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Dow to appeal court's order over alleged price fixing

May 17, 2013
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Dow Chemical headquarters
Dow was one of five firms alleged to have overcharged clients between 1999 and 2003 by conspiring to set prices for the foam materials.

U.S. giant Dow Chemical