1

1010080

UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

COMMISSIONERS: Jon Leibowitz, Chairman

J. Thomas Rosch 

Edith Ramirez

Julie Brill

In the Matter of

MCWANE, INC., 

 a corporation, and 

STAR PIPE PRODUCTS, LTD., 

 a limited partnership. 

 Docket No. 9351

 

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the

authority vested in it by said Act, the Federal Trade Commission (“Commission”), having reason

to believe that Respondents McWane, Inc. (“McWane”) and Star Pipe Products, Ltd. (“Star)

have violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and it appearing

to the Commission that a proceeding by it in respect thereof would be in the public interest,

hereby issues this Complaint stating its charges as follows: 

NATURE OF THE CASE

1. This action concerns the collusive conduct of Respondents, and the exclusionary

conduct of McWane, relating to the marketing and sale of ductile iron pipe fittings (“DIPF”). 

2. Beginning in January 2008, McWane and Star, along with their competitor Sigma

Corporation (“Sigma”), conspired to raise and stabilize the prices at which DIPF are sold in the

United States. McWane, Sigma and Star (collectively, the “Sellers”) exchanged sales data in

order to facilitate this price coordination. 

3. The passage of the American Recovery and Reinvestment Act of 2009 (“ARRA”)

in February 2009 significantly altered the competitive dynamics of the DIPF industry, and upset

the terms of coordination among the Sellers. In the ARRA, the United States Congress allocated

more than 6 billion dollars to water infrastructure projects, conditioned on the use of
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domestically produced materials, including DIPF, in those projects (the “Buy American”

requirement). 

4. At the time the ARRA was passed, McWane was the sole supplier of a full line of

domestically produced DIPF in the most commonly used size ranges. Federal stimulus of the

domestic DIPF market potentially left McWane in a position to reap a monopoly profit.

5. In response to the passage of the ARRA and its Buy American provision, Sigma,

Star and others attempted to enter the domestic DIPF market in competition with McWane. 

6. McWane maintained its monopoly in the domestic DIPF market through

exclusionary conduct, including (i) entering into a distribution agreement with Sigma that

eliminated Sigma as an actual potential entrant into the domestic DIPF market, and (ii) excluding

actual and potential competitors, including Star, through the adoption and enforcement of

exclusive dealing policies. 

7. Respondents’ conduct has restrained competition and led to higher prices for both

imported and domestically produced DIPF.

THE RESPONDENTS

8. Respondent McWane is a corporation organized, existing and doing business

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

located at 2900 Highway 280, Suite 300, Birmingham, Alabama 35223. McWane manufactures,

imports, markets and sells products for the waterworks industry, including DIPF. 

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

“corporation” is defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44. 

10. McWane’s acts and practices, including the acts and practices alleged herein, are

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

Trade Commission Act, 15 U.S.C. § 44.

11. Respondent Star is a limited partnership organized, existing and doing business

under and by virtue of the laws of the State of Texas, with its principal place of business located

at 4018 Westhollow Parkway, Houston, Texas 77082. Star imports, markets and sells products

for the waterworks industry, including DIPF.

12. At all times relevant herein, Star has been, and is now, a corporation as

“corporation” is defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44. 

13. Star’s acts and practices, including the acts and practices alleged herein, are in or

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

Trade Commission Act, 15 U.S.C. § 44.
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THE DIPF INDUSTRY 

14. DIPF are a component of pipeline systems transporting drinking and waste water

under pressurized conditions in municipal distribution systems and treatment plants. DIPF are

used to join pipes, valves and hydrants in straight lines, and to change, divide or direct the flow

of water. The end users of DIPF are typically municipal and regional water authorities.

15. DIPF are produced in a broad product line of more than 2000 unique

configurations of size, shape and coating. The industry differentiates between “A Items,” or

commonly used fittings used routinely and on almost every job, and “oddball” fittings that are

either of unusual configuration or size, or both. Although approximately 80 percent of market

demand may be serviced with a product line of 100 fittings, DIPF suppliers must be able to

supply more than 1900 additional fittings to serve the remaining 20 percent of demand. 

