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UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

COMMISSIONERS: Jon Leibowitz, Chairman 

J. Thomas Rosch 

 Edith Ramirez

 Julie Brill

 Maureen K. Ohlhausen 

In the Matter of 

MCWANE, INC., 

a corporation, and Docket No. 9351 

STAR PIPE PRODUCTS, LTD.

 a limited partnership. 

OPINION OF THE COMMISSION 

By Commissioner Edith Ramirez, 

In this case we address allegations of anticompetitive conduct relating to the sale of 

ductile 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— 

Respondent McWane, Inc., Sigma Corporation, and Star Pipe Products, Ltd.—account for the 

overwhelming majority of pipe fitting sales in the United States. Complaint Counsel alleges that 

these three companies entered into an agreement beginning in 2008 to fix prices. Complaint 

Counsel also alleges that McWane, the largest of the three suppliers, has a monopoly in the 

market for U.S.-made pipe fittings and that it illegally sought to maintain its monopoly after 

Sigma and Star tried to enter in 2009. 

Before us are cross-motions for summary decision by Respondent McWane and 

Complaint Counsel. McWane seeks summary decision in its favor on all seven counts of the 

Complaint. Complaint Counsel moves for summary decision only on a narrow price fixing claim 

arising out of a brief telephone conversation between two McWane and Star executives in April 

2009. 

The allegations of price fixing have been met with strenuous denials, with McWane 

insisting that, at most, the suppliers engaged in consciously parallel conduct. Pointing to such 

denials and other claimed exculpatory evidence, McWane contends that its innocence can be 

established as a matter of law with respect to all the price-fixing charges. McWane also 

challenges the basis for Complaint Counsel’s claims of monopolization and attempted 

monopolization, arguing that those claims should also be summarily dismissed. As discussed 
 

PROVISIONALLY REDACTED VERSION

below, we find that genuine issues of material fact exist as to all of the counts in the Complaint, 

thereby precluding summary decision. 

For its part, Complaint Counsel focuses its limited request for summary decision on a 

conversation between McWane’s fittings division general manager and Star’s head of sales. But 

while the substance of the communication is not disputed, its significance is vigorously contested 

by McWane. We conclude that this issue too must await trial. 

We therefore deny the summary decision motions of both McWane and Complaint 

Counsel in their entirety. 

I. COMPLAINT ALLEGATIONS 

On January 4, 2012, the Commission issued a seven count administrative complaint 

against McWane1

 and Star.2 The first three counts, charging violations of Section 5 of the 

Federal Trade Commission Act, are based on allegations that, beginning in January 2008, 

McWane, Sigma, and Star conspired to increase the prices at which imported and domestic pipe 

fittings were sold in the United States. Specifically, Complaint Counsel alleges that in early 

2008 McWane devised a plan to raise and fix industry prices and invited Sigma and Star to 

collude with it. Compl. ¶¶ 29-30.3 

McWane publicly announced a pipe fittings price increase on January 11, 2008, and 

Sigma and Star followed suit. Id. ¶ 31. McWane’s actions leading up to the price increase 

included an invitation to Sigma and Star to curtail price discounting in exchange for higher 

future prices. Id. ¶ 32.a-c. According to Complaint Counsel, Sigma and Star accepted 

McWane’s offer by “publicly taking steps to limit their discounting from published price levels” 

and centralizing pricing authority. Id. ¶ 32.c. 

1

 McWane’s ductile iron fittings business is known as “TylerUnion,” named after 

McWane’s now-closed Tyler, Texas facility and Union Foundry in Anniston, Alabama. R’s SOF 

at 5, n.2. 

2

 At the same time that the Commission issued its complaint against McWane and Star, it 

also 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 Commission accepted for public comment a proposed 

consent order against Star on March 20, 2012, and approved the final order on May 8. In re 

McWane, Inc. & Star Pipe Prods., Ltd., Star Decision and Order, Docket No. C-9351 

(May 8, 2012). 

3

 An index of the abbreviations used to refer to the parties’ documents cited herein is 

attached at the end of this opinion. 

2 
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A second round of collusive price increases allegedly took place in June 2008. Id. ¶ 34. 

Before announcing this round of increases, McWane allegedly decided to trade its support for 

higher prices in exchange for monthly sales information from Sigma and Star disseminated by an 

industry association called the Ductile Iron Fittings Research Association (“DIFRA”). Id. ¶ 34.a. 

According to Complaint Counsel, Sigma and Star accepted McWane’s offer by submitting their 

shipment data to DIFRA, following which McWane announced its second price increase on 

June 17, 2008. Id. ¶¶ 33, 34.c-d. Sigma and Star later matched McWane’s June price increase. 

Id. ¶ 34.d. 

The remaining counts relate to the domestic pipe fittings market, in which McWane, as 

the only major supplier with domestic production capability, is alleged to be a monopolist. 

Complaint Counsel contends that the passage of the American Recovery and Reinvestment Act 

of 2009 (“ARRA”) in February 2009, which set aside more than $6 billion for potential use in 

water infrastructure projects, “significantly altered the competitive dynamics of the [fittings] 

industry, and upset the terms of coordination” among McWane, Sigma, and Star. Id. ¶ 3. 

Because ARRA funding was conditioned on the use of domestically-produced fittings, it spurred 

Sigma and Star to seek to enter the domestic fittings market. Id. ¶¶ 3, 18, 44. Counts four 

through seven are based on McWane’s alleged efforts to exclude competitors from this market. 

In counts four and five, Complaint Counsel alleges that McWane induced Sigma to become a 

distributor of McWane’s domestic fittings to prevent it from becoming an independent 

competitor, in violation of Section 5 of the FTC Act. Id. ¶ 48. In counts 6 and 7, Complaint 

Counsel claims that McWane adopted restrictive and exclusive distribution policies to impede or 

delay the ability of Star and others to enter the domestic fittings market in violation of Section 5 

of the FTC Act. Id. ¶¶ 57, 61. 

McWane denies the substantive allegations of the Complaint. 

II. BACKGROUND AND UNDISPUTED FACTS 

A. The Ductile Iron Pipe Fittings Industry 

Ductile iron pipe fittings (“pipe fittings” or “fittings”) are used to join pipes, valves, and 

hydrants and to change or direct the flow of water in the pipeline systems used in municipal, 

state, and federal drinking and waste water distribution systems. R’s Ans. ¶ 14. Although there 

are more than 4,000 individual fittings of different diameters (ranging from 3 inches to 48 inches 

or larger), configurations (e.g., elbows, tees, and sleeves), joints, coatings, and finishes 

(R’s SOF ¶ 11), approximately 80% of demand may be serviced with fewer than 100 commonlyused sizes and configurations (R’s Ans. ¶ 15). 

There are three primary pipe fittings sellers in the United States: Respondent McWane, 

Sigma, and Star. McWane is a full-line supplier of fittings, selling more than 4,000 individual 

fittings that are both imported and domestically produced. As of 2008, Sigma and Star only sold 

fittings that were manufactured outside the United States. Compl. ¶ 18; R.’s SOF ¶ 12. In 2009, 

Star began selling fittings produced by U.S. foundries. Star Ans. ¶ 18; R’s Ans. ¶ 18. 

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Some waterworks infrastructure projects specify whether the end user prefers or 

mandates the use of domestic pipe fittings. R’s Ans. ¶ 19. While a majority of end users 

currently issue “open source” specifications that do not indicate a preference for domestic or 

imported fittings, some government projects require the use of domestic fittings, often a result of 

a legal mandate requiring domestic sourcing. Id. Domestic fittings sold for use in jobs specified 

as “domestic only” are generally sold at prices higher than imported or domestic fittings sold for 

use in projects that are not designated as such. R’s Ans. ¶ 20. 

Fittings suppliers publish list prices for each unique item they carry. Id. ¶ 27.e. They 

then periodically publish multiplier discounts on a state-by-state basis. Id. At times, suppliers 

also offer further special “job price discounts,” which are below the multiplier discounts. These 

discounts are negotiated individually by customers for particular projects. R’s SOF ¶¶ 30-33. 

Pipe fittings are sold primarily through independent wholesale distributors specializing in 

distributing products for waterworks infrastructure projects. Compl. ¶ 16. The two largest 

national distributors represent 50% of the waterworks distribution market. Thees IH 87-88; 

Tatman IH 83; R’s SOF ¶ 111. The third largest distributor has a network in 22 states. Gibbs 

Dep. 8, 12. There are also a number of regional players (CC’s SOF ¶ 170) and hundreds of small 

distributors, many with only a single location (McCutcheon IH 50, 204; Tatman IH 83-85). 

B. The January and June 2008 Price Increases 

McWane, the largest of the three main fittings suppliers, was most often the industry 

price leader. McCutcheon IH 421, 458; McCutcheon Dep. 182-83. In late 2007, however, 

Sigma and Star both announced they would be increasing list prices in early 2008. 

CC’s SOF ¶¶ 23-24; R’s SOF ¶ 54. McWane elected not to follow the price increases announced 

by Sigma and Star. CC’s SOF ¶ 25. Instead, on January 11, 2008, McWane issued a pricing 

letter to its customers (“January pricing letter”) announcing a 10% to 12% increase on the 

multiplier applicable to imported fittings and a 3% to 5% increase on domestic fittings, effective 

February 18, 2008. CX 1178-001. The letter noted that McWane anticipated the need to raise 

prices again within the next six months “as conditions require.” Id. Sigma and Star soon 

matched McWane’s announced pricing. CC’s SOF ¶¶ 35-36; R’s SOF ¶ 57. 

In February, soon after these price increases, McWane, Sigma, and Star began discussing 

the possibility of creating an industry trade association, DIFRA, which would include a forum 

for exchanging their aggregated sales information. Discussions about creating such an exchange 

had taken place since at least 2005, but the effort had always stalled. CC’s SOF ¶ 46. Led by 

Rick Tatman, general manager of McWane’s fittings division, the initiative gained renewed 

momentum in Spring 2008. CX 0179-1. 

By April 2008, the members of DIFRA had agreed to share monthly fittings shipment 

data for 2006, 2007, and the first four months of 2008 by May 15, 2008.4 CX 1479-001; 

4

 In addition to McWane, Sigma, and Star, a fourth company, U.S. Pipe, agreed to 

participate in DIFRA. (CX 1479-001.) Although by 2008 U.S. Pipe was no longer a significant 

fittings provider (CX 0313-004; Brakefield Dep. 128-29), the others chose to invite it to 

4 
 

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CX 1186. Each company agreed to report this data to DIFRA on a monthly basis thereafter. 

CX 1479-001. They provided the information to a third-party accounting firm, which aggregated 

the information and disseminated it to the members. Id. 

On April 24, Sigma sent a letter to its customers announcing a large multiplier price 

increase, effective May 19. CX 0137. Star announced similar multiplier price increases on May 

7, also to take effect on May 19. CX 0816. 

In a customer letter dated May 7 (referred to as the “June pricing letter”), McWane 

indicated it would not be following the price increases announced by its competitors. CX 0138. 

