, 1151-1153. The June 24, 2009 email 

exchanges between Mr. Walton, Mr. McCullough, and Mr. Tatman, set forth in F. 1148-1150 

and summarized above, Section III.G.3.a.(i), clearly express McWane’s concern that if Star 

were to enter the Domestic Fittings market, prices of Domestic Fittings would be driven down, 

which prompted McWane to “plot a comprehensive strategy going forward.” F. 1149. See also

F. 1158 (among the series of assumptions in Mr. Tatman’s June 29, 2009 PowerPoint 

Presentation of topics for discussion were, Star might “drive profitability out of our business”). 

In the narrative for McWane’s 2010 budget, Mr. Tatman listed the biggest risk factor for 

McWane’s Fittings business in 2010 as the “[e]rosion of domestic pricing if Star emerges as a 

legitimate competitor.” F. 1151. 

McWane’s Mr. Napoli recognized that if Star entered the market, Distributors would 

seek lower prices from McWane:

We may not be losing business now but I am concerned about the future. Those 

[Distributors] not aligned with us or Sigma will be aggressive with Star backing 

them against our people... When that happens our distributors will continually 

pressure us to ‘do something’ (lower prices). If [Star] stay[s] in business, we 

will always see downward pressure in the future.

F. 1152.

Internal McWane documents also show that Respondent implemented the Full Support 

Program with the specific intent of preventing Star from entering and lowering prices in the 

Domestic Fittings market. As summarized above, McWane drafted and implemented its Full 

Support Program in direct response to Star’s entry and because it wanted to “block” Star from 

entering the Domestic Fittings market. E.g., F. 1155, 1580 (June 29, 2009 PowerPoint 

Presentation wherein Mr. Tatman considered how to “block Star” from entering the Domestic 

Fittings market). See also F. 1148 (internal McWane email by Mr. McCullough, writing: “Just 

because we share our blended fittings does not require us to share our domestic.”). 

That the intent of the Full Support Program was to discourage Distributors from 

purchasing Domestic Fittings from Star is quite clear in an internal email that Mr. Tatman sent 

on August 24, 2009 to Mr. Dennis Charko, head of Clow Water (a subsidiary of McWane), 
418

which sells a limited number of Fittings, regarding “McWane Domestic Fittings 2010 

brand/market protection.” The email stated in part:

Star has announced a Domestic line of waterworks fittings and restraints. . . .

To protect our domestic brands and market position we are going to adopt a 

distributor exclusivity program for 2010 wherein we won’t provide domestic 

product to distributors who are not fully supporting our domestic product lines.

F. 1167. McWane’s National Sales Manager, Mr. Jansen, expressed this same intent in a 

November 3, 2009 email to his sales representatives regarding Domestic Fittings, stating: “We 

don’t want the market tumbling and if we keep everyone on board we shouldn’t have to drop 

prices.” F. 1153 (Mr. Jansen explained in his deposition that “market tumbling” means prices 

falling; and “keep everyone on board” refers to Distributors being loyal to McWane under the 

Full Support Program). See also F. 1154 (Mr. Jansen email to sale representatives, writing, 

“We need to make sure we are getting into the smaller [Distributor] players up there and keep 

them from Star. That’s how a cancer starts, is by letting them get in with one, two, then three, 

and it crumbles from there.”).

McWane’s goal to maintain high prices by preventing Star from becoming a legitimate 

competitor is not a procompetitive reaction akin to pursuing greater sales by increasing quality 

and service or lowering price. Instead, McWane’s goal is a “clear expression[] of a plan to 

maintain monopolistic power.” See Dentsply, 399 F.3d at 190. When viewed in its entirety, 

the greater weight of the evidence demonstrates that McWane had a specific intent to control 

prices and eliminate competition. 

5. Dangerous probability of achieving monopoly power

The last element of an attempted monopolization claim, “dangerous probability of 

achieving monopoly power,” Spectrum Sports, 506 U.S. at 456, although listed as a separate 

and independent element of attempted monopolization, can be inferred from evidence 

indicating the existence of the first two elements – anticompetitive conduct and specific intent. 

William Inglis, 668 F.2d at 1029. In determining whether there is a dangerous probability of 

monopolization, courts consider “the relevant market and the defendant’s ability to lessen or 

destroy competition in that market.” Confederated Tribes of Siletz Indians of Or. v. 
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Weyerhaeuser Co., 411 F.3d 1030, 1043 (9th Cir. 2005). As established above, Respondent 

had the ability to lessen or destroy competition in the Domestic Fittings market. In addition, 

Respondent engaged in anticompetitive conduct with specific intent. Thus, the dangerous 

probability of achieving monopoly power element has been met.

6. Conclusion

Have met its burden of proof on each of the elements, Complaint Counsel has proven 

Count Six, Monopolization and Count Seven, Attempted Monopolization.

H. Count Four: Alleged Restraint of Trade in the Domestic Fittings Market

1. Overview

Count Four of the Complaint alleges that McWane and Sigma entered into a Master 

Distribution Agreement, dated September 17, 2009 (“MDA”), that unreasonably restrains trade 

and constitutes an unfair method of competition in or affecting commerce in violation of 

Section 5 of the FTC Act. Complaint ¶¶ 49, 67. The Complaint alleges that McWane

perceived Sigma as preparing to enter the Domestic Fittings market and sought to eliminate the 

risk of competition from Sigma by inducing Sigma to become a distributor of McWane’s 

Domestic Fittings, rather than a competitor in that market. Complaint ¶ 48. 

Complaint Counsel argues that Count Four of the Complaint charges McWane with 

violating Section 1 of the Sherman Act by entering the MDA with Sigma. CCB at 180. 

Specifically, according to Complaint Counsel, the MDA, by its terms and by the parties’ 

understanding, barred Sigma from independently entering the Domestic Fittings market in 

competition with McWane. CCB at 181. The Complaint does not allege that McWane 

excluded Sigma, but that McWane and Sigma agreed that Sigma would cede the Domestic 

Fittings market to McWane. CCRB at 93.

Complaint Counsel asserts that “Sigma was first motivated to enter the Domestic 

Fittings market after Congress passed ARRA.” CCB at 185. Complaint Counsel characterizes 

Sigma as a potential entrant in the Domestic Fittings market and thus asserts that the MDA is 

properly characterized as a horizontal agreement among potential competitors, and not as a 
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simple vertical distribution agreement. CCB at 181. Complaint Counsel argues that because 

Sigma was a potential competitor and the MDA eliminated Sigma as an independent entrant, 

the MDA is a naked market allocation agreement among potential competitors not to compete 

with each other, and is per se illegal. CCB at 182. Complaint Counsel argues, alternatively, 

that because the parties have market power and there are no procompetitive efficiencies, the 

MDA can also be condemned under a more plenary market analysis pursuant to the rule of 

reason. CCB at 182.

Respondent asserts that McWane did not exclude Sigma from the Domestic Fittings 

market; Sigma did. RB at 102. Specifically, Respondent asserts that Complaint Counsel must 

prove, and cannot prove, that, as of September 2009 when the MDA was executed, Sigma 

intended to expand into the Domestic Fittings market and had taken the necessary concrete 

steps to do so. RB at 102. Respondent further asserts that Sigma was in a “grave” financial 

situation and had not taken any concrete steps to manufacture its own Domestic Fittings by 

September 2009. RB at 102. Accordingly, Respondent asserts that because the MDA was the 

best, quickest, and only way for Sigma to serve its customers who desired Domestic Fittings, 

Respondent is entitled to judgment in its favor on Count Four of the Complaint. RB at 104.

2. Elements of restraint of trade

A Section 1 violation requires (1) the existence of a contract, combination, or 

conspiracy among two or more separate entities (concerted action), that (2) unreasonably 

restrains trade. Realcomp, 635 F.3d at 824; Law, 134 F.3d at 1016. 

On September 17, 2009, McWane and Sigma entered into a Master Distribution 

Agreement through which Sigma would resell McWane’s Domestic Fittings. They agreed as 

follows:

a. Appointment: McWane hereby appoints Sigma, and Sigma hereby accepts 

appointment, as an authorized OEM Distributor of McWane Domestic 

Fittings upon the terms and conditions of this Agreement.

b. Exclusivity: Sigma agrees that McWane shall be Sigma’s sole and exclusive 

source for Domestic Fittings, with the exception that: 
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(1) Sigma may purchase Domestic Fittings in the 30”- 48” diameter size 

range from other manufacturers so long as Sigma is the sole owner of 

the patterns for such Domestic Fittings, but only for resale to other 

domestic foundry manufacturers of ductile iron pipe and fittings; 

(2) If McWane does not own patterns for a particular Domestic Fitting, 

Sigma may purchase that Domestic Fitting from an alternative 

source, but only until such time as McWane acquires the pattern for 

that Domestic Fitting; and 

(3) Sigma may purchase Domestic Fittings from alternative sources on 

an order by order basis only if McWane cannot deliver McWane 

Domestic Fittings to the designated delivery point by the time 

specified in the order or within 30 days after the order has been 

received and processed by McWane, whichever occurs later.

F. 1540. The signed MDA between McWane and Sigma meets the concerted action 

requirement of Section 1. See, e.g., United States v. Delta Dental, 943 F. Supp. 172, 175 

(D.R.I. 1996) (“[C]oncerted action may amply be demonstrated by an express agreement.”). 

Therefore, the remaining Section 1 inquiry is whether the MDA unreasonably restrains trade. 

Under Section 1 of the Sherman Act, agreements among actual or potential competitors 

at the same level of the market structure (i.e., horizontal competitors) to allocate markets are 

per se unlawful. See, e.g., Palmer v. BRG of Georgia, Inc., 498 U.S. 46, 49 (1990) (per 

curiam); United States v. Topco Assocs., 405 U.S. 596, 608-09 & n.9, 612 (1972); Continental

T. V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 58 n.28 (1977). “[A]greements not to compete 

among potential competitors are also illegal per se.” Transource Int’l, Inc. v. Trinity Indus., 

725 F.2d 274, 280 (5th Cir. 1984) (citing Otter Tail Power Co. v. United States, 410 U.S. 366, 

377 (1973)); Engine Specialties, Inc. v. Bombardier, Ltd., 605 F.2d 1, 9 (1st Cir. 1979). 

Therefore, the preliminary inquiry focuses on “whether or not each firm alleged to have 

been a party to [the agreement] was an actual or potential competitor in that market.” United 

States v. Sargent Electric Co., 785 F.2d 1123, 1127 (3d Cir. 1986); Bombardier, 605 F.2d at 9

(stating that the first inquiry is whether the parties to the agreement “can be deemed to have 

been operating at the same horizontal level in the market, thus triggering the per se rule should 

[market allocation] be found”). If Sigma was not a potential competitor, the MDA does not 

“constitute a per se violation of section 1 of the Sherman Act as a horizontal restraint.” 
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Transource Int’l Inc., 725 F.2d at 280. Thus, if Sigma was not a potential competitor, the 

MDA must, instead, be analyzed under the rule of reason. Transource Int’l Inc., 725 F.2d at 

280; Bombardier, 605 F.2d at 9. 

To prove that Sigma was a potential competitor, Complaint Counsel must show that 

Sigma “had the necessary desire, intent, and capability to enter the market at [the 

manufacturing] level.” Bombardier, 605 F.2d at 9. Sigma’s desire and intent are addressed 

first. Sigma’s capability is addressed second. 

3. Whether Sigma was a potential competitor

a. Desire and intent

After the enactment of ARRA in February 2009, with its allocation of $6 billion to

shovel-ready water infrastructure projects and requirement that such projects use only 

Domestic Fittings (F. 524-526), Sigma believed that it needed to offer Domestic Fittings. 

F. 1421. Sigma considered two potential avenues for entering the Domestic Fittings market: 

(1) purchasing “private label” Domestic Fittings from McWane (i.e., Fittings manufactured by 

McWane for Sigma and branded as Sigma); or (2) producing Domestic Fittings using the 

“virtual manufacturing” model that it used for imported Fittings (i.e., contracting with 

independent, domestic foundries). F. 1423. 

In evaluating both of these options, Sigma recognized that ARRA was a short term 

stimulus program and that Sigma needed to be able to enter the Domestic Fittings market 

quickly. F. 1422 (“It was intended as a shovel-ready stimulus. So there was a lot of emphasis 

on now.”). Notably, as discussed above, with the exception of Star, every current and former 

Domestic Fittings manufacturer, including Griffin Pipe, U.S. Pipe, and Backman Foundry, 

concluded that it was not worthwhile to expand or return to Domestic Fittings production. 