16. Independent wholesale distributors, known as “waterworks distributors,” are the

primary channel of distribution of DIPF to end users. Waterworks distributors specialize in

distributing products for water infrastructure projects, and generally handle the full spectrum of

waterworks products, including pipes, DIPF, valves and hydrants. Waterworks distributors

employ sales personnel dedicated to servicing the needs of end users, and are generally able to

satisfy the needs of end users for rapid service by stocking inventory in relatively close

proximity to project sites.

17. Direct sales of DIPF to end users, or to the utility contractors that often serve as

the agent of the end user in purchasing and installing DIPF, are uncommon. End users and DIPF

suppliers alike prefer to work through waterworks distributors with locations near project sites. 

As a result, DIPF suppliers need to distribute DIPF through local waterworks distributors in each

region of the country in order to compete effectively in that region. 

18. Both imported and domestically produced DIPF are commercially available. All

of the Sellers sell imported DIPF. Before Star’s entry into domestic production in 2009,

McWane was the sole domestic producer of a full line of small and medium-sized DIPF. 

19. The end user of DIPF specifies whether, on a particular project, it will accept both

imported and domestically produced DIPF, or only domestically produced DIPF. This

specification is often mandated by municipal code, or by state or federal law. 

20. Domestically produced DIPF sold for use in projects specified as domestic only

are sold at higher prices than imported or domestically produced DIPF sold for use in projects

not specified as domestic only. 
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THE RELEVANT MARKETS

 

21. The relevant product market in which to evaluate Respondents’ conduct is the

marketing and sale of DIPF, and narrower relevant markets as contained therein (collectively,

the “relevant DIPF markets”), including:

a. DIPF for projects not specified as domestic only; 

b. DIPF for projects specified as domestic only; and 

c. DIPF of certain size ranges (e.g., 24" in diameter and smaller).

22. In particular, the marketing and sale of domestically produced small and mediumsized (3-24" in diameter) DIPF for use in projects specified as domestic only constitutes a

separate relevant product market (the “relevant domestic DIPF market”).

23. There are no widely used substitutes for DIPF, and no other product significantly

constrains the prices of DIPF. 

24. Before and after the passage of the ARRA, some end users purchasing DIPF for

use in projects specified as domestic only were unable to substitute imported DIPF, or any other

product, for domestically produced DIPF. The passage of the ARRA and its Buy American

requirement temporarily expanded the relevant domestic DIPF market. 

25. The relevant geographic market is no broader than the United States. To compete

effectively within the United States, DIPF suppliers need distribution assets and relationships

within the United States. DIPF suppliers located outside the United States that lack such assets

and relationships are unable to constrain the prices of DIPF suppliers that have such assets and

relationships. 

26. Each and every state within the United States is also a relevant geographic

market, and smaller markets within the boundaries of many states exist as well. DIPF suppliers

can and do engage in price discrimination based on customers’ location. DIPF end users require

local and expeditious service and support, and typically do not purchase DIPF from waterworks

distributors located more than 200 miles away. Waterworks distributors typically do not resell

DIPF to other waterworks distributors or end users outside their service areas in any substantial

quantity. As a result, DIPF suppliers charge different prices in different states, and within

certain regions within many states.

THE RELEVANT DIPF MARKETS ARE CONDUCIVE TO COLLUSION

27. The relevant DIPF markets have several features that facilitate collusion among

the Sellers, including product homogeneity, market concentration of DIPF suppliers, barriers to

timely entry of new DIPF suppliers, inelastic demand at competitive prices, and uniform

published prices. 
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a. DIPF are commodity products produced to industry-wide standards. 

Product homogeneity enhances the Sellers’ ability to collude on prices and to detect

deviations from those collusive prices. 

b. The relevant DIPF markets are highly concentrated. In 2008, the Sellers

collectively made more than 90 percent of sales in the relevant DIPF markets. A highly

concentrated market enhances the Sellers’ ability and incentive to collude on prices. 

c. Effective de novo entry into the relevant DIPF markets takes several years. 

Barriers to entry include the need for a new entrant to develop a distribution network and

a reputation for quality and service with waterworks distributors and end users. 

Convincing end users to allow the use of a new entrant’s DIPF is often a time consuming

process. 

d. Demand for DIPF is inelastic to changes in price at competitive levels. 