McWane stated it would instead perform a pricing analysis by the end of May before deciding 

how to proceed. Id. As a result, both Sigma and Star retracted their previously announced price 

increases. CX 0527-001; Tatman Dep. 142. 

On June 5, Star submitted its data to DIFRA. CX 0049. McWane received the DIFRA 

report on June 17 and later that same day announced an eight percent price increase. 

CX 0366-001; CX 1576. Sigma and Star soon announced they were following McWane’s price 

increases. CX 1851; CX 1734; CX 2254-001; CX 2255. Sigma and Star stopped submitting data 

to DIFRA by February 2009. CX 1278-001; Brakebill Dep. 124-125. 

C. ARRA and the Domestic Fittings Market 

With passage of ARRA in February 2009, Congress set aside more than $6 billion in 

stimulus funds for water and other infrastructure projects. This funding, however, was 

conditioned on the use of domestically produced materials, including pipe fittings (the “Buy 

American” requirement). Following ARRA’s enactment, Sigma publicly announced its intention 

to supply its customers with domestic fittings. Rona IH 99-100, 105-07; Box Dep. 62. 

Lacking its own domestic manufacturing capability, Sigma approached McWane in 

Spring 2009 regarding the possibility of having Sigma purchase McWane domestic fittings and 

sell them under a private label. CC’s SOF ¶ 116; R’s SOF ¶ 115. These initial discussions 

proved unsuccessful. CX 908. Later, during the summer, Sigma renewed negotiations with 

McWane. CC’s SOF ¶ 123. Ultimately, in September, McWane and Sigma entered into a 

master distribution agreement (“MDA”) pursuant to which Sigma would purchase domestic 

fittings from McWane at 20% off McWane’s published prices. CX 1194-001. 

participate because counsel had advised that having a fourth member would reduce legal risk 

(CX 0048-001). 

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Like Sigma, Star began to explore the possibility of entering the domestic fittings market 

following the passage of ARRA. Bhargava Dep. 8. By Spring 2009, Star had decided to enter 

the domestic market (id. at 22) and publicly announced it was doing so in June (R’s Ans. ¶ 56; 

CX 2330; CX 2331). Rather than operating its own foundry, it chose to purchase fittings from 

existing independent foundries in the United States. Bhargava Dep. 22-23, 118-19. By the close 

of 2009, Star had sold domestic fittings to 29 customers. R’s Ex. 21 ¶ 2. In 2010 and 2011, Star 

sold approximately $6.5 million worth of domestic fittings each year. Id. ¶ 9. 

On September 22, 2009, McWane issued a letter to its distributors announcing that, 

pursuant to the MDA, McWane domestic fittings would be available through Sigma. CX 559­

002. The letter also notified customers that McWane was adopting a program requiring that 

customers purchase domestic fittings exclusively from McWane or risk losing unpaid rebates for 

domestic fittings and experiencing delays in product shipments of up to 12 weeks. Id. The 

policy contained an exception if McWane domestic fittings were unavailable or if fittings were 

purchased from a competitor along with pipe. Id. 

III. STANDARD FOR SUMMARY DECISION 

We review the parties’ cross motions for summary decision pursuant to Rule 3.24 of our 

Rules of Practice, which is virtually identical to Federal Rule of Civil Procedure 56. Polygram 

Holding, Inc., 136 F.T.C. 310, 2002 WL 31433923, at *1 (FTC Feb. 26, 2002). Accordingly, we 

treat a motion for summary decision analogously to a motion for summary judgment. As with a 

summary judgment motion, the party seeking summary decision “bears the initial responsibility 

of . . . identifying those portions of [the record] which it believes demonstrate the absence of a 

genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal 

quotations omitted). The “party opposing the motion may not rest upon the mere allegations or 

denials of his or her pleading” and must instead “set forth specific facts showing that there is a 

genuine issue of material fact for trial.” 16 C.F.R. §3.24(a)(3); Celotex, 477 U.S. at 323. We are 

required to resolve all factual ambiguities and draw all justifiable inferences in the light most 

favorable to the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 

(1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). 

We turn first to McWane’s request that we summarily decide in its favor on all counts of 

the Complaint and then address Complaint Counsel’s more limited motion. 

IV. MCWANE’S MOTION FOR SUMMARY DECISION 

A. Count One: Conspiracy to Fix Prices 

Section 1 of the Sherman Act prohibits contracts, combinations, and conspiracies that 

unreasonably restrain trade.5 15 U.S.C. § 1; In re Flat Glass Antitrust Litig., 385 F.3d 350, 356 

5

 Violations of Sherman Act Sections 1 and 2 also constitute violations of Section 5 of the 

FTC Act, 15 U.S.C. § 45, as unfair methods of competition. See California Dental Ass’n v. FTC, 

526 U.S. 756, 762 & n.3 (1999), FTC v. Motion Picture Adver. Serv. Co., 344 U.S. 392, 394-95 

6 
 

 

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(3rd Cir. 2004). Because of their “pernicious effect on competition and lack of any redeeming 

virtue,” Northern Pac. Ry. v. United States, 356 U.S. 1, 5 (1958), price-fixing agreements are per 

se illegal. Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007). 

Accordingly, to establish a horizontal price-fixing scheme, a plaintiff need only demonstrate the 

existence of an agreement, combination, or conspiracy among actual competitors with the 

purpose or effect of “raising, depressing, fixing, pegging or stabilizing” the price of a 

commodity. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223-224 (1940). 

“The existence of an agreement is ‘[t]he very essence of a section 1 claim.’” In re Flat 

Glass, 385 F.3d at 356 (quoting Alvord-Polk, Inc. v. Shumacher & Co., 37 F3d 996, 999 (3d Cir. 

1994)). The crucial question then is “whether the challenged anticompetitive conduct stems 

from independent decision or from an agreement.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 

553 (2007). Evidence of parallel behavior or even conscious parallelism alone, without more, is 

insufficient to establish a Section 1 violation. Id. at 553-54. Thus, to survive a motion for 

summary judgment, a plaintiff alleging a violation of Section 1 “must present evidence ‘that 

tends to exclude the possibility’ that the alleged conspirators acted independently.” Matsushita, 

475 U.S. at 588 (quoting Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 768 (1984)).6 

Put differently, there must be evidence “that reasonably tends to prove . . . a conscious 

commitment to a common scheme designed to achieve an unlawful objective.” Monsanto, 465 

U.S. at 768. 

More often than not, a plaintiff lacks direct evidence of a conspiracy. Indeed, “[i]t is only 

in rare cases that a plaintiff can establish the existence of a conspiracy by showing an explicit 

agreement; most conspiracies are inferred from the behavior of the alleged conspirators . . . and 

from other circumstantial evidence.” City of Tuscaloosa v. Harcos Chems., 158 F.3d 548, 569 

(11th Cir. 1998); see also ES Dev., Inc. v. RWM Enters., Inc., 939 F.2d 547, 553 (8th Cir. 1991) 

(“[I]t is axiomatic that the typical conspiracy is rarely evinced by explicit agreements, but must 

always be proven by inferences that may be drawn from the behavior of the alleged 

conspirators.”) (internal quotations omitted); VI PHILLIP E. AREEDA & HERBERT HOVENKAMP, 

ANTITRUST LAW ¶ 1410c, at 63 (2d ed. 2003) (an agreement “can exist without any documentary 

trail and without any admission by the participants”).7

 This circumstantial evidence of a 

(1953). We will therefore only reference the Sherman Act for our analysis of the relevant 

claims. 

6

 As the Supreme Court has explained, Matsushita does not “introduce a special burden 

on plaintiffs facing summary judgment in antitrust cases.” Eastman Kodak Co. v. Image 

Technical Servs., 504 U.S. 451, 468-69 (1992). Rather, it only requires that “the nonmoving 

party’s inferences be reasonable in order to reach the jury, a requirement that was not invented, 

but merely articulated, in that decision.” Id.; see also In re Flat Glass, 385 F.3d at 357 

(recognizing that in a price fixing case, the summary judgment standard is no different than that 

applied generally). 

7

 Unless otherwise noted, citations to Areeda and Hovenkamp’s ANTITRUST LAW treatise 

refer to volume VI of the second edition. 

7 
 

 

 

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conspiracy, when considered as a whole, must tend to rule out the possibility of independent 

action. Matsushita, 475 U.S. at 764; Toys ‘R’ Us, Inc. v. FTC, 221 F.3d 928, 934 (7th Cir. 

2000). 

1. Parallel Behavior 

In support of its claim of conspiracy, Complaint Counsel first points to parallel pricing 

behavior in the pipe fittings market in 2008. Specifically, Complaint Counsel cites to two 

identical industry-wide multiplier price increases in 2008—one in January and another in 

June—as well as alleged efforts during this time period by the three claimed conspirators to 

centralize pricing authority and reduce price discounting on individual jobs. CC’s SOF ¶¶ 30, 

35, 37, 77-78. But although probative of an agreement, “[parallel pricing behavior] falls short of 

conclusively establishing an agreement.”8 Cosmetic Gallery Inc. v. Schoeneman Corp., 495 F.3d 

46, 51-52 (3d Cir. 2007); see also In re Baby Food Antitrust Litig., 166 F.3d 112, 122 (3d Cir. 

1999) (noting that when competitors act individually, but in a parallel manner, “this may provide 

probative evidence of an understanding by the competitors to fix prices,” but is insufficient alone 

to prove a conspiracy) (internal quotations omitted). 

McWane does not dispute that Star and Sigma announced they were matching McWane’s 

multiplier increases in both January and June 2008 (R’s SOF ¶¶ 57, 66), but maintains that this 

conduct reflects nothing more than parallel conduct (R’s SD Br. at 12-17). According to 

McWane, the price increases were merely necessary responses to rising costs. R’s SOF ¶ 53. 

Not surprisingly, the four McWane employees who testified all consistently stated that they 

made their pricing decisions independently. R’s SOF ¶¶ 22, 25-26, 30-31. Employees from 

Sigma and Star also all testified that they unilaterally decided to follow McWane’s announced 

prices. R’s SOF ¶¶ 50-51, 57-58. 

McWane is correct that evidence of parallel pricing alone would be insufficient to show a 

conspiracy. In a market dominated by a small number of firms, “any single firm’s ‘price and 

output decisions will have a noticeable impact on the market and its rivals.’” In re Flat Glass, 

385 F.3d at 359 (quoting AREEDA ¶ 1429, at 206-07). 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. The result is that “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.” In re Flat Glass, 385 F.3d at 359. 

Because this conduct, referred to as “conscious parallelism,” may stem from independent 

conduct, it is well established that the Sherman Act does not prohibit it. See, e.g., Brooke Group, 

8

 In an oligopolistic market, “conscious parallelism” to raise or maintain prices is not 

necessarily unlawful because it could stem from independent conduct. Brooke Group Ltd. v. 

Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993). In dicta, the Supreme Court has 

described “conscious parallelism” as “the process, not in itself unlawful, by which firms in a 

concentrated market might 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.” Id. 

