___________________________________ 

 

 

 

 

 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION
	

06 08 2012 

) 

In the Matter of ) PUBLIC 

) 

MCWANE, INC., )

 a corporation, and ) 

STAR PIPE PRODUCTS, LTD., )

 a limited partnership. ) DOCKET NO. 9351 

) 

__________________________________ ) 

RESPONDENT McWANE, INC.’S MOTION [AND PROPOSED ORDER] 

FOR SUMMARY DECISION 

Pursuant to Rule 3.24 of the Federal Trade Commission’s Rules of Practice, Respondent 

McWane, Inc. (“McWane”) respectfully moves for summary decision in this action. For the 

reasons set forth in the accompanying memorandum, this motion should be granted. 

/s/ J. Alan Truitt 

J. Alan Truitt 

Thomas W. Thagard III 

Maynard Cooper and Gale PC 

1901 Sixth Avenue North 

2400 Regions Harbert Plaza 

Birmingham, AL 35203 

Phone: 205.254.1000 

Fax: 205.254.1999 

Joseph A. Ostoyich 

Dated: June 8, 2012 

/s/ Joseph A. Ostoyich 

William Lavery 

Baker Botts L.L.P. 

The Warner 

1299 Pennsylvania Ave., N.W. 

Washington, D.C. 20004-2420 

Phone: 202.639.7700 

Fax: 202.639.7890 

joseph.ostoyich@bakerbotts.com 

william.lavery@bakerbotts.com 

Attorneys for Respondent McWane, Inc. 

1 

FTC Docket No. 9351 

McWane, Inc.’s Motion for Partial Summary Decision 
PUBLIC VERSION 

CERTIFICATE OF SERVICE 

I hereby certify that on June 8, 2012, I filed the foregoing document electronically using 

the FTC’s E-Filing System, which will send notification of such filing to: 

Donald S. Clark
	

Secretary
	

Federal Trade Commission
	

600 Pennsylvania Ave., NW, Rm. H-113
	

Washington, DC 20580
	

I also certify that I delivered via hand delivery a copy of the foregoing document to: 

The Honorable D. Michael Chappell
	

Administrative Law Judge
	

Federal Trade Commission
	

600 Pennsylvania Ave., NW, Rm. H-110
	

Washington, DC 20580
	

I further certify that I delivered via electronic mail a copy of the foregoing document to: 

Edward Hassi, Esq.
	

Geoffrey M. Green, Esq. 

Linda Holleran, Esq. 

Thomas H. Brock, Esq. 

Michael L. Bloom, Esq. 

Jeanine K. Balbach, Esq.
	

J. Alexander Ansaldo, Esq.
	

Andrew K. Mann, Esq.
	

By: ______/s/ William C. Lavery_____ 

One of the Attorneys for McWane 
 

___________________________________ 

 

 

 

 

______________________ 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION
	

) 

In the Matter of ) PUBLIC 

) 

MCWANE, INC., )

 a corporation, and ) 

STAR PIPE PRODUCTS, LTD., )

 a limited partnership. ) DOCKET NO. 9351 

) 

__________________________________ ) 

[PROPOSED ORDER] 

Having carefully considered Respondent’s Motion, Complaint Counsel’s Opposition, and 

Respondent’s Reply, and all supporting and opposing evidence, and the applicable law, it is 

hereby ORDERED AND ADJUDGED, that Respondent’s Motion for Summary Decision is 

hereby GRANTED and this action is DISMISSED. 

ORDERED: 

Judge D. Michael Chappell 

Administrative Law Judge 

3 

FTC Docket No. 9351 

McWane, Inc.’s Motion for Summary Decision 
 

___________________________________ 

 

 

 

 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION
	

) 

In the Matter of ) PUBLIC 

) 

MCWANE, INC., )

 a corporation, and ) 

STAR PIPE PRODUCTS, LTD., )

 a limited partnership. ) DOCKET NO. 9351 

) 

__________________________________ ) 

MEMORANDUM OF LAW IN SUPPORT OF RESPONDENT McWANE, INC.’S 

MOTION FOR SUMMARY DECISION 

REDACTED MATERIALPROTECTED 

PURSUANT TO JANUARY 5, 2012 PROTECTIVE ORDER ENTERED BY THIS COURT
	
PUBLIC VERSION
	

TABLE OF CONTENTS
	

SUMMARY OF ARGUMENT ....................................................................................................8
	

THE ALLEGATIONS ................................................................................................................10
	

SUMMARY OF UNDISPUTED MATERIAL FACTS ...........................................................11
	

I. MCWANE WITNESSES TESTIFIED THEY PRICED 

INDEPENDENTLY ........................................................................................................12 

II. SIGMA AND STAR WITNESSES DID NOT DISCUSS PRICES 

WITH MCWANE............................................................................................................13 

A. McWane Charted Its Own Course In January 2008 and Star and 

Sigma Each Decided To Follow..........................................................................14 

B. McWane Charted Its Own Course In June 2008 and Star and 

Sigma Followed....................................................................................................15 

C. McWane, Star, and Sigma All Continued Job Pricing Throughout 

2008 .......................................................................................................................16 

III. THE AGGREGATED TONS-SHIPPED DATA DID NOT 

“FACILITATE” PRICE COORDINATION ...............................................................17 

IV. STAR SUCCESSFULLY ENTERED PRODUCTION OF 

DOMESTIC FITTINGS .................................................................................................19 

V. SIGMA COULD NOT HAVE SUPPLIED DOMESTIC FITTINGS 

WITHOUT THE SEPTEMBER 2009 MASTER 

DISTRIBUTORSHIP AGREEMENT............................. .............................................20 

ARGUMENT ...............................................................................................................................22
	

I. MCWANE DID NOT ENTER INTO ANY AGREEMENT TO FIX 

PRICES OR STOP DISCOUNTING ............................................................................22
	

A.		 Undisputed Testimony Establishes That McWane Was Not 

Involved In Any Conspiracy...............................................................................23
	

II.		 MCWANE’S DECISION TO CHART ITS OWN COURSE IN 2008
	

AND STAR AND SIGMA DECISIONS TO FOLLOW MCWANE 

DEMONSTRATE INDEPENDENT CONDUCT ........................................................26
	

III. THERE WAS NO INVITATION TO COLLUDE AND THE TONSSHIPPED DIFRA DATA DID NOT FACILITATE PRICE 

COORDINATION...........................................................................................................28 

ii
PUBLIC VERSION
	

IV. STAR’S SUCCESSFUL ENTRY DISPROVES ANY 

ALLEGATIONS OF MONOPOLY POWER ..............................................................31
	

V. THE SEPTEMBER 2009 MASTER DISTRIBUTORSHIP 

AGREEMENT DID NOT FORECLOSE SIGMA.......................................................32 

CONCLUSION ............................................................................................................................34
	

iii
PUBLIC VERSION
	

TABLE OF AUTHORITIES
	

Page(s) 

CASES 

Advo, Inc. v. Philadelphia Newspapers,
 

51 F.3d 1191 (3d Cir. 1995)....................................................................................................32
 

Alvord-Polk, Inc. v. F. Schumacher & Co.,
 

37 F.3d 996 (3d Cir. 1994)......................................................................................................24
 

American Key Corp. v. Cumberland Associates,
 

579 F. Supp. 1245 (N.D. Ga. 1983).........................................................................................27
 

American Tobacco Co. v. United States,
 

328 U.S. 781 (1946) ................................................................................................................24
 

Anderson v. Liberty Lobby, Inc.,
 

477 U.S. 242 (1986) ..........................................................................................................23, 24
 

Bell Atl. Corp. v. Twombly,
 

127 S. Ct. 1955 (2007) ............................................................................................................24
 

Blomkest Fertilizer, Inc. v. Potash Corporation of Saskatchewan,
 

203 F.3d 1028 (8th Cir. 2000)...............................................................................26, 27, 28, 31
 

Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.,
 

509 U.S. 209 (1993) ................................................................................................................32
 

Cable Holdings of Ga., Inc. v. Home Video, Inc., 

825 F.2d 1559 (11th Cir. 1987).........................................................................................34, 35
 

Catalano, Inc. v. Target Sales,
 

446 U.S. 643 (1980) ................................................................................................................30
 

Celotex Corp. v. Catrett,
 

477 U.S. 317 (1986) ................................................................................................................23
 

City of Moundridge v. Exxon Mobil Corp.,
 

409 Fed. Appx. 362 (D.C. Cir. 2011)......................................................................................26
 

City of Moundridge v. Exxon Mobil Corp.,
 

429 F. Supp. 2d 117 (D.D.C. 2006).........................................................................................25
 

Clamp-All Corp. v. Cast Iron Soil Pipe Institute,
 

851 F.2d 478 (1st Cir. 1988)..............................................................................................28, 29
 

Copperweld Corp. v. Independence Tube Corp.,
 

467 U.S. 752 (1984) ................................................................................................................24
 

iv
 
PUBLIC VERSION
	

E. Food Servs., Inc. v. Pontifical Catholic Univ. Servs. Ass’n, Inc.,
 

357 F.3d 1 (1st Cir. 2004)........................................................................................................33
 

E.I. duPont de Nemours & Co. v. FTC,
 

729 F.2d 128 (2d Cir. 1984)....................................................................................................32
 

Fashion Originators’ Guild v. FTC, 

312 U.S. 457 (1941) ................................................................................................................24
 

Fleer Corp. v. Topps Chewing Gum,
 

501 F. Supp. 485 (E.D. Pa. 1980)............................................................................................33
 

FTC v. Cement Institute, 

333 U.S. 683 (1948) ................................................................................................................24
 

FTC v. Texaco, Inc.,
 

393 U.S. 223 (1968) ................................................................................................................32
 

Gas Utils. Co. v. Southern Natural Gas Co.,
 

996 F.2d 282 (11th Cir. 1993).................................................................................................34
 

Harding v. Gray,
 

9 F.3d 150 (D.C. Cir. 1993).....................................................................................................23
 

Holiday Wholesale Grocery v. Philip Morris, Inc.,
 

231 F. Supp. 2d 1253 (N.D.Ga. 2002).....................................................................................31
 

In re Baby Food Antitrust Litig.,
 

166 F.3d 112 (3d Cir. 1999)............................................................................24, 26, 28, 29, 30
 

In re Citric Acid Litigation,
 

191 F.3d 1090 (9th Cir. 1999)...........................................................................................29, 31
 

In re Hearst Corp.,
 

80 F.T.C. 1011 (1972).............................................................................................................24
 

Jefferson Parish Hosp. Dist. No. 2 v. Hyde,
 

466 U.S. 2 (1984) ....................................................................................................................33
 

Kreuzer v. American Academy of Periodontology,
 

735 F.2d 1479 (D.C. Cir. 1984)...............................................................................................28
 