F. 1039. See also F. 1037-1038. 

Sigma recognized that it had an immediate need to be able to offer its customers 

Domestic Fittings and thus desired to enter the market. E.g., F. 1421. For example, in a May 

4, 2009 memorandum to the Sigma Board, Mr. Pais described the ARRA Buy American 

provision and declared that “it behooves SIGMA to review the feasibility of producing a line of 
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‘domestic’ Fittings, to meet this growing need, in order to reassure our customer base and 

retain their loyalty and their business at the current levels.” F. 1448.

In the first half of 2009, Sigma approached McWane about the possibility of McWane 

supplying Sigma with “private label” Domestic Fittings that Sigma could resell. F. 1425. On 

June 5, 2009, McWane made its initial offer to sell Domestic Fittings to Sigma at five percent 

off McWane’s published prices. F. 1443. Sigma was not satisfied with McWane’s June 5, 

2009 offer, as it would not allow Sigma enough profit margin to cover operating costs, and thus 

Sigma did not accept McWane’s June 5, 2009 offer. F. 1444-1445.

In an update by Mr. Pais to Sigma’s Board after Sigma had rejected McWane’s June 5, 

2009 offer, Mr. Pais wrote: “We now need to go all out and implement a SDP [Sigma Domestic 

Production] plan - replicating SIGMA’s ‘virtual manufacturing’ model working with a 

collection of domestic foundries who have ample capacity, to produce the vast range of 

Fittings, just as we do thru a collection of facilities overseas.” F. 1455; see also F. 1421 (Sigma 

believed demand for Domestic Fittings would increase as a result of ARRA and that Sigma 

therefore “needed to explore the option of being in a position to produce fittings for 

oursel[ves].”).

Thus, the evidence amply shows that Sigma had the desire and had expressed an intent 

to enter the Domestic Fittings market. 

b. Capability

Under the case law advanced by Complaint Counsel, to show that Sigma would 

“probably have entered the . . . market independently, . . . it must be shown that [Sigma] had 

‘available feasible means’ for entering the relevant market.” Yamaha Motor Co. v. FTC, 657 

F.2d 971, 977 (8th Cir. 1981); Bombardier, 605 F.2d at 9 (requiring “intent and ability”). One 

district court case, in evaluating whether an agreement not to compete was per se illegal as 

between two potential competitors, explained:

Although courts have not defined what a “potential competitor” is for the 

purpose of determining whether there has been a violation of the Sherman Act, 

courts have looked to the following factors to determine whether a plaintiff is a 
424

potential competitor such that it has standing to sue under the Clayton Act: “1) 

the background and experience of plaintiff in the prospective business; 2) 

affirmative acts of plaintiff with the object of entering the proposed business; 3) 

the ability of plaintiff to finance operation of the business and the purchase of 

necessary equipment and facilities; and 4) the formation of contracts by 

plaintiff.”

Conergy AG v. MEMC Elec. Materials, Inc., 651 F. Supp. 2d 51, 57-58 (S.D.N.Y. 2009)

(citation omitted). These four standards are used herein to evaluate whether Sigma was 

logistically and financially “capable” of entering the Domestic Fittings market.

i. Sigma’s background and experience in the 

prospective business

First, the evidence of the “background and experience of [Sigma] in the prospective 

business” (Conergy, 651 F. Supp. 2d at 57-58) shows that Sigma has extensive experience in 

manufacturing and selling imported Fittings, as it has imported and sold Fittings in the United 

States since 1985, with net sales approaching 200 million dollars in 2009. F. 51, 53. Using a 

“virtual manufacturing” model, Sigma is responsible for the technical know-how that goes into 

producing its Fittings and handles administration, engineering, drawings, inspection, testing, 

quality control, and transportation of the Fittings it imports. F. 57. Sigma has approximately 

23 territory sales managers across the United States and approximately 25 inside customer 

service personnel supporting the sales force. F. 61. Sigma had personnel who could supervise 

a virtual manufacturing operation for Domestic Fittings, such as Mr. Stuart Box, who had 

extensive experience in U.S. foundry work and fittings manufacturing before joining Sigma, 

and Mr. Gopi Ramanathan, who also had extensive foundry experience. F. 1451.

At the same time that it was considering entering production of Domestic Fittings in 

2009, Sigma attempted to become a supplier of domestic pipe restraints, a product distinct from 

Fittings. F. 1504. Domestic production of pipe restraints is a much simpler, smaller and less 

expensive venture with a much smaller product range than Domestic Fittings and thus was an 

easier market for Sigma to try to enter. F. 1506. Mr. Rybacki described Sigma’s domestic 

restraints project as “a disaster for us because we were very unsuccessful at it” and felt that it 

was inadvisable for Sigma to attempt to become a Domestic Fittings supplier in 2009, because 
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“we proved it with the domestic restraint [effort] that we weren’t real good at it.” F. 1507-

1508.

ii. Sigma’s affirmative acts to enter the Domestic 

Fittings market

Second, the evidence of the “affirmative acts of [Sigma] with the object of entering the 

proposed business” (Conergy, 651 F. Supp. 2d at 57-58) shows that in early 2009, Sigma 

pursued the virtual manufacturing option for producing Domestic Fittings by forming a Sigma 

Domestic Production (“SDP”) plan and assembling a team of executives responsible for 

investigating and exploring the possibility of Sigma producing Fittings domestically. F. 1446. 

The SDP team investigated the possibility of Sigma entering the Domestic Fittings market by 

producing fittings through independent, domestic foundries and evaluated the costs, foundry 

capabilities, and time it would take for Sigma to produce Domestic Fittings in response to 

ARRA. F. 1447. Sigma spent between $50,000 and $75,000 investigating domestic production 

options. F. 1449. Sigma’s SDP team considered using factories and independent foundries to 

produce Domestic Fittings based on Sigma’s drawings and tooling, similar to Sigma’s existing 

methods of producing Fittings overseas. F. 1452. Sigma contemplated doing the finishing, or 

lining and painting, of its Domestic Fittings itself. F. 1452. On or about June 5, 2009, Mr. Box 

summarized the results of SDP planning meetings held in June 2009, which included detailed 

action plans for identification of top Fittings, foundries, molding machines, cost modeling, 

testing of lost foam production technology, and visits to potential foundry partners. F. 1454. 

Sigma believed that it needed to be able to offer around 730 different types of Domestic 

Fittings and that it needed a minimum of 450 core patterns to produce those 730 types of 

Fittings. F. 1468. In June 2009, Sigma’s SDP team was working on obtaining patterns for 

producing Domestic Fittings and had placed orders for foam patterns and other equipment to be 

used in Domestic Fittings production. F. 1457. 

By August 2009, Sigma had visited at least five different domestic foundries as part of 

its investigation into the production of Domestic Fittings and had purchased two large flasks for 

large Domestic Fittings production trials. F. 1459-1460. In addition, Sigma had produced two 

sample Domestic Fittings at the Eureka Foundry in Tennessee, using patterns supplied by 
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Metalfit (F. 1461 (describing the Fittings as trial runs, not commercially ready)); and had 

received a quote from Metalfit for the production of tooling. F. 1464. 

iii. Sigma’s ability to finance entry into the 

 Domestic Fittings market

Third, the evidence of the “the ability of [Sigma] to finance operation of the business 

and the purchase of necessary equipment and facilities” (Conergy, 651 F. Supp. 2d at 57-58) 

shows that throughout 2009, Sigma was in a “precarious position overall in financial terms.” 

F. 1483. Sigma had had a loss of { } million dollars in 2008. F. 1482. In 2009, Sigma’s 

sales were down { } million dollars and its EBITDA was { 

}. F. 1485. As a result of the “very, very difficult” financial environment it faced in 2009, 

Sigma was forced to lay off employees, cut salaries and benefits for employees who remained, 

and cut numerous other expenses. F. 1487. 

Sigma had a very large amount of debt at the end of 2008, and even breached some of 

its bank covenants in 2009. F. 1488. In 2009, a significant portion of Sigma’s substantial debt 

was unsecured and carried high interest rates. F. 1489. Sigma’s long-term debt was 

approximately { } million dollars at the end of 2008, which it reduced to approximately { }

million dollars at the end of 2009, mostly as a by-product of reduction of inventories. F. 1490-

1491. In June 2009, Mr. Pais issued an update to Sigma’s Board of Directors outlining his 

“SOS” plan to save Sigma. F. 1496. In that update, Mr. Pais noted the decline of about { }

percent in its earnings level in 2008; that Sigma stood to lose another { } percent in 2009; that 

Sigma will barely be able to meet its second quarter 2009 covenants; and that the second 

quarter 2009 results were “marginal at best,” which “may cause a lot of concern to all, 

especially the banks, as we would be unable to assure them of the future performance trends.” 

F. 1496. 

Sigma’s estimates for its costs to enter the Domestic Fittings market were between 

about five and ten million dollars. F. 1480. These estimates are similar to those of both SIP (a 

supplier of imported Fittings) and EBAA (a domestic foundry). F. 1062, 1070, 1373. Each of 

these companies, when considering expanding into Domestic Fittings production, estimated 
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that the required expansion would cost up to ten million dollars and take two years to realize. 

F. 1062, 1378.

Capital expenditure limits imposed by Sigma’s lenders in 2009 were extremely low. 

F. 1499. The Frontenac Group, a private equity firm that purchased a 60% ownership interest 

in Sigma in 2007, said at Sigma’s July 2009 Board meeting, that Sigma did not have the 

capability to invest in Domestic Fittings production and that Frontenac would not provide the 

finances for Sigma’s Domestic Production Plan. F. 1501. Sigma’s lenders never authorized 

Sigma to invest in becoming a Domestic Fittings supplier, and Sigma lacked sufficient funds to 

invest in such an operation on its own. F. 1503. 

Complaint Counsel presented contrary evidence showing that Sigma did, in fact, have 

the financial capability to invest in Domestic Fittings production. For example, on July 27, 

2009, following the July 15, 2009 Sigma Board meeting, Walter Florence, a Frontenac 

managing director and a member of Sigma’s Board of Directors, sent an email to Sigma 

management regarding strategy for upcoming lender meetings. F. 1502. In this email, he noted 

that Sigma’s liquidity was fine, that it had recently received an injection of capital from 

investors and shareholders, and that these investors and shareholders were prepared to invest 

7.5 million dollars more to fund the SDP program and strategic business additions, which will 

enhance credit quality and help Sigma grow and build equity value. F. 1502. Regardless of 

whether Sigma had the financial capability to produce Domestic Fittings by contracting with 

independent, domestic foundries, it did not have the time required to do so, as addressed below. 

iv. Sigma’s steps to form contracts

Fourth, the evidence on “the formation of contracts by [Sigma]” (Conergy, 651 F. Supp. 

2d at 57-58) shows that as of mid-2009, Sigma had no domestic foundries, no contracts with 

existing domestic foundries to produce Fittings in the United States, no core boxes, no 

machining facilities, and no finishing facilities or contracts for coating, painting, and lining for 

Domestic Fittings. F. 1465, 1471-1472. Although Sigma believed it needed a minimum of 450 

core patterns for Domestic Fittings production, in September 2009, Sigma had very few of the

patterns it needed for making Fittings in the United States and, as of September 2009, Sigma 
428

did not have any contracts with any pattern shops to build the patterns it would need to produce 

Fittings in the United States. F. 1468-1471.

c. Summary

It would have taken Sigma approximately 6 to 8 months to produce even one Domestic 

Fitting and lead time of at least 18 to 24 months to begin production of a full range of Fittings. 

F. 1476. If Sigma had started producing Domestic Fittings in September of 2009, Sigma could 

not have sold its first Domestic Fittings until between February and May 2010. F. 1475. 

Sigma knew that ARRA was a short term stimulus program. F. 1422 (“[R]ightly speaking, we 

should have had that [domestic] capability on day one for us to have any capacity to supply the 

projects. So we were already behind the eight ball on day one, because [ARRA] was just a ball 

from the blue.”). Indeed, according to the EPA publication titled, “Implementation of the 

American Recovery and Reinvestment Act of 2009,” all ARRA funded projects were to be 

under contract by February of 2010. F. 1032. 