8 
 

 

 

 

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509 U.S. at 227 (describing “conscious parallelism” as “the process, not in itself unlawful, by 

which firms in a concentrated market might in effect share monopoly power”). Accordingly, to 

distinguish between lawful behavior and an illegal price-fixing scheme, a plaintiff is required to 

show evidence of certain other factors known as “plus factors.” In re Flat Glass, 385 F.3d. at 

360; Williamson Oil Co. v. Philip Morris USA, Inc., 346 F.3d 1287, 1301 (11th Cir. 2003). 

It is undisputed that there is conscious parallelism in this industry. McWane 

acknowledges that market participants regularly track each other’s pricing, obtained from their 

customers, and that Sigma and Star routinely follow McWane’s announced pricing changes. 

R’s SOF ¶¶ 50, 57-58. We now turn to whether Complaint Counsel has pointed to sufficient 

evidence of “plus factors” to defeat McWane’s motion for summary decision. 

2. Plus Factors 

The existence of plus factors “tends to ensure that courts punish ‘concerted action’—an 

actual agreement—instead of the unilateral, independent conduct of competitors.” In re Flat 

Glass, 385 F.3d at 360 (internal quotations omitted); see also Blomkest Fertilizer, Inc. v. Potash 

Corp. of Sask., 203 F.3d 1028, 1032-33 (8th Cir. 2000); City of Tuscaloosa, 158 F.3d at 570. 

There is no exhaustive list of plus factors (AREEDA ¶ 1434a, at 241-42), but the main types of 

relevant evidence can be grouped into the following three categories: “(1) evidence that the 

alleged conspirator had a motive to enter into the price fixing conspiracy; (2) evidence that it 

acted contrary to its self-interest; and (3) evidence implying a traditional conspiracy.” In re Flat 

Glass, 385 F.3d at 360 (internal quotations omitted); see also Re/Max Int’l v. Realty One, 173 

F.3d 995, 1009 (6th Cir. 1999) (listing plus factors); Apex Oil Co. v. DiMauro, 822 F.2d 246, 

254 (2d Cir. 1987) (same). 

It has been pointed out, however, that “in the context of parallel pricing, the first two 

factors largely restate the phenomenon of interdependence.” In re Flat Glass, 385 F.3d at 360; 

AREEDA ¶ 1429, at 207. Evidence that the alleged price-fixer had reason to enter into a 

conspiracy, for instance, may merely show “that the industry is conducive to oligopolistic price 

fixing, either interdependently or through a more express form of collusion.” In re Flat Glass, 

385 F.3d at 360. Similarly, evidence that it acted contrary to its interests may only mean that the 

conduct would be irrational in the context of a fully competitive market. Id. Accordingly, while 

important because they help distinguish between competitive market conduct and oligopolistic 

behavior, these first two factors alone do not suffice to defeat summary judgment. Here, as in 

most price-fixing cases, the third factor, “customary indications of traditional conspiracy,” will 

be the most important.9 Id. As shown below, Complaint Counsel has pointed to sufficient 

evidence of all three plus factors to defeat summary judgment. 

9

 Customary indications of a traditional conspiracy include information exchanges, 

ambiguous participant admissions, solicitations of agreement, communications between parties, 

and parallelism that it is difficult to explain absent an agreement. AREEDA ¶ 1434b, at 243. 

9 
 

 

 

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a) Motive 

To show that McWane and its alleged co-conspirators had a motive to enter into a price 

fixing conspiracy, Complaint Counsel emphasizes that the structure of the pipe fittings market is 

conducive to secret price fixing. Market structure can facilitate collusion when it: (1) involves a 

commodity product with few substitutes; (2) is concentrated on the supply side; (3) reflects a 

lack of concentration on the buying side; (4) has excess capacity; and (5) features published 

prices. Cf. In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 656-58 (7th Cir. 2002) 

(noting that the high fructose corn syrup market exhibited these characteristics, making price 

fixing feasible and providing parties with a motive to engage in such conduct). The parties do 

not dispute that pipe fittings are a commodity product designed to industry-wide specifications, 

that they have no substitutes, and that suppliers publish list prices. R’s Ans. ¶¶ 23, 27(a) & (e). 

There is also evidence that McWane, Sigma, and Star together account for about 95% of sales in 

the fittings market (CX 1163-006), and that buyers, primarily distributors, are far less 

concentrated (CC’s SOF ¶¶ 168-171). And during the relevant time period, the market had 

excess capacity. CX 1287-007; CX 0627-001; CX 2145-006. McWane does not offer evidence 

to the contrary. 

b) Actions Against Interest 

Actions against interest by a participant in a conspiracy are actions that would have been 

economically irrational for a firm acting in a competitive market. In re Flat Glass, 385 F.3d at 

360-61; Williamson Oil, 346 F.3d at 1310. Complaint Counsel focuses on Star, the industry’s 

claimed pricing maverick, arguing Star behaved contrary to its economic self-interest throughout 

the period of the alleged conspiracy. Complaint Counsel points to two acts in particular: Star’s 

decision to curtail discounting throughout much of 2008, and its decision to participate in the 

DIFRA information exchange. Read in the light most favorable to Complaint Counsel, a 

plausible interpretation of the evidence could be that Star’s conduct only made sense in the 

context of a conspiracy. 

Star had long relied on discounting off list prices to gain market share. McCutcheon 

Dep. 152-53. In fact, competitors frequently complained about Star’s “reckless, irresponsible, 

and undisciplined” pricing. CX 1076-003; see also Tatman IH 232-34; Rybacki Dep. 114. Yet, 

beginning in January 2008, following the release of the McWane January pricing letter, which 

Complaint Counsel posits included a veiled message to its competitors to stop discounting in 

exchange for future price increases (CC’s SOF ¶¶ 27-29), Star abruptly announced it was 

curtailing discounting (CX 1170-3).10 To ensure that this occurred, Star removed pricing 

authority from its sales force and centralized it with its National Sales Manager, Matt Minamyer. 

Id. 

10 In fact, when announcing Star’s new approach, Mr. Minamyer wrote to Star’s district 

sales managers that “[d]on’t think we need the price increases. . . . 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.” CX 1170-3. 

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PROVISIONALLY REDACTED VERSION

Ultimately, this shift in policy appeared to have backfired. By late November 2008, Star had 

“lost too much revenue” and resumed project pricing. CX 0746. Nonetheless, one reasonable 

interpretation of the decision to centralize its pricing authority and reduce job discounting 

beginning in early 2008 supports Complaint Counsel’s view that Star was not acting 

independently. Cf. United States v. Andreas, 216 F.3d 645, 652 (7th Cir. 2000) (noting that the 

ringleaders of the lysine cartel had urged competitors to centralize pricing to minimize cheating 

on the cartel agreement). 

Star’s agreement to exchange company sales information through DIFRA can also be 

seen as an action against self-interest. Mr. McCutcheon declared that he had long been reluctant 

to join DIFRA because he feared that the data would only be used by McWane and Sigma to 

gain insight into Star’s pricing and sales information to undermine Star in the future. CX 0807. 

Yet in Spring 2008, after significant pressure from McWane and Sigma, Star agreed to 

participate in DIFRA (CX 0807), thereby arguably making its pricing decisions more transparent 

to its competitors (CC’s SOF ¶¶ 46-47). Star stopped providing DIFRA data shortly after 

resuming its practice of job discounting. CC’s SOF ¶¶ 95-97. Star’s participation in the DIFRA 

exchange, even though short-lived, plausibly fits with Complaint Counsel’s claim that it was 

driven primarily by an understanding with its competitors, rather than the company’s economic 

self-interest. 

Although Complaint Counsel focuses on Star because it had been the industry’s most 

aggressive discounter, the evidence also shows that McWane and Sigma may have taken actions 

contrary to their self-interest. First, as with Star, their decisions to curtail job discounting would 

be against their interest absent an understanding that their competitors were going to do the 

same. Otherwise, they risked losing sales to competitors who discounted. Second, McWane’s 

decision to curtail discounting and raise prices in 2008, particularly in the face of excess 

capacity, lower demand, and declining market share (CX 1287-005-007), could also be read as 

contrary to the company’s interests. 

c) The Alleged Conspiracy 

As described by Complaint Counsel, in 2007 the fittings industry was suffering from 

declining demand and excess capacity, leading to pricing that trailed inflation. CX 1287; 

CX 0627-001; CX 1088-003. Star was placing additional pressure on prices. CC’s SOF ¶ 13. 

McWane had answered by matching Star’s pricing, but its profitability had suffered. 

CC’s SOF ¶¶ 14, 18. McWane’s senior management decided to shake up its fittings business, 

appointing Rick Tatman as Vice President and General Manager in an effort to turn the 

struggling business around. CC’s SOF ¶ 16. 

Against this backdrop, Complaint Counsel contends that McWane, led by Mr. Tatman, 

developed a strategy in December 2007 to stabilize and increase industry-wide prices for fittings 

in 2008. CX 0627; CC’s SOF ¶¶ 26-31. As described in a presentation that appears to have been 

shared with various McWane senior executives, 

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 According to 

Complaint Counsel, McWane viewed the centralization of pricing authority at the management 

level and reduction of individual job pricing as key to the plan. Id. at 005. 

As the first step in the plan, McWane issued the January pricing letter in early 2008, 

announcing a 10% to 12% increase on the multiplier applicable to imported fittings and a 3% to 

5% increase on domestic fittings, effective February 18. CX 1178-001. The letter noted that 

McWane anticipated the need to raise prices again within the next six months “as conditions 

require” (id.), which Complaint Counsel contends was an offer from McWane to Sigma and Star. 

McWane would consider a larger price increase if its two competitors limited their discounts off 

of list prices. CC’s SOF ¶ 34. By early February, both Sigma and Star had indicated they would 

match the previously-announced McWane pricing. CC’s SOF ¶¶ 35-36. 

Complaint Counsel alleges that following the first round of industry-wide price increases 

in early 2008, McWane moved on to the next stage of its plan—an increase in industry 

transparency. CX 0627-004. Sigma supported McWane’s interest in creating an industry 

association, ultimately known as DIFRA, for the purpose of exchanging industry data, believing 

it would “create trust and respect among [DIPF] suppliers, which could lead to mature and 

disciplined decision making.” CX 1088-001. Star was initially reluctant to participate in 

DIFRA, but later gave in to pressure from McWane and Sigma and agreed to join. CX 0807. 

During Spring 2008, both in-person and telephonic negotiations to set up DIFRA were 

underway. CX 1479. The parties reached an agreement in April 2008 that they would share 

monthly fittings shipment data for 2006, 2007, and the first four months of 2008 by May 15. CX 

1479-001; CX 1186. Going forward, each company would continue to provide their sales data to 

DIFRA on a monthly basis. CX 1479-001. 

According to Complaint Counsel, Sigma viewed the successful implementation of 

DIFRA as the time to again raise prices. CC’s SOF ¶¶ 57-58. Sigma announced a large 

multiplier price increase on April 24, which would be effective May 19, shortly after the DIFRA 

data was due. CX 0137. On May 7, Star announced similar multiplier price increases. 

CX 0816. McWane considered its competitors actions, but chose not to support such large price 

increases because they “would lead to instability.” CX 0137. 

