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From Antitrust Law Daily, January 26, 2016

Price fixing suit against Chinese bauxite exporters thrown out

By Jeffrey May, J.D.

Two of China’s largest exporters of “refractory grade” bauxite (RGB) were entitled to summary judgment in a price fixing action brought by a putative class of RGB purchasers, the federal district court in Pittsburgh has decided. No reasonable jury could find that Bosai Minerals Group and CMP Tianjin Co. entered into an agreement to fix RGB prices and limit bauxite production (Resco Prods., Inc. v. Bosai Minerals Group Co., January 25, 2016, Conti, J.).

Direct evidence. The defendants were members of the “Bauxite Branch” of the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (CCCMC). Among other things, the CCCMC coordinated the import and export trading activities of the metal, mineral and chemical industry. The complaining purchaser contended that the minutes of Branch meetings from 2004 through 2008, particularly those concerning membership votes on export quotas, amounted to direct evidence of a conspiracy.

While proposals to set bauxite quotas at specified levels being voted on at Bauxite Branch meetings appeared to indicate explicit member participation in a conspiracy to limit output, a reasonable jury could not conclude that this evidence rose to the level of direct evidence of a conspiracy when taken in the context of the record, according to the court. The Bauxite Branch lacked authority with respect to quotas. The implementation of quotas was mandated by the Chinese government, not agreed to by private entities. The quota was set by the Chinese Ministry of Commerce or MOFCOM.

The court also rejected the assertion that meeting minutes and other communications amounted to direct evidence that Bauxite Branch members “voted to fix prices.” Votes pertaining to “minimum price for export quota” during Bauxite Branch meetings referred to the amount of export license fees, and not to the prices to be charged to buyers. This same conduct also failed as circumstantial evidence of a price fixing conspiracy because the defendants lacked the authority to influence bauxite bidding and quotas.

Conscious parallelism as circumstantial evidence. The complaining purchaser unsuccessfully argued that, even in the absence of direct evidence, a fact-finder could infer the existence of a conspiracy based on consciously parallel behavior by defendants and the existence of certain “plus” factors. Other than the evidence of bauxite bidding and quotas, the plaintiff made no mention of parallel behavior by the defendants or other alleged co-conspirators in fixing the prices paid by buyers. Although the plaintiff asserted that the “price of RGB in the United States doubled during 2003 and 2004 and increased an additional 70 [percent] between 2004 and 2007,” there was no evidence that prices “moved in a parallel fashion” during the period.

Even if the plaintiff could show consciously parallel behavior by the defendants, summary judgment was still proper given the plaintiff’s failure to establish any plus factor. The market was not “concentrated in the hands of several Chinese producers,” as the plaintiff contended. The defendants’ price increases were not shown to be contrary to their interests. Lastly, the plaintiff did not adduce “evidence implying a traditional conspiracy.” At best, the meetings and communications identified by the complaining purchaser showed that the defendants had the opportunity to conspire, and without more, this would not sustain an inference of conspiracy, the court concluded.

The case is No. 2:06-cv-00235-JFC.

Attorneys: Austin P. Henry (Mills & Henry) and Richard E. Donovan (Kelley Drye & Warren LLP) for Resco Products, Inc. Benjamin J. Lambiotte (Garvey Schubert Barer) and Frederick B. Goldsmith (Goldsmith & Ogrodowski LLC) for CMP Tianjin Co., Ltd. and Bosai Minerals Group Co., Ltd.

Companies: Resco Products, Inc.; CMP Tianjin Co., Ltd.; Bosai Minerals Group Co., Ltd.

MainStory: TopStory Antitrust PennsylvaniaNews

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