In a September 9, 2009 report to the Sigma Board, Mr. Pais explained Sigma’s ability to 

enter the Domestic Fittings market as follows: 

For Fittings, the range of sizes and complexities of the line items required even 

at a certain select level is rather huge and along with the additional processing 

required for machining, coating and packing etc. the entire project was found to 

be too overwhelming and cumbersome, calling for a sizable Capital Expenditure 

in the range of $6M to $8M as per the initial estimates. The likely sales volume 

we could garner from our [Buy American] capability was uncertain at best and 

far less than what we had originally feared. But most importantly, in the end, 

the time it would have taken for us to come on line and our inability to service 

our customers with the [Buy American] requirements over the next 12 months 

and of course the huge [capital expenditure], made us wish for an alternate 

viable option and as such, we responded when McWane too revived our dialog 

to accommodate us as a Master Distributor with better terms. 

F. 1474. 

Weighing the evidence presented at trial, Complaint Counsel has not met its burden of 

showing that Sigma “had the necessary desire, intent, and capability,” Bombardier, 605 F.2d at 
429

9, to enter the Domestic Fittings market. Accordingly, Complaint Counsel has not shown that 

Sigma was a potential competitor.

4. Whether the MDA unreasonably restrained trade

a. Legal standards governing rule of reason inquiries

Because Sigma was not a potential competitor, the MDA must be analyzed under the 

rule of reason. Transource Int’l Inc., 725 F.2d at 280; Bombardier, 605 F.2d at 9. “When 

restraints are not per se unlawful, and their net impact on competition not obvious, the 

conventional rule-of-reason approach requires courts to engage in a thorough analysis of the 

relevant market and the effects of the restraint in that market.” Realcomp, 635 F.3d at 825

(citing Ind. Fed’n, 476 U.S. at 461). “A full rule-of-reason inquiry ‘may extend to a “plenary 

market examination,”’ which may include the analysis of ‘the facts peculiar to the business, the 

history of the restraint, and the reasons why it was imposed’” ‘as well as the availability of 

reasonable, less restrictive alternatives.’” Id. at 825 (citations omitted). 

Complaint Counsel bears the initial burden of demonstrating that the MDA produced 

adverse, anticompetitive effects within the Domestic Fittings market or sufficient evidence of 

market power. See Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1065 (11th Cir. 2005) 

(citing Ind. Fed’n, 476 U.S. at 460-61). If the MDA is “shown to have an anticompetitive 

effect,” or if McWane “is shown to have market power and to have adopted policies likely to 

have an anticompetitive effect, then the burden shifts to [McWane] to provide procompetitive 

justifications for the policies.” Realcomp, 635 F.3d at 825 (citations omitted).

A “quick-look,” or abbreviated, rule of reason analysis applies to those arrangements 

that “an observer with even a rudimentary understanding of economics could conclude . . . 

would have an anticompetitive effect on customers and markets.” California Dental Ass’n, 526 

U.S. at 770. In such cases, the nature of the restraint is such that the likelihood of 

anticompetitive effects “can easily be ascertained” or is “comparably obvious” and no elaborate 

or detailed market analysis is necessary. See id. at 769-71. If the nature of the restraint is 

deemed facially anticompetitive pursuant to this “quick-look,” “the proponent of the restraint 

must provide ‘some competitive justification’ for it, ‘even in the absence of a detailed market 
430

analysis’ showing market power or market effects.” Realcomp, 635 F.3d at 825 (quoting Cal. 

Dental Ass’n, 526 U.S. at 769-71). In all cases, “the criterion to be used in judging the validity 

of a restraint on trade is its impact on competition.” NCAA, 468 U.S. at 104.

b. Nature of the restraint

In Count Four, Complaint Counsel charges that the MDA is an unreasonable restraint of 

trade because, through the MDA, McWane and Sigma agreed that Sigma would abandon its 

efforts to enter the Domestic Fittings market independent of McWane, and instead distribute 

McWane’s Domestic Fittings under restrictive terms. CCB at 180. Complaint Counsel’s 

charge that McWane and Sigma agreed through the MDA to implement and enforce McWane’s 

Full Support Policy with the specific intent of eliminating competition from Star is evaluated 

separately in the analysis of Count Five, infra Section III.I.

As determined in Section III.G.2.b. supra, McWane has market power in the Domestic 

Fittings market. The evidence here shows that, through the MDA, Sigma agreed to abandon its 

efforts to produce its own Domestic Fittings. F. 1540, 1543-1544. The evidence further shows 

that Sigma did, in fact, abandon such efforts. F. 1545. As Mr. Rona, Sigma’s OEM business 

manager, explained, “once we had the MDA, we were satisfied we had a source of domestic 

fittings for ARRA, period.” F. 1545. 

Complaint Counsel has presented evidence supporting its position that Sigma would 

have entered the Domestic Fittings market, but for Sigma’s decision to enter the MDA. 

Complaint Counsel points out that Mr. Pais testified that, absent an agreement with McWane, 

Sigma would have entered the domestic market. CX 2527 (Pais, IHT at 179-180) (“[I]f 

[McWane] stuck with that initial offer [of a 5% discount] . . . then we certainly would have 

gone another – to Plan B, which is our [domestic] production.”). However, Mr. Pais also 

testified that, as of September 2009, Sigma did not have a viable plan for entering the Domestic 

Fittings market and that Sigma had only “some wishful thinking type of scenarios that we could 

have struggled through.” Pais, Tr. 1799, 1801. 

Because the testimony of Mr. Pais is contradictory on this point, the contemporary 

documents of Sigma and the actions taken by Sigma in furtherance of its plan to enter the 
431

Domestic Fittings market are relied upon. Contemporaneous documents addressing a firm’s 

subjective intent to enter are “[t]he best evidence that a firm is an actual potential entrant.” In 

re B.A.T. Industries, 1984 FTC LEXIS 4, *154 (Dec. 17, 1984). As analyzed above, the 

contemporaneous evidence shows that, as of September 2009, Sigma could not have produced 

its own Domestic Fittings in time to serve its customers’ needs. F. 1470-1477. Consistent with 

this evidence is Mr. Pais’ testimony that, “we had finally found a recourse by going to our 

competitor because we thought that was the only option that was viable because the service of 

the customer was imminent. . . . There was no other option that we could -- this is not a 

premeditated three or four-year plan that we had to enter a new product.” F. 1582. See also

F. 1583 (it was critical for Sigma to offer Domestic Fittings to its customers and “entering into 

the master distribution agreement with McWane was a solution to the problem we had”). Thus, 

the evidence shows that the MDA was Sigma’s only viable option for supplying Domestic 

Fittings to Sigma’s customers during ARRA’s short time window.

This finding, however, does not end the inquiry into whether the MDA was an 

unreasonable restraint of trade. When a rule of reason inquiry extends to a “plenary market 

examination,” the history of the restraint and the reasons why it was imposed and the 

availability of reasonable, less restrictive alternatives are also evaluated. Realcomp, 635 F.3d 

at 825. Therefore, the history and the reasons are analyzed below.

i. History of the restraint and reasons why it was 

imposed

An analysis of “the history of the restraint, and the reasons why it was imposed”

(Realcomp, 635 F.3d at 825) shows that McWane entered into the MDA because it feared entry 

by Sigma. Although the evidence shows that Sigma could not have entered the Domestic 

Fittings market in time to take advantage of the increased demand for Domestic Fittings 

through ARRA, the evidence also shows that after meeting with Mr. Pais in April 2009, Mr. 

McCullough believed that Sigma had the ability to enter into domestic production of Fittings, 

had access to the needed capital, and “also had the contacts and the talent[, as] they’ve been 

importing for a very long time.” F. 1427. In addition, McWane considered the likelihood of 

Sigma producing its own Domestic Fittings as part of McWane’s internal discussions regarding

whether to sell Domestic Fittings to Sigma. E.g., F. 1439-1440, 1442.
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Mr. Tatman, in developing topics for discussion as McWane considered whether to sell 

Domestic Fittings to Sigma, noted that one reason for McWane to sell Domestic Fittings to 

Sigma was to “eliminate the probability” that Sigma would secure another domestic source 

option. F. 1439. A May 26, 2009 memorandum by Mr. Tatman contained the following 

discussion points in conclusion: 

McWane’s decision to sell Domestic Fittings to Sigma “probably comes down to two 

factors:”

1. How legitimate of a risk is there with a competitor successfully introducing a 

Domestic product line?

2. Do we believe that in the bigger picture, supporting competitors with 

Domestic product would result in a healthier industry on the non-Domestic 

side of the business?

F. 1440. See also F. 1518 (Mr. Tatman noting: “If [Sigma is] truly committed to make the 

investment level required to be a viable competitor regardless of our actions, then producing for 

[Sigma] is probably of greater financial benefit to our business than having them source 

elsewhere.”).

Mr. McCullough expressed his view of McWane’s determination to sell Domestic 

Fittings to Sigma as follows:

[U]ltimately [McWane’s] decision [of whether to sell Domestic Fittings to 

SIGMA] was SIGMA has the ability to get into domestic made manufacturing 

of waterworks fittings, just as Star did. If we had the choice between [they’re] 

not being in it and us selling them, or them being in it and us not selling them, 

that ultimately, we made the decision it’s under our best interest to sell them.

F. 1442.

McWane viewed Sigma’s ability to produce Domestic Fittings and enter the market to 

be more likely after Star announced its planned entry at the June 15, 2009 AWWA conference. 

F. 1511. In evaluating whether to enter the MDA with Sigma, Mr. Tatman believed that Sigma 

was in a “much better position” to develop its own Domestic Fittings capability than Star, in 
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part because of Sigma’s existing OEM relationships (with ACIPCO and U.S. Pipe) and 

Sigma’s access to financial backing. F. 1512. 

ii. Availability of reasonable, less restrictive 

alternatives

Conducting a “plenary market examination” also requires an analysis of “the 

availability of reasonable, less restrictive alternatives.” Realcomp, 635 F.3d at 825. Although 

there were no other alternatives to the MDA for Sigma to enter the Domestic Fittings market in 

a timely manner, the MDA contains restrictive terms that were not necessary for McWane to 

sell Domestic Fittings to Sigma. The restrictive terms, as they relate to provisions intended to 

exclude Star from the market, are the subject of Count Five of the Complaint and discussed 

infra Section III.I. The restrictive terms, as they relate to the agreement between McWane and 

Sigma through which Sigma ceded the Domestic Fittings market to McWane, are evident in 

two provisions of the MDA relating to: (1) sources from whom Sigma could purchase 

Domestic Fittings, and (2) prices Sigma could charge under the MDA. 

Under the MDA, “Sigma agree[d] that McWane shall be Sigma’s sole and exclusive 

source for Domestic Fittings,” with narrow, limited exceptions. F. 1540. Sigma further agreed 

to, and did, stop its efforts to produce its own Domestic Fittings. F. 1543-1546. Instead, Sigma 

became an exclusive distributor of McWane branded Domestic Fittings.41 The effect of this 

provision was to preclude Sigma from purchasing Domestic Fittings from Star and to prevent 

Sigma from developing the capability to produce Domestic Fittings on its own in competition 

with McWane. Accordingly, this provision of the MDA has likely anticompetitive effects.

In addition, the MDA contains restrictive terms as they relate to price. Specifically,

the MDA provides:

Pricing. McWane will sell McWane Domestic Fittings to Sigma at a discount of 

twenty percent (20%) off McWane’s published distributor pricing in effect at the 

time the order is received by McWane. 

 41 Although Sigma had originally approached McWane seeking to purchase Fittings manufactured by McWane for 

Sigma and branded as Sigma, under the MDA, Sigma agreed to become an OEM distributor of Domestic Fittings 

branded as McWane fittings. F. 1425, 1540. 
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While Sigma may resell McWane Domestic Fittings at any price it deems 

appropriate, it is the unilateral policy of McWane not to appoint or continue any 

OEM distributor who resells McWane Domestic Fittings at a price less than 

98% of McWane’s published pricing on a weighted average basis for all 

customers and items sold during any given quarterly period, before rebates, 

freight and prompt payment discounts (the “Suggested Resale Price”), or who 

fails to establish a rebate program of 8% or greater for customers, excluding 

manufacturers of ductile iron pipe, who purchase more that [sic] $200,000 

annually of McWane Domestic Fittings or who stock McWane Domestic 

Fittings in the normal course of business. 

. . . This agreement shall terminate immediately and without notice in the event 

that Sigma resells McWane Domestic Fittings at a price below the Suggested 

Resale Price, or fails to implement and maintain the Suggested Rebate for 

eligible customers; provided, however, that the Suggested Rebate shall not apply 

to customers who are domestic manufacturers of ductile iron pipe. McWane 

reserves the right to audit Sigma’s compliance with this paragraph at any time 

through a third party . . . auditor chosen by McWane.