In the June pricing letter, McWane indicated it would not be following the price increases 

announced by its competitors. CX 0138. Instead, McWane indicated that before making any 

12 
 

 

 

 

 

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pricing decision, it would “carefully analyze all factors including: domestic and global inflation, 

market and competitive conditions within each region, as well as our own performance against 

our own internal metrics.” Id. McWane also noted that it would complete its pricing analysis by 

the end of May. Id. 

Following McWane’s statement, both Sigma and Star retracted their previously 

announced price increases. CX 0527-001; Tatman Dep. 142. 

On June 5, 2008, Star submitted its data to DIFRA. CX 0049. That same day, Dan 

McCutcheon, then Star’s Vice President of Sales, notified Sigma by e-mail that Star had 

submitted its data. He recited language from the June pricing letter: 

McWane received the DIFRA data on June 17. Later that day, McWane announced an 

eight percent price increase for fittings, effective July 14. CX 0366-001; CX 1576. Sigma and 

Star quickly followed McWane’s price increases. CC’s SOF ¶ 78. 

By August 2008, the declining U.S. housing market put significant pressure on the 

fittings businesses. Rybacki Dep. 134-35. Complaint Counsel contends that this pressure led to 

increased complaints from McWane, Sigma, and Star, each claiming the others were failing to 

abide by the agreement not to deviate from published pricing. CC’s SOF ¶ 85. For example, on 

August 22, Mr. Tatman at McWane complained to Mitchell Rona, Vice President of Operations 

at Sigma, that he was “upset” by Sigma and Star’s pricing in California and Florida. CX 1149­

001; Rona Dep. 194-98. 

Similarly, according to Complaint Counsel, Star became increasingly concerned about its 

competitors’ pricing, asserting that they were not living up to their commitments to minimize 

discounting off of list prices. In a number of e-mails, Star employees complained that its 

competitors, particularly Sigma, were “cheating.” By October 2008, Star was “catching Sigma 

cheating more and more.” CX 1698. In an October 22 e-mail, Mr. Minamyer, then Star’s 

National Sales Manager, wrote that “Sigma is silently bringing the markets down and acting as if 

they are being good stewards.” CX 0827-001. According to Complaint Counsel, McWane also 

viewed Sigma as responsible for the decline in prices. CX 0456. 

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PROVISIONALLY REDACTED VERSION

Complaint Counsel alleges that by late November 2008, Star had decided to resume 

discounting. CC’s SOF ¶¶ 95-96. On November 25, Mr. Minamyer wrote to Star sales 

managers to announce that, having lost substantial revenue, Star would return to matching 

competitor pricing, albeit stealthily. CX 0746-001. He noted that while Star had been 

“extremely diligent in protecting the stability” of fittings pricing, the competition had not been as 

diligent. Id. By February 2009, Star and Sigma no longer participated in DIFRA. 

CC’s SOF ¶ 97. 

d) Analysis 

Complaint Counsel maintains this evidence supports an inference of conspiracy. For its 

part, McWane insists that there was no conspiratorial plan at all. According to McWane, the 

strategy described by Mr. Tatman in the documents was nothing more than his “personal . . . 

brainstorming”—ideas that were never communicated to Sigma or Star. Moreover, it argues that 

the sequence of price increases shows at most conscious parallelism, not concerted action. We 

disagree. 

As an initial matter, the strategy laid out in Mr. Tatman’s presentation is both suggestive 

of possible collusion and provides a context for interpreting the events that followed. See, e.g., 

In re Sulfuric Acid Antitrust Litig., 743 F. Supp. 2d 827, 858 (N.D. Ill. 2010) (noting that the 

“most damaging piece of evidence” for the defendants was a document laying out a plan to 

stabilize the market); In re Linerboard Antitrust Litig., 504 F. Supp. 2d 38, 59 (E.D. Pa. 2007) 

(indicating that all of the evidence supporting allegations of a conspiracy were “contextualized 

within” a document discussing a strategy to encourage competitors to reduce inventory). 

While McWane denies that it ever intended to convey any plan to its competitors, there is 

evidence suggesting otherwise. The slide laying out the elements of the plan is titled the 

Id. Both versions contained 

language that Complaint Counsel contends was aimed at competitors and would have been 

meaningless to customers. Thus, a reasonable inference could be that McWane intended to use 

its pricing letters to communicate a plan to its competitors. 

Moreover, both the January and June pricing letters could reasonably be read as veiled 

communications to Sigma and Star. 

 While not explicitly referring to “job 

discounts,” a plausible reading is that McWane’s intent going forward was to adhere to the 

published multipliers and not engage in job discounting. McWane makes much of Mr. Jansen’s 

denial—mild though it is—of any such message, (Jansen Dep. 253 (“I don’t think I’m 

14 
PROVISIONALLY REDACTED VERSION

announcing that we’re not going to do job pricing”)), as well as denials by others, but these are 

precisely the type of disputed facts that preclude summary decision. 

Additionally, internal communications at both Sigma and Star as well as their behavior 

show that both firms interpreted McWane’s January pricing letter as an offer to support higher 

prices, particularly if each curtailed job discounting. In a January 24 e-mail, Sigma CEO, Victor 

Pais, wrote to Sigma’s regional managers that 

 Mr. Pais then notes that he 

“urged” Larry Rybacki, Sigma’s former Vice President of Sales and Marketing, to match 

McWane’s new pricing, which it did on January 29, 2008, and 

 Complaint Counsel 

contends that Mr. Pais is referring to curtailing project pricing. Shortly thereafter, Sigma 

informed its customers that as of May 5, it was eliminating project pricing. CX 1138-004 

(announcing that Sigma would “cease to use any varying ‘special’ pricing” and that orders would 

instead be processed using the prevailing list prices). 

Like Sigma, Star responded to the January pricing letter by announcing in a customer 

letter that it would match McWane’s multiplier price increases. CX 2336; CX 2315-001. Star 

also decided to curb project pricing, i.e., discounting. In a January 22 e-mail discussing 

McWane’s pricing letter, Mr. Minamyer, Star’s National Sales Manager, ordered Star employees 

to “stop project pricing.” CX 1170-2-3 (emphasis in original); see CX 0034-1. Mr. Minamyer 

noted that the elimination of project pricing “is best for the industry and that [Star] need[s] to be 

part of the effort to help [the fittings] industry. We will not [be] part of damaging the industry 

due to lack of discipline.” CX 1170-3. Shortly after receiving the McWane letter, Star notified 

customers that there would be “no utility project pricing nationwide.” CX 2315-001. To ensure 

compliance with the restrictions on project pricing, Star decided to centralize pricing authority 

with Mr. Minamyer. CX 1170-3. 

McWane also argues that the June pricing letter on its face “says nothing at all about 

DIFRA . . . [or] about any willingness to support higher prices in exchange for submissions of 

tons-shipped data to DIFRA.” R’s Reply Br. at 4. That may very well be, but, at a minimum, 

Sigma and Star’s reactions to the June pricing letter raise disputed questions of fact about 

whether it also contained veiled communications to Sigma and Star. 

Specifically, Complaint Counsel interprets the June letter, particularly its references to 

McWane needing until the end of May to determine whether a further price increase was 

warranted, as conveying a message to Sigma and Star that McWane would only support higher 

pricing after it received and analyzed the DIFRA data. CC’s SOF ¶¶ 62-64. It contends that 

only Sigma and Star knew that the companies had agreed to submit DIFRA data “by the end of 

May.” CC’s SOF ¶ 64. Prior to receiving the pricing letter, Star had not yet confirmed it would 

share its sales data with DIFRA, but within hours of receipt, Dan McCutcheon, then Star’s Vice 

President for Sales, e-mailed the other DIFRA members confirming that Star would submit its 

data. CX 1085-001; CX 0863. Further, Complaint Counsel contends that Mr. McCutcheon’s 

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data. In a May 24 e-mail from Mr. Tatman to other McWane executives, he wrote that 

 McWane finally announced a price increase on June 17, hours after it received, 

and quickly analyzed, the DIFRA data. CC’s SOF ¶¶ 75-77. This evidence shows a plausible 

quoting of select language from McWane’s June letter in his e-mail to Sigma demonstrates that 

Star understood McWane was offering to raise prices contingent on its competitors providing 

their sales data to DIFRA. CC’s SOF ¶ 74. Complaint Counsel further contends that Star 

accepted the offered price increase by submitting the requested data. Id. Whether that is or is 

not an accurate account of what happened is a matter that will have to be resolved at trial, not on 

summary decision.11 

McWane also takes issue with Complaint Counsel’s assertion that the DIFRA 

information exchange serves as evidence of a conspiracy. In particular, McWane stresses that 

the DIFRA data was limited to aggregated sales volume numbers and provided no insight into 

pricing. But where there is evidence suggesting that the exchange of information may have been 

closely intertwined with the alleged conspiracy, an inference of conspiracy is plausible.12 In re 

Flat Glass, 385 F.3d at 369 (finding that exchanges of information among competitors supported 

an inference of a conspiracy where they were “tightly linked” with the alleged concerted 

behavior); In re Petroleum Prods. Antitrust Litig., 906 F.2d at 462 (“an inference of conspiracy 

drawn from the appellants’ evidence of supply data exchanges is plausible”). 

Here, there is evidence that McWane delayed a price increase until receipt of the DIFRA 

link between the DIFRA information exchange and the alleged conspiracy.13 See In re Currency 

11 In addition to the January and June pricing letters, Complaint Counsel also points to 

other examples of pricing-related communications among the alleged conspirators. Many of 

these communications involve complaints about a rival’s low pricing. CC’s SOF ¶¶ 15-21, 41­

42. While the evidence surrounding the pricing letters is more than sufficient to conclude that 

summary decision would be inappropriate here, these additional communications lend further 

support to an inference of a conspiracy. See AREEDA ¶ 1419a, at 122-23 (“[W]hen a competitor 

merely complains to its rival about the latter’s ‘low price’ . . . the ‘objective’ meaning of such a 

statement to the reasonable observer seems clear: the only business rationale for complaining is 

to induce a higher price.”); In re Plywood Antitrust Litig., 655 F.2d 627, 633 (5th Cir. 1981) 

(recognizing a high level of inter-firm communication as a plus factor). 

12 It is uncontested that the DIFRA data lacked specific pricing information 

(R’s SOF ¶¶ 87-91; CC’s SOF ¶ 56), but this fact is not dispositive. See In re Coordinated 

Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 906 F.2d 432, 461-62 (9th Cir. 1990) 

(holding that an agreement to exchange non-price information with competitors can serve as 

circumstantial evidence of an agreement to raise prices); see also Am. Column & Lumber Co. v. 

United States, 257 U.S. 377, 398 (1921) (recognizing that disseminating production and supply 

data cannot be treated categorically different than the exchange of price information). 

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Conversion Fee Antitrust Litig., 773 F. Supp. 2d 351, 370 (S.D.N.Y. 2011) (holding that timing 

of defendants’ decisions to raise prices—within days of an exchange of information—supported 

a finding that the information had an impact on the pricing decision). 