Lamb’s Patio Theatre, Inc. v. Universal Film Exchanges, Inc.,
 

582 F.2d 1068 (7th Cir. 1978).................................................................................................27
 

Market Force Inc. v. Wauwatosa Realty Co.,
 

906 F.2d 1167 (7th Cir. 1990).................................................................................................29
 

v
 
PUBLIC VERSION
	

Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
 

475 U.S. 574 (1986) ................................................................................................................29
 

Mitchael v. Intracorp, Inc.,
 

179 F.3d 847 (10th Cir. 1999).................................................................................................29
 

Monsanto Co. v. Spray-Rite Serv. Corp.,
 

465 U.S. 752 (1984) ................................................................................................................29
 

Omega Envt’l. v. Gilbarco, Inc.,
 

127 F.3d 1157 (9th Cir. 1997).................................................................................................32
 

Reserve Supply Corp. v. Owens-Corning Fiberglas Corp.,
 

971 F.2d 37 (7th Cir. 1992).....................................................................................................30
 

Serfecz v. Jewel Food Stores,
 

67 F.3d 591 (7th Cir. 1995).....................................................................................................28
 

Sunbeam Television Corp., v. Nielsen Media Research, Inc.,
 

736 F. Supp. 2d 1341 (S.D.Fla. 2011).....................................................................................35
 

Tampa Elec. Co. v. Nashville Coal Co.,
 

365 U.S. 320 (1961) ................................................................................................................33
 

Tops Mkts., Inc. v. Quality Mkts., Inc.,
 

142 F.3d 90 (2d Cir. 1998)......................................................................................................32
 

United States v. American Airlines,
 

570 F. Supp. 654 (N.D. Tex. 1983).........................................................................................31
 

States v. General Motors,
 

1974 Trade Cas. (CCH) para 75,253 (E.D.Mich. 1974)..........................................................32
 

United States v. Syufy Enters.,
 

903 F.2d 659 (9th Cir. 1990)...................................................................................................33
 

Venzie Corp. v. United States Mineral Products Co., 

521 F.2d 1309 (3d Cir. 1975)............................................................................................24, 28
 

Williamson Oil Co. v. Philip Morris USA,
 

346 F.3d 1287 (11th Cir. 2003)...................................................................................26, 29, 31
 

STATUTES 

FTC Act Section 5 .......................................................................................................10, 11, 24, 32
 

Sherman Act Section 1 ......................................................................................................24, 29, 31
 

Sherman Act Section 2 ..................................................................................................................31
 

vi
 
PUBLIC VERSION
	

OTHER AUTHORITIES 

Fed. R. Civ. P. 56(f) ......................................................................................................................24
 

FTC Rule 3.24 ...........................................................................................................................8, 24
 

FTC Rule 3.24(a)(1)......................................................................................................................23
 

FTC Rule 3.24(a)(3)......................................................................................................................23
 

FTC Rule 3.24(a)(4)......................................................................................................................24
 

FTC Rule 56(c)..............................................................................................................................23
 

vii
PUBLIC VERSION 

Pursuant to Rule 3.24 of the Federal Trade Commission’s Rules of Practice, Respondent 

McWane, Inc. (“McWane”), submits this memorandum of law, and the accompanying Separate 

Statement of Undisputed Material Facts (“SOF”), in support of its Motion for Summary

Decision.

SUMMARY OF ARGUMENT 

Every single witness in this case testified that there was no conspiracy to fix prices (or 

eliminate job price discounts) in 2008 or any other time. Instead, they were crystal clear: 

McWane’s witnesses testified that they made all of their price decisions independently. Star and 

Sigma witnesses testified that they never discussed or agreed upon prices with anyone from 

McWane. Instead, undisputed facts show that McWane charted its own course - - with different 

and, often, lower multiplier prices than Sigma and Star - - and that Sigma and Star learned about 

McWane’s January and June 2008 multipliers after-the-fact (from customers, not from McWane) 

and independently decided to match McWane’s lower prices. The evidence is also crystal clear 

that all three companies continued to offer job price discounts (and other price concessions) 

throughout 2008 and, as a result, that price deterioration was severe. Summary disposition of 

Counts 1 and 2 should thus be granted. 

Count 3 also fails. Complaint Counsel’s allegations that McWane “invited” Star and 

Sigma to collude by sending its January and June 2008 letters to customers, and “facilitated” 

collusion by participating in DIFRA, are also flatly contradicted by the evidence. Witnesses 

uniformly testified that they distrusted each other’s price letters, continued to provide job price 

discounts and other price concessions below the price letters (and reported that McWane was 

doing so, as well). Every witness testified that the aggregated tons-shipped data gathered and 

disseminated by an accounting firm, operating under the guidance of DIFRA’s lawyers, shed no 

light on their competitors’ prices. The “invitation to collude” Count also fails because the 

doctrine has not been litigated and affirmed by any Court of Appeals. On the contrary, Courts of 

8

FTC Docket No. 9351

McWane, Inc.’s Motion for Summary Decision
 

PUBLIC VERSION
	

Appeals have consistently rejected antitrust liability when presented with a one-way offer. 

Courts have also rejected any antitrust liability premised upon the theory that a company’s 

decision to participate in a trade association that gathers and disseminates aggregated tonsshipped data (not prices) is sufficient to establish a price-fixing conspiracy. 

Counts 4-7 - - alleging that McWane monopolized a domestic market for fittings by

“excluding” Star and Sigma - - fails because it is undisputed that neither company was excluded 

by McWane. On the contrary, Star achieved extraordinary success in its very first year selling 

domestic fittings and its success continues today: Star had more than 130 separate distributor 

customers for its domestic fittings in 2010 (and again in 2011), including more than 75 

exclusive customers. Star sold $6.5 million worth of domestic fittings sales in 2010 and again in 

2011 (despite a slowdown in domestic demand following the end of the Buy America stimulus) 

and it is on pace for greater sales in 2012. Its sales at dozens of distributors, including many of 

the largest national and regional chains, increased year over year over year. Star’s significant 

sales “rebut inferences” that McWane had monopoly power and “preclude[] a finding that 

[alleged] exclusive dealing is an entry barrier of any significance.” Indeed, Respondent has not 

found a single “exclusion” case in the history of the antitrust laws where a supplier had more 

9

than 125 customers - - including more than 75 exclusive customers - - in its very first year in a 

market segment.

Nor did McWane exclude Sigma from “virtual manufacturing” of domestic fittings 

during the ARRA period. Sigma was simply not prepared to do so: it was in dire financial 

straits in mid-2009, had already breached certain debt-to-earnings covenants with its banks and 

was in danger of doing so again, and its banks had capped its capital expenditures at $2.5 million 

and insisted that it pay down its $110 million debt. Sigma’s board and its banks never authorized 

it to exceed its debt or its capital expense limits or to spend the $5-$10 million it concluded was 

necessary to begin virtual manufacturing. The company owned only a few of the 700-800 

patterns needed to get into virtual manufacturing. It owned no foundries or machine shops and 

had no contracts with any outside U.S. companies to cast or machine fittings for it. The VP of 

FTC Docket No. 9351

McWane, Inc.’s Motion for Summary Decision
 

 

PUBLIC VERSION
	

Engineering testified that he had concluded by July 2009 that virtual manufacturing of domestic 

fittings was, thus, “not a viable option” for Sigma for at least 18-24 months. Accordingly, the 

undisputed facts demonstrate that McWane did not “exclude” Star or Sigma and summary

disposition of Counts 4-7 should be granted.1

THE ALLEGATIONS 

Counts 1 and 2 of the Administrative Complaint (“AC”) allege that McWane “conspired” 

with Sigma and Star, in violation of FTC Act Section 5, “[b]eginning in January 2008” and 

ending in February 2009 - - when Congress passed Buy-America legislation. (SOF ¶ 1.) The 

three companies allegedly agreed to issue “multiplier” price increases for ductile iron pipe 

fittings in January and June 2008 and to stop their “job price” discounting. (SOF ¶ 2.) The AC 

also alleges that the companies’ participation in a trade association (the Ductile Iron Fittings 

Research Association or “DIFRA”) “facilitated price coordination” for the six-month period after 

June 2008. (SOF ¶ 3 (“between June 2008 and January 2009”).) The AC alleges that McWane, 

Sigma, and Star each provided a third-party accounting firm with a monthly report of its tonsshipped data, which the firm then aggregated, and distributed the overall totals back to them. 

(Id.) The AC alleges that the combined, aggregated tons-shipped data allowed the DIFRA 

members to “indirectly” monitor their “output levels.” (SOF ¶ 4.) Count 3 alleges that McWane 

“invited” Star and Sigma to collude, in violation of Section 5, by some or all of the same 

conduct. (Id.)

1 To be clear, McWane is not conceding any of the other elements that Complaint Counsel needs to prove on any of 

its Counts, and has simply focused on the most obvious and undisputed failures of proof for purposes of this motion. 

There are many others. For example, the record is clear that all fittings (whether made inside or outside the U.S.) 

are interchangeable for virtually all jobs and that McWane’s share of the total fittings sales in the U.S. has steadily 

declined over the last decade and is nowhere near the thresholds required to establish a monopoly. It is also clear - -

as Commissioner Rosch stated in his separate disagreement with the Commission’s decision to file its AC - - that 

McWane’s short-term rebate policy and short-term Master Distributorship Agreement with Sigma do not constitute 

exclusionary conduct as a matter of law: “I do not think that the Part 3 Administrative Complaint against 

McWane and the draft Part 2 Complaint against Sigma adequately allege exclusive dealing as a matter of law. In 

particular, there is case law in both the Eighth and Ninth Circuits blessing the conduct that the complaints 

charge as exclusive dealing.” (Jan. 4, 2012 Statement of Commissioner J. Thomas Rosch.) McWane expressly 

reserves its rights on this and other legal defects, as well.

10

FTC Docket No. 9351

McWane, Inc.’s Motion for Summary Decision
 

PUBLIC VERSION
	

Counts 4 through 7 of the Administrative Complaint (“AC”) allege that McWane 

monopolized or attempted to monopolize the market for domestic fittings, in violation of FTC 

Act Section 5, by “excluding” two importers, Star and Sigma, from sourcing and re-selling 

domestic fittings (aka, “virtual manufacturing”). (SOF ¶ 5.) Counts 4 and 5 allege that McWane 

“excluded” Sigma by agreeing to sell it domestic fittings under a one-year sales agreement 

signed in September 2009. (Id.) Counts 6 and 7 allege that McWane “excluded” Star by

modifying its domestic fittings rebate policy in September 2009. (SOF ¶¶ 8-9.)