F. 1548. Although the MDA stated, “Sigma may resell McWane Domestic Fittings at any price 

it deems appropriate,” the MDA also stated that McWane could immediately terminate the 

MDA without notice in the event that Sigma did not resell McWane’s Domestic Fittings at 

McWane’s suggested resale price. F. 1548. See also F. 1553 (Mr. Pais describing the pricing 

provision of the MDA as follows: “with the pricing, we are obliged to be as close to the 

published multiplier as possible. Our hands are not tied – but we cannot sell below, because it 

will undermine McWane’s own sales.”). 

On December 21, 2009, McWane sent a customer letter announcing multiplier increases 

for Domestic Fittings, effective January 22, 2010. F. 1554. Mr. Tatman forwarded McWane’s 

December 21, 2009 multiplier increase letter to Mr. Rona of Sigma: “Per our MDA this will 

impact Sigma orders as of the effective date.” F. 1555. Mr. Greg Fox of Sigma then forwarded 

the McWane December 21, 2009 customer letter within Sigma, noting: “Under the terms and 

agreements of our Master Distribution Agreement with [McWane], we will mirror the 

multiplier and implementation dates of this letter. We have no latitude for exceptions.” 

F. 1556. Sigma enacted the same multiplier increase as McWane did, effective January 22, 

2010. F. 1557.
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“While vertical agreements setting minimum resale prices can have procompetitive 

justifications, they may have anticompetitive effects in other cases; and unlawful price fixing, 

designed solely to obtain monopoly profits, is an ever-present temptation.” Leegin, 551 U.S. at 

892. McWane has offered no procompetitive justifications for the provision of the MDA 

requiring Sigma to resell McWane Domestic Fittings at a weighted average of no less than 98% 

of McWane’s published prices. 

The Supreme Court, in Leegin, further explained, “[v]ertical agreements establishing 

minimum resale prices can have either procompetitive or anticompetitive effects, depending 

upon the circumstances in which they are formed.” Leegin, 551 U.S. at 893. Here, the 

circumstances in which the MDA was formed show that the price provision of the MDA has 

the potential for anticompetitive effects. As determined in Section III.G.2.b., McWane has 

monopoly power in the Domestic Fittings market. Further, in considering the circumstances in 

which the MDA was formed, it is also significant that the MDA contains provisions designed to 

exclude Star from the Domestic Fittings market, addressed infra Section III.I. In these 

circumstances, the price provision of the MDA has the potential for anticompetitive effects.

iii. Summary of competitive impact

Evidence of the history of the MDA, the reasons McWane entered into it, and the 

restrictive terms contained therein, demonstrate the anticompetitive nature of the MDA. 

“Market power and the anticompetitive nature of the restraint are sufficient to show the 

potential for anticompetitive effects under a rule-of-reason analysis, and once this showing has 

been made, [the respondent] must offer procompetitive justifications.” Realcomp, 635 F.3d at 

827.

c. Procompetitive justifications

Respondent’s concerted action with Sigma through the MDA cannot be sustained under 

the rule of reason analysis “[a]bsent some countervailing procompetitive virtue.” Indiana 

Fed’n of Dentists, 476 U.S. at 459. Respondent bears the burden of “establishing an 

affirmative defense which competitively justifies [an] apparent deviation from the operations of 

a free market.” NCAA, 468 U.S. at 113; Realcomp, 635 F.3d at 825. 
436

Respondent asserts that the MDA, as well as the Full Support Program, was an effort to 

keep its Union foundry operating. RB at 107. As determined in Section III.G.3.g., supra, 

McWane’s desire to increase sales for its last remaining United States foundry is not a valid 

procompetitive justification. See Microsoft, 253 F.3d at 71-72 (the desire to increase sales “is 

not an unlawful end, but neither is it a procompetitive justification”). Moreover, McWane had 

not expected that entry by Sigma into the Domestic Fittings market – either through the MDA 

or independently – would increase the size of the Domestic Fittings market. F. 1591. And 

indeed, the MDA did not increase the size of the Domestic Fittings market. F. 1593 (“The fact 

that Sigma had access to McWane fittings under the MDA, that didn’t cause there to be more 

domestic jobs; is that right? A. Correct.” “Q. . . . By having access to those fittings, you didn’t 

expand the size of the pie, if you will, you expanded Sigma’s ability to service a piece of that 

pie, is that fair? A. Yes.”). 

Respondent next asserts that Sigma was able to reach and service customers that 

McWane could not. RB at 107-108. See F. 1584-1585 (Sigma, with its network of regional 

distribution yards and larger sales force, was better able than McWane to provide certain 

servicing benefits); F. 1586-1589 (some Distributors preferred Sigma to McWane). An 

efficiency defense is valid only if the challenged conduct is reasonably necessary in order to 

achieve the legitimate objective identified by the respondent. In re Realcomp II, Ltd., 2009 

FTC LEXIS 250 at *39-40 (Oct. 30, 2009). See also Broadcast Music, Inc. v. CBS, Inc., 441 

U.S. 1, 19-21 (1979) (blanket license was “an obvious necessity” for achieving integrative 

efficiencies, and joint setting of price was “necessary” for the blanket license); National Soc’y 

of Prof’l Engineers, 435 U.S. at 696 (rejecting asserted justification for complete ban on 

competitive bidding as “simply too broad”). 

Respondent has not demonstrated that the restrictive provisions of the MDA – requiring 

Sigma to purchase only from McWane, requiring Sigma to stop its own efforts to produce 

Domestic Fittings, requiring Sigma to price in accordance with McWane, and requiring Sigma 

to refuse to sell to Distributors pursuant to McWane’s Full Support Program – were reasonably 

necessary to achieve a legitimate objective. Respondent’s proffered justifications are, 

therefore, rejected.
437

5. Conclusion

Under a rule of reason analysis, the evidence establishes that the MDA gave rise to 

potential genuine adverse effects on competition due to McWane’s monopoly power and the 

anticompetitive nature of the MDA. Respondent’s proffered procompetitive justifications were 

insufficient to overcome Complaint Counsel’s prima facie case of adverse impact. These 

findings establish that the MDA was an unreasonable restraint of trade in the Domestic Fittings 

market. Accordingly, Complaint Counsel has proven Count Four, Unreasonable Restraint of 

Trade.

I. Count Five: Alleged Conspiracy to Monopolize the Domestic Fittings 

Market

1. Overview

Count Five of the Complaint alleges that McWane and Sigma entered into the MDA 

with the specific intent to monopolize the Domestic Fittings market, and took overt acts to 

exclude their rivals in furtherance of their conspiracy, constituting an unfair method of 

competition in or affecting commerce in violation of Section 5 of the FTC Act. Complaint

¶¶ 55, 68. The Complaint further alleges that the principal terms of the MDA were that 

McWane would be Sigma’s exclusive source for Domestic Fittings and that Sigma would resell 

McWane’s Domestic Fittings to Distributors only on the condition that the Distributor agreed 

to purchase Domestic Fittings exclusively from McWane or Sigma. Complaint ¶ 49.

Respondent first asserts that even if there is a separate market for Domestic Fittings, 

McWane did not have monopoly power in that market. RB at 89. Respondent next asserts that 

Star rapidly and effectively entered the Domestic Fittings market and thus McWane did not 

exclude Star from that market. RB at 90. Respondent further asserts that the Full Support 

Program, as incorporated in the MDA between McWane and Sigma, was merely a rebate policy 

that did not require any customer to buy Domestic Fittings from McWane or Sigma. RB at 92-

101, 107. These arguments have been considered, evaluated, and decided against Respondent, 

supra Sections III.C.2. and III.G. 

With respect to the MDA between McWane and Sigma, Respondent asserts that 
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Complaint Counsel must prove that McWane and Sigma possessed the specific intent to confer 

monopoly power upon McWane by predatory or exclusionary conduct; that McWane and 

Sigma in fact engaged in such anticompetitive conduct; and that a dangerous probability 

existed that McWane would succeed in its attempt to achieve monopoly power. RRB at 67-68. 

Respondent further asserts that Complaint Counsel presented no evidence that McWane or 

Sigma entered into the MDA with the specific intent to monopolize. RB at 105-106; RRB at 

68.

2. Elements of conspiracy to monopolize

“A ‘conspiracy to monopolize’ means a conspiracy to acquire or maintain the power to 

exclude competitors from some portion of commerce.” Williams v. 5300 Columbia Pike Corp., 

891 F. Supp. 1169, 1175 (E.D. Va. 1995) (citing American Tobacco Co., 328 U.S. at 809). 

Three elements of a claim for conspiracy to monopolize are: (1) concerted action, with (2) the 

specific intent to monopolize, and (3) an overt act in furtherance of the conspiracy. Levine v. 

Central Fla. Medical Affiliates, 72 F.3d 1538, 1556 (11th Cir. 1996); Thompson v. 

Metropolitan Multi-List, Inc., 934 F.2d 1566, 1582 (11th Cir. 1991). 

In addition to these elements, Respondent urges a fourth element, “an effect upon an 

appreciable amount of interstate commerce,” citing the decision of the Court of Appeals for the 

Tenth Circuit in Lantec, Inc. v. Novell, Inc., 306 F.3d 1003, 1028 (10th Cir. 2002). RB at 105. 

Other circuits require no showing or have been quiet on this issue. E.g., Int’l Distrib. Ctrs., 

Inc. v. Walsh Trucking Co., 812 F.2d 786, 795 (2d Cir. 1987) (holding that elements of a 

conspiracy to monopolize are concerted action, deliberately entered into with the specific intent 

to achieve an unlawful monopoly, and the commission of an overt act in furtherance of the 

conspiracy); Baxley-DeLamar Monuments, Inc. v. American Cemetery Ass’n, 843 F.2d 1154, 

1157 (8th Cir. 1988) (same); Thompson, 934 F.2d at 1582 (same). As analyzed above, 

Complaint Counsel has proven that Respondent’s Full Support Program substantially 

foreclosed Star from the Domestic Fittings market (Section III.G.3. supra), which thus had an 

effect upon an appreciable amount of interstate commerce. Further, thousands of tons of 

Domestic Fittings, worth millions of dollars, were sold throughout the United States under the 

MDA (F. 1597), which reflects an appreciable amount of interstate commerce. See United 
439

States v. Yellow Cab Co., 332 U.S. 218, 225-26 (1947) (observing that “interstate purchases of 

replacements of some 5,000 licensed taxicabs in four cities . . . is an appreciable amount of 

commerce under any standard”). The remaining elements of conspiracy to monopolize are 

addressed below.

3. Concerted action

The MDA is a written agreement, entered into and signed by McWane and Sigma on 

September 17, 2009. F. 1537. This satisfies the concerted action element for a conspiracy to 

monopolize claim, which has the same standard for proving an agreement as Section 1. See, 

e.g., Howard Hess Dental Labs. v. Dentsply Int’l Inc., 602 F.3d 237, 254 n.7 (3d Cir. 2010) 

(standard governing existence of agreement same for Section 1 and Section 2); U.S. Anchor 

Mfg., 7 F.3d at 1001-02.

The MDA explicitly states that Sigma may only resell McWane Domestic Fittings to:

(1) American Cast Iron Pipe Company; and 

(2) Other customers, including distributors, contractors and 

fabricators, but excluding manufacturers of ductile iron pipe that 

have agreed to purchase McWane Domestic Fittings as their sole 

source of Domestic Fittings when McWane Domestic Fittings are 

available at the time of order. 

McWane shall from time to time provide Sigma with a list of customers 

who have not agreed to source their Domestic Fittings solely from 

McWane. Sigma agrees not to sell McWane Domestic Fittings to any 

customer so listed by McWane, or to any other customer who Sigma 

actually knows has purchased Domestic Fittings from a source other than 

McWane at any time during the previous 60 days. 

F. 1558. Under the MDA, McWane required Sigma not to sell, and Sigma agreed not to sell, 

McWane Domestic Fittings to any customer listed by McWane as not having agreed to 

purchase their Domestic Fittings solely from McWane. F. 1559-1560. 

The MDA further provides that Sigma would assist McWane in the enforcement of 

McWane’s Full Support Program:
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Sigma shall . . . take reasonable efforts to monitor its customer’s sources of 

supply of Domestic Fittings, and shall notify McWane as soon as possible if 

Sigma becomes aware of any purchases of non-McWane Domestic Fittings by 

any such customer.

F. 1561. Sigma understood that under the MDA, if a customer wanted to buy Domestic 

Fittings through Sigma, they could, but they would have to buy all their Domestic Fittings from 

Sigma and that if a customer purchased Domestic Fittings from Star, Sigma could no longer 

sell them McWane’s Domestic Fittings. F. 1562. 