Moreover, as discussed at greater length below, there is also evidence that all three 

suppliers believed that the DIFRA data allowed monitoring of the market and their competitors’ 

behavior. Specifically, Complaint Counsel presents evidence that the data provided sufficient 

insight into the market, much of which the alleged conspirators could not access previously, to 

allow them to determine whether they were losing sales due to a downturn in the market (shown 

by a steady market share) or discounting by competitors (evidenced by a declining share). 

CX 1092. As a result, it seems the recipients believed the information would help maintain 

pricing stability. Id.; CX 1287. 

Finally, Complaint Counsel also points to a number of statements by the parties 

suggestive of a conspiracy. Various Star documents refer directly to “cheating” in the fittings 

marketplace, implying the existence of an agreement that Star believed a coconspirator had 

We close this discussion by addressing one overarching argument made by McWane— 

that a price-fixing conspiracy could not have existed here because individual job discounting 

continued throughout 2008. McWane’s argument is flawed for several reasons. First, courts 

breached. In a number of e-mails, Star’s regional division managers complained to 

Mr. Minamyer that their competitors were cheating. 

There are 

similar references by McWane employees. For example, in a May 18, 2009 e-mail to Ruffner 

Page, CEO of McWane, in anticipation of his meeting with Mr. Pais, former CEO of Sigma, Mr. 

Tatman wrote that 

These references to 

“cheating” and “agreements” clearly support the possibility of a conspiracy. See Blomkest 

Fertilizer, 203 F.3d at 1050 (Gibbons, J. dissenting) (noting that “the use of the word ‘cheating’ 

denotes the breach of an agreement or convention, not independent action”); see also In re High 

Fructose Corn Syrup, 295 F.3d at 662 (recognizing that statements suggestive of an agreement 

among competitors serve as circumstantial evidence of a conspiracy). 

13 Although McWane concedes that it announced a price increase hours after receiving 

the DIFRA data, it responds that rather than match its competitors’ previously announced—and 

subsequently suspended—price increases, it instead announced smaller price increases. R’s 

Reply Br. at 10. This does not disprove a conspiracy, however. Indeed, some evidence suggests 

that McWane actually preferred smaller increases because they reduced the likelihood of 

cheating, thereby promoting price stability. For example, a December 31, 2007 e-mail to 

Mr. Tatman from Thomas Walton, McWane Senior Vice President, responding to Mr. Tatman’s 

proposed strategy, praised the recommendation to only raise prices half as much as McWane’s 

competitors as part of an effort 

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have consistently held that “[a]n agreement to fix list price . . . is a per se violation of the 

Sherman Act even if most or for that matter all transactions occur at lower prices.” In re High 

Fructose Corn Syrup Antitrust Litig., 295 F.3d at 656. As Judge Posner has explained, that is 

because “the list price is usually the starting point for the bargaining and the higher it is, the 

higher the ultimately bargained price is going to be.” Id.; see also Plymouth Dealers’ Ass’n v. 

United States, 279 F.2d 128, 132 (9th Cir. 1960) (holding that an agreement among competitors 

on common list prices as the starting point for bargaining with customers violated the Sherman 

Act). That the claimed conspiracy here allegedly involved a reduction in discounting off of list 

prices (Compl. ¶ 32) only heightens the concern that raising list prices may have resulted in 

higher prices for customers. 

Second, evidence that job pricing continued, at least to some degree, in 2008 does not 

preclude a finding of conspiracy. In evaluating a claim of price fixing, one must distinguish 

“between the existence of a conspiracy and its efficacy.” In re High Fructose Corn Syrup 

Antitrust Litig., 295 F.3d at 656. The fact that not all of the claimed conspirators complied fully 

with the conspiracy does not mean there was no conspiracy.14 See United States v. Beaver, 515 

F.3d 730, 739 (7th Cir. 2008) (holding that evidence of cartel “cheating” did not undermine the 

government’s case that a cartel existed); Andreas, 216 F.3d at 679 (same). 

Finally, there is also evidence belying McWane’s contention that job pricing continued 

unabated following the dissemination of the January pricing letter. 

 Similarly, in its Second 

Quarter 2008 Executive Report, McWane continued to observe a decrease in discounting and job 

pricing. CX 1562-004. 

Considered as a whole, the evidence presented by Complaint Counsel more than suffices 

to defeat summary decision as to count one. See Continental Ore Co. v. Union Carbide & 

Carbon Corp., 370 U.S. 690, 699 (1962) (emphasizing that “the character and effect of a 

conspiracy are not to be judged by dismembering it and viewing its separate parts, but [rather] by 

looking at it as a whole”); InterVest, Inc. v. Bloomberg, L.P., 340 F.3d 144, 160 (3d Cir. 2003) 

(“a court should not tightly compartmentalize the evidence put forward by the nonmovant, but 

instead analyze it as a whole to see if together, it supports an inference of concerted action.”). 

B. Count Two: Conspiracy to Exchange Sales Information 

In addition to arguing that the DIFRA information exchange is a plus factor supporting 

the inference of a price-fixing agreement, Complaint Counsel also alleges that it constitutes an 

14 Moreover, Complaint Counsel does not argue that McWane and its rivals intended to 

or would “stop” all job discounting; rather, Complaint Counsel argue and offer evidence that 

McWane intended to “curtail” job discounting, and that it was soliciting its rivals to do the same 

in part through its January pricing letter. See, e.g., CC’s SOF ¶¶ 28-30, 33-34. Accordingly, that 

at least some job pricing continued is not inconsistent with the conspiracy allegations. 

18 
 

 

 

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independent violation of Sherman Act Section 1 as a facilitating practice. Compl. ¶¶ 35-38, 65. 

McWane seeks summary dismissal of this claim on the ground that McWane, Star, and Sigma 

witnesses uniformly testified that the DIFRA shipping data they received provided them with no 

insight into competitor pricing, and therefore, could not facilitate a price fixing agreement. This 

argument does not hold up under the facts before us. 

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.” AREEDA ¶ 1407b, at 29-30; see also In re Brand Name 

Prescription Drugs Antitrust Litig., 288 F.3d 1028, 1033 (7th Cir. 2002) (recognizing that “there 

is authority for prohibiting as a violation of the Sherman Act or of section 5 of the Federal Trade 

Commission Act an agreement that facilitates collusive activity”). As an initial matter here, the 

fact that the traded information was non-price data does not necessarily absolve McWane and its 

rivals. See In re Petroleum Prods. Antitrust Litig., 906 F.2d at 462 (holding that the exchange of 

non-price information can facilitate collusion). Whether an agreement to exchange competitive 

information constitutes an unreasonable restraint of trade is analyzed under the rule of reason. 

Therefore, the question is whether the anticompetitive effect of the agreement outweighs its 

beneficial effects. United States v. United States Gypsum, 438 U.S. 422, 441 n.16 (1978); Todd 

v. Exxon, 275 F.3d 191, 199 (2d Cir. 2001); In re Petroleum Prods. Antitrust Litig., 906 F.2d at 

447 n.13; Ipenne v. Greater Minneapolis Area Bd. of Realtors, 604 F.2d 1143, 1148 (8th Cir. 

1979). In assessing the competitive effects of the information exchange, the susceptibility of the 

industry to collusion and the nature of the information exchanged are the most important factors 

in determining likely effects. United States Gypsum, 438 U.S. at 441 n.16; Todd, 438 F.3d at 

207-08. 

As discussed above, the fittings industry has characteristics arguably making it 

susceptible to collusion: fittings are fungible; demand is largely inelastic; and the market is 

concentrated. In evaluating the nature of the information exchanged, courts look to the 

timeliness and specificity of the data to determine its anticompetitive potential. Todd, 438 F.3d 

at 211-13. Here, the DIFRA members agreed to share data regarding monthly fittings shipments. 

Although the data was not prospective, which would be particularly troubling, it was nonetheless 

very recent, sometimes reflecting sales data less than two weeks old. CX 2334. The parties also 

apparently believed it provided them with a much more accurate picture of sales in the industry 

than prior sources of data. CX 1706; CX 2337. Moreover, it was sufficiently detailed that with 

some manipulation, the parties could calculate their market share down to at least the state level. 

CX 2335. Perhaps most importantly, it allowed the parties to monitor competitor discounting. 

CC’s SOF ¶¶ 80-82. There are also a number of documents explaining that the DIFRA data 

allowed the members to determine whether sales losses resulted from overall market decline or 

from competitor discounting.15 See CX 0313-004; CX 1077-002. Based on this evidence, 

15 

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Complaint Counsel reasonably argues that the DIFRA exchange allowed the parties to monitor 

their competitors and thereby promoted the conspiracy. See In re Corn Syrup Antitrust Litig., 

295 F.3d at 656 (recognizing that the ability to detect cheating “tends to shore up a cartel”). 

Relying on Williamson Oil, McWane argues that the exchange of sales information, as 

opposed to price data itself, is far less indicative of a price fixing conspiracy. It is certainly true 

that the exchange of sales information does not in and of itself suggest a conspiracy, but the 

inquiry does not end there. Importantly, in Williamson Oil, not only was there a lack of evidence 

tying the exchange of information to the claimed conspiracy, but the parties also had evidence of 

a procompetitive justification for the exchange. 346 F.3d at 1313. Here, by contrast, McWane 

fails to identify a single procompetitive purpose for the DIFRA exchange.16 Additionally, the 

fact that the data exchange began during the alleged conspiracy period (CC’s SOF ¶ 46), and 

stopped shortly after Complaint Counsel alleges that Star withdrew from the conspiracy 

(CC’s SOF ¶ 97), raises doubt about whether the exchange of data served any procompetitive 

objective. Tellingly, when Sigma attempted to revive DIFRA reporting in May 2009, it did not 

provide a procompetitive reason, but rather said 

In sum, Complaint Counsel presents evidence plausibly showing that the agreement 

among McWane, Sigma, and Star to exchange sales data may have facilitated their alleged 

collusion. This, coupled with McWane’s failure at this stage to provide evidence of any 

procompetitive justification to offset the potential anticompetitive harm, requires that we deny 

McWane’s motion for summary decision on count two. 

C. Count Three: Invitations to Collude 

McWane also moves for summary decision on Complaint Counsel’s allegations that 

McWane’s January and June pricing letters constitute unlawful invitations to collude in violation 

of Section 5 of the FTC Act. Compl. ¶ 66. McWane acknowledges that the FTC has previously 

asserted that invitations to collude are an unfair method of competition but argues that summary 

decision is warranted because the issue has not been litigated and no court has held that an 

invitation to collude violates Section 5. As discussed above, McWane also disputes as a factual 

matter that its January and June 2008 pricing letters were invitations to collude. Neither 

argument provides a basis for summary decision. 

For more than twenty years, the Commission has held that an invitation to collude is “the 

quintessential example of the kind of conduct that should be . . . challenged as a violation of 

Section 5.” Statement of Chairman Leibowitz and Commissioners Kovacic and Rosch, In re U16 Although McWane presents evidence that one of DIFRA’s primary purposes was to 

address technical specifications of fittings (R’s SOF ¶ 85), it provides no evidence demonstrating 

that this goal was related to the exchange of the sales volume data. 