SUMMARY OF UNDISPUTED MATERIAL FACTS 

McWane produces more than 4,000 individual ductile iron pipe fittings in a range of 

diameters, configurations, joints, coatings, and finishes at its last remaining foundry in the U.S., 

the Union Foundry, and in its foundry in China, Tyler Xin Xin. (SOF ¶ 11.)2 McWane’s 

competitors include a number of importers (Sigma, Star, MetalFit, Serampore, NAPAC, and 

ElectroSteel), and a number of domestic foundries (U.S. Pipe, Griffin Pipe, American Cast Iron 

Pipe Company, and Backman Foundry), although several of the domestic foundries have stopped 

or cut back their production in the face of a flood of cheap imports. (SOF ¶ 12.) 

The prices customers ultimately pay for McWane’s fittings depend upon multiple tiers of 

discounts. First, McWane issues a list price, which is nationwide and typically only changes 

every few years. (SOF ¶ 13.) Virtually no customer pays list price. (SOF ¶ 14.) Second, 

McWane issues “multipliers,” which are region-by-region and, often, state-by-state discounts off 

the list price. (SOF ¶ 15.) Third, McWane offers “job prices” which are further discounts off the 

multiplier discount granted based on competition for a specific job. (SOF ¶ 17.) Fourth, 

McWane provided additional discounts in the form of rebates. (SOF ¶ 18.) Fifth, McWane at 

times provided additional price concessions in the form of reductions in freight or credit or other 

terms. (SOF ¶ 36.)

2

 McWane’s ductile iron fittings business is known as TylerUnion.

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FTC Docket No. 9351

McWane, Inc.’s Motion for Summary Decision
 

PUBLIC VERSION
	

I. McWane Witnesses Testified They Priced Independently 

McWane witnesses testified that they made their pricing decisions independently, and the 

company denied participating in the alleged conspiracy in its Answer to the AC. (SOF ¶ 20.) 

McWane Vice President and General Manager Rick Tatman had day-to-day responsibility for the 

company’s ductile iron fittings business. (SOF ¶ 21.) He testified at length that the company 

made its pricing decisions independently at all times. (SOF ¶ 22 (“independent decision”); ¶ 23 

(“an independent decision”).) Jerry Jansen, McWane’s National Sales Manager, likewise 

testified that McWane made its pricing decisions independently. (SOF ¶ 26.)

McWane’s decisions were based on its assessment of a wide range of factors, and McWane 

witnesses testified at length that McWane always determined its multipliers independently

“based on what’s the competitive level out there in the marketplace[.]” (SOF ¶ 28, ¶ 27, ¶ 24.) 

When Mr. Tatman learned from customers that Star or Sigma “put out a letter” announcing a 

multiplier change, he “took that into account along with everything else” and made his own 

“independent decision.” (SOF ¶29.) He testified that he did not “put that much faith in those 

letters” because “history shows there’s not a good correlation between what goes in that letter 

and what actually happens.” (Id.)

McWane also made independent decisions to provide special job price discounts, below 

its multipliers, on a regular basis. (SOF ¶ 30 (“A lot.”), Id. (“I know for 2008 we put out close to 

500 job prices”).) Leon McCullough, McWane’s Executive Vice President, agreed that job 

pricing is “practically everything.” (SOF ¶ 31.) McWane granted these lower job prices for a 

range of reasons, including large volumes. (SOF ¶ 32.) It also routinely granted lower job prices 

if it determined it was necessary to meet or beat its competitors. (SOF ¶ 34; ¶ 33; ¶ 35.) In 

addition, McWane, at times, absorbed freight costs, extended credit terms, or provided other 

price concessions. (SOF ¶ 36.) McWane’s average blended fittings price declined steadily and

12

FTC Docket No. 9351

McWane, Inc.’s Motion for Summary Decision
 

PUBLIC VERSION
	

substantially throughout 2008, 2009 and 2010 and the business was “break-even[,]” at best. 

(SOF ¶ 37.)

II. Sigma and Star Witnesses Did Not Agree Upon 2008 Multipliers With McWane 

And Did Not Agree To Stop Job Price Discounts 

Star and Sigma witnesses testified that they made their own, independent price decisions 

and they flatly denied any agreement with McWane. Dan McCutcheon, Star’s Vice President of 

Sales, testified that he and McWane people “weren’t friendly” and he never discussed prices, 

market share, or any other competitive factors with anyone from McWane. (SOF ¶ 40 (Q. . . . 

never agreed with him on a price for ductile iron pipe fittings . . . ? A. That’s correct.”); Id. (“No,

sir.”); Id. (“No, sir.”); Id. (“No, sir.”); Id. (“nobody said anything about market share”), Id. (“No, 

sir”), Id. (“There was not a conversation about that”), Id. (“No”), Id. (“No, sir”), Id. (“it’s not 

correct”), Id. (“And as far as McWane, I have no idea what they do”).) Indeed, Mr. McCutcheon 

testified that his contact with McWane fittings personnel was limited and entirely perfunctory. 

(SOF ¶ 41 (“Q. You had no substantive discussion of anything? A. That’s correct.”); Id. (“No 

phone conversations, no emails. . . . Never a meeting, nothing”), Id. (“he actually forgot who I 

was and I had to re-introduce myself”), Id. (“he walked over and introduced himself. . . . That’s 

the only time I’ve ever talked to him”), Id. (“he doesn’t want to talk, he’s very uncomfortable”).)

Star’s National Sales Manager, Matt Minamyer, likewise testified that he never discussed 

pricing or marketing strategy with McWane personnel. (SOF ¶ 42 (“No ... No ... The answer to 

that is no ... No ... No ... No ... No”), Id. (“No . . . No”), Id. (“I don’t remember doing that”), 

Id. (“We always tended to try to keep our business within the walls”), Id. (“Same answer, I don’t 

recollect that, no”).) Star denied any price agreements with McWane in its Answer to the AC 

and in its statements to this Court. (SOF ¶ 43.)

SIGMA’s key decision-makers also denied any price communications or agreements with 

McWane. Indeed, SIGMA’s President, Victor Pais, testified that he never had discussions with 

McWane regarding price. (SOF ¶ 44 (“Not at all. . . . Not at all”), Id. (“at no time”), Id. (“No”), 

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McWane, Inc.’s Motion for Summary Decision
 

 

 

PUBLIC VERSION
	

SOF ¶ Id. (“No, there was no discussion about that”), Id. (“No. . . . No”).) Larry Rybacki, 

SIGMA’s Vice President of Sales and Marketing, similarly testified that he never had any 

discussions with McWane regarding price. (SOF ¶ 46 (“Never. . . . No”).)

Tellingly, Complaint Counsel conceded that it has no information suggesting that 

McWane communicated its January 2008 or June 2008 multiplier changes (or any other price) in 

advance to either Star or Sigma. (SOF ¶48.)

A. McWane Charted Its Own Course In January 2008 and Star and Sigma Each 

Decided To Follow 

McWane issued a multiplier change on January 11, 2008 because - - as the AC concedes 

- - its raw materials prices were increasing dramatically. (SOF ¶ 53 “due to rising input costs.”) 

McWane’s January 2008 multipliers were higher than its competitors in some regions, lower in 

some regions, and comparable in others. (SOF ¶ 55.) McWane’s multiplier changes were“not 

keeping up with where costs [were] going” (SOF ¶ 53).3

Star and Sigma were facing similar cost increases. (SOF ¶ 56 (“I know that our scrap 

price and the freight costs to get the product over here [from] China was rising at a very rapid 

and erratic pace”); Id. (“costs were rising so quickly and so uncontrollably . . . it was double digit 

in significance. And we thought it was going to keep coming”).) Each company subsequently

obtained McWane’s announcement from customers (e.g., SOF¶ 57 (“Why are you asking ‘is this 

up or down in each state’? A. Because I didn’t know”)) and independently decided to follow on 

January 29, 2008 (Sigma) and February 6, 2008 (Star). (SOF ¶ 57 (“Customers. In reality, from 

salespeople that got them from a customer that the sales guy would send it to me”), Id. (“it’s our 

standard process to follow”).) There was no advance coordination and no meeting of the minds. 

(Id.) Star and Sigma witnesses testified they read McWane’s customer letter after they got it 

from customers (not from McWane) and they independently decided to follow it. (Id. (“we 

3 McWane’s multipliers were also much lower than the list price (not multiplier) increase Sigma had announced in 

Fall 2007 for January 2008. (SOF ¶ 54) McWane did not change its list prices, and Sigma subsequently decided to 

rescind its higher list prices. (Id.)

14

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McWane, Inc.’s Motion for Summary Decision
 

PUBLIC VERSION
	

almost instantly would follow”), Id. (“I’ve followed every increase they’ve ever taken”), Id. (“we 

follow it, as quickly as possible”).) Star and Sigma witnesses testified to the independence of 

their decisions to follow McWane based, in part, on their customers’ requests that they do so. 

(Id. (“We would ask our customers”); (SOF ¶ 58 (“we’re going to follow it, because, it’s the 

customer demands,” “So the price list matching is going to happen, you know, by customer 

request”).)

Every witness flatly denied that McWane’s January 2008 customer letter was a “signal” 

to stop job price discounts. First, McWane’s January 2008 letter said nothing of the sort and its 

authors testified that was not what it meant. (SOF ¶ 58 (“I don’t think I’m announcing that we’re 

not going to do job pricing.”).) Second, the Star and Sigma witnesses testified they did not read 

the letter to suggest McWane would stop job price discounts and, in any event, distrusted 

McWane and never believed that McWane was likely to stop job pricing. (Id. (“never”); Id. 

(“we couldn’t trust anybody”), Id. (“not credible”), Id. (“I didn’t believe them.”), Id. (“didn’t 

make an impact on me . . . I would never believe”) .)

 B. McWane Charted Its Own Course In June 2008 and Star and Sigma Followed 

In late April 2008, Sigma announced it was increasing its multipliers by a very large 

amount (roughly 40%) due to continued cost increases. (SOF ¶ 63.) It “hoped” and “prayed” 

McWane and Star would follow, but had no discussions about that with anyone from McWane 

and no assurances.4 Star did follow, but McWane did not. Although McWane also faced 

continued cost increases, it internally decided, after learning of the increase letters from 

customers, that its customers would not accept such large increases. (Id. (“that was too high”).) 

As a result, McWane charted its own course and did not follow Star and Sigma. (SOF ¶ 64 

(“Although SIGMA announced an increase in the range of 20 to 40 percent, I don’t believe we 

should follow that”); Id. (“we announced a price increase, no one followed, or at least McWane 

4

 Undisputed evidence supporting this sentence will be provided as soon as a recent deposition transcript is received 

from the court reporter. 