4. Specific intent

The next element of conspiracy to monopolize is “[s]pecific intent to monopolize the 

relevant market.” Fleer Corp. v. Topps Chewing Gum, 658 F.2d 139, 153 (3d Cir. 1981) 

(citing Times-Picayune Publ’g Co., 345 U.S. at 626) (other citations omitted). A “specific 

intent to monopolize” means an intent to exclude competition or control prices. Stanislaus 

Food Products v. USS-POSCO Indus., 2011 U.S. Dist. LEXIS 72764, *34-35 (E.D. Cal. 2011) 

(citing Carpet Seaming Tape Licensing Corp. v. Best Seam. Inc., 616 F.2d 1133, 1141-42 (9th 

Cir. 1980) (specific adverse impact on the market); American Tobacco Co., 328 U.S. at 789 

(object of a combination or conspiracy to monopolize is “to exclude actual and potential 

competitors”)). 

In this case, the object of the conspiracy was to exclude Star from the Domestic Fittings 

market. Although Sigma has been found not to be a potential competitor in the Domestic 

Fittings market (Section III.H.3. supra), for this cause of action, it is not necessary to determine 

that Sigma was a potential entrant into the Domestic Fittings market. As a distributor of 

McWane’s Fittings, pursuant to the MDA, Sigma had a vertically oriented agreement with 

McWane. Traders oriented vertically to each other can be held in violation of Section 2 for 

conspiracy to monopolize. Perington Wholesale, Inc. v. Burger King Corp., 631 F.2d 1369, 

1377 (10th Cir. 1979) (“The fact that [the defendant’s] coconspirators competed in markets 

different from [the defendant’s] market does not preclude finding a conspiracy to monopolize 

[the defendant’s] market.”). 
441

There is direct evidence of both McWane’s and Sigma’s specific intent to exclude Star 

from the Domestic Fittings market. With respect to McWane’s specific intent to exclude Star, 

as previously found, McWane implemented the Full Support Program in order to impede Star’s 

ability to sell to Distributors. Section III.G.4. supra. As discussed below, McWane 

incorporated the Full Support Program into the MDA. That is, through the MDA, McWane 

required Sigma to enforce McWane’s Full Support Program. See F. 1558-1562. From the 

documents regarding the negotiations between McWane and Sigma leading up to the MDA, it 

is clear that McWane intended for Sigma to work in concert with McWane to exclude Star from 

the Domestic Fittings market, as discussed below. 

After Sigma rejected McWane’s June 5, 2009 offer to supply Sigma with McWane 

Domestic Fittings at five percent off McWane’s published prices, McWane officials continued 

to debate whether to supply Sigma with McWane’s Domestic Fittings. One of the 

considerations listed in evaluating whether to enter into a master distribution agreement with 

Sigma was: “Would providing Sigma with access to Tyler/Union domestic [product] help us 

either better protect our brand/share against Star or promote more stable market prices.” 

F. 1527. See also F. 1580 (Mr. Tatman’s June 29, 2009, “brainstorming slide,” posing that he 

did not think that Sigma would be “willing to generate little to no incremental margin $ just to 

help us block Star”). 

In a July 27, 2009 PowerPoint Presentation titled, “Sigma - Domestic Review Session,” 

intended for spurring discussion within McWane, Mr. Tatman wrote that having Sigma sell 

McWane branded product should “reduce Star’s ability to grow share.” F. 1581. On August 

20, 2009, McWane held an internal meeting among Mr. McCullough, Mr. Tatman, Mr. Jansen, 

and Mr. Walton to consider whether to supply Domestic Fittings to Sigma through a master

distribution agreement. F. 1578. As recorded in the handwritten notes of Mr. Walton, 

Mr. McCullough made the following points at that meeting about selling Domestic Fittings to 

Sigma:

LM [Leon McCullough (Executive Vice President)] want[s] to sell SIGMA to 

put pressure on Star. LM hopefully to drive Star out of business. Would rather 

have competition other than Star.
442

LM thinks that we should sell SIGMA as an insurance policy and to continue to 

put pressure on Star. . . . LM approved Rick [Tatman]’s recommendation page 

of his PowerPoint presentation on selling SIGMA.

F. 1579.

These internal discussions among McWane executives are direct evidence of McWane’s 

specific intent to enter into the MDA with Sigma with the aim of excluding Star from the 

Domestic Fittings market.

Sigma also entered into the MDA with the specific intent to exclude Star. When Sigma 

was first assessing its options for offering Domestic Fittings, Mr. Pais wrote to a Sigma Board 

member as follows: “With our relationship with McWane, it is also fully conceivable to get 

part of our needs produced with SIGMA label, once we establish ourselves as the ‘2nd choice’ 

for the [Buy American] segment, as they may privately prefer it to be just a 2-supplier market! 

Besides, this may marginalize Star.” F. 1575. Mr. Pais also noted in a September 9, 2009 

report to the Sigma Board, that Sigma’s “strategy to team up with McWane” through the MDA 

was “likely to have the intended effect of marginalizing Star. . .” F. 1576. In addition, Mr. Pais

stated in a September 22, 2009 dictated message: “[I]f we do our job right, it might isolate Star 

and make them suffer with their investment even more, because they may not be able to gain 

credibility.” F. 1577. 

In addition to the foregoing direct evidence, there is circumstantial evidence that 

McWane and Sigma had specific intent to monopolize the Domestic Fittings market by 

excluding Star. One court of appeals has stated, specific “intent may be inferred . . . from the 

proof of actual monopoly power.” Fleer Corp., 658 F.2d at 54 (citing American Tobacco Co., 

328 U.S. at 789). See also In re Luria Brothers & Co., 1963 FTC LEXIS 97, *112 n.11 (Feb. 

13, 1963) (stating that “[w]hile in Section 2 cases involving combinations or conspiracies to 

monopolize it is necessary to show intent, its proof merges into the proof of unlawful 

conspiracy. . . . ‘Where a conspiracy is proved . . . from the evidence of the action taken in 

concert by the parties to it, it is all the more convincing proof of an intent to exercise the power 

of exclusion acquired through that conspiracy’” (quoting American Tobacco Co., 328 U.S. at 

809)). Similarly, the court in Northeastern Tel. Co. v. AT&T, 651 F.2d 76 (2d Cir. 1981)
443

explained that because “it is frequently impossible for a plaintiff to obtain direct evidence of 

the alleged conspirators’ specific intent, . . . the finder of fact must be allowed to infer 

defendants’ intent from their anticompetitive practices.” Id. at 85. 

As determined in Section III.G., McWane has monopoly power in the Domestic Fittings 

market and McWane’s Full Support Program is exclusionary conduct. As discussed below, 

through the MDA, McWane and Sigma implemented McWane’s Full Support Program and 

thus engaged in anticompetitive conduct from which specific intent may be inferred.

5. Overt acts in furtherance of the conspiracy

The final element of a conspiracy to monopolize claim is that the conspirators take overt 

acts in furtherance of their conspiracy. Levine, 72 F.3d at 1556. Transactions that take place 

pursuant to an exclusive dealing policy are sufficient to establish the overt act requirement of a 

conspiracy to monopolize. Fraser, 284 F.3d at 68; see also United States v. Hickok, 77 F.3d 

992, 1005-06 (7th Cir. 1996) (“Under the general conspiracy statute, an overt act is defined as 

‘any act to effect the object of the conspiracy.’”). Here, McWane and Sigma worked in concert 

and took overt acts in furtherance of their agreement to control prices and exclude rivals, 

including Star.

McWane and Sigma worked in concert to control prices of Domestic Fittings. As 

summarized supra Section III.H.4.b., pursuant to the MDA, Sigma was required to resell 

McWane Domestic Fittings at a weighted average of no less than 98% of McWane’s published 

prices. When McWane announced multiplier increases in Domestic Fittings effective January 

22, 2010, Sigma enacted the same increases. F. 1557.

In addition, McWane and Sigma collaborated to make Distributors aware of the MDA 

and that Sigma would be enforcing McWane’s Full Support Program. In the same September 

22, 2009 letter through which McWane informed its customers of its Full Support Program, 

McWane also informed its Distributors that McWane had entered into an MDA with Sigma, 

whereby Sigma would sell McWane Domestic Fittings, and further informed Distributors that 

the Full Support Program applies to Domestic Fittings whether purchased through McWane or 

Sigma. F. 1173. McWane also met with Distributors to inform them that Sigma would be 
444

enforcing McWane’s Full Support Program. F. 1538; see also F. 1558. Mr. Tatman described 

Sigma’s role in McWane’s Full Support Program as follows:

Access to McWane domestic product either through McWane or Sigma requires 

distributors to exclusively support McWane where products are available within 

normal lead times. Violation will result in: Loss of access [and] Loss of accrued 

rebates.

F. 1183.

Sigma implemented McWane’s Full Support Program. In Sigma’s September 22, 2009 

announcement to its customers, Sigma informed its customers as follows:

As per this MDA, we are now Master Distributors of [McWane] domestic 

Fittings. As such, we will follow [McWane’s] distribution and pricing policies 

as they are announced from time to time. 

As mentioned in their own letter from [McWane] to their customers, which you 

too may have received, we wish to supply [McWane] domestic Fittings to any 

customers who elect to commit to fully support [McWane] branded Fittings for 

their requirements of domestic Fittings, purchased thru [McWane] or SIGMA. 

We appeal to you to accept this requirement of exclusive choice, as a fair and 

reasonable one, in light of the considerable investment by [McWane] to provide 

this range of domestic production, which is now being expanded to offer 

domestic Fittings up to 48”. 

Please note that customers who elect not to fully support this program may 

forgo any unpaid volume incentive rebates applicable to only the domestic 

Fittings and delivery of domestic Fittings up to 12 weeks.

F. 1566 (emphasis in original).

On December 14, 2009, McWane informed Sigma that it was cutting off Hajoca 

pursuant to its Full Support Program and that Sigma must do the same. Mr. Tatman told 

Mr. Rona: “Per the terms of our MDA I need you to acknowledge that Sigma will also not 

supply any Hajoca branch with Domestic fittings or accessories until further notice.” F. 1568; 

see also Section II.J.6. supra (McWane’s enforcement of its Full Support Program against 

Hajoca). Mr. Rona forwarded the email to Sigma’s CEO, who responded that Sigma had “no 

choice but to agree to abide by the rules of the MDA.” F. 1569. As requested by McWane, on 
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December 15, 2009, Mr. Rona confirmed to McWane that Sigma was “clear about Hajoca” and 

would not sell Domestic Fittings to any Hajoca branch. F. 1570. 

The actions discussed above constitute overt acts in support of the conspiracy between 

McWane and Sigma to monopolize the Domestic Fittings market. See Fraser, 284 F.3d at 68; 

Hickok, 77 F.3d at 1005-06. 

6. Conclusion

Having met its burden of proof on each of the elements, Complaint Counsel has proven 

Count Five, Conspiracy to Monopolize.

J. Remedy

1. Applicable legal standards

Pursuant to Section 5 of the FTC Act, upon determination that the challenged practice is 

an unfair method of competition, the Commission “shall issue . . . an order requiring such 

person . . . to cease and desist from using such method of competition or such act or practice.” 

15 U.S.C. § 45(b); FTC v. National Lead Co., 352 U.S. 419, 428 (1957). Courts have long 

recognized that the Commission has considerable discretion in fashioning an appropriate 

remedial order, subject to the constraint that the order must bear a reasonable relationship to the 

unlawful acts or practices. See, e.g., FTC v. Colgate-Palmolive Co., 380 U.S. 374, 394-95

(1965); FTC v. Ruberoid Co., 343 U.S. 470, 473 (1952); Jacob Siegel Co. v. FTC, 327 U.S. 

608, 612-13 (1946).

Respondent objects to the entry of any remedial order in this case on the ground that 

“the conduct at issue all ended years ago.” RB at 109. Respondent asserts that it changed its 

“rebate letter” long ago and the MDA with Sigma was terminated in 2010. RB at 109. 

Respondent further asserts that because courts cannot grant injunctions unless a plaintiff shows 

ongoing or imminent harm, Complaint Counsel is not entitled to its proposed remedy. RB at 

109.

On January 22, 2010, the FTC informed McWane that it was conducting an 

investigation to determine whether McWane had engaged in unfair methods of competition and 
446

sought relevant materials relating to the Full Support Program and the MDA. See F. 1220. 

