On April 26, 2022, Judge Haywood S. Gilliam, Jr. of the United States District Court for the Northern District of California denied in part Defendants’ motion to dismiss this antitrust lawsuit against Commercial Metals Company, a multi-national steel conglomerate and the nation’s largest manufacturer and fabricator of steel rebar.
The lawsuit, brought on behalf of Pacific Steel Group, a steel rebar fabricator located in San Diego, California, seeks damages and injunctive relief against Commercial Metals Company for violations of antitrust and other laws.
Pacific Steel Group was founded in 2014 as a fabricator and installer of rebar in California.
On October 30, 2020, Pacific Steel Group, filed an antitrust lawsuit against Commercial Metals Company (CMC), a multi-national steel conglomerate and the nation’s largest manufacturer and fabricator of steel rebar, in federal court in San Francisco asserting that 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 (later acquired by CMS), both in the rebar fabrication business, responded to PSG’s entry by bidding on construction projects below cost to try to starve Pacific Steel Group of revenues and drive it from the market. As alleged, Pacific Steel Group’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 Pacific Steel Group, but would have created competition for CMC in the local rebar manufacturing market that CMC currently dominates, the complaint alleges. The only commercially viable way for Pacific Steel Group 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 Pacific Steel Group’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 CMC competitor within a 500-mile radius of Rancho Cucamonga, California for 69 months. This agreement effectively blocks Pacific Steel Group and other potential competitors from manufacturing rebar for years.
Original 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
Operative case name and new case number: Pacific Steel Group v. Commercial Metals Company, et al., Case No. 4:20-cv-07683-HSG, United States District Court for the Northern District of California