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didn’t follow”).) Instead, McWane announced on June 7, 2008 that it was increasing its 

multipliers due to ongoing cost increases, but its multipliers were different from - - and 

substantially lower than - - Sigma and Star multipliers in 50 out of the 51 states and territories 

across the country. (SOF ¶ 65.)5

Again, Star and Sigma learned of McWane’s lower multipliers from customers - - not 

McWane - - and each subsequently decided to rescind its higher multipliers, (SOF ¶ 66 (“we put 

it on hold”), and, instead, to follow McWane’s lower multipliers. (SOF ¶ 64.) Star and Sigma 

witnesses flatly denied that McWane’s June 2008 customer letter contained a “signal” from 

McWane. (SOF ¶ 67 (“I don’t try to interpret a whole lot of what they mean”).)

C. McWane, Star, and Sigma All Continued Job Pricing Throughout 2008 

Job pricing between the companies continued throughout 2008, as witnesses from all 

three companies testified. McWane witnesses testified that there was “[a] lot” of job pricing and 

flatly denied that it ever stopped. (SOF ¶ 72 (“I know for 2008 we put out close to 500 job 

prices”); SOF ¶ 72 (“I don’t believe I’m saying that.”).) Numerous contemporaneous documents 

from the Sigma and Star sales force report their views that McWane was providing job price 

discounts and leading prices down in 2008. (SOF ¶ 63 (“I have written evidence of two 

examples where Tyler has in writing Current Pricing Good through June 08”), (“For what it is 

worth, I was told by [HD Supply, a customer] that Tyler and SIP were at a .26 and only us and 

Star are holding the .28”) (“from my vantage point it appears that Union/Tyler was the first of 

the three fitting manufacturers to move to a .25 from .28”).)

5

 McWane’s independent decision to price at different (and substantially lower) multipliers than Star and Sigma in 

50 of 51 states and territories is, of course, inconsistent with any alleged meeting of the minds - - perhaps explaining 

why the AC literally ignores it. It is difficult to see how this squares with a lawyer’s obligation to the court. It 

would be perverse, of course, to hold McWane liable for not following a higher price increase and, instead, issuing 

a lower price increase - - simply because its competitors subsequently chose to rescind their higher price increase 

and to follow the lower one. 

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Star witnesses testified that they “didn’t stop job pricing” and that job pricing was 

“particularly fierce.” (SOF ¶ 74.) Customers “routinely” auctioned one supplier off against 

another for specific jobs or large volumes. (SOF ¶ 75; ¶ 74 (“Q. Can they [large distributors] 

beat you up on price? A. They do, I mean, because of the volume”).) Star’s job prices varied 

day-to-day and job-to-job, depending on competitive market conditions. (SOF ¶ 76 (“our pricing 

is determined on what we need to do that day. It’s constantly moving”), SOF ¶ 77 (“The vast 

majority of our business is done with a special price”), Id. (job pricing is “the driver” for price 

differences).) As a result, Star’s fittings business was “not profitable” in recent years and has not 

been profitable since “before 2008.” (SOF ¶ 78 (“2008 was a difficult year for us”).) Indeed, the 

company has long been “losing money,” “upside down,” and is “in a downward spiral we really

can’t stop.” (SOF ¶ 79.) 

SIGMA witnesses also testified to the ongoing job discounts and the competitive nature 

of their pricing throughout 2008. (SOF ¶ 81 (“pricing is so competitive”), Id. (“It had always 

been competitive . . . extremely competitive . . . prices eroded very quickly”); SOF ¶ 82 (“pricing 

in the market was very competitive”); SOF ¶ 83 (“market conditions were tough and very

competitive . . . really cut throat . . . intense”), Id. (“very intense”).) Sigma witnesses testified 

that pricing was a “day-to-day phenomena” and “very dynamic,” and they routinely decided to 

price below their multiplier to win specific jobs. (Id.) Prices varied “depending upon the costs, 

depending upon the market factors.” (Id.) Sigma, too, was losing money.

III. The Tons-Shipped DIFRA Data Did Not “Facilitate” Price Coordination 

DIFRA was a short-lived trade association for fittings suppliers that was operational only 

during the second half of 2008. (SOF ¶ 84.) McWane, Sigma, Star, and U.S. Pipe were 

members. (Id.) One of DIFRA’s main purposes was to address standardization of technical 

specifications of fittings in the marketplace, such as product configurations, joints, thickness of 

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the fitting, linings, and coatings. (SOF ¶ 85 (“there [were] so many different approaches to that, 

that it needed some housecleaning”).)

DIFRA’s operations were overseen by three lawyers, including very experienced antitrust 

counsel, Thad Long, of the Bradley Arant firm in Birmingham, Alabama. (SOF ¶ 86.) 

Following Mr. Long’s guidelines, each member began submitting monthly tons-shipped data for 

January through April 2008 (and annual tons-shipped data for 2006-07) to a third-party 

accounting firm, Seller Richardson, in June 2008. (SOF ¶ 87.) Sellers Richardson then 

combined the members’ monthly data and sent overall total tons-shipped back to the members 

the following month. (Id.)6

The tons-shipped data did not contain any breakdown of the thousands of unique fittings 

SKUs. Instead, the data was aggregated into broad size-ranges: 2-12”, 14-24”, and 30” and 

greater.7 Each broad size-range lumped together dozens, and perhaps hundreds, of unique SKUs. 

The tons-shipped data did not contain any geographic breakdown of where in the country the 

tons were shipped.8 Nor did it contain any breakdown of whether the shipments were of 

domestic or imported fittings. Indeed, the tons-shipped data each month did not reliably reflect 

anything about price or sales - - not even when they occurred. (SOF ¶ 88.) Indeed, many jobs 

do not ship for six months or more after they are initially bid. Each sale could thus have 

occurred anytime over a six month or longer period before shipment date. (See SOF ¶ 89.) 

McWane witnesses testified, as a result, that the tons-shipped data did not give them any 

insight into their competitors’ prices. (SOF ¶ 90 (“there’s no pricing there”), Id. (“The DIFRA 

data isn’t going to give me any sense of how they’re pricing.”); Id. (“DIFRA numbers report 

nothing as far as prices”).) Star and Sigma witnesses likewise testified that the tons-shipped data 

6 The AC does not allege that any prices were communicated as part of DIFRA or under its penumbra. 

7

 The data also distinguished in each size range between flanged and mechanical joint fittings. The AC does not 

lodge any allegations related to this distinction. 

8

 As noted above, fittings multipliers vary region-by-region and state-by-state (and job prices, obviously, vary by 

job). The tons-shipped data made no distinction, however.

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shed no light on their competitors’ prices. (SOF ¶ 91 (“No, sir. . . . Not from what I got, not 

from what we received, it’s not possible”), Id. (“DIFRA didn’t influence the way we ran our 

business at all . . . [o]n the price side”); SOF ¶ 92 (“Not at all”), Id. (“Not at all”), SOF ¶ 95 (“Q. 

And was there any exchange of pricing data as part of DIFRA? A. No, sir, none that I saw at 

all.”).) Indeed, Star’s VP of Sales testified that the DIFRA data had no impact on his pricing 

decisions. (SOF ¶ 93). Sigma’s CEO testified likewise: “You know, for us the pricing was and 

is now, before and after DIFRA, has been largely based on what is happening on a day-to-day

basis with the orders.” (SOF ¶ 94.)

The President of DIFRA flatly denied that DIFRA was a mechanism to facilitate price 

collusion. (SOF ¶ 95 (“Q. Mr. Brakefield, as the president of DIFRA, was DIFRA, the Ductile 

Iron Fittings Research Association, a secret mechanism to facilitate price collusion? A. No, 

sir.”).) So did its lawyer.

9

 The undisputed testimony thus demonstrates that the tons-shipped 

data did not “facilitate” price coordination. On the contrary, McWane charted its own course 

with lower multipliers after receiving the tons-shipped data in June 2008 - - and job price 

discounts grew even more fierce in the second half of 2008. (SOF ¶ 96.)

IV. Star Successfully Began Selling Domestic Fittings 

The undisputed evidence shows that in February 2009, following the passage of the 

America Reinvestment and Recovery Act (“ARRA”), Star began exploring the possibility of 

sourcing and re-selling domestic fittings. In June 2009, Star had announced that it would begin 

selling a full range of small, medium, and large diameter domestic fittings by the end of 2009. 

(See SOF ¶ 97.) Star did not build or buy a foundry. Instead, it sourced castings from seven of 

the 100+ domestic foundries that had excess capacity. (SOF ¶ 99 (“[M]ost foundries have a

9 Again, a citation will be added as soon as a transcript is available. 

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good deal of excess capacity to take in whatever projects come their way.”).) In the Fall of 2009, 

during its ramp-up phase, Star won its first domestic fittings job.10

In 2010, its first full year with domestic fittings, Star sold domestic fittings to more than 

130 separate customers - - including more than 75 exclusive customers - - and its sales topped 

$6.5 million. (SOF ¶¶ 102, 104.) Star had nearly 20 separate customers in 2010 who each 

purchased $100,000 or more of its domestic fittings and its biggest customer that year, Hajoca 

Corporation, purchased more than $1.2 million. (SOF ¶¶ 104-105.) Star’s domestic fittings 

sales to HD Supply, the largest national chain, topped $500,000. (SOF ¶ 106.) Star’s 2011 sales 

of domestic fittings also hit $6.5 million (despite a downturn in demand for domestic fittings 

following the end of significant “Buy America” funding under ARRA) and it again had 125+ 

domestic fittings customers, including 75 exclusive customers. (SOF ¶107-08.) Dozens of 

distributors increased their purchases of Star domestic fittings year over year over year, including 

the largest national and regional chains like HD Supply (more than 230 branches), Ferguson 

(more than 160 branches), WinWholesale (43 waterworks branches), and dozens of large 

regional chains, such as Dana Kepner (15 branches in MT, WY, CO, TX, AZ and NV). (SOF ¶ 

111.) Star’s 2012 sales are on pace to hit $7 million, again, despite the end of ARRA’s Buy 

America stimulus.

V. Domestic Manufacturing Was “Not A Viable Option” For Sigma In Mid-2009 

On September 17, 2009, TylerUnion entered into a short-term Master Distributorship 

Agreement (“MDA”) with Sigma under which Sigma purchased TylerUnion Fittings for re-sale 

during the ARRA period. In the months preceding the MDA, Sigma had explored the feasibility

of “virtually” manufacturing domestic fittings (i.e., buying them from an outside company and 

re-selling them) and concluded that virtual manufacturing was “not a viable option” for at least 

18-24 months - - long after the ARRA period was over. (SOF ¶¶ 116, 126.) 