Less than one month after learning of the Commission’s investigation, and only six months into 

its initial one year term, McWane gave Sigma notice of termination of the MDA. F. 1595. In 

addition, subsequent to learning of the Commission’s investigation, McWane negotiated with 

Hajoca regarding McWane’s Full Support Program and came to an agreement in April 2010 

whereby McWane agreed to allow Hajoca’s Lansdale branch to resume purchasing Domestic 

Fittings from McWane. F. 1221; see also F. 1220 (internal McWane email from 

Mr. McCullough asking “[h]ow our potential FTC action might [a]ffect how we do business 

with [Hajoca]”).

Evidence that “is subject to manipulation by the party seeking to use it is entitled to 

little or no weight” in an antitrust case. Hospital Corp. of America v. FTC, 807 F.2d 1381, 

1384 (7th Cir. 1986). In particular, the probative value of a defendant’s evidence is “extremely 

limited” when the defendant itself can control events; otherwise, violators could “stave off” the 

government’s enforcement efforts “merely by refraining from aggressive or anticompetitive 

behavior when such a suit was threatened or pending.” General Dynamics, 415 U.S. at 504-05. 

Furthermore, Section 5(b) of the FTC Act expressly authorizes the Commission to issue 

an administrative complaint whenever it has reason to believe that a person “has been or is

using any unfair method of competition . . .” 15 U.S.C. § 45(b). “Voluntary cessation of 

unlawful activity is not a basis for halting a law enforcement action.” In re The Coca-Cola 

Company, 117 F.T.C. 795, 1994 FTC LEXIS 327, at *199 (1994). “To hold otherwise would 

mean that a Commission law enforcement action could be brought to a halt at any time . . . by 

an abandonment, even a temporary one, of the challenged conduct.” Id.

In addition, issuance of a remedy is appropriate even where a respondent no longer 

engages in the illegal conduct. In W.M.R. Watch Case Corp. v. FTC, 343 F.2d 302 (D.C. Cir. 

1965), where the respondent voluntarily abandoned the challenged conduct well before the 

filing of the Commission’s complaint, the court rejected the respondent’s argument that the 

matter was moot. The court held that if the danger of recurrence is sufficient, “there is no bar 

to enforcement merely because the conduct has ceased at least temporarily under the weight of 

the Commission’s hand.” Id. at 304. See also Rubbermaid, Inc. v. FTC, 575 F.2d 1169, 1175 
447

(6th Cir. 1978) (holding that where respondent abandoned the challenged practices and did not 

intend to resume them, it was, nevertheless, “reasonable to conclude that the effects of 

[respondent’s] illegal agreements with wholesalers may tend to be perpetuated in practice 

unless affirmative measures are taken to eradicate them”). “A company bears a heavy burden 

in showing that past conduct will not be repeated.” Id. at 1173 (citing United States v. W.T. 

Grant Co., 345 U.S. 629, 633 (1953); United States v. Concentrated Phosphate Export Ass’n, 

393 U.S. 199, 203 (1968)). Respondent has not met that burden here. Accordingly, to the 

extent Respondent did “voluntarily” cease its illegal conduct, such cessation is not a basis for 

not issuing a cease and desist order. 

2. Specific provisions

Complaint Counsel submitted a proposed order along with its Post Trial Brief 

containing those provisions it believes are necessary and appropriate to remedy the violations 

alleged in this case. The provisions of the attached order (hereafter, “Order”) are substantially 

the same as Complaint Counsel’s proposed order (hereafter, “proposed order”), except that, 

because the evidence failed to establish the violations alleged in Counts One, Two, and Three,

the Order does not include provisions or definitions pertaining to those Counts. Counts One, 

Two, and Three – that Respondent conspired with Sigma and Star to raise and stabilize Fittings 

prices, conspired through DIFRA to exchange competitively sensitive sales information, and 

invited Sigma and Star to collude – are dismissed. 

Counts Four, Five, Six, and Seven – that Respondent engaged in monopolistic practices, 

attempted to monopolize, engaged in a conspiracy to monopolize, and engaged in an 

unreasonable restraint of trade with Sigma in the Domestic Fittings market – have been proven 

by a preponderance of the evidence. The appropriate remedy is to bring an end to this conduct, 

rectify past violations, and prevent reoccurrence. In this regard, the Order entered herewith, 

more fully discussed below, adopts the provisions of Complaint Counsel’s proposed order 

relating to Counts Four through Seven. The Order accomplishes the remedial objectives of the 

FTC Act and is reasonably related to the proven violations. Thus, the Order also is necessary 

and appropriate to remedy the violations of law found to exist.
448

The Order entered herewith imposes pragmatic, effective restrictions on Respondent

that are necessitated by its illegal conduct. First, to address the violations arising in connection 

with Respondent’s MDA with Sigma, Section II of the Order requires Respondent to cease and 

desist from: 

A. Entering into, adhering to, Participating in, maintaining, organizing, implementing, 

enforcing, or otherwise facilitating any combination, conspiracy, agreement, or 

understanding between or among any Competitors to allocate or divide markets, 

Customers, contracts, transactions, business opportunities, lines of commerce, or 

territories.

B. Communicating to any Person who is not an Insider, that Respondent is ready or 

willing to forbear from competing for any Customer, contract, transaction, or 

business opportunity conditional upon any other Competitor also forbearing from 

competing for any Customer, contract, transaction, or business opportunity. 

C. Attempting to engage in any of the activities prohibited by Paragraphs II.A or II.B

Order, Paragraphs II. A.-C.

Further, to address the violations arising in connection with Respondent’s exclusionary 

conduct with respect to Star, Section III of the Order precludes Respondent from directly or 

indirectly monopolizing, or attempting or conspiring to monopolize the market for Domestic 

Fittings. The Order also prohibits Respondent from financially inducing its customers to deal 

exclusively with McWane.

In summary, together with the standard provisions of a Commission order, the Order 

prohibits McWane from engaging in, or attempting thereto, the following conduct:

A. Inviting, entering into, adhering to, maintaining, implementing, enforcing, or 

attempting thereto any condition, policy, practice, agreement, contract, or 

understanding that requires Exclusivity with a Customer including as a condition 

of McWane’s sale of any product, including Domestic Fittings, or conditioning 

the price it charges or the services it offers based on the customer’s purchase or 

sale of Domestic Fittings from McWane.

B. Instituting, for a period of 10 years, a rebate program in which the rebate a 

customer receives for a Domestic Fitting in a completed sale is increased 

retroactively if the customer’s total purchases in a designated period meet a 

specified threshold, except under certain conditions outlined in the Order.
449

C. Discriminating or retaliating against a customer that purchases or sells a 

competitor’s Domestic Fittings, except under certain conditions outlined in the 

Order. Prohibited types of retaliation include (i) terminating or threatening to 

terminate the sale to a customer of any product marketed by McWane; (ii) 

auditing the customer’s Domestic Fittings to determine its purchase of 

competing Domestic Fittings; (iii) changing the price or services McWane 

furnishes to the customer; or (iv) refusing to deal with the customer on terms 

generally available to other customers.

D. Enforcing any condition, requirement, policy, agreement, contract or understanding 

that is inconsistent with the terms of the Order.

Order, Paragraphs III A.-D.

3. Duration

Complaint Counsel has requested that the order issued in this case remain in effect for a 

period of twenty years. Pursuant to the Policy Statement Regarding Duration of Competition 

and Consumer Protection Orders, 60 Fed. Reg. 42,569 (August 16, 1995), the Commission’s 

stated policy is for administrative cease and desist orders to terminate after twenty years. The 

Order entered in this case shall remain in effect for a period of twenty years.

IV. SUMMARY OF CONCLUSIONS OF LAW

1. Complaint Counsel bears the burden of proving jurisdiction and liability by a 

preponderance of evidence.

2. The Commission has jurisdiction over Respondent McWane, Inc. (“Respondent” or 

“McWane”) and the subject matter of this proceeding, pursuant to Section 5 of the 

Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45.

3. Respondent is a corporation whose business is in or affects commerce in the United 

States, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. 

4. Unfair methods of competition under Section 5 of the FTC Act include any conduct that 

would violate Sections 1 or 2 of the Sherman Act. 

5. Section 1 of the Sherman Act prohibits “every contract, combination in the form of trust 

or otherwise, or conspiracy, in restraint of trade or commerce among the several States. 

15 U.S.C. § 1. 
450

6. Section 2 of the Sherman Act prohibits monopolization, attempted monopolization, and 

combination or conspiracy to monopolize. 15 U.S.C. § 2. 

7. Because none of the claims in this case is brought under the Commission’s “unfair acts 

or practices” authority, Section 5(n) of the FTC Act, requiring proof of substantial 

consumer injury does not apply.

8. In a Section 1 case, the first step in determining if a respondent unreasonably restrained 

trade in the relevant market “is determining the relevant market.” In a Section 2 case, 

as well, the first step in assessing whether a respondent possesses monopoly power is 

establishing the relevant market. 

9. A relevant product market consists of products that have reasonable interchangeability 

for the purposes for which they are produced - - price, use and qualities considered. 

10. The relevant product market is ductile (easily molded) iron pipe fittings that are 24” and

smaller in diameter (the “Fittings market”). 

11. There is also a relevant product market, a submarket of the Fittings market, consisting 

of ductile iron pipe fittings of 24” and smaller in diameter that are made in the United 

States, for use in waterworks projects with domestic-only specifications (the “Domestic 

Fittings” market). 

12. A relevant geographic market is defined as the area of effective competition in which 

the seller operates, and to which the purchaser can practicably turn for supplies.

13. The relevant geographic market for both the Fittings market and the Domestic Fittings 

market is the United States.

14. To establish a violation of Section 1 of the Sherman Act, the evidence must show: (1) 

the existence of an agreement, combination, or conspiracy, (2) that unreasonably 

restrains competition. 

15. A restraint may be adjudged unreasonable either because it fits within a class of 

restraints that has been held to be per se unreasonable, or because it violates what has 

come to be known as the rule of reason.

16. When restraints are not per se unlawful, and their net impact on competition is not 

obvious, the conventional rule-of-reason approach requires courts to engage in a 

thorough analysis of the relevant market and the effects of the restraint in that market.

17. A full rule-of-reason inquiry may extend to a plenary market examination, which may 

include the analysis of the facts peculiar to the business, the history of the restraint, and 

the reasons why it was imposed as well as the availability of reasonable, less restrictive 

alternatives.
451

18. A conspiracy to raise and stabilize prices is illegal per se under Section 1. 

19. The crucial question in determining conspiracy is whether the challenged 

anticompetitive conduct stems from an independent decision or from an agreement.

20. An “agreement” is a conscious commitment to a common scheme designed to achieve 

an unlawful objective. 

21. A conspiracy may be demonstrated by direct or circumstantial evidence. 

22. Circumstantial evidence to prove a conspiracy to restrain trade will usually be of two 

types -- economic evidence suggesting that the alleged co-conspirators were not in fact 

competing, and noneconomic evidence suggesting that they were not competing 

because they had agreed not to compete.

23. Circumstantial evidence alone cannot support a finding of conspiracy when the 

evidence is equally consistent with independent conduct. An inference of a conspiracy 

must be more probable than the inference of independent action in order for the 

inference of conspiracy to be drawn.

24. Mistaken inferences that arise from circumstantial evidence are costly, because they

chill competitive conduct – the very conduct the antitrust laws are designed to protect. 

25. Although the language of Section 1 is broad enough to encompass a “tacit agreement,” 

i.e., an agreement that is reached through conduct rather than express words, it is well 

established that the Sherman Act does not prohibit mere “conscious parallelism,” “tacit 

collusion,” or “oligopolistic price coordination.” The evidence must prove an actual, 

manifest agreement. 

26. An unlawful agreement will not be presumed. 

27. A plaintiff cannot make its case just by asking the fact finder to disbelieve the 

defendant’s witnesses. Mere disbelief does not rise to the level of positive proof of an 

agreement.

28. An agreement for purposes of Section 1, and particularly in the context of an oligopoly 

market, is revealed by evidence of a prior understanding or commitment, or the sort of 

restricted freedom of action and sense of obligation that one generally associates with 

agreement. Tacit coordination in an oligopoly market need not imply even a weak 

commitment or prior understanding among the oligopolists.

29. Proof of parallel conduct, including conscious parallel conduct, can constitute 

circumstantial evidence from which an agreement, tacit or express, can be inferred but 

such evidence, without more, is insufficient.
452

30. “Plus” factors are designed to serve as proxies for direct evidence of an agreement in a 

circumstantial case based upon parallel pricing conduct and, therefore, to constitute a 

“plus” factor, the evidence must be probative of an agreement. 