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Haul Int’l, Inc., Docket No. C-4294 (June 9, 2010), at 1 (identifying cases). This conclusion is 

based on the longstanding principle that the scope of Section 5 of the FTC Act is broader than 

the Sherman Act. As the Supreme Court has explained, Section 5 empowers the Commission to 

challenge anticompetitive practices in their incipiency: 

The unfair methods of competition which are condemned by §5 of the Act 

are not confined to those that were illegal at common law or that were 

condemned by the Sherman Act. . . . [T]he FTCA was designed to 

supplement and bolster the Sherman Act and the Clayton Act, to stop in 

their incipiency acts and practices, which, when full-blown, would violate 

those Acts, as well as to condemn as unfair methods of competition 

existing violations of them. 

FTC v. Motion Picture Adver. Serv. Co., 344 U.S. 392 (1953).17 

McWane ignores this well-established authority and instead directs us to Sherman Act 

Section 1 conspiracy cases. But these cases do not relate to Section 5 and are therefore 

inapposite. Even Liu v. Amerco, upon which McWane principally relies, makes clear the 

distinction between the requirements of Section 1 of the Sherman Act and Section 5. 677 F.3d 

489, 494 (1st Cir. 2012). 

Liu was a follow-on private action to the Commission’s complaint and consent decree in 

In re U-Haul International, the most recent case in which the Commission has challenged an 

invitation to collude under Section 5. In Liu, the First Circuit held that Liu’s complaint stated a 

cognizable claim under the Massachusetts consumer protection statute, which, like Section 5, 

prohibits “unfair methods of competition.” Id. at 494-95. The First Circuit endorsed the 

Commission’s position, noting that “while . . . an unsuccessful attempt [to conspire] is not a 

violation of Section 1 of the Sherman Act,” the FTC has concluded under Section 5 of the FTC 

Act that a “proposal to engage in horizontal price fixing is dangerous merely because of its 

potential to cause harm to consumers if the invitation is accepted.” Id. at 493-94. 

McWane also ignores leading antitrust scholars who have endorsed the Commission’s 

use of Section 5 to challenge invitations to collude. See, e.g., AREEDA ¶ 1419e, at 129-38; 

Stephen Calkins, Counterpoint: The Legal Foundation of the Commission’s Use of Section 5 to 

Challenge Invitations to Collude is Secure, 14 Antitrust 69 (Spring 2000) (“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”). While there may be some debate about the precise contours 

of Section 5, there is widespread agreement that invitations to collude are, and should be, an 

unfair method of competition. After all, “an unsuccessful attempt to fix prices is pernicious 

conduct with a clear potential for harm and no redeeming value whatever.” Liu, 677 F.3d at 494; 

17 Accord FTC v. Texaco, 393 U.S. 223, 225 (1969); FTC v. Brown Shoe Co., 384 U.S. 

316, 321 (1966); FTC v. Cement Inst., 333 U.S. 683, 708 (1948); Fashion Originators’ Guild, 

Inc. v. FTC, 312 U.S. 457, 466 (1941). 

21 
 

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see also In re Valassis, 141 F.T.C. 279, 282-86 (2006) (delineating the legal and economic 

justifications for imposing liability on invitations to collude under Section 5). 

Equally unpersuasive is McWane’s argument that there is no factual support for this 

count. As discussed above, whether McWane’s January and June pricing letters are invitations 

to collude present genuine issues of fact to be resolved at trial. 

D.	 Counts Four and Five: McWane’s Efforts to Exclude Sigma from the 

Domestic Fittings Market 

Complaint Counsel also alleges that McWane induced Sigma to abandon its plan to enter 

the domestic fittings market as an independent competitor and instead distribute product 

manufactured by McWane. Complaint Counsel charges that the resulting distribution 

arrangement, embodied in a master distribution agreement (“MDA”), violates Sherman Act 

Sections 1 and 2 by excluding Sigma and maintaining McWane’s alleged monopoly in the 

domestic fittings market. McWane challenges these allegations on a single ground, arguing that 

Sigma was not in a position to enter the domestic fittings market at the time it entered into the 

MDA with McWane. In other words, McWane contends Sigma was not an actual potential 

competitor in that market. R’s SD Br. at 11, 32-33; R’s Reply Br. at 6-7. The question for us is 

whether the uncontroverted evidence supports McWane’s contention. We conclude that it does 

not. 

The parties dispute whether Sigma was an actual potential competitor in the domestic 

fittings market. Complaint Counsel, for the purposes of this motion, agrees with McWane that a 

firm is an actual potential entrant when it can be shown that it has taken “affirmative steps to 

enter the business” and has an “intention” and “preparedness” to do so.18 R’s SD Br. at 33 

(citing Gas Utils. Co. of Ala. v. Southern Natural Gas Co., 996 F.2d 282, 283 (11th Cir. 1993) 

(holding that a “party must take some affirmative step to enter”); Cable Holdings of Ga., Inc. v. 

Home Video, Inc., 825 F.2d 1559, 1562 (11th Cir. 1993) (requiring “an intention to enter the 

business” and a “showing of preparedness”)). 

In arguing that Sigma was not positioned to enter the market, McWane relies heavily on 

what it characterizes as undisputed testimony from Larry Rybacki, Sigma’s former Vice 

President of Sales and Marketing, and Siddarth Bhatacharji, Sigma’s Executive Vice President, 

that it would have taken at least 18-24 months for Sigma to begin domestic manufacturing of 

fittings. By that time, argues McWane, the spike in domestic sales resulting from ARRA 

18 Given that the parties agree on the standard at this juncture, and based on the 

conflicting evidence before us, we do not find it necessary at this stage to address the appropriate 

standard for establishing an “actual potential competitor.” We do note that in the merger 

context, for a firm to be an “actual potential competitor,” most courts require a “reasonable 

probability” of entry. See Yamaha Motor Co. v. FTC, 657 F.2d 971, 977-79 (8th Cir. 1981); 

United States v. Siemens Corp., 621 F.2d 499, 506-07 (2d Cir. 1980); see also V PHILLIP W. 

AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW ¶ 1121b, at 53 (2d ed. 2003) (noting that the 

appropriate standard should be that the potential entrant “would probably have entered the 

market within a reasonable period of time”). 

22 
PROVISIONALLY REDACTED VERSION

stimulus would have ended, rendering the enterprise unprofitable. McWane also contends that 

Sigma lacked the financial resources to undertake the estimated $5 to $10 million cost of 

developing domestic manufacturing capability. There is some merit to both points, but there is 

also contrary evidence that Sigma had other options. 

For example, Mr. Rybacki testified that Sigma was also exploring using its 

Rybacki Dep. 130-31; 

CX 0086-005. In investigating this possibility, Mr. Rybacki was told by some that it could be 

done in as little as 120 days. Rybacki Dep. 137-38. His personal view was that Sigma could be 

in a position to enter the market within nine months. Id. Meanwhile, although Mr. Bhatacharji 

estimated that it would take at least 18-24 months for Sigma to have a full line of fittings 

available across the country even using a virtual manufacturing model, he also explained that 

Sigma would have been able to operate successfully earlier than that with less than a full range 

of fittings. Bhatacharji Dep. 247-48. 

Star’s entry into the domestic market is also instructive. Star, like Sigma, employs a 

virtual manufacturer model for fittings. See Bhutada Dep. 6-9. And it began selling domestic 

fittings manufactured by third-party foundries within a few months of its June 2009 

announcement that it was entering the market and less than nine months after passage of the 

ARRA. R’s SOF ¶ 98. 

There is also evidence that Sigma’s owners and board supported Sigma’s domestic entry 

even absent ARRA, based on the belief that “Buy American” requirements as well as end-user 

preferences could lead to the domestic market increasing to 25% to 30% of the overall fittings 

market. See CX 0081-004; CX 0225-001; CX 0978-001. 

As for Sigma’s financial condition, it appears that Sigma had sufficient capital to invest 

into entering the domestic market. A July 27, 2009 e-mail from Sigma’s equity owner to 

Sigma’s executive management, for instance, indicates that Sigma’s liquidity was “fine” and that 

investors and shareholders were prepared to invest up to $7.5 million “to fund [the] domestic 

sourcing initiative” as well as other strategic additions to “help Sigma grow.” CX 0099-007. 

Sigma’s CEO also testified that if no deal had been struck with McWane, Sigma “would have 

brought in the finances” necessary to fund domestic production. Pais IH 180-81. 

Complaint Counsel also points to other evidence showing that Sigma had the intent to 

enter the domestic market. Sigma executives testified that absent an agreement with McWane, 

Sigma would have entered the domestic market. Pais IH 179-80; Rona IH 102-04. 

Contemporaneous business documents confirm this. In a June 5, 2009 e-mail following receipt 

of McWane’s initial low offer, Mr. Pais wrote that “it’s time [Sigma] seriously went ahead with 

[its] SDP [Sigma Domestic Plan] plans.” CX 0225-001. Similarly, in a board of directors 

update from the same day, Sigma management wrote that the company 

CX 0086-005; see In re B.A.T. 

23 
 

 

PROVISIONALLY REDACTED VERSION

Indus., 104 F.T.C. 852, 922 (1984) (noting that the “best evidence that a firm is an actual 

potential entrant . . . will ordinarily consist of internal, non-public information”). 

In fact, Sigma had taken a number of affirmative steps to enter the market. These 

included visiting domestic foundries and securing offers to produce domestic fittings; purchasing 

tooling equipment; acquiring patterns; ordering production drawings; and conducting test 

manufacturing. Bhattacharji Dep. 55-56; Box Dep. 27-28; CX 0282; R’s Ex. 27 at 6165-66. 

According to Mr. Bhattacharji, Sigma’s domestic plan was “ready with what was needed once 

the switch was flipped.” Bhattacharji Dep. 54-55. 

The record also suggests that McWane itself believed that Sigma could soon begin selling 

domestic fittings. R’s RFA Resp. No. 35; CX 1179-002; CX 0329. 

And 

McWane clearly recognized that Sigma’s entry posed a threat to McWane’s domestic fittings 

sales. 

This evidence suffices to raise a factual dispute about whether Sigma was an actual 

potential entrant into the domestic fittings market at the time it entered into the MDA with 

McWane. Accordingly, we deny McWane’s motion for summary decision on counts four and 

five. 

E. Counts Six and Seven: Exclusive Dealing 

McWane also seeks summary decision with respect to the final two counts, in which 

Complaint Counsel alleges that McWane adopted exclusive dealing policies to monopolize or 

attempt to monopolize the domestic pipe fittings market. Compl. ¶¶ 69-70. In particular, 

Complaint Counsel alleges that McWane threatened to withhold rebates, delay deliveries, and 

refuse to deal with waterworks distributors that purchased domestic fittings from Star. 

Compl ¶ 57; CC’s SOF ¶¶ 175-77. According to Complaint Counsel, McWane’s exclusionary 

distribution policies are “the primary barriers to effective entry and expansion” in this market for 

domestic fittings for suppliers like Star that have established “reputations for quality and service” 

in the broader fittings market. Compl. ¶ 42. 