Star did not project any volume of sales during this ramp-up phase in the Fall of 2009. (SOF ¶ 102 (In 2009 . . . 

we weren't going to be able to sell anything).) Nonetheless, its sales topped $300,000 that Fall. (Id.)

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Sigma had not taken the concrete steps necessary to begin virtual manufacturing any time 

soon. (SOF ¶ 117 (“I don’t recall us making any formal plans by this date that we were going to 

go ahead with domestic manufacturing”); SOF ¶ 116.) It was in dire financial straits - - it had 

more than $110 million in debt on roughly $200 million in sales (a figure which appeared to be 

dropping fast in 2009). It had less than $500,000 in cash on its books. It had breached its debtto-earnings bank covenants at the end of 2008 and was in danger of doing so again in Spring 

2009. Its banks had capped its capital expenditures for the year at $2.5 million - - far below the 

$5 to $10 million it estimated would be required to begin virtual manufacturing of domestic 

fittings. It owned only a handful of the 700-800 patterns it believed were necessary to make 

fittings in the U.S. (SOF ¶ 118.) It owned no foundries and no machining equipment, and did 

not have any contracts with outside companies to cast or machine fittings. (SOF ¶ 118.) 

Sigma’s VP of Engineering believed the 18-24 months it would take to begin virtual 

manufacturing was too late to supply ARRA jobs (which were largely funded between the 

statute’s passage in February 2009 and mid-2010) and that virtual manufacturing was thus “not a 

viable option.” (SOF ¶ 126.) Sigma’s board and its banks did not authorize it to exceed 

its capital expense budget or to move forward with domestic manufacturing. (SOF ¶ 121 (“Q. 

How could you even get into domestic production with $5 to $10 million of potential capex if 

you’re capped at $2-1/2 million? A. Absolutely. You could not.”); (SOF ¶ 123 (board was 

“deeply concerned” because ’09 was the toughest year for SIGMA financially” and “had no 

answer as to how they could be funded”); Id. (“[t]he latter option [Sigma Domestic] Fittings 

simply does not exist.”); (SOF ¶ 125 (“The board was not inclined to go ahead [with domestic 

production] because of the eroding market, overall market, and the fact that the capital 

expenditure would have been so high”); Id. (“They were very apprehensive about any domestic 

manufacturing and that in the foundry business. They don’t look at manufacturing kindly 

because it has so many other issues in terms of investment”.)

Because Sigma had no viable option for domestic manufacturing, it approached McWane 

to determine whether it could buy and re-sell TylerUnion domestic fittings. (SOF ¶ 115.) The 

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resulting MDA was negotiated at arms’ length over several months. It was the only way Sigma 

was able to satisfy its customers’ demand for domestic fittings during the ARRA period, and it 

was a benefit to Sigma’s customers. (SOF ¶ 124 (“very good for customers”); SOF ¶ 127.)

ARGUMENT 

The standards governing a motion for summary decision are well settled. FTC Rule 

3.24(a)(3) provides that “[a]ny party may move, with or without supporting affidavits, for a 

summary decision in the party’s favor upon all or any part of the issues being adjudicated.” “A 

mere unsubstantiated allegation . . . creates no ‘genuine issue of fact’ and will not withstand 

summary judgment.” Harding v. Gray, 9 F.3d 150, 154 (D.C. Cir. 1993). Instead, the party 

opposing the motion “must set forth specific facts” and the facts must be significant enough to 

establish a genuine issue of disputed, material fact for trial. CRP 3.24(a)(1). See also Celotex 

Corp. v. Catrett, 477 U.S. 317, 322 (1986) (“the plain language of Rule 56(c) mandates the entry

of summary judgment . . . against a party who fails to make a showing sufficient to establish the 

existence of an element essential to that party’s case”). “The mere existence of a scintilla of 

evidence in support of the plaintiff’s position will be insufficient.” Anderson v. Liberty Lobby, 

Inc., 477 U.S. 242, 252, 255 (1986). If the evidence “is merely colorable, or is not significantly 

probative,” summary judgment must be granted. Id. at 249 (internal citations omitted). 11

I. McWane Independently Determined Its Multipliers In 2008 And Continued 

Offering Job Price Discounts Throughout The Year 

Counts 1 and 2 of the AC borrow the language of Sherman Act Section 1 and allege a 

conspiracy in violation of FTC Act Section 5. “The existence of an agreement is the hallmark” 

of a conspiracy claim. In re Baby Food Antitrust Litig., 166 F.3d 112, 117 (3d Cir. 1999); see 

11 The provisions of FTC Rule 3.24 governing the standards for summary decision are virtually identical to the 

provisions of Fed. R. Civ. P. 56, governing summary judgment in the federal courts. In re Hearst Corp., 80 F.T.C. 

1011, 1014 (1972) (“Rule 3.24(a)(4) tracks Federal Rule 56(f)”). 

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Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771 (1984) (conspiracy requires 

proof of “unity of purpose or a common design and understanding or a meeting of the minds in 

an unlawful arrangement”).12 That requires proof that defendants discussed and agreed upon “a 

unity of purpose or common design and understanding, or a meeting of minds in an unlawful 

arrangement.” American Tobacco Co. v. United States, 328 U.S. 781, 810 (1946). Moreover, 

the agreement must precede the allegedly fixed price. Bell Atl. Corp. v. Twombly, 127 S. Ct. 

1955, 1966 (2007) (“when allegations of parallel conduct are set out in order to make a § 1 

claim, they must be placed in a context that raises a suggestion of a preceding agreement, not 

merely parallel conduct that could just as well be independent action”). A plaintiff fails to show 

a preceding agreement if it simply establishes that defendants had an opportunity to conspire and 

asks the court to speculate that they must have done so. Alvord-Polk, Inc. v. F. Schumacher & 

Co., 37 F.3d 996, 1013 (3d Cir. 1994) (affirming grant of summary judgment because the 

“evidence tends to show only an opportunity to conspire, not an agreement to do so”); Venzie 

Corp. v. United States Mineral Products Co., Inc., 521 F.2d 1309, 1313-4 (3d Cir. 1975) (“an 

opportunity is significant only if other evidence permits an inference that an agreement did in 

fact exist.”).

A.		 Undisputed Testimony Establishes That McWane Was Not Involved In Any 

Conspiracy 

McWane witnesses testified that they made all of their price decisions independently, 

including their decision to issue their January and June 2008 multipliers. (SOF ¶ 22 

(“independent decision”); SOF ¶ 28 (“based on what the competitive selling environment is”), 

SOF ¶ 29 (“independent decision”), Id. (“independent decision”).)

12 An agreement under FTC Act Section 5 requires the same proof as an agreement under Sherman Act Section 1. 

See, e.g., FTC v. Cement Institute, 333 U.S. 683, 691-92 (1948) (“soon after its creation the Commission began to 

interpret the prohibitions of s 5 as including those restraints of trade which also were outlawed by the Sherman Act, 

and that this Court has consistently approved that interpretation of the Act”); Fashion Originators’ Guild v. FTC, 

312 U.S. 457, 463-64 (1941) (“If the purpose and practice of the combination of garment manufacturers and their 

affiliates runs counter to the public policy declared in the Sherman and Clayton Acts, the Federal Trade Commission 

has the power to suppress it as an unfair method of competition.). 

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The Star and Sigma witnesses, likewise, testified that they never discussed and agreed 

upon prices with anyone from McWane. (SOF ¶ 40 (Q. . . . never agreed with him on a price for 

ductile iron pipe fittings . . . ? A. That’s correct.”); Id. (“No, sir.”); SOF ¶ 39 (“nobody said 

anything about market share”), Id. (“There was not a conversation about that”); SOF ¶ 42 (“No . 

. . No”), Id. (“No, sir”); SOF ¶ 44 (“Not at all. . . . Not at all”), Id. (“at no time”), Id. (“there was 

no discussion about that”); SOF ¶ 45 (“No”).) On the contrary, the witnesses were clear: they 

learned about McWane’s multipliers from customers after-the-fact.

A plaintiff confronted with sworn denials faces a high burden to overcome them: 

“Facing the sworn denial of the existence of conspiracy, it [is] up to plaintiff to produce 

significant probative evidence by affidavit or deposition that conspiracy existed if summary 

judgment [is] to be avoided.” City of Moundridge v. Exxon Mobil Corp., 429 F. Supp. 2d 117, 

130 (D.D.C. 2006) (emphasis added) (citation omitted). In Moundridge, the defendants testified, 

as here, that they made their price and output decisions independently. In the face of this 

testimony, the plaintiffs proffered evidence that defendants’ had an opportunity to conspire 

(during a series of industry meetings) and pointed to numerous internal documents that they

argued suggested a conspiracy. The district court granted summary judgment because plaintiffs’ 

factual evidence did not overcome the defendants’ sworn denials, and in the face of these denials 

the opinion of plaintiffs’ “liability” expert was entitled to “no weight.” No. 04-940, 2009 U.S. 

Dist. LEXIS 123954, at * 39 (D. D.C. Sept. 30, 2009). The D.C. Circuit affirmed and held that 

the plaintiffs’ “few scattered communications” and other evidence “falls far short” of creating a 

genuine issue of material fact. City of Moundridge v. Exxon Mobil Corp., 409 Fed.Appx. 362, 

364 (D.C. Cir. 2011).

In Baby Foods, the Third Circuit similarly affirmed summary judgment in favor of 

defendants because plaintiffs failed to present significant evidence of a conspiracy sufficient to 

overcome defendants’ sworn denials. The Court found direct evidence lacking even though there 

was evidence that defendants notified each other of price increases before announcing them to 

customers and regularly exchanged sales information. In re Baby Foods, 166 F.3d at 118-121. 

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Unlike Baby Foods, there is no evidence that McWane provided Star or Sigma with proprietary

pricing information before issuing its January or June 2008 multipliers or any other pricing 

decision - - indeed, Complaint Counsel conceded that it lacked such evidence in its answers to 

McWane’s Requests For Admission. (See SOF ¶ 48.)

In Williamson Oil Co. v. Philip Morris USA, the Eleventh Circuit likewise affirmed 

summary judgment in favor of defendants despite 11 consecutive parallel price increases 

announced by every defendant, numerous alleged price “signals” between the defendants 

suggesting a desire to end a price war (and its subsequent end), regular sharing of very detailed 

sales information broken down by company, and an expert’s opinion that it all amounted to a 

conspiracy. 346 F.3d 1287 (11th Cir. 2003). The Court found that the plaintiffs’ evidence was 

insufficient to overcome defendants’ sworn denials and it would be improper to permit the jury

“to engage in speculation” in the face of defendants’ denials. Id. at 1310. (“None of the actions . 

. . that appellants label ‘signals’ tend to exclude the possibility that the primary players in the 

tobacco industry were engaged in rational, lawful, parallel pricing behavior.”). 

