Ice Cream Maker Blames Caustic Soda Price Increase on Anti-Competitive Conspiracy

An ice cream company says a caustic soda price increase is the result of illegal collusion among producers of sodium hydroxide.

Perry’s Ice Cream Company has filed a class action lawsuit alleging several companies conspired to restrict availability of sodium hydroxide, commonly known as caustic soda or lye, to artificially inflate prices. Perry’s alleges the steep price increases and restricted distribution harmed the financial situation of those who relied upon the commodity as part of doing business.

Caustic soda is sold in solid and liquid forms and is produced from the chlorine production from the electrolysis of salt water. Many industries rely upon caustic soda to aid in the production of paper, soaps, detergents, aluminum, biodiesel fuel and textiles. It’s also used to peel fruit before canning and for unblocking pipes. Doctors even use caustic soda to chemically burn away skin growths.

The defendants in the case together reportedly control an estimated minimum of 90 percent of the domestic supply of caustic soda. The defendants are:

• Olin Corporation
• K.A. Steel Chemicals, Inc.
• Occidental Petroleum Corporation
• Occidental Chemical Corporation (d/b/a Oxychem)
• Westlake Chemical Corporation
• Shin-etsu Chemical Co. Ltd.
• Shintech Incorporated
• Formosa Plastics Corporation
• Formosa Plastics Corporation, USA

Perry’s says that caustic soda prices were either declining or flat between 2012 and the fourth quarter of 2015. Industry profit margins were poor allegedly because of overcapacity and flat demand.

“These conditions motivated the defendants to conspire and combine to restrict domestic supply; to fix, raise, maintain, and stabilize the price at which caustic soda was and continues to be sold…” alleges the sodium hydroxide lawsuit.

Antitrust law attorneys know that the chemical arena is a relatively small community where conspiring has occurred in the past. Dow Chemical agreed to an $815 million settlement in 2016 after the company was accused of price fixing the polyurethane raw materials industry, and other alleged conspirators settled prior to Dow.

Several other producers of sodium hydroxide are facing claims similar to those brought by Perry’s.

Caustic Soda Price Increase Background

Perry’s Ice Cream alleges that prices of caustic soda have increased more than 50 percent since the fourth quarter of 2015, even though prices declined by about six percent between the fourth quarter of 2012 through the third quarter of 2015.

The manufacturers of caustic soda allegedly began coordinating a shutting down of hundreds of tons of capacity in late 2015 in order to create an artificial shortage of the commodity, Perry’s claims. After that, the industry allegedly began to see dramatically improved profit margins. Defendant Olin Corp. purportedly saw profits increase 250 percent between 2015 and 2017, mainly due to the caustic soda price increase.

During the last four years, customers purchasing caustic soda have allegedly been told the supply was “tight” and the product was “scarce” to the point that customers were – and many allegedly still are – on strict allocations, which means they are not allowed to purchase any more caustic soda annually than they have in the past.

Perry’s accuses the defendants of meeting in secret during annual industry meetings. The ice cream maker claims decisions to slow or stop production and to artificially manipulate prices were made at the American Fuel & Petrochemical Manufacturers annual meeting.

If the allegations are true, the caustic soda manufacturers may be liable for violating federal antitrust laws such as the Sherman Act, which prohibits companies from conspiring to control trade.

The Caustic Soda Price Increase Lawsuit is Perry’s Ice Cream Company Inc., et al. v. Olin Corporation, et al., Case No. 1:19-cv-00403, in the U.S. District Court for the Western District of New York.

Join a Free Caustic Soda Class Action Lawsuit Investigation

If your business has purchased caustic soda since 2015, you may have been affected by this alleged price-fixing scheme. Participating in this free caustic soda price-fixing class action lawsuit investigation may help you get compensation.

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This article is not legal advice. It is presented
for informational purposes only.