Appeals Court Reinstates Suit Alleging Monopolistic Practices by Johns Manville

The 10th U.S. Circuit Court of Appeals in Denver determined that a trial judge in the same city made an error in dismissing the lawsuit filed by competitor Chase Manufacturing, which is also known as Thermal Pipe Shields (TPS).

In 2018, TPS introduced a calcium silicate product from China into the market, claiming it was not only superior but also 20% to 25% more cost-effective. It contends that Johns Manville utilized threats to deter distributors from purchasing TPS’s calcium silicate, allowing Johns Manville to maintain a substantial 97.3% share of the market by August 2021.

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Circuit Judge Gregory Phillips, writing on behalf of a panel of three judges at the appeals court, identified substantial evidence suggesting that Johns Manville employed its monopoly power to coerce distributors. This was supported by testimony revealing that Johns Manville experienced significantly higher gross margins on calcium silicate compared to other products facing stronger competition.

Judge Phillips also pointed to an email sent shortly after TPS entered the market, in which Johns Manville advised sales staff to potentially adopt aggressive tactics and warn distributors about potential significant changes to their relationship if they opted for TPS’s product.

“Considering the evidence in the light most favorable to TPS, we interpret JM’s actions as forcing distributors into a dilemma: cease business with TPS or lose access to JM’s extensive thermal-insulation inventory,” Phillips wrote in his decision.

The appeals court additionally upheld the dismissal of the claim asserting that Johns Manville might have linked the sale of other products to distributors’ agreements not to purchase TPS’s calcium silicate.

Source: WSAU