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Lawsuits Accuse Drywall Manufacturers of Fixing Prices
By Robert J. Boumis
Most people never think of building materials unless something goes wrong. Antitrust laws are the same way. Recently, class action lawsuits over drywall antitrust claims have given people cause to notice both.
After the burst of the housing bubble, drywall companies that produced building materials found themselves with diminished profits. Many drywall manufacturers had to find ways to increase profit margins to stay afloat. It appears that in some cases, companies may have resorted to methods of questionable legality to do so, harming consumers’ wallets in the process.
In the United States, a number of laws and government agencies exist to regulate trade, and make sure no one company becomes powerful enough to form monopolies and abuse consumers. The statutes in the United States to promote fair competition include the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. These are enforced by the United States Department of Justice (DOJ), the Federal Trade Commission (FTC), as well as state and local governments. Consumers and other private parties also help enforce antitrust laws through actions like civil litigation. The entire point of these laws is to prevent any one entity from having enough economic power to control a particular market.
Nine companies control 99% of the production of drywall in the United States. Drywall, also called gypsum board or sheet rock, is a major construction material used to build walls in homes. In 2012, the price of sheetrock suddenly went up 35 percent, virtually overnight, across different brands and manufacturers.
The hike certainly appeared coordinated. Various distributers, contractors, and others who purchased drywall have filed antirust lawsuits and class action lawsuits against drywall producers. These lawsuits allege that the major drywall producers in the United States worked together to set the price of drywall, bypassing market competition. This practice is called price-fixing.
In theory, companies that engage in price-fixing can set any price they want, increasing the cost of a supply independent of demand. While the different companies are separate entities, price-fixing allows a group of companies to form a functional monopoly, being able to extort whatever price they want for their goods.
Various drywall price-fixing lawsuits against sheet rock manufacturers have been consolidated into a multi-district litigation or MDL. This type of legal action is similar to a class action lawsuit. However, while class action lawsuits are typically run by a single lawyer or team of lawyers for all of the plaintiffs, in MDLs each plaintiff typically retains their own council. The lawsuits in the drywall antitrust MDL allege a coordinated collusion between the companies that manufacturer drywall in the United States. The lawsuits’ allegations hold that manufacturers also planned future hikes in the price based on their earlier “success” in fixing the price of this ubiquitous building material.
If you have purchased a new home, renovated your home, or purchased drywall since 2008, you may have paid too much for your building materials. Consumer advocates are looking for people who may have been overcharged for their drywall as a result of this alleged price-fixing scheme. If you’ve purchased drywall directly, or indirectly through renovations or building, visit the Drywall Price-Fixing, Antitrust Class Action Lawsuit Investigation and enter your information for a free legal review. You may be entitled to compensation.
Updated May 27th, 2013
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