The Eighth Circuit reached the same conclusion in Blomkest Fertilizer, Inc. v. Potash 

Corporation of Saskatchewan, 203 F.3d 1028 (8th Cir. 2000). The Court affirmed summary 

judgment despite evidence that defendants engaged in “a high level of interfirm 

communications,” including evidence plaintiffs argued demonstrated that the defendants 

“signaled pricing intentions to each other through advance price announcements,” and evidence 

that all defendants raised their prices “markedly higher.” Id. at 1033, 1037. The Court found the 

evidence insufficient to overcome defendants’ denials and “far too ambiguous to defeat summary

judgment.” Id.; see also Lamb’s Patio Theatre, Inc. v. Universal Film Exchanges, Inc., 582 F.2d 

1068, 1070 (7th Cir. 1978) (affirming summary judgment because plaintiff had only “its bald 

allegation of conspiracy to refute the sworn affidavit denying a conspiracy”); American Key 

Corp. v. Cumberland Associates, 579 F. Supp. 1245, 1259 (N.D. Ga. 1983) (affirming summary

judgment because each of the defendants submitted “sworn affidavits denying the existence of 

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any contract, combination or conspiracy” and plaintiff failed to “come forward with significant 

probative evidence supporting its allegations of a conspiracy.”).

II. McWane’s Decision To Chart Its Own Course In 2008 and Star And Sigma 

Decisions To Follow McWane Demonstrate Independent Conduct 

Undisputed evidence establishes that McWane independently decided to chart its own 

course in January 2008 after Sigma publicly announced a significant list price increase in the Fall 

of 2007. McWane did not change its list price at all and, instead, issued new (and in many states, 

lower) multiplier discounts. (SOF ¶¶ 23, 29, 55.) Star and Sigma each learned of McWane’s 

new multipliers from customers (SOF ¶¶ 55, 57) and subsequently decided to follow them. (SOF 

¶ 51 (“we would follow”); SOF ¶ 57 (“it’s our standard process to follow”), SOF ¶ 58 (“we 

follow their multipliers”).)

Undisputed evidence also establishes that although cost increases continued, McWane 

did not follow Star and Sigma’s large multiplier increases in Spring 2008, after McWane learned 

of them, but instead, issued multipliers that differed - - and were lower - - in 50 of the 51 states 

and territories across the U.S. Undisputed evidence establishes that Star and Sigma learned of 

McWane’s lower multipliers from their customers (not McWane) and subsequently decided to 

rescind their higher multipliers and, instead, to follow McWane’s lower multipliers.

It is well-established that a price increase in the face of raw materials cost increases 

suggests rational independent decision-making, not a conspiracy. Baby Foods, 166 F.3d at 131 

(document showing that “prices were being raised due to market factors, including increased 

costs in raw materials and packaging” reflected defendant’s “competitive behavior and not 

conscious parallelism”). A subsequent decision by other suppliers to follow a price increase, 

likewise, suggests independent decision-making, not a conspiracy. Blomkest Fertilizer, 203 F.3d 

at 1032-33 (affirming summary judgment because “[e]vidence that a business consciously met 

the pricing of its competitors does not prove a violation of the antitrust laws.”); Serfecz v. Jewel 

Food Stores, 67 F.3d 591, 600-01 (7th Cir. 1995) (affirming summary judgment because “[t]he 

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mere existence of mutual economic advantage, by itself, does not tend to exclude the possibility

of independent, legitimate action and supplies no basis for inferring a conspiracy”); Kreuzer v. 

American Academy of Periodontology, 735 F.2d 1479, 1488 n.12 (D.C. Cir. 1984) (plaintiff must 

provide facts demonstrating that the “acts by the defendants [are] in contradiction of their own 

economic interests”); Baby Foods, 166 F.3d at 129-30 (“[e]ven in a concentrated market, the 

occurrence of a price increase does not in itself permit a rational inference of a conscious 

parallelism”) (internal citation omitted); Venzie Corp, 521 F.2d at1314 (“[t]he absence of action 

contrary to one’s economic interests renders consciously parallel business behavior 

‘meaningless, and in no way indicates agreement’.”) 

Moreover, the undisputed fact that job price discounts continued throughout this period -

- “[a] lot” “ close to 500 job prices [in 2008]”) “ “everyday” “constantly” “practically 

everything” “particularly fierce” - - underscores the independent nature of each company’s 

decision-making. (SOF ¶ 72; ¶ 31, ¶ 35, ¶ 73.) In Clamp-All Corp. v. Cast Iron Soil Pipe 

Institute, 851 F.2d 478 (1st Cir. 1988) (Breyer, J.), the First Circuit affirmed summary judgment 

for defendants in a case in which defendants in a concentrated market followed each other’s list 

prices, but - - as here - - routinely offered discounts off list. The Court held that the fact that 

suppliers “often set prices that deviated from their price list helps support the inference that the 

similarity of price lists reflect individual decisions to copy, rather than any more formal pricing 

agreement.” Id. at 484. 

Other Circuits agree. See, e.g., Baby Foods, 166 F.3d at 128 (“In an oligopoly . . . there 

is pricing structure in which each company is likely aware of the pricing of its competitors”); In 

re Citric Acid Litigation, 191 F.3d 1090, 1103 (9th Cir. 1999) (“Varni has not . . . produced 

evidence tending to exclude the possibility that Cargill received these price lists legitimately

from customers after they were distributed by competitors”); Market Force Inc. v. Wauwatosa 

Realty Co., 906 F.2d 1167, 1173 (7th Cir. 1990)(“[i]t is well established that evidence of 

informal communications among several parties does not unambiguously support an inference of 

a conspiracy.”)

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 It is well established that “antitrust law limits the range of permissible inferences from 

ambiguous evidence in a § 1 case,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 

574, 588 (1986), and that it is not possible to infer that McWane conspired from the subsequent 

Star and Sigma decisions to follow McWane’s multipliers in January and June of 2008. See 

Citric Acid, 191 F.3d at 1102 (“A section 1 violation cannot, however, be inferred from parallel 

pricing alone, nor from an industry’s follow-the-leader pricing strategy”) (internal citations 

omitted). Parallel pricing is simply ambiguous conduct that is consistent with independent 

decision-making and does not “tend[] to exclude the possibility of independent action[.]” 

Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 768 (1984); see also Williamson Oil, 346 

F.3d at 1300 (affirming summary judgment: “Evidence that does not support the existence of a 

price fixing conspiracy any more strongly than it supports conscious parallelism is insufficient to 

survive a defendant’s summary judgment motion”); Mitchael v. Intracorp, Inc., 179 F.3d 847, 

858 (10th Cir. 1999) (affirming summary judgment because “ambiguous conduct that is as 

consistent with permissible competition as with illegal conspiracy does not by itself support an 

inference of antitrust conspiracy under Sherman Act section 1”); Baby Foods, 166 F.3d at 122 

(“no conspiracy should be inferred from ambiguous evidence or from mere parallelism when 

defendants’ conduct can be explained by independent business reasons.”) Indeed, inferring that 

McWane conspired because its competitors followed its lower prices would turn the antitrust 

laws on their head.

III. There Was No Invitation To Collude And The Tons-Shipped DIFRA Data Did 

Not Facilitate Price Coordination 

Count 3 of the AC alleges that McWane “invited” Star and Sigma to stop job price 

discounts by sending its January and June 2008 letters to customers and by participating in 

DIFRA’s monthly tons-shipped reporting which, it alleges, “facilitated” collusion. But, the 

McWane witnesses testified that the letters did not contain any “invitation” regarding job prices 

(and the letters do not say that), and all witnesses testified they distrusted each other’s price 

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letters and did not expect any supplier to stop job pricing: “Not in my opinion,” “not credible,” 

“I don’t believe it,” “we couldn’t trust anybody,” “didn’t make an impact,” “No.” (SOF ¶ 61; ¶ 

62.) The evidence is undisputed that job price discounts continued throughout 2008 and 

accelerated during the Fall of 2008 - - during the brief period when DIFRA was operational. 

The witnesses also flatly denied that DIFRA’s tons-shipped data suggested anything 

about their competitors’ prices: “No, sir” “there’s no pricing there,” “doesn’t give me any sense

of how they’re pricing,” “it’s not possible,” “didn’t influence the way we ran our business at all . 

. . on the pricing side,” “No.” (SOF ¶ 95; ¶ 91; ¶ 92.)

The “invitation to collude” Count also fails because no court has ever found an antitrust 

violation based upon a one-way “ invitation” or “offer” or “attempt” or “signal” to collude that 

was unconsummated. On the contrary, court after court has rejected antitrust liability when 

presented with a one-way offer. Liu v. Amerco, No. 11-2053, 2012 WL 1560170, (1st Cir. May

4, 2012) (“Section 1 of the Sherman Act, however, does not condemn an attempt to conspire, nor 

a solicitation to conspire”); Catalano, Inc. v. Target Sales, 446 U.S. 643, 647 (1980) (per 

curium) (“advance price announcements are perfectly lawful”); Baby Foods, 166 F.3d at 125 (“to 

survive summary judgment, there must be evidence that the exchanges of information had an 

impact on pricing decisions”), Reserve Supply Corp. v. Owens-Corning Fiberglas Corp., 971 

F.2d 37, 54 (7th Cir. 1992) (advance announcements of price changes “served important 

purpose” in construction industry because customers “bid on building contracts well in advance 

of starting construction and, therefore, required sixty days’ or more advance notice of price 

increases”); United States v. American Airlines, 570 F. Supp. 654, 657 (N.D. Tex. 1983) 

(Sherman Act’s prohibition of conspiracies “does not reach attempts”), rev’d on other grounds, 

743 F. 2d 1114, 1119 (5th Cir. 1984) (“our decision that the government has stated a claim 

[under Sherman Act Section 2] does not add attempt to violations of Section 1 of the Sherman 

Act”). 

Courts have also rejected any antitrust liability premised upon the theory that a 

company’s decision to participate in a trade association that gathers and disseminates aggregated 

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tons-shipped data somehow “facilitated” price collusion. Williamson Oil, 346 F.3d at 1313 (in 

finding that gathering volume data (like here) was entirely consistent with each participant’s 

unilateral self-interest, the Court held that “it is far less indicative of a price fixing conspiracy to 

exchange information relating to sales as opposed to prices”) (emphasis added). In Williamson 

Oil, the Court found that it was “plainly beneficial for each individual appellee to keep tabs on 

the commercial activities of its competitors, so the receipt of the information concerning their 

sales does not tend to exclude the possibility of independent action or to establish 

anticompetitive collusion.” Id. (emphasis added); Citric Acid, 191 F.3d at 1103 (no violation of 

the antitrust laws where Cargill received “price lists legitimately from customers after they were 

distributed by competitors”).