31. “Plausibility” is not the standard of proof for purposes of prevailing on the merits. 

Rather, Complaint Counsel’s burden is to prove that the asserted “plus” factor evidence 

tends to make the inference of an agreement more likely than not. 

32. There is no exhaustive list of “plus” factors. Such evidence is generally grouped into 

the following three categories: (1) evidence that the alleged conspirator had a motive to 

enter into a price fixing conspiracy; (2) evidence that the alleged conspirator acted 

contrary to its interests; and (3) evidence implying a traditional conspiracy.

33. In the context of parallel pricing behavior in an oligopoly, evidence of motive and 

actions against interest typically only demonstrate interdependence among the 

oligopolists. Mere interdependence among oligopolists, unaided by an advance 

agreement among them, does not suggest an unlawful agreement. 

34. Because the “plus” factors of motive and actions contrary to interest may only restate 

the theory of interdependence among oligopolists, evidence indicating an actual, 

manifest agreement is the key to a proper determination in a conspiracy case. 

35. Proof of actions contrary to interest, for “plus” factor purposes, means showing that the 

alleged co-conspirators’ behavior would not be reasonable or explicable (i.e., not in 

their legitimate economic self-interest) if they were not conspiring to fix prices or 

otherwise restrain trade - that is, that the alleged co-conspirators would not have acted 

as they did had they not been conspiring in restraint of trade.

36. Communications between competitors do not permit an inference of an agreement 

unless those communications rise to the level of an agreement, tacit or otherwise. It 

remains the plaintiff’s burden to prove that the defendant succumbed to temptation and 

conspired. It is not enough to point out the temptation and ask that the defendants bear 

the onerous, if not impossible, burden of proving the negative – that no conspiracy 

occurred. 

37. Even where there is proof of parallel conduct and one or more “plus” factors, this does 

not mandate a finding of an unlawful agreement. The court may still conclude, based 

upon the evidence, that the alleged co-conspirators acted independently of one another,

and not in violation of antitrust laws.

38. An agreement to adhere to published prices is unlawful under Section 1 of the Sherman 

Act. 

39. In evaluating the totality of the evidence of conspiracy, it is not the quantity of the 

evidence that is important, but its qualitative value in demonstrating that the parties 

actually entered into a conspiracy.
453

40. The line between lawful interdependent behavior and unlawful commitment is not 

sharp. Although the line between coordination through recognized interdependence and 

some commitment is shadowy, the distinction is important so long as antitrust law 

allows the former but condemns the latter. 

41. Where evidence, taken as a whole, points with at least as much force toward unilateral 

actions as toward conspiracy, the inference of conspiracy cannot be drawn

42. Viewed as whole, the preponderance of the evidence fails to prove the alleged 

conspiracy among McWane, Sigma, and Star, to raise and stabilize prices in the Fittings 

market and, therefore, Complaint Counsel has not met its burden of proof on Count One 

of the Complaint.

43. Whether an alleged “information exchange” unreasonably restrains trade is assessed 

under the rule of reason. 

44. A facilitating practice is one that makes it easier for parties to coordinate price or other 

anticompetitive behavior in an anticompetitive way. It increases the likelihood of a 

consequence that is offensive to antitrust policy. 

45. A facilitating practice cannot be found unreasonable without considering the offsetting 

economic or social benefits of the practice. Thus, the label “facilitating practice” is 

only an invitation to further analysis, not a license for automatic condemnation.

46. The proper approach to analyzing whether an alleged information exchange among 

competitors is anticompetitive is first to determine whether the structure of the industry 

is such that it is susceptible to the exercise of market power through tacit coordination, 

and second, to evaluate the nature of the information exchanged.

47. There are certain well-established criteria used to help ascertain the anticompetitive 

potential of information exchanges, including the time frame of the data; the specificity 

of the data; whether the data is made publicly available; and whether the data is 

discussed in meetings among the participants.

48. The preponderance of the evidence fails to show that the DIFRA tons-shipped data 

reporting system has the nature and tendency to facilitate price coordination and, 

therefore, Complaint Counsel failed to prove likely anticompetitive effects resulting 

from an information exchange by competitors. Accordingly, Complaint Counsel has 

failed to meet its burden of proving that the DIFRA tons-shipped data reporting system 

is an agreement in restraint of trade, as alleged in Count Two of the Complaint.

49. A solicitation to enter into an anticompetitive agreement (i.e., an “invitation to collude”) 

can justify a remedy under Section 5 of the FTC Act, even if the solicitation does not 

result in an unlawful agreement under Section 1 of the Sherman Act.
454

50. The preponderance of the evidence fails to show that Respondent invited its competitors 

to collude and, therefore, Complaint Counsel has failed to meet its burden of proof on 

Count Three of the Complaint.

51. Monopolization requires proof of: (1) the possession of monopoly power in the relevant 

market and (2) the willful acquisition or maintenance of that power as distinguished 

from growth or development as a consequence of a superior product, business acumen, 

or historic accident.

52. Attempted monopolization requires proof: (1) that the defendant has engaged in 

predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a 

dangerous probability of achieving [or obtaining] monopoly power.

53. Monopoly power is defined as the power to control prices or exclude competition. 

54. Monopoly power may be inferred or proven indirectly through proof of high market 

shares in a market protected by barriers to entry.

55. Complaint Counsel has proven that Respondent has a high market share in a market 

protected by barriers to entry, and thus has demonstrated that Respondent has monopoly 

power in the Domestic Fittings market. 

56. Monopoly power may also be proven by direct evidence of a firm’s ability to control

prices or exclude competitors. 

57. Complaint Counsel has proven that Respondent has the ability to control prices and

exclude competitors, and thus has demonstrated that Respondent has monopoly power 

in the Domestic Fittings market.

58. A firm violates Section 2 when it maintains or attempts to maintain a monopoly by 

engaging in exclusionary conduct. 

59. Exclusionary conduct is behavior that not only tends to impair the opportunities of 

rivals, but also either does not further competition on the merits or does so in an 

unnecessarily restrictive way. An exclusive dealing arrangement is unlawful only if the 

probable effect of the arrangement is to substantially lessen competition, rather than 

merely disadvantage rivals.

60. Exclusive dealing arrangements are of special concern when imposed by a monopolist.

61. An exclusive dealing arrangement is not unlawful unless it is likely to foreclose 

competition in a substantial share of the line of commerce affected. The test is not total 

foreclosure, but whether the challenged practices bar a substantial number of rivals or 

severely restrict the market’s ambit.
455

62. The preponderance of the evidence shows that Complaint Counsel has met its burden of 

proving that McWane’s Full Support Program foreclosed Star from a substantial share 

of the Domestic Fittings market.

63. The likely or actual anticompetitive effects of exclusionary conduct must be considered 

in light of any procompetitive effects. Once the government demonstrates harm to 

competition, the burden shifts to Respondent to show that the challenged conduct 

promotes a sufficiently procompetitive objective.

64. A respondent’s assertion that it acted in furtherance of its economic interests does not 

constitute the type of business justification that is an acceptable defense to Section 2

monopolization.

65. Because the evidence fails to show any procompetitive justification that outweighs the 

harm to competition, Complaint Counsel has met its burden of proving that 

Respondent’s Full Support Program constitutes unlawful exclusionary conduct and 

willful maintenance of Respondent’s monopoly power.

66. Intent is relevant to proving monopolization.

67. Specific intent is required for proving attempted monopolization.

68. The preponderance of the evidence demonstrates that Respondent intended to 

substantially foreclose Star from the Domestic Fittings market.

69. Dangerous probability of achieving monopoly power can be inferred from evidence 

indicating the existence of anticompetitive conduct and specific intent. 

70. The preponderance of the evidence shows that Respondent had a dangerous probability 

of achieving monopoly power.

71. Having met its burden of proof on each of the elements, Complaint Counsel has proven 

Count Six, Monopolization and Count Seven, Attempted Monopolization.

72. Under Section 1 of the Sherman Act, agreements among actual or potential competitors 

at the same level of the market structure (i.e., horizontal competitors) to allocate 

markets are per se unlawful. 

73. In evaluating an agreement among competitors, the preliminary inquiry is whether or 

not each firm alleged to have been a party to the agreement was an actual or potential 

competitor in that market.

74. To be a potential competitor, one must have the necessary desire, intent, and capability 

to enter the market.
456

75. Elements for evaluating capability to enter the market are 1) the background and 

experience of in the prospective business; 2) affirmative acts with the object of entering 

the proposed business; 3) the ability to finance operation of the business and the 

purchase of necessary equipment and facilities; and 4) the formation of contracts.

76. The evidence fails to show that Sigma had the necessary capability to enter the 

Domestic Fittings market in a timely manner and, thus, the evidence fails to show that 

Sigma was a potential competitor in the Domestic Fittings market.

77. Because the evidence fails to show that Sigma was a potential competitor in the 

Domestic Fittings market, the Master Distribution Agreement (“MDA”) is evaluated 

under a rule of reason analysis.

78. Under a rule of reason analysis, including the evaluation of the market power of 

Respondent, the nature of the restraint, the history of the restraint and the reasons why it 

was imposed, and the availability of reasonable, less restrictive alternatives, Complaint 

Counsel has demonstrated the potential for anticompetitive effects of the MDA.

79. Respondent’s concerted action with Sigma through the MDA cannot be sustained under 

the rule of reason analysis unless Respondent meets its burden of establishing some 

countervailing procompetitive virtue. 

80. A desire to increase one’s own sales is not a valid procompetitive justification. 

81. Respondent has failed to prove any valid procompetitive justification for the MDA.

82. Under a rule of reason analysis, the MDA was an unreasonable restraint of trade in the 

Domestic Fittings market. Therefore, Complaint Counsel has proven Count Four, 

Unreasonable Restraint of Trade.

83. A conspiracy to monopolize means a conspiracy to acquire or maintain the power to 

exclude competitors from some portion of commerce. 

84. Three elements of a claim for conspiracy to monopolize are: (1) concerted action, with 

(2) the specific intent to monopolize, and (3) an overt act in furtherance of the 

conspiracy. In addition to these elements, some courts require an effect upon an 

appreciable amount of interstate commerce.

85. The MDA is a written agreement that satisfies the concerted action element of a 

conspiracy to monopolize claim.

86. Specific intent to monopolize means an intent to exclude competition or control prices. 

Specific intent may be inferred from the proof of actual monopoly power and 

anticompetitive practices.
457

87. The evidence demonstrates that McWane and Sigma entered into the MDA with an 

intent to exclude Star from the Domestic Fittings market, McWane had monopoly 

power, and the Full Support Program was anticompetitive. 

88. Transactions that take place pursuant to an exclusive dealing policy are sufficient to 

establish the overt act requirement of a conspiracy to monopolize. 

89. The MDA had an effect on an appreciable amount of interstate commerce

90. The preponderance of the evidence shows that McWane and Sigma worked in concert 

and took overt acts in furtherance of their agreement to control prices and exclude 

rivals, including Star.

91. Having met its burden of proving concerted action, specific intent to monopolize, and 

an overt act in furtherance of the conspiracy, and having shown an effect upon an 

appreciable amount of interstate commerce, Complaint Counsel has proven Count Five, 

Conspiracy to Monopolize.

92. Pursuant to Section 5 of the FTC Act, upon determination that a challenged practice is 

an unfair method of competition, the Commission “shall issue . . . an order requiring 

such person . . . to cease and desist from using such method of competition or such act 

or practice.” 15 U.S.C. § 45(b).

93. The appropriate remedy is to bring an end to the unlawful conduct found to exist, rectify 

past violations, and prevent reoccurrence. 

94. Issuance of a remedy is appropriate, upon determination that a challenged practice is an 

unfair method of competition, even where a respondent no longer engages in the illegal 

conduct. If the danger of recurrence is sufficient, there is no bar to enforcement merely 

because the conduct has ceased at least temporarily.

95. The attached Order accomplishes the remedial objectives of the FTC Act and is 

reasonably related to the proven violations. The Order also is necessary and appropriate 

to remedy the violations of law found to exist.
458

ORDER

I.

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. “Commission” means the Federal Trade Commission. 

B. “Respondent” means McWane, Inc., its officers, directors, employees, agents, 

representatives, successors, and assigns; and the United States based 

subsidiaries, divisions, groups, and affiliates controlled by it, and the respective 

officers, directors, employees, agents, representatives, successors, and assigns of 

each.

