On October 30, 2020, Cohen Milstein and co-counsel, on behalf of Pacific Steel Group, a steel rebar fabricator located in San Diego, California, filed a lawsuit against Commercial Metals Company, a multi-national steel conglomerate and the nation’s largest manufacturer and fabricator of steel rebar, in federal court in San Francisco seeking damages and injunctive relief for violations of antitrust and other laws.
Pacific Steel Group (PSG) was founded in 2014 as a fabricator and installer of rebar in California.
PSG alleges that Commercial Metals Company (CMC) conspired with Danieli Corporation to prevent PSG from building a Danieli micro mill to begin manufacturing its own rebar. PSG further alleges that CMC has priced its fabrication services below cost for the purpose of injuring PSG and destroying competition in violation of two California statutes.
According to the complaint, CMC and Gerdau Reinforcing Steel, both in the rebar fabrication business, responded to PSG’s entry by bidding on construction projects below cost to try to starve PSG of revenues and drive it from the market. As alleged, PSG’s more efficient operations enabled it nonetheless to win some bids and grow slowly, until, in 2019, it decided to become an even more efficient competitor by building its own steel rebar mill. Such vertical integration had major cost-saving advantages for PSG, but would have created competition for CMC in rebar manufacturing, the complaint alleges. The only commercially viable way for PSG to manufacture rebar was to build a state-of-the-art, environmentally-friendly micro mill in Southern California, according to the complaint. Micro mills are the most efficient rebar manufacturing mills in the world, and Danieli is the only company that has built them.
The complaint further alleges that when CMC learned of PSG’s plans, it decided to build a Danieli micro mill in Mesa, Arizona, and secured Danieli’s agreement not to build another micro mill for any competitor within a 500-mile radius of Rancho Cucamonga, California for 69 months. This agreement effectively blocks PSG and other potential competitors from manufacturing rebar for years.
Case name: Pacific Steel Group v. Commercial Metals Company, et al., Case No. 3:20-cv-07683, United States District Court for the Northern District of California