There is a good reason for this unanimous rejection of any invitation to collude liability

in these circumstances: it is consistent with a competitive marketplace. “[I]n competitive 

markets, particularly oligopolies, companies will monitor each other’s communications with the 

market in order to make their own strategic decisions.” Williamson Oil, 346 F.3d at 1305, citing 

Holiday Wholesale Grocery v. Philip Morris, Inc., 231 F.Supp.2d 1253, 1276 (N.D.Ga. 2002); 

Blomkest Fertilizer, 203 F.3d at 1036 (“evidence that the alleged conspirators were aware of 

each other’s prices, before announcing their own prices, is nothing more than a restatement of 

conscious parallelism, which is not enough to show an antitrust conspiracy”); United States v. 

General Motors, 1974 Trade Cas. (CCH) para 75,253 (E.D. Mich. 1974) (“The public 

announcement of a pricing decision cannot be twisted into an invitation or signal to conspire; it is 

instead an economic reality to which all other competitors must react.”). 

Any other rule - - particularly if applied to two customer letters with entirely ordinary and 

commonplace language and a plain vanilla trade association volume-gathering practice - - would 

turn the antitrust laws on their head and throttle competitive practices that are widespread 

throughout the economy.13

13 Complaint Counsel may cite consent orders the Commission entered on administrative complaints about signaling 

or invitations to collude. But a consent cannot create new law (and, indeed, does not even constitute an admission 

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IV. Star Was Not Excluded From Selling Domestic Fittings 

Star’s successful expansion into selling domestic fittings affirmatively disproves any 

allegations that McWane exercised monopoly power and excluded Star from competing. In its 

first full year with domestic fittings, Star had more than 130 customers, including more than 75 

exclusive domestic customers, and $6.5 million in sales. Star’s huge (and often, exclusive) 

customer base and significant sales are dispositive here. Brooke Group Ltd. v. Brown & 

Williamson Tobacco Corp., 509 U.S. 209, 226 (1993) (“[W]here new entry is easy . . . summary

disposition of the case is appropriate”); Advo, Inc. v. Philadelphia Newspapers, 51 F.3d 1191, 

1202 (3d Cir. 1995). It is well-established that actual entry of a new competitor or actual 

expansion by an existing competitor “precludes a finding that exclusive dealing is an entry

barrier of any significance” Omega Envt’l. v. Gilbarco, Inc., 127 F.3d 1157, 1164 (9th Cir. 

1997), and easy entry conditions “rebut inferences of market power.” Tops Mkts., Inc. v. Quality 

Mkts., Inc., 142 F.3d 90, 99 (2d Cir. 1998). Thus, Star’s actual successful entry -- the fact that it 

has been able to source a full line of domestic fittings and bid for jobs across the country --

conclusively shows that McWane did not (and could not) exercise monopoly power. 

Indeed, Respondent is unable to find a single case in the history of the federal antitrust 

laws in which a supplier with more than 130 customers, including more than 75 exclusive 

customers, in its first year in the market segment was considered “excluded.” Complaint 

Counsel may argue that Star did not achieve all the success it hoped and dreamed for - - but the 

antitrust laws do not guarantee that. They only ensure that a company has the opportunity to 

compete - - and it is undisputed that Star, with 130-plus domestic fittings customers in its first 

that any law was violated). That is the province of the federal courts, FTC v. Texaco, Inc., 393 U.S. 23, 226 (1968) 

(“ultimate responsibility for the construction of this statute rests with the courts”), and the courts have roundly 

rejected the theory, as discussed above. Indeed, courts have struck down the FTC’s expansive interpretation of 

“unfairness” under FTC Act Section 5 when, as here, it attempts to penalize competitive conduct based on the 

“elusive concept” of unfairness which is “often dependent upon the eye of the beholder.” E.I. duPont de Nemours & 

Co. v. FTC, 729 F.2d 128, 137-38 (2d Cir. 1984). The First Circuit’s recent Liu decision recognized in dicta that the 

FTC had entered consent orders prohibiting invitations to collude under Section 5, but did not concern an appeal 

from a litigation Section 5 invitation to collude case. 

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year (and 75-plus exclusive customers), had that by any definition. United States v. Syufy 

Enters., 903 F.2d 659, 664 (9th Cir. 1990) (“[T]he nature of competition is to make winners and

losers.”) 

Star’s 130+ domestic fittings customers (and 75+ exclusive domestic customers) disprove 

Complaint Counsel’s allegation that McWane’s rebate policy excluded Star. True, long-term 

exclusive deals - - and the rebate policy was not one, for the reasons set out by Commissioner 

Rosch14 - - are only problematic if they “foreclose competition in a substantial share of the line 

of commerce affected.” Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961). To 

foreclose competition in a substantial share of the affected line of commerce, the exclusive deals 

must “foreclose so large a percentage of the available . . . outlets that entry into the concentrated 

market is unreasonably constricted,” E. Food Servs., Inc. v. Pontifical Catholic Univ. Servs. 

Ass’n, Inc., 357 F.3d 1, 8 (1st Cir. 2004), and significant sellers are “frozen out of a market by

the exclusive deal.” Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 45 (1984) 

(O’Connor, J., concurring). 

Here, more than 130 significant waterworks distributors across the country are already

buying Star’s domestic fittings. By definition, Star was not “frozen out” of access to them and 

was not foreclosed. The fact that Star may not have sold as much product as it hoped and 

dreamed it would (or as soon as it would have liked) is irrelevant.

McWane Did Not Exclude Sigma From Virtual Domestic Manufacturing 

Undisputed evidence establishes that virtual domestic manufacturing was “not a viable 

option” for Sigma in mid-2009 for at least 18-24 months. It had a huge debt, little cash, and 

V. 

14 As noted above, the rebate policy on its face could not constitute exclusive dealing “as a matter of law” and has 

been “blessed” by several Courts of Appeals - - as Commissioner Rosch set out in his separate statement disagreeing 

with the Part 3 action against McWane. Moreover, there was a perfectly legitimate reason for McWane to have the 

policy: to ensure that the last remaining foundry dedicated to domestic fittings in 3”-24” diameters would have 

enough volume to stay in business in the face of a long-term flood of cheap imports coming into the U.S. from 

Korea, China, India, Mexico, Brazil, and elsewhere. Union Foundry was only operating at a fraction of its rated 

capacity at the time (and still is). 

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sharply declining sales. It had already breached debt-to-earnings covenants with its banks and 

was in danger of doing so again. The banks had capped its capital expenditures at a fraction of 

the $5-10 million it believed was necessary to begin virtual manufacturing. It owned only a 

handful of the 700-800 necessary patterns to make fittings. It did not own foundries or machine 

shops and had no contracts with third-party companies to cast or machine fittings. Its board and 

its banks did not authorize it to exceed its capital expense limits, nor to proceed with virtual 

domestic manufacturing. It simply had no viable option in the middle of 2009 to participate in 

domestic jobs during the ARRA period (February 2009-mid-2010). Without the MDA with 

McWane, Sigma would have been unable to supply its customers with domestic fittings at all 

during ARRA. (See SOF ¶ 125; ¶ 126.) 15

Case law makes clear that a party is not an “actual potential competitor” unless it has 

taken “affirmative steps to enter the business” and has an “intention” and “preparedness” to do 

so. Gas Utils. Co. of Alabama, Inc. v. Southern Natural Gas Co., 996 F.2d 282, 283 (11th Cir. 

1993) (“Inquiry into procedures is insufficient to establish preparedness . . .party must take some 

affirmative step to enter”); Cable Holdings of Ga., Inc. v. Home Video, Inc., 825 F.2d 1559, 1562 

(11th Cir. 1987) (requiring “an intention to enter the business” and a “showing of 

preparedness”); Sunbeam Television Corp., v. Nielsen Media Research, Inc., 136 F.Supp.2d 

1341, 1354 (S.D.Fla. 2011) (“a would-be purchaser suing an incumbent monopolist for 

excluding a potential competitor . . . must prove the excluded firm was willing and able to supply

it but for the incumbent firm’s exclusionary conduct”). Sigma had not taken the necessary steps 

to become a virtual manufacturer. It was thus not an actual potential competitor for domestic 

jobs during the ARRA period - - and was not excluded by McWane. 

15 The MDA was pro-competitive, as it allowed domestic ductile iron pipe fittings to reach more distributors and 

expanded the purchasing options available to end users. Customers even acknowledged that the MDA was 

beneficial to them, as it provided them additional access to the domestic fittings they needed. (SOF ¶ 127)

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CONCLUSION
	

The critical facts here - - established by sworn testimony from every witness in the case -

- are entirely undisputed. McWane did not participate in any conspiracy to fix fittings prices in 

2008, the tons-shipped DIFRA data did not “facilitate” price coordination in the second half of 

2008, and McWane did not exclude Star or Sigma from selling domestic fittings. Summary

disposition should thus be granted on all Counts. 

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/s/ J. Alan Truitt 

J. Alan Truitt

Thomas W. Thagard III

Maynard Cooper and Gale PC 

1901 Sixth Avenue North

2400 Regions Harbert Plaza

Birmingham, AL 35203

Phone: 205.254.1000

Fax: 205.254.1999

atruitt@maynardcooper.com

tthagard@maynardcooper.com

Dated: June 8, 2012

/s/ Joseph A. Ostoyich

Joseph A. Ostoyich

William Lavery

Baker Botts L.L.P. 

The Warner

1299 Pennsylvania Ave., N.W.

Washington, D.C. 20004-2420

Phone: 202.639.7700

Fax: 202.639.7890

joseph.ostoyich@bakerbotts.com

william.lavery@bakerbotts.com

Attorneys for Respondent McWane, Inc. 

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CERTIFICATE OF SERVICE 

I hereby certify that on June 8, 2012, I filed the foregoing document electronically using 

the FTC’s E-Filing System, which will send notification of such filing to: 

Donald S. Clark
	

Secretary
	

Federal Trade Commission
	

600 Pennsylvania Ave., NW, Rm. H-113
	

Washington, DC 20580
	

I also certify that I delivered via hand delivery a copy of the foregoing document to: 

The Honorable D. Michael Chappell
	

Administrative Law Judge
	

Federal Trade Commission
	

600 Pennsylvania Ave., NW, Rm. H-110
	

Washington, DC 20580
	

I further certify that I delivered via electronic mail a copy of the foregoing document to: 

Edward Hassi, Esq.
	

Geoffrey M. Green, Esq. 

Linda Holleran, Esq. 

Thomas H. Brock, Esq. 

Michael L. Bloom, Esq. 

Jeanine K. Balbach, Esq.
	

J. Alexander Ansaldo, Esq.
	

Andrew K. Mann, Esq.
	