C. “Communicate” means to transfer or disseminate any information, regardless of 

the means by which it is accomplished, including without limitation orally, by 

letter, email, notice, or memorandum. This definition applies to all tenses and 

forms of the word “communicate,” including, but not limited to, 

“communicating,” “communicated” and “communication.” 

D. “Competitor” means Respondent and any Person that, for the purpose of sale or 

resale within the United States: (1) manufactures DIPF or Domestic DIPF; (2) 

causes DIPF or Domestic DIPF to be manufactured; or (3) imports DIPF. 

E. “Customer” means any Person that purchases any DIPF from Respondent 

F. “Designated Manager” means the Executive Vice President, General Manager, 

National Sales Manager, Pricing Coordinator, Regional Manager, or the OEM 

Manager for sales of DIPF in and into the United States, and any employee 

performing any job function relating to the setting of Prices (including offering 

any discounts) for DIPF sold in or into the United States. 

G. “Domestic DIPF” means DIPF that is manufactured in the United States of 

America. 

H. “Ductile Iron Pipe Fittings” or “DIPF” means any iron casting produced in 

conformity with the C153/A21 or C110/A21 standards promulgated by the 

American Water Works Association, including all revisions and amendments to 

those standards and any successor standards incorporating the C153/A21 or 

C110/A21 standards by reference. 

I. “Exclusivity” or “Exclusive” means any requirement, whether formal or 

informal, or direct or indirect, by the Respondent that a Customer purchase all of 

their Domestic DIPF from Respondent, or any other requirement that a 
459

Customer restrain, refrain from, or limit its future purchases of Domestic DIPF 

from any Competitor. 

Provided, however, that the terms “Exclusivity” or “Exclusive” do not:

1. apply to Respondent’s sales of non-Domestic DIPF or any product other 

than Domestic DIPF; and

2. apply to individual bids of Domestic DIPF for specific jobs or refer to 

the sale by Respondent to a Customer of any specified number of units 

during any term, without more. For the avoidance of doubt, the fact that 

a Customer purchases its full requirements of Domestic DIPF from 

Respondent does not establish that Respondent has engaged in 

Exclusivity and is not prohibited by this Order unless the Customer does 

so because Respondent imposes a requirement of Exclusivity. 

J. “Federal Securities Laws” means the securities laws as that term is defined in 

§ 3(a)(47) of the Securities Exchange Act of 1934, 15 U.S.C. § 78c(a)(47), and 

any regulation or order of the Securities and Exchange Commission issued 

under such laws.

K. “Insider” means a consultant, officer, director, employee, agent, or attorney of 

Respondent. Provided, however, that no other Competitor shall be considered to 

be an “Insider.” 

L. “Participate” in an entity or an arrangement means (1) to be a partner, joint 

venturer, shareholder, owner, member, or employee of such entity or 

arrangement, or (2) to provide services, agree to provide services, or offer to 

provide services through such entity or arrangement. This definition applies to 

all tenses and forms of the word “participate,” including, but not limited to, 

“participating,” “participated,” and “participation.” 

M. “Person” means any natural person or artificial person, including, but not limited 

to, any corporation, unincorporated entity, or government. For the purpose of 

this Order, any corporation includes the subsidiaries, divisions, groups, and 

affiliates controlled by it. 

N. “Price” means the retail or wholesale price, resale price, purchase price, list 

price, multiplier price, job price, credit term, freight term, delivery term, service 

term, or any other monetary term defining, setting forth, or relating to the 

money, compensation, or service paid by a Customer to Respondent, or received 

by a Customer in connection with the purchase or sale of DIPF or Domestic 

DIPF. 

O. “Retroactive Incentive” means any flat or lump-sum payment of monies or any 

other item(s) of pecuniary value based upon a Customer’s sales or purchases of 
460

Respondent’s Domestic DIPF reaching a specified threshold (in units, revenues, 

or any other measure), or otherwise reducing the Price of one unit of 

Respondent’s Domestic DIPF because of the purchase or sale of an additional 

unit of that product; provided, however, that Respondent may offer a discount or 

other item of pecuniary value based upon sales or purchases of Domestic DIPF 

beyond a specified threshold. 

By way of example, Respondent may offer or provide a discount of X% on all 

purchases of Domestic DIPF in excess of Y units, but it may not offer or provide 

a discount of X% on all units of Domestic DIPF, including those below Y units, 

if sales exceed Y units. 

P. “Service” means any service, assistance or other support provided by 

Respondent to a Customer, including without limitation, responsiveness to 

requests for bids, responsiveness in filling purchase orders, product availability, 

handling of warranty claims, and handling of returns.

II.

IT IS FURTHER ORDERED that in connection with the business of manufacturing, 

marketing or selling Domestic DIPF in or affecting commerce, as “commerce” is defined in 

Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44, Respondent shall cease and 

desist from, either directly or indirectly, or through any corporate or other device: 

A. Entering into, adhering to, Participating in, maintaining, organizing, 

implementing, enforcing, or otherwise facilitating any combination, conspiracy, 

agreement, or understanding between or among any Competitors to allocate or 

divide markets, Customers, contracts, transactions, business opportunities, lines 

of commerce, or territories. 

Provided, however, that nothing in Paragraph II.A of this Order prohibits 

Respondent from entering into an agreement with another Competitor regarding 

the Price of DIPF if, and only if, that agreement relates exclusively to the terms 

under which Respondent will buy DIPF from, or sell DIPF to, that other 

Competitor.

B. Communicating to any Person who is not an Insider, that Respondent is ready or 

willing to forbear from competing for any Customer, contract, transaction, or 

business opportunity conditional upon any other Competitor also forbearing 

from competing for any Customer, contract, transaction, or business 

opportunity. 

Provided, however, that it shall not of itself constitute a violation of Paragraph 

II.B of this Order for Respondent to Communicate:
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1. To any Person reasonably believed to be an actual or prospective 

purchaser of DIPF, the Price and terms of a sale of DIPF; or 

2. To any Person reasonably believed to be an actual or prospective 

purchaser of DIPF that Respondent is ready and willing to adjust the 

terms of a sale of DIPF in response to a Competitor’s offer. 

C. Attempting to engage in any of the activities prohibited by Paragraphs II.A or

II.B. 

III.

IT IS FURTHER ORDERED that in connection with the business of manufacturing, 

marketing or selling Domestic DIPF in or affecting commerce, as “commerce” is defined in 

Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44, Respondent shall cease and 

desist from, either directly or indirectly, or through any corporate or other device: 

A. Inviting, entering into, adhering to, maintaining, implementing, enforcing, or 

attempting thereto any condition, policy, practice, agreement, contract, or 

understanding that requires Exclusivity with a Customer, including but not 

limited to: 

1. Conditioning the sale or purchase of any product, including Respondent’s Domestic 

DIPF, on a Customer’s Exclusivity; 

2. Conditioning any term of Price or Service offered or provided by Respondent to a 

Customer relating to any product, including Respondent’s Domestic DIPF, on a 

Customer’s Exclusivity; 

3. Conditioning any term of Price or Service offered or provided to a Customer based 

upon a requirement that the Customer purchase 50% or more of its purchases (in units, 

revenues, or any other measure) of Domestic DIPF from Respondent over any period of 

time; and 

4. Conditioning any term of Price or Service offered or provided to a Customer relating to 

any product marketed by Respondent upon that Customer’s purchases or sales of 

Respondent’s Domestic DIPF. 

B. For ten (10) years from the date this Order becomes final, inviting, entering into, 

adhering to, maintaining, implementing, enforcing, or attempting thereto any 

condition, policy, practice, agreement, contract, or understanding that offers or 

provides any Retroactive Incentive.

C. Discriminating against, penalizing, or otherwise retaliating against any 

Customer, for the reason, in whole or in part, that the Customer engages in, or 

intends to engage in, the distribution, purchase or sale of a Competitor’s 
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Domestic DIPF, or otherwise refuses to enter into or continue any condition, 

agreement, contract, or understanding that requires Exclusivity. Examples of 

prohibited discrimination or retaliation against a Customer shall include, but not 

be limited to: 

1. Terminating, suspending, or threatening or proposing thereto, sales of 

any product marketed by the Respondent to the Customer; 

2. Auditing the Customer’s purchases or sales of Domestic DIPF to 

determine the extent of purchases or sales of competing Domestic DIPF; 

3. Withdrawing or modifying, or threatening or proposing thereto, any 

terms of Price or Service offered or provided by Respondent to a 

Customer relating to any product marketed by Respondent; and 

4. Refusing to deal with the Customer on terms and conditions generally 

available to other Customers. 

D. After ninety (90) days from the date this Order becomes final, from enforcing 

any condition, requirement, policy, agreement, contract or understanding that is 

inconsistent with the terms of the Order. 

PROVIDED, HOWEVER, that nothing in paragraphs III A-D of this Order prohibits 

Respondent from providing discounts, rebates, or other Price or non-Price incentives to 

purchase Domestic DIPF that are (i) volume-based, above average variable cost, and not 

Retroactive Incentives as defined herein; or (ii) designed to meet competition, if 

Respondent determines in good faith that one or more Competitors are offering terms of 

sale for their Domestic DIPF for which Respondent needs to match in order to win 

contested business. 

PROVIDED, FURTHER, that nothing in Paragraph III.D of this Order prohibits 

Respondent from honoring or providing discounts, rebates, or other Price or non-Price 

incentives to purchase its Domestic DIPF that a Customer contracted for prior to the 

date this Order becomes final even if paid or provided by Respondent subsequent to that 

date.

IV.

IT IS FURTHER ORDERED that Respondent shall: 

A. Within sixty (60) days from the date this Order becomes final distribute by firstclass mail, return receipt requested, or by electronic mail with return 

confirmation, a copy of this Order with the Complaint, to each of its officers, 

directors, and Designated Managers; 
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B. Within sixty (60) days from the date this Order becomes final, distribute by firstclass mail, return receipt requested, or by electronic mail with return 

confirmation, a copy of this Order with the Complaint, to each Customer of 

Respondent that has purchased DIPF or Domestic DIPF at any time since 

September 1, 2012; 

C. For ten (10 years) from the date this Order becomes final distribute by first-class 

mail, return receipt requested, or by electronic mail with return confirmation, a 

copy of this Order with the Complaint, within sixty (60) days, to each Person 

who becomes its officer, director, or Designated Manager and who did not 

previously receive a copy of this Order and Complaint; and 

D. Require each Person to whom a copy of this Order is furnished pursuant to 

Paragraphs IV.A and IV.C of this Order to sign and submit to Respondent 

within sixty (60) days of the receipt thereof a statement that: (1) represents that 

the undersigned has read and understands the Order; and (2) acknowledges that 

the undersigned has been advised and understands that non-compliance with the 

Order may subject Respondent to penalties for violation of the Order. 

V.

IT IS FURTHER ORDERED that Respondent shall file verified written reports within 

ninety (90) days from the date this Order becomes final, annually thereafter for ten (10) years 

on the anniversary of the date this Order becomes final, and at such other times as the 

Commission may by written notice require. Each report shall include, among other information 

that may be necessary:

A. Copies of the signed return receipts or electronic mail with return confirmations 

required by Paragraphs IV.A-D of this Order; 

B. A detailed description of the manner and form in which Respondent has 

complied and is complying with this Order.

VI.

IT IS FURTHER ORDERED that Respondent shall notify the Commission:

A. Of any change in its principal address within twenty (20) days of such change in 

address; and

B. At least thirty (30) days prior to any proposed: (1) dissolution of Respondent; 

(2) acquisition, merger, or consolidation of Respondent; or (3) any other change 

in Respondent including, but not limited to, assignment and the creation or 
dissolution of subsidiares, if such change might affect compliance obligations

arising out of this Order.

VII.

IT is FURTHER ORDERED that, for the purose of determining or securing

compliance with this Order, Respondent shall permit any duly authorized representative ofthe

Commission:

A. Access, during office hours of Respondent, and in the presence of counsel, to all

facilities and access to inspect and copy all books, ledgers, accounts,

correspondence, memoranda, and all other records and documents in the

possession, or under the control, of Respondent relating to compliance with this

Order, which copying services shall be provided by Respondent at its expense;

and

B. Upon fifteen (15) days' notice, and in the presence of counsel, and without

restraint or interference from it, to interview officers, directors, or employees of

Respondent.

VIII.

IT is FURTHER ORDERED that this Order shall terminate twenty (20) years from

the date it becomes finaL.

ORDERED: J)1t ~t'.d

D. Michael Chappe

Chief Administrative Law Judge

Date: May 8, 2013

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