McWane argues that Star’s “successful expansion” into the domestic fittings market 

compels summary decision in its favor on these two claims. As described by McWane, the 

undisputed evidence shows that Star announced its decision to sell domestic fittings in June 2009 

and was able to sell to 126 customers, including some of the largest U.S. distributors, by the end 

of 2011. R’s SOF ¶¶ 97-98, 101. McWane also points to the fact that Star sold nearly $300,000 

of domestic fittings in 2009, and approximately $6.5 million per year in 2010 and 2011. 

R’s SOF ¶¶ 102, 104, 107. In McWane’s view, Star’s sales numbers, which are uncontroverted, 

do not permit a trier of fact to conclude that McWane had monopoly power or that its 

distribution policies were exclusionary. We disagree. 

The offense of monopolization has two elements: “(1) the possession of monopoly 

power in the relevant market and (2) the willful acquisition or maintenance of that power as 

24 
  

PROVISIONALLY REDACTED VERSION

distinguished from growth or development as a consequence of superior product, business 

acumen or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). 

Attempted monopolization, in turn, 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 monopoly power.” Spectrum Sports v. McQuillan, 506 U.S. 447, 456 

(1993). Monopoly power is defined as “the power to control prices or exclude competition.” 

United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391 (1956). But “having a 

monopoly does not itself violate [Section] 2.” United States v. Microsoft, 253 F.3d 34, 58 (D.C. 

Cir. 2001). There must also be a showing that the challenged conduct is “exclusionary.” In 

other words, to be condemned, the act must have an anticompetitive effect. As the Microsoft 

court explained, this means “it must harm the competitive process and thereby harm 

consumers. . . . [H]arm to one or more competitors will not suffice.” Id. (emphasis in original). 

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 68 (citing Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 327 

(1961)). Under Section 2, however, a plaintiff is not required to show that the claimed 

monopolist excluded all entry by rivals. As explained in United States v. Dentsply International, 

“[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.” 399 F.3d 181, 191 (3d Cir. 2005). 

Accordingly, the question here is whether McWane’s conduct foreclosed a substantial portion of 

the effective channels of distribution, and whether the conduct had a significant effect in 

preserving McWane’s monopoly. See Microsoft, 253 F.3d at 70 (noting that “a monopolist’s use 

of exclusive contracts . . . may give rise to a § 2 violation even though the contracts foreclose 

less than the roughly 40% or 50% share usually required in order to establish a § 1 violation”). 

The undisputed facts that provide the basis for McWane’s motion are not dispositive of 

Complaint Counsel’s monopolization claims. Complaint Counsel disputes the competitive 

significance of Star’s sales, characterizing Star’s purported success as mere “toehold entry,” and 

has provided evidence that could lead a fact finder to conclude that McWane’s policies deterred 

distributors from dealing with Star and had a significant effect on McWane’s ability to 

monopolize the domestic market. Significantly, it appears that at least 85% of domestic fittings 

are sold through distributors. CC’s SOF ¶ 8. And the two largest national distributors, HD 

Supply and Ferguson Enterprises, which are responsible for 50% of all waterworks sales, each 

testified that they directed their regional managers to purchase domestic fittings exclusively from 

McWane. Id. at 168, 182, 185, 189-93. The evidence also plausibly shows that McWane’s 

policies did in fact cause Star to lose business with at least Ferguson. A Star sales manager 

testified that Ferguson regional managers refused to do business with Star as a direct result of 

McWane’s policies. CC SOF ¶¶ 188-93, Berry Dep. 131-44. This testimony is confirmed by 

Star’s internal bidding records. CX 2294-012 (“All Ferguson are lost-they only get quotes from 

us for reference.”) 

Similarly, McWane’s policies seemingly led the third largest distributor, WinWholesale, 

to add Star’s domestic fittings to its “Not Approved” list, preventing its branches from 

purchasing Star domestic fittings. CC’s SOF ¶¶ 169, 194. Although Complaint Counsel does 

not dispute that these three large distributors purchased a small share of their supply of domestic 

25 
PROVISIONALLY REDACTED VERSION 


fittings from Star, McWane's distribution policies did permit sales where it could not readily fill 

a customer's order. CX 0059-002. Material factual disputes remain as to whether Star's sales to 

these customers fell within this exception, and whether McWane's distribution policies 

prevented Star from competing more broadly for the business ofthese large distributors. 

This suggests that Star could arguably have been a more effective competitor absent McWane's 

allegedly exclusionary policies. 

In light of this evidence, and drawing as we must all reasonable inferences in favor of the 

nonmoving party, we conclude that a fact finder could find in favor of Complaint Counsel on 

these claims. Moreover, because the power to exclude competition provides direct evidence of 

monopoly power, triable issues also remain as to whether Mc Wane possessed monopoly power. 

Dentsply, 399 F.3d at 190 (fin.ling that Dentsply's power over a dealer network provided direct 

evidence of monopoly power). 

The authority Mc Wane relies on does not hold differently or otherwise support summary 

decision on the narrow ground Mc Wane advances here. For instance, the court in Omega 

Environmental v. Gilbarco correctly held that an exclusive dealing claim cannot succeed without 

proof oflikely competitive harm. 127 F.3d 1157, 1165 (9th Cir. 1997). But the court also 

recognized that in determining whether there is competitive harm, one must examine a broad 

range of evidence. While the court took account of the fact that a competitor was able to enter 

and grow its market share from 6% to 8% in affirming judgment for the defendant, that evidence 

did not provide the sole basis for its decision. It also considered a variety ofother industry 

evidence, including the volume of direct sales to end users, ease of entry into distribution, prices, 

output, and fluctuations in market shares, all of which suggested that the defendant's policy did 

not harm competition. Id. at 1162-65. Moreover, the court in Omega concluded that the 

plaintiffs had not produced any credible evidence that the defendant's policy had actually 

deterred entry. 127 F.3d at 1164. In contrast, Complaint Counsel has identified evidence that 

could lead a fact finder to conclude that Mc Wane ' s alleged exclusive <lea. ~- -:: !JOlicies had an 

anticompetitive effect. CC' s SOF ~~ 8, 180-82, 185, 187-94, 202. 

McWane's reliance on Tops Jviarketv. Quality Markets, 142 F.3d 90 (2d. Cir. 1998), is 

similarly unavailing. In Tops, the court rejected the plaintiff's effort to provide evidence of 

market power solely through a conclusory affidavit. Id. at 98. The court also held that the 

plaintiff could not prove market power in light of evidence of meaningful entry by a large 

competitor, as well as the plaintiffs own contemporaneous market studies showing that 

competitors (including the plaintiff) could readily enter the defendant's market and compete 

effectively. Id. at 99. We do not understand Tops to hold that evidence ofsome entry on its own 

provides conclusive proof that the defendant lacks monopoly power as a matter of law. As the 

26 

 

 

 

PROVISIONALLY REDACTED VERSION

Ninth Circuit explained in Rebel Oil Co. v. Atlantic Richfield Co., “[i]f the output or capacity of 

the new entrant is insufficient to take significant business away” from the accused, the entrant is 

“unlikely to represent a challenge to the [defendant’s] market power.” 51 F.3d 1421, 1440 (9th 

Cir. 1995).19 Nothing in Tops suggests that Complaint Counsel would be precluded from 

establishing monopoly power at trial on the facts here. 

Whether Complaint Counsel can ultimately prove that McWane’s distribution policies 

constitute monopoly maintenance remains to be seen. But Star’s sales numbers standing alone 

do not rule out that possibility. And, because we find there are genuine issues of fact on the 

question whether McWane has monopolized the domestic market, we also find triable issues 

remain on Complaint Counsel’s attempted monopolization claim, which requires a lesser 

showing. See 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.”). Accordingly, we also deny McWane’s request for summary decision on Complaint 

Counsel’s attempted monopolization claim.20 

V. Complaint Counsel’s Motion for Partial Summary Decision 

For its part, Complaint Counsel moves for partial summary decision on one discrete 

claim: that McWane and Star unlawfully restrained price competition in the fittings market in 

April 2009. On April 15, 2009, McWane announced a new price list, effective May 1, which 

contained lower prices for some fittings and higher prices for others. CX 1873 ¶ 14, CX 0569; 

Tatman Dep. 167-69. After McWane announced the new price list but before it became 

effective, Sigma announced it would not follow McWane. CX 0807 ¶ 5; CX 1873 ¶ 15; 

19 McWane fares no better with its citation to Brooke Group Ltd. v. Brown & Williamson 

Tobacco Corp., 509 U.S. 209 (1993), a predatory pricing case brought under the Robinson 

Patman Act. In Brooke Group, the Supreme Court affirmed judgment as a matter of law in favor 

of the defendant because the plaintiff failed to show the defendant had a reasonable prospect of 

recovering its losses and thus later harming competition. Id. at 243. There is nothing in Brooke 

Group that would suggest that Star’s sales numbers, isolated from a broader factual picture, 

compel summary decision here. To the contrary, Brooke Group specifically rejects a formulistic 

approach in favor of a more fact-specific analysis of competitive effects. Id. at 230 (“We decline 

to create a per se rule of nonliability—when recoupment is alleged to take place through 

supracompetitive oligopoly pricing.”). 

20 While we agree with Commissioner Rosch’s dissent that Complaint Counsel must 

ultimately prove that McWane’s distribution policy harmed competition in the domestic fittings 

market, we disagree that Star’s entry alone is dispositive of that question, or that Complaint 

Counsel is necessarily required to quantify the additional sales Star would have made absent 

McWane’s policy. Instead, as detailed above, we find that Complaint Counsel comes forward 

with evidence sufficient to permit a fact finder to conclude that McWane substantially 

constrained Star’s entry into the market, and harmed competition. 

27 
 

 

 

 

PROVISIONALLY REDACTED VERSION

CX 2350 ¶ 1. Star, on the other hand, apparently intended to follow McWane, but was uncertain 

whether McWane would actually implement its new price list. CX 1873 ¶ 16; 

McCutcheon Dep. 43, 227-28. In an attempt to resolve the uncertainty, Star’s Vice President of 

Sales, Mr. McCutcheon, called McWane’s general manager, Mr. Tatman, to determine whether 

McWane was in fact going to implement its new price list. He received assurances from Mr. 

Tatman that McWane intended to do so. CX 1873 ¶ 17; McCutcheon Dep. 227-28. 

Complaint Counsel bases its claim primarily on Mr. McCutcheon’s testimony describing 

the conversation: 

McCutcheon IH 258. Arguing that this “bargained-for exchange of express assurances 

firmly establishes an agreement” (CC’s SD Br. at 7), Complaint Counsel asks us to find 

that this discussion violates Section 1 as a matter of law. 

McWane does not dispute that the communication occurred. Instead, in addition to 

disputing the significance of the communication, it argues that we should strike the motion 

because the Complaint does not include specific allegations regarding the exchange. In 

particular, McWane argues it did not receive adequate notice of the claims in violation of 

procedural due process, and further that the FTC Act prohibits the Commission from addressing 

allegations not contained in the Complaint. In the alternative, McWane urges us to deny 

Complaint Counsel’s motion on the ground that the evidence shows “that McWane 

independently decided its April 2009 price list reduction and that Star independently decided to 

follow.” R’s Opp’n Br. at 5-11, 23. 