DIPF are a relatively small portion of the cost of materials of a typical waterworks

project, and there are no widely used substitutes for the product. 

e. The Sellers publish nearly identical price books listing per-unit prices for

each unique DIPF item carried by a given supplier, and periodically publish uniform

multiplier discounts at which they offer to sell DIPF on a state-by-state basis. By

simplifying and standardizing published prices, the DIPF price list/multiplier format

enhances the Sellers’ ability to collude on prices and to detect deviations from those

collusive prices. 

THE SELLERS RESTRAINED

 PRICE COMPETITION IN THE RELEVANT DIPF MARKETS

28. Senior executives of the Sellers frequently and privately communicate with one

another. These communications often relate to DIPF price and output. 

29. Beginning in January 2008, the Sellers conspired to raise and stabilize the prices

at which DIPF were sold in the United States. 

30. Due to rising input costs, all of the Sellers desired price increases in 2008. 

However, McWane was concerned that Sigma and Star would not adhere to announced price

increases, which would result in lost sales for McWane. The Sellers worked together though

2008 to alleviate McWane’s concerns, with the common purpose of clearing the way for

McWane to support common price increases. 

31. On January 11, 2008, McWane publicly announced its first DIPF price increase of

2008. Sigma and Star followed this price increase.
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32. This January 2008 price increase was the result of a combination and conspiracy

among the Sellers. 

a. Before announcing the January 2008 price increase, McWane planned to

trade its support for higher prices in exchange for specific changes to the business

methods of Sigma and Star that would reduce the risk that local sales personnel for these

competitors would sell DIPF at prices lower than published levels. 

b. McWane communicated the terms of its plan to Sigma and Star. McWane

acted with the intent of conspiring with Sigma and Star to restrain price competition. 

c. Sigma and Star manifested their understanding and acceptance of

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

levels in order to induce McWane to support higher price levels. 

d. On or about March 10, 2008, McWane and Sigma executives discussed by

telephone their efforts to implement the January 2008 price increase. 

33. On June 17, 2008, McWane publicly announced its second DIPF price increase of

2008. Sigma and Star followed this price increase. 

34. The June 2008 price increase was the result of a combination and conspiracy

among the Sellers. 

a. Before announcing the June 2008 price increase, McWane planned to

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

documenting the volume of their monthly sales of DIPF. This exchange of information

was to be achieved under the auspices of an entity styled as the Ductile Iron Fittings

Research Association (“DIFRA”). 

b. McWane communicated the terms of its plan to Sigma and Star, at least in

part through a public letter sent by McWane to waterworks distributors, the common

customers of the Sellers. A section of that letter was meaningless to distributors, but was

intended to inform Sigma and Star of the terms of McWane’s offer. McWane acted with

the intent of conspiring with Sigma and Star to restrain price competition. 

c. Sigma and Star manifested their understanding and acceptance of

McWane’s offer by initiating their participation in the DIFRA information exchange in

order to induce McWane to support higher price levels. 

d. McWane then led a price increase, and Sigma and Star followed. 

e. On or about August 22, 2008, executives of McWane and Sigma discussed 

by telephone their efforts to implement the June 2008 price increase.
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DIFRA FACILITATED PRICE

COORDINATION AMONG THE SELLERS 

35. The DIFRA information exchange operated as follows. The Sellers submitted a

report of their previous month’s sales to an accounting firm. Shipments were reported in tons

shipped, subdivided by diameter size range (e.g., 2-12") and by joint type. Data submissions

were aggregated and distributed to the Sellers. Data submitted to the accounting firm was

typically no older than 45 days, and the summary reports returned to the Sellers contained data

typically no more than 2 months old.

36. During its operation between June 2008 and January 2009, the DIFRA

information exchange enabled each of the Sellers to determine and to monitor its own market

share and, indirectly, the output levels of its rivals. In this way, the DIFRA information

exchange facilitated price coordination among the Sellers on the pricing of DIPF. 

37. The acts and practices of Respondents, as alleged herein, have the purpose,

capacity, tendency, and effect of (i) fixing, maintaining and raising prices of DIPF in the relevant

DIPF markets, and (ii) facilitating collusion in the relevant DIPF markets. 

38. There are no legitimate procompetitive efficiencies that justify the conduct of

Respondents as alleged herein, or that outweigh its anticompetitive effects.