By: ______/s/ William C. Lavery_____ 

One of the Attorneys for McWane 
 

___________________________________ 

 

 

 

 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION
	

) 

In the Matter of ) PUBLIC 

) 

MCWANE, INC., )

 a corporation, and ) 

STAR PIPE PRODUCTS, LTD., )

 a limited partnership. ) DOCKET NO. 9351 

) 

__________________________________ ) 

STATEMENT OF MATERIAL FACTS AS TO WHICH THERE IS NO GENUINE 

DISPUTE IN SUPPORT OF RESPONDENT MCWANE, INC.’S MOTION FOR 

SUMMARY DECISION
	

REDACTED MATERIAL PROTECTED 

PURSUANT TO JANUARY 5, 2012 PROTECTIVE ORDER ENTERED BY THIS COURT
	

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Statement of Material Facts in Support of 

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TABLE OF CONTENTS
	

Page 

I. Allegations...........................................................................................................................3 

II. Background..........................................................................................................................5
	

A. Background of Fittings Market. ..............................................................................5
	

III. McWane Witnesses Testified They Priced Independently..................................................8 

IV. 

1.
	

...................................................................................................21
	

2.		 McWane Charted Its Own Course In June 2008 

.........................................................................................25
	

3.		 .........................29
	

V. The Aggregated Tons-Shipped Data Did Not “Facilitate” Price Coordination.................32
	

VI.		 ..............................................37
	

VII.
	

...................................................................................................................41
	

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Pursuant to Rule 3.24 of the Federal Trade Commission’s Rules of Practice, Respondent 

McWane, Inc. (“McWane”), submits this Statement of Material Facts as to Which there is no 

Genuine Dispute (“SOF”), in support of its Motion for Partial Summary Decision. 

There is no genuine dispute as to the following facts: 

I. Allegations 

1. Counts 1 and 2 of the Administrative Complaint (“AC”) allege that McWane 

“conspired” with Sigma and Star, in violation of FTC Act Section 5, “[b]eginning in January 

2008” and ending in February 2009 - - when Congress passed Buy-America legislation. (AC ¶¶ 

2, 3; see also (January 4, 2012 Statement by Federal Trade Commission, 

http://www.ftc.gov/opa/2012/01/mcwane.shtm.) (“disbanded in early 2009”).) 

2. The three companies allegedly agreed to issue price increases in January and June 

2008 and to limit their discounting. (AC ¶¶ 32-34.) 

3. The AC also alleges that the companies’ participation in the Ductile Iron Fittings 

Research Association (“DIFRA”), a trade association, “facilitated price coordination” for the sixmonth period after June 2008. (AC ¶ 36 (“between June 2008 and January 2009”).) The AC 

alleges that McWane, Sigma, and Star each provided a third-party accounting firm with a 

monthly report of its tons-shipped data, which the firm then aggregated, and distributed the 

overall totals back to them. (AC ¶ 35.) 

4. The AC alleges that the combined, aggregated tons-shipped data allowed the 

DIFRA members to “indirectly” monitor their “output levels.” (AC ¶ 36.) Count 3 alleges that 

McWane “invited” Star and Sigma to collude, in violation of Section 5, by some or all of the 

same conduct. (AC ¶ 66.) 

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5. Counts 4 through 7 of the Administrative Complaint (“AC”) allege that McWane 

monopolized or attempted to monopolize the market for domestic ductile iron pipe fittings 

(“DIPF”),1 in violation of Section 5 of the FTC Act. (AC ¶¶ 67-70.) 

6. Counts 4 and 5 allege that McWane and Sigma entered a Master Distributorship 

Agreement (“MDA”) in September 2009 with the specific intent to monopolize the market for 

domestic DIPF. (Id. ¶¶ 67-68.) 

7. Complaint Counsel alleges that Sigma took steps to evaluate entry into domestic 

production of fittings, and McWane sought to eliminate that risk by inducing Sigma to become a 

distributor of McWane’s fittings rather than a competitor. (Id. ¶¶ 47-55.) 

8. Counts 6 and 7 allege that McWane willfully engaged in anticompetitive and 

exclusionary acts and practices to acquire, enhance or maintain its monopoly power, and, at a 

minimum resulted in a dangerous probability of monopolizing the alleged market for domestic 

ductile iron fittings. (Id. ¶¶ 69-70.) 

9. Complaint Counsel alleges that McWane excluded Star by adopting exclusive 

dealing policies with the intention that these policies would impede and delay the ability of Star 

to enter the domestic DIPF market. (Id. ¶¶ 56-57.) 

10. Complaint Counsel further alleges that the effect of these policies has been to 

compel the majority of waterworks distributors to deal with McWane and Sigma on an exclusive 

basis for their domestic DIPF business, and foreclose Star from a substantial volume of sales 

opportunities with waterworks distributors. (Id. ¶ 58-59.) 

1 McWane challenges Complaint Counsel’s allegation that a “domestic” market exists for ductile iron waterworks 

fittings. It is undisputed that imported fittings compete with domestic fittings. 

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II. Background 

A. Background of Fittings Market. 

11. McWane produces more than 4,000 individual ductile iron pipe fittings in a range 

of diameters (from 3” to 48” or larger), configurations (e.g., elbows, tees, and sleeves), joints 

(flanged, mechanical, push-on), coatings (e.g., tar, epoxy, cement-lined, glass-lined), and finishes 

at its last remaining foundry in the U.S., the Union Foundry, and in its foundry in China (which 

makes the same 4,000-plus fittings at lower costs). ( ; see also 

http://www.tylerunion.com.)2 

12. McWane’s competitors in the market for ductile iron pipe fittings include a 

number of importers (including Sigma, Star, MetalFit, Serampore, NAPAC, and ElectroSteel) 

who source fittings from third-party foundries in Korea, China, India, Mexico, and Brazil, and a 

number of domestic foundries (including U.S. Pipe, Griffin Pipe, American Cast Iron Pipe 

Company (“ACIPCO”), and Backman Foundry), although several of the domestic foundries such 

as U.S. Pipe, ACIPCO and Griffin Pipe have stopped or cut back their production of domestic 

fittings. 

2 McWane’s ductile iron fittings business is known as TylerUnion after its now-closed Tyler, Texas foundry and its 

Union Foundry in Anniston, Alabama. TylerUnion is a division of McWane under the Valve and Hydrant Group. 

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13. The prices customers pay for McWane’s fittings depend upon multiple factors. 

McWane issues a list price, which is nationwide and historically has only changed every few 

years. 

15. McWane then issues “multipliers,” which are region-by-region and, often, “will 

vary by state.” 

There are also different multipliers, in every region and state, for McWane’s domestic and 

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foreign or “blended” fittings. 

16. “ 

17. McWane also offers “job prices” which are 

multiplier granted based on competition for a specific job. 

 Job prices, i.e., discounts from McWane’s published multipliers, have been 

routinely granted in recent years. 

18. Further, McWane provides additional discounts in the form of rebates. 

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19. Finally, McWane at times provided additional price concessions in the form of 

reductions in freight, or extensions of credit or payment terms. 

III. McWane Witnesses Testified They Priced Independently. 

20. McWane witnesses testified that 

 McWane also denied participating in the alleged conspiracy in its Answer to the AC. 

(Respondent McWane, Inc’s Answer (“McWane Answer”) at ¶¶ 1-2, 28-38, 64-66.) 

) 

22. 

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23.
	

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32. McWane granted job prices for a range of reasons, including large volumes, and if 

it determined it was necessary to meet or beat its competitors’ prices. 

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In fact, McWane witnesses confirmed that there was always significant amounts 

of job pricing. 

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As a result of high costs, competition, and price concessions, the company’s 

business 

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Star also denied any price agreements with McWane in its Answer to the AC 

See Respondent Star Pipe Products, Ltd.’s Answer (“Star 

Answer”) at ¶¶ 1-2, 28-38, 64-66; 

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49.
	

) 

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52. 

53. The Administrative Complaint concedes that McWane issued a multiplier change 

on January 11, 2008 because its raw materials prices were increasing dramatically and demand 

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was very low following the crash of the housing market. (AC ¶ 30 (“Due to rising input costs, 

all of the Sellers desired price increases in 2008.”).) 

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(“ 

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2. McWane Charted Its Own Course In June 2008 

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65.
	

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71.
	

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72.
	

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76.
	

78.
	

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81. 

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83. 

PUBLIC VERSION

V. The Aggregated Tons-Shipped Data Did Not “Facilitate” Price Coordination. 

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86. 

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97. In June 2009, Star announced that it would begin selling a full range of small, 

medium and large diameter fittings made for Star by outside foundries in the United States. (See 

Star’s Price List, available online at http://www.starpipeproducts.com/utilities.asp.) 

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114.
	

116. 

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/s/ J. Alan Truitt 

J. Alan Truitt 

Thomas W. Thagard III 

Maynard Cooper and Gale PC 

1901 Sixth Avenue North 

2400 Regions Harbert Plaza 

Birmingham, AL 35203 

Phone: 205.254.1000 

Fax: 205.254.1999 

atruitt@maynardcooper.com 

tthagard@maynardcooper.com 

Dated: June 8, 2012 

/s/ Joseph A. Ostoyich 

Joseph A. Ostoyich 

William Lavery 

Baker Botts L.L.P. 

The Warner 

1299 Pennsylvania Ave., N.W. 

Washington, D.C. 20004-2420 

Phone: 202.639.7700 

Fax: 202.639.7890 

joseph.ostoyich@bakerbotts.com 

william.lavery@bakerbotts.com 

Attorneys for Respondent McWane, Inc. 

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PUBLIC VERSION 

CERTIFICATE OF SERVICE 

I hereby certify that on June 8, 2012, I filed the foregoing document electronically using 

the FTC’s E-Filing System, which will send notification of such filing to: 

Donald S. Clark
	

Secretary
	

Federal Trade Commission
	

600 Pennsylvania Ave., NW, Rm. H-113
	

Washington, DC 20580
	

I also certify that I delivered via hand delivery a copy of the foregoing document to: 

The Honorable D. Michael Chappell
	

Administrative Law Judge
	

Federal Trade Commission
	

600 Pennsylvania Ave., NW, Rm. H-110
	

Washington, DC 20580
	

I further certify that I delivered via electronic mail a copy of the foregoing document to: 

Edward Hassi, Esq.
	

Geoffrey M. Green, Esq. 

Linda Holleran, Esq. 

Thomas H. Brock, Esq. 

Michael L. Bloom, Esq. 

Jeanine K. Balbach, Esq.
	

J. Alexander Ansaldo, Esq.
	

Andrew K. Mann, Esq.
	

By: ______/s/ William C. Lavery_____ 

One of the Attorneys for McWane 
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