We first address McWane’s request to strike Complaint Counsel’s motion. Complaint 

Counsel argues that the conversation and the circumstances surrounding it, although not 

specifically set out in the Complaint, are well within its reasonable scope; that McWane had 

actual notice that the communication was at issue in the case; and that the Commission may, 

under its rules, conform the pleadings to the evidence at the summary judgment stage. 

It is true that the Complaint does not describe this specific communication, and that the 

discussion involved price lists rather than multipliers or job discounting. R’s Opp’n Br. at 5. 

But the Complaint is not necessarily limited to collusion on multipliers and job discounts. As 

detailed in the Complaint, standardized price lists and multipliers are alleged to enhance the 

ability of the sellers here to collude. Compl. ¶ 27(e). Moreover, the Complaint nowhere states 

that the conspiracy was “disbanded” in early 2009 (before the communication), despite 

McWane’s repeated assertions to the contrary. Rather, the Complaint alleges that McWane, Star, 

and Sigma began fixing prices of fittings in January 2008 (Compl. ¶¶ 2, 29), but contains no 

28 
 

 

 

PROVISIONALLY REDACTED VERSION

allegation as to the end date of the conspiracy, or, for that matter, any allegation of the 

conspiracy ending at all (see id. ¶¶ 3, 36). Indeed, the closest the Complaint comes to alleging 

an ending date are allegations that the DIFRA sales data exchange ended in January 2009, and 

that the enactment of ARRA in February 2009 “upset the terms of coordination” among 

McWane and its rivals. Compl. ¶ 3. 

The Commission’s rules require only that complaints contain “[a] clear and concise 

statement sufficient to inform each respondent with reasonable definiteness of the type of acts or 

practices alleged to be in violation of the law.” 16 C.F.R. § 3.11(b)(2). The Complaint here is 

clear that the conduct at issue is price-fixing by McWane and its rivals, Star and Sigma. We do 

not read our rule to require Complaint Counsel to set out explicitly in the Complaint each and 

every episode of the allegedly unlawful conduct. See In re Basic Research, LLC, 2004 WL 

1942068 (F.T.C.), at *3 (Aug. 17, 2004) (recognizing that FTC complaints need only satisfy the 

requirements of notice pleading); cf. Ericson v. Pardus, 551 U.S. 89, 94 (2007) (holding that 

“[s]pecific facts are not necessary” to satisfy the notice pleading requirement); Tamayo v. 

Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008) (holding that federal notice pleading does not 

require the plaintiff to allege all facts raised by a claim). Accordingly, we conclude that the 

communication and its surrounding circumstances are “reasonably within the scope of the 

original complaint.” 16 C.F.R. § 3.15(a)(2). 

Nor are we persuaded that McWane lacked sufficient notice that the communication was 

also in contention. McWane had actual notice of the claim arising out of the communication, 

and, in fact, actively engaged in discovery on the issue. The conversation first emerged in 

Mr. McCutcheon’s investigational hearing on May 4, 2011. McCutcheon IH 257-58. It was also 

a topic of a declaration by Mr. McCutcheon. CX 1873-003-004. In subsequent discovery, after 

the Complaint issued, McWane’s counsel appeared at the deposition of ten different individuals, 

including both Mr. Tatman and Mr. McCutcheon, where testimony about the events of April and 

May 2009 surrounding McWane’s change in list prices, and/or the communication itself, was 

elicited and given. See, e,g., Bhutada Dep. 97-98; Jansen Dep. 255-57; McCullough Dep. 231­

38; McCutcheon Dep. 42-45; 221-36; Minamyer Dep. 229-39; Page Dep. 244-47; Pais Dep. 149­

50, 325-36; Rybacki Dep. 193-201, 284-88; Tatman Dep. 167-81; Walton Dep. 151-60. Indeed, 

McWane’s counsel questioned Mr. McCutcheon about the communication before Complaint 

Counsel even raised the issue in his deposition. McCutcheon Dep. 42-43, 227-31. Thus, there 

can be little question that McWane had actual notice and ample opportunity to conduct its own 

discovery on the issue. Accordingly, we deny McWane’s request to strike Complaint Counsel’s 

motion.21 

21 Although there appears to be no Commission precedent for conforming the pleadings 

to the evidence on a motion for summary decision, we note that many courts have interpreted 

Rule 15(b)(2) of the Federal Rules of Civil Procedure, which is analogous to our Rule 3.15(a)(2), 

to permit such action in appropriate cases. See, e.g., McCree v. SEPTA, No. 07-4908, 2009 U.S. 

Dist. LEXIS 4803, at *33 (E.D. Pa. Jan. 23, 2009) (noting that “the vast majority of the Circuit 

Courts of Appeals” apply Rule 15(b) at summary judgment); but see Ahmad v. Furlong, 435 

F.3d 1196, 1203 n.1 (10th Cir. 2006) (noting circuit split). However, in light of our finding that 

the claim is reasonably within the scope of the Complaint, we need not decide at this time 

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We turn next to the merits of Complaint Counsel’s motion. McWane argues that “after 

the fact” assurances about price are not unlawful and that, at most, the evidence shows that 

“McWane made its own decision to announce a radical list price decrease (on April 14) and that 

Star subsequently learned about the decrease from its customers and decided to follow (before 

Mr. McCutcheon called Mr. Tatman).” R’s Opp’n Br. at 19-21. According to McWane, 

“follow-the-leader behavior is entirely lawful.” Id. at 21. In reply, Complaint Counsel urges us 

to conclude that the communication here is essentially the same as the agreement to adhere to 

previously announced prices at issue in Sugar Institute v. United States, 297 U.S. 553 (1936), 

and that it is therefore per se unlawful. 

We deny Complaint Counsel’s motion for two reasons. First, we disagree that the facts 

in Sugar Institute are “indistinguishable” from those here. In Sugar Institute, 15 refiners that 

collectively processed nearly all of the sugar refined in the United States and supplied 70 to 80 

percent of the sugar consumed formed an association that adopted numerous rules governing 

pricing practices of the refiners. Id. at 572. Among the adopted rules, the firms agreed to 

publicly announce prices and conditions of sale in advance, to abolish all price discrimination 

between customers, and to strictly adhere to their publicly announced prices. Id. at 573-74. The 

Court found the rule requiring pre-announced prices to be reasonable, but condemned the 

combination of rules in which the refiners agreed not to grant price concessions or variations in 

prices, i.e., discounting off of the pre-announced list prices. Id. at 601. Here, Complaint 

Counsel insists that the communication constitutes an agreement to adhere to previously 

announced prices just like that in Sugar Institute. However, the uncontroverted evidence 

adduced thus far does not support the contention that there was any agreement to adhere to 

posted prices. 

Second, viewing the evidence in the light most favorable to McWane, there is a genuine 

issue of disputed fact as to whether there was an “agreement” to fix prices. Mr. McCutcheon 

testified that the exchange about paying Star $25,000—which Complaint Counsel argues was 

part of the “bargained-for exchange of assurances about future pricing”—was only a joke. 

McCutcheon Dep. 43. Mr. Tatman testified that he not only had no recollection of the call, but 

also that he never had any conversations with anyone at Star about what they were going to do in 

response to the revised McWane pricing. Tatman Dep. 177-80. 

As discussed above, to establish an unlawful agreement under Section 1, there must be 

evidence “that reasonably tends to prove that [the parties] had a conscious commitment to a 

common scheme designed to achieve an unlawful objective.” Monsanto Co. v. Spray-Rite Serv. 

Corp., 465 U.S. 752, 768 (1984). Complaint Counsel points to McWane’s guarantee as a key 

part of the agreement to adhere to the previously announced list price. But the testimony 

contains no mention of any “guarantee” by McWane, and Mr. McCutcheon characterized the 

whole exchange as a joke. To be sure, Mr. McCutcheon testified that he called Mr. Tatman to 

assure himself that McWane was actually going to “come out with” or “stay with” the new price 

whether Commission Rule 3.15(a)(2) should be construed to apply on a motion for summary 

decision under the circumstances here. 

30 
 

PROVISIONALLY REDACTED VERSION

list, and Mr. Tatman said “yes” rather than hanging up the phone. McCutcheon IH 257-58; 

McCutcheon Dep. 43-44. Evidence that Mr. Tatman may have confirmed that McWane was 

“staying with” its new price list does not necessarily equate to a commitment to adhere to the 

previously announced list price, as had been the case in Sugar Institute. Although Complaint 

Counsel relies on an April 28, 2009 e-mail from Mr. Tatman stating, 

, McWane points to later communications in 

which Mr. Tatman continued to express uncertainty about Star’s plans as evidence of the lack of 

understanding or agreement. See R’s Ex. 4. In addition, there is evidence that McWane 

independently determined its new pricing list after months of internal analysis, and that Star 

independently decided to follow McWane’s new pricing before ever contacting Mr. Tatman. 

McCutcheon Dep. 226-27; Tatman Dep. 168-71. In short, there are disputed facts about the 

existence of an agreement, an essential element of the claim, thereby precluding summary 

decision. 

VI. Conclusion 

For all of the reasons stated above, we deny McWane’s Motion for Summary Decision 

and Complaint Counsel’s Motion for Partial Summary Decision. 

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PROVISIONALLY REDACTED VERSION

Index of Abbreviations 

CC’s Opp’n Br. – Complaint Counsel’s Opposition to Respondent McWane’s Motion for 

Summary Decision 

CC’s Reply Br. – Complaint Counsel’s Reply Memorandum in Support of its Motion for Partial 

Summary Decision 

CC’s Resp. to R’s SOF – Complaint Counsel’s Response to Respondent’s Statement of 

Undisputed Facts 

CC’s SD Br. – Complaint Counsel’s Memorandum in Support of its Motion for Partial 

Summary Decision 

CC’s SOF – Complaint Counsel’s Concise Statement of Material Facts as to Which There is a 

Genuine Issue for Trial 

Compl. – Complaint 

CX – Complaint Counsel’s Exhibit 

Dep. – Deposition Transcript 

IH – Investigational Hearing Transcript 

R’s Ans. – Respondent’s Answer 

R’s Ex. – Respondent’s Exhibit 

R’s Opp’n Br. – Memorandum of Law in Support of Respondent McWane, Inc.’s Opposition 

To and Motion to Strike Complaint Counsel’s Motion for Partial Summary 

Decision 

R’s Reply Br. – Reply Brief in Support of Respondent McWane, Inc.’s Motion for Summary 

Decision 

R’s RFA Resp. – Respondent McWane, Inc.’s Response to Complaint Counsel’s Request for 

Admission 

R’s SD Br. – Memorandum of Law in Support of Respondent McWane, Inc.’s Motion for 

Summary Decision 

R’s SOF – Statement of Material Facts as to Which There is no Genuine Dispute in Support of 

Respondent McWane, Inc.’s Motion for Summary Decision 

Star Ans. – Star’s Answer 

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