MCWANE MONOPOLIZED 

THE RELEVANT DOMESTIC DIPF MARKET

39. At the time of the enactment of the ARRA in February 2009 and thereafter,

McWane possessed monopoly power in the relevant domestic DIPF market. 

40. At the time of the enactment of the ARRA, McWane was the only manufacturer

of a full line of DIPF in the relevant domestic DIPF market and controlled nearly 100 percent of

the relevant domestic DIPF market. Despite Star’s entry into the relevant domestic DIPF market

in late 2009, McWane continues to make more than 90 percent of sales in the relevant domestic

DIPF market. 

41. McWane’s monopoly power in the relevant domestic DIPF market is protected by

substantial barriers to effective entry and expansion, including the unfair methods of competition

of McWane and Sigma, as alleged in Paragraphs 42 through 63, below. 

42. For suppliers of the relevant DIPF that have existing relationships and goodwill

with waterworks distributors and established reputations for quality and service in the provision

of the relevant DIPF, McWane’s unfair and exclusionary methods of competition are the primary

barriers to effective entry and expansion in the relevant domestic DIPF market. 
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43. McWane’s monopoly power in the relevant domestic DIPF market is further

demonstrated directly by its ability to exclude competitors, to control prices, and to coercively

impose unwanted distribution policies on its customers. 

44. Federal stimulus gave Sigma, Star and Serampore Industries Private, Ltd. (“SIP”),

another imported DIPF supplier, an incentive to enter the domestic DIPF market. 

45. Sigma, Star and SIP all attempted to enter the relevant domestic DIPF market in

response to the ARRA.

46. McWane maintained its monopoly in the relevant domestic DIPF market by

illegally inducing Sigma to abandon its effort to enter the domestic DIPF market, and by

implementing an exclusive dealing policy to prevent other competitors from entering or

expanding. Through this conduct, McWane eliminated or delayed competition from the only

firms with the ability and incentive to enter the relevant domestic DIPF market in a timely

fashion. McWane acted with the specific intent to monopolize the relevant domestic DIPF

market. 

McWane Eliminated Sigma as an Actual Potential Entrant

47. After the enactment of the ARRA, Sigma took steps to evaluate entry into

domestic production of DIPF, including but not limited to (i) formulating a complete or nearly

complete operational plan, (ii) arranging for an infusion of equity capital to fund domestic

production, (iii) obtaining the approval of its Board of Directors for its entry plans, and (iv)

casting prototype product. 

48. McWane perceived that Sigma was preparing to enter the relevant domestic DIPF

market. McWane sought to eliminate the risk of competition from Sigma by inducing Sigma to

become a distributor of McWane’s domestic DIPF rather than a competitor in the relevant

domestic DIPF market.

49. McWane and Sigma executed a Master Distribution Agreement dated September

17, 2009 (“MDA”). The principal terms of the MDA were as follows:

a. McWane would sell domestic DIPF to Sigma at a 20 percent discount off

of McWane’s published prices;

b. McWane would be Sigma’s exclusive source for the relevant domestic

DIPF;

c. Sigma would resell McWane’s domestic DIPF at or very near McWane’s

published prices for domestic DIPF; and
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d. Sigma would resell McWane’s domestic DIPF to waterworks distributors

only on the condition that the distributor agreed to purchase domestic DIPF exclusively

from McWane or Sigma. 

50. An unwritten term of the MDA was that McWane would also sell its domestic

DIPF at or very near its published prices. 

51. In the absence of a sufficiently profitable arrangement with McWane, Sigma

would likely have entered the relevant domestic DIPF market in competition with McWane.

52. Under the MDA, McWane controlled the price at which Sigma could sell

domestic DIPF and the customers to whom Sigma could sell domestic DIPF. Sigma’s

participation in the relevant domestic DIPF market under the MDA was not equivalent to, and

for consumers not a substitute for, Sigma’s competitive entry into the relevant domestic DIPF

market. 

53. Sigma’s independent, competitive entry into the relevant domestic DIPF market

would likely have benefitted consumers by constraining McWane’s prices for the relevant

domestic DIPF and otherwise. 

54. Through the MDA, McWane transferred a share of its sales and monopoly profits

in the domestic DIPF market to Sigma in exchange for Sigma’s commitment to abandon its plans

to enter the relevant domestic DIPF market as an independent competitor. 

55. Both McWane and Sigma entered into the MDA with the specific intent to

maintain and share in McWane’s monopoly profits in the relevant domestic DIPF market by

eliminating competition among themselves and excluding their rivals. 

McWane Excluded Star Through Exclusive Dealing 

56. Star announced its entry into the relevant domestic DIPF market in June 2009. 

McWane knew that, initially, Star would have a shorter product line and a smaller inventory than

McWane. Star would therefore have difficulty convincing a waterworks distributor to purchase

all of its domestic DIPF from Star. McWane nevertheless projected that Star’s entry into the

domestic DIPF market, if unobstructed by McWane, would place downward pressure on

McWane’s prices for its domestic DIPF. 

57. McWane responded to Star’s entry into the relevant domestic DIPF market by

adopting restrictive and exclusive distribution policies (collectively, “McWane’s exclusive

dealing policies”). McWane intended and expected that these policies would impede and delay

the ability of Star to enter the domestic DIPF market. 

a. McWane threatened waterworks distributors with delayed or diminished

access to McWane’s domestic DIPF, and the loss of accrued rebates on the purchase of

McWane’s domestic DIPF, if those distributors purchased domestic DIPF from Star. 
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b. As part of its MDA with McWane, Sigma agreed to implement a similar

distribution policy, as alleged in Paragraph 49, above. 

c. McWane threatened some waterworks distributors with the loss of rebates

in other product categories, such as ductile iron pipe, waterworks valves, and hydrants, if

those distributors purchased domestic DIPF from Star. 

d. Beginning in 2011, McWane changed its rebate structure for domestic

DIPF to require waterworks distributors to make certain minimum, and high, shares of

their total domestic DIPF purchases from McWane in order to qualify for these rebates. 

58. The purpose and effect of McWane’s exclusive dealing policies has been and is to

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

or nearly exclusive basis for their domestic DIPF business.

a. Due to Star’s perceived or actual status as an untested supplier of domestic

DIPF with a shorter product line and smaller inventory than McWane, many distributors

interested in purchasing domestic DIPF from Star were unwilling to switch all of their

domestic DIPF business to Star. 

b. Instead, many distributors wished to purchase domestic DIPF from both

McWane/Sigma and Star, and thereby to garner the benefits of price and service

competition. 

c. McWane’s exclusive dealing policies increased the risk of purchasing

domestic DIPF from Star.

d. Distributors otherwise interested in purchasing domestic DIPF from Star

were and are unwilling to do so under the terms of McWane’s exclusive dealing policies,

and have remained exclusive or nearly exclusive with McWane and Sigma, contrary to

their preference. 

59. McWane’s exclusive dealing policies have foreclosed Star from a substantial

volume of sales opportunities with waterworks distributors. 

60. By foreclosing Star from a substantial volume of sales opportunities with

waterworks distributors, McWane’s exclusive dealing policies tend to minimize and delay Star’s

ability to compete in the domestic DIPF market and thereby to benefit consumers by

constraining the prices of domestically produced DIPF charged by McWane and Sigma, and

otherwise. 

61. McWane’s exclusive dealing policies have also raised barriers to entry into the

relevant domestic DIPF market by other potential entrants, including SIP. This conduct has

contributed to McWane’s monopolization of the relevant domestic DIPF market.
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62. The acts and practices of McWane, as alleged herein, have the purpose, capacity,

tendency, and effect of (i) maintaining and stabilizing prices of DIPF in the relevant DIPF

markets, (ii) eliminating potential competition from Sigma in the relevant domestic DIPF

market, (iii) impairing the competitive effectiveness of Star in the relevant domestic DIPF

market, and (iv) raising barriers to entry for potential rivals in the relevant domestic DIPF

market. The conduct of McWane is reasonably capable of making a significant contribution to

the enhancement or maintenance of McWane’s monopoly power in the relevant domestic DIPF

market. 

63. There are no legitimate procompetitive efficiencies that justify the conduct of

McWane as alleged herein, or that outweigh its anticompetitive effects.

FIRST VIOLATION ALLEGED

RESTRAINT OF TRADE

64. As alleged herein, McWane and Star conspired, along with their competitor

Sigma, to restrain price competition. These concerted actions unreasonably restrain trade and

constitute unfair methods of competition in or affecting commerce in violation of Section 5 of

the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. Such acts and practices, or the

effects thereof, will continue or recur in the absence of appropriate relief.

SECOND VIOLATION ALLEGED

RESTRAINT OF TRADE

65. As alleged herein, McWane and Star conspired, along with their competitor

Sigma, to exchange competitively sensitive sales information. These concerted actions

unreasonably restrain trade in and constitute unfair methods of competition in or affecting

commerce in violation of Section 5 of the Federal Trade Commission Act, as amended, 15

U.S.C. § 45. Such acts and practices, or the effects thereof, will continue or recur in the absence

of appropriate relief.

THIRD VIOLATION ALLEGED

UNFAIR METHODS OF COMPETITION

66. As alleged herein, McWane invited its competitors to collude with McWane to

restrain price competition. These actions constitute unfair methods of competition in or

affecting commerce in violation of Section 5 of the Federal Trade Commission Act, as amended,

15 U.S.C. § 45. Such acts and practices, or the effects thereof, will continue or recur in the

absence of appropriate relief.
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FOURTH VIOLATION ALLEGED

RESTRAINT OF TRADE

67. As alleged herein, McWane and Sigma entered into the MDA. The agreement

unreasonably restrains trade and constitutes an unfair method of competition in or affecting

commerce in violation of Section 5 of the Federal Trade Commission Act, as amended, 15

U.S.C. § 45. Such acts and practices, or the effects thereof, will continue or recur in the absence

of appropriate relief.

FIFTH VIOLATION ALLEGED

CONSPIRACY TO MONOPOLIZE

68. As alleged herein, McWane and Sigma entered into the MDA with the specific

intent to monopolize the relevant domestic DIPF market, and took overt acts to exclude their

rivals in furtherance of their conspiracy, constituting an unfair method of competition in or

affecting commerce in violation of Section 5 of the Federal Trade Commission Act, as amended,

15 U.S.C. § 45. Such acts and practices, or the effects thereof, will continue or recur in the

absence of appropriate relief.

SIXTH VIOLATION ALLEGED

MONOPOLIZATION

69. As alleged herein, McWane has willfully engaged in anticompetitive and

exclusionary acts and practices to acquire, enhance or maintain its monopoly power in the

relevant domestic DIPF market, constituting unfair methods of competition in or affecting

commerce in violation of Section 5 of the Federal Trade Commission Act, as amended, 15

U.S.C. § 45. Such acts and practices, or the effects thereof, will continue or recur in the absence

of appropriate relief.

SEVENTH VIOLATION ALLEGED

ATTEMPTED MONOPOLIZATION

70. As alleged herein, McWane has willfully engaged in anticompetitive and

exclusionary acts and practices, with the specific intent to monopolize the relevant domestic

DIPF market, resulting, at a minimum, in a dangerous probability of monopolizing the relevant

domestic DIPF market, constituting unfair methods of competition in or affecting commerce in

violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. Such

acts and practices, or the effects thereof, will continue or recur in the absence of appropriate

relief.
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NOTICE

Notice is hereby given to Respondents that the fourth day of September, 2012, at

10:00 a.m., is hereby fixed as the time and Federal Trade Commission offices, 600 Pennsylvania

Avenue, NW, Washington D.C. 20580, as the place when and where a hearing will be had before

an Administrative Law Judge of the Federal Trade Commission, on the charges set forth in this

complaint, at which time and place you will have the right under the Federal Trade Commission

Act to appear and show cause why an order should not be entered requiring you to cease and

desist from the violations of law charged in the complaint.

You are notified that the opportunity is afforded you to file with the Commission an

answer to this complaint on or before the fourteenth (14 ) day after service of it upon you. An th

answer in which the allegations of the complaint are contested shall contain a concise statement

of the facts constituting each ground of defense; and specific admission, denial, or explanation of

each fact alleged in the complaint or, if you are without knowledge thereof, a statement to that

effect. Allegations of the complaint not thus answered shall be deemed to have been admitted.

If you elect not to contest the allegations of fact set forth in the complaint, the answer

shall consist of a statement that you admit all of the material allegations to be true. Such an

answer shall constitute a waiver of hearings as to the facts alleged in the complaint and, together

with the complaint, will provide a record basis on which the Commission shall issue a final

decision containing appropriate findings and conclusions and a final order disposing of the

proceeding. In such answer, you may, however, reserve the right to submit proposed findings of

fact and conclusions of law under § 3.46 of said Rules.

Failure to file an answer within the time above provided shall be deemed to constitute a

waiver of your right to appear and to contest the allegations of the complaint, and shall authorize

the Commission, without further notice to you, to find the facts to be as alleged in the complaint

and to enter a final decision containing appropriate findings and conclusions and a final order

disposing of the proceeding.

The Administrative Law Judge shall hold a prehearing scheduling conference not later

than ten (10) days after an answer is filed by the last answering Respondent. Unless otherwise

directed by the Administrative Law Judge, the scheduling conference and further proceedings

will take place at the Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington

DC 20580. Rule 3.21(a) requires a meeting of the parties’ counsel as early as practicable before

the prehearing scheduling conference, and Rule 3.31(b) obligates counsel for each party, within

five days of receiving the answer of the last answering Respondent, to make certain initial

disclosures without awaiting a formal discovery request.
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NOTICE OF CONTEMPLATED RELIEF

Should the Commission conclude from the record developed in any adjudicative

proceedings in this matter that Respondents have violated or are violating Section 5 of the FTC

Act, as amended, as alleged in the Complaint, the Commission may order such relief against

Respondents as is supported by the record and is necessary and appropriate, including, but not

limited to:

1. Ordering Respondents to cease and desist from the conduct alleged in the

Complaint to violate Section 5 of the FTC Act, and to take all such measures as are appropriate

to correct or remedy, or to prevent the recurrence of, the anticompetitive practices engaged in by

Respondents. 

2. Prohibiting Respondents from agreeing with any competitor to fix prices or to

allocate markets, or from soliciting any competitor to enter into such an agreement. 

3. Prohibiting Respondents from agreeing with any competitor to exchange

competitively sensitive information unless that information exchange meets sufficient criteria to

assure that the information exchange will not facilitate collusion among Respondents and their

competitors, such conditions to be determined by the Commission, or soliciting any competitor

to enter into such an agreement. 

4. Prohibiting Respondents from communicating competitively sensitive

information to any competitor, except where such communications are the unavoidable result of

announcing the terms on which Respondents propose to sell their products to their customers, or

where the information communicated by Respondents relates solely to the terms on which

Respondents propose to sell any product to, or purchase any product from, the person to whom

the information is communicated by Respondents. 

5. Requiring, for a period of time, that Respondents document all communications

with any competitor, including by identifying the persons involved, the nature of the

communication, and its duration, and that Respondents submit such documentation to the

Commission.

6. Requiring that Respondents, upon request, provide the Commission with

notification of any public price change relating to DIPF, including copies of pricing letters. 

7. Prohibiting McWane from conditioning the sale, or any term of sale (including

invoice price, delivery terms, credit allowances, rebates, or discounts), of any product on a

customer’s dealing, refusal to deal, or terms of dealing with any other supplier of domestically

produced DIPF. 

8. Prohibiting McWane, for a period of time, from providing any discounts or other

incentives that retroactively reduce the price of previously purchased units of McWane’s

domestically produced DIPF because of the purchase or sale of an additional unit of that product. 
15

Provided, however, that McWane shall be permitted to offer discounts or lower prices based

solely on volume, provided that these discounts or lower prices are otherwise in accordance with

the law.

9. Prohibiting McWane, for a period of time, from offering bundled rebates

involving domestically produced DIPF. 

10. Requiring that Respondents’ compliance with the order shall be monitored at its

expense by an independent monitor, for a term to be determined by the Commission.

11. Requiring that Respondents file periodic compliance reports with the

Commission.

12. Any other relief appropriate to correct or remedy the anticompetitive effects in

their incipiency of any or all of the conduct alleged in the complaint.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on

this fourth day of January, 2012, issues its complaint against Respondents. 

By the Commission.

Donald S. Clark

Secretary

SEAL: