Legal case filed against E.I. du Pont Canada for possible price fixing
The first steps have been taken in the Ontario Superior Court of Justice that could see E.I. du Pont Canada Company (referred to as DuPont) involved in a possible class action case alleging that the g...
The first steps have been taken in the Ontario Superior Court of Justice that could see E.I. du Pont Canada Company (referred to as DuPont) involved in a possible class action case alleging that the giant manufacturer and distributor of engineering resins engaged in price fixing.
On Dec. 15, 2005 Axiom Plastics Inc. filed papers for a proposed class action, the first step in a possible class action lawsuit on behalf of all Canadian Tier Two plastics processors, alleging DuPont engaged in actions that artificially inflated the price of its certified engineering resins. These resins are used by Tier Two plastics processors in Canada in the manufacture of plastic parts, many of which are used by Tier One automotive suppliers.
The case is currently at the certification stage where a judge will decide if the case meets certain criteria for a class action lawsuit. That will likely be decided in three months time.
Specifically, Axiom is bringing the claim on behalf of “All purchasers in Canada since January 2000 of engineering resins, including Delrin and Zytel brand engineering resins, from DuPont or its authorized Canadian distributors for use in parts manufactured by such purchasers for supply to a Tier One automotive manufacturer.”
As well, the claim by Axiom alleges DuPont arranged with others to not only keep the prices of engineering resins artificially high, but to prevent or lessen the ability of the Tier Two plastics processors to find alternative and less costly sources for DuPont’s certified engineering resins. This is alleged to be contrary to Canada’s Competition Act, although none of the allegations in the claim have yet been proven in court.
The lawsuit further alleges DuPont entered into arrangements with certain Tier One manufactures that would require their Tier Two plastics processors to only use engineering resins supplied by DuPont or its distributors at the artificially high prices. In doing so, DuPont would then secretly remit to the Tier One manufacturers substantial monies, or kickbacks, as a result of the price fixing.
“This claim is geared towards obtaining compensation for what we allege is a long-standing practice of improper price inflation of engineering resins to the Tier Two suppliers,” said David Sterns, a lawyer with Sotos LLP in Toronto who is representing Axiom Plastics in the claim. “We are also hoping that it will change the way resin prices are imposed upon the Tier Two suppliers going forward.”
Roger Goodman, public affairs manager for E.I. DuPont Canada in Mississauga, Ont. said the company rejected the claims contained in the action initiated by Axiom.
“Quite simply, the claims are baseless,” Goodman added in a statement. “The picture of DuPont that they present is contrary to the facts, and does not reflect the manner in which the company and our employees strive to conduct business. We intend to defend ourselves vigorously.”
Perry Rizzo, president of the Aurora, Ont.-based Axiom Group Inc., of which Axiom Plastics Inc. is a division in Axiom Group, said he declined to comment as the case is before the court.