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Antitrust Suits Against U.S. Drywall Manufacturers Increase

by TAUC General Counsel Steve Fellman

The number of private antitrust treble-damage suits against the eight major U.S. manufacturers of drywall (gypsum) board has been growing fast. Over 20 plaintiff's class actions have been filed by groups representing contractors, building supply houses and consumers.

The suits allege that beginning in the fall of 2011, at least five of the major U.S. manufacturers of drywall agreed to raise prices by 35%, probably at a meeting of the Association of the Wall and Ceiling Industry held in Idaho. The suits also allege that the manufacturers agreed to stop the practice of offering "job quote" clauses in their contracts with construction contractors. Under the "job quote" clause, a contractor was guaranteed that the contract price for drywall on a particular job would not increase for that job during the time it took to build the project, no matter how long it took.

The Department of Justice is aware of this litigation but has not indicated whether it is considering filing suit against the manufacturers. In commenting on this litigation, several drywall manufacturers have strongly denied that there were any illegal agreements among competitors and claim that the increases in prices in the fall of 2011 were independent decisions and did not involve any illegal agreements. Other manufacturers have refused to comment.

TAUC members who buy significant amounts of drywall should consult with counsel regarding the advisability of actively participating as plaintiffs in this litigation. It is anticipated that the suits in question will be consolidated into two or three separate class actions. One class may represent indirect purchasers, such as consumers; one class may represent direct purchasers, such as building supply houses and home improvement retailers; and one class may represent contractors.

The U.S. drywall market is a $5 billion dollar a year market and it is estimated that over 90% of the new buildings in the U.S. have drywall walls and ceilings.

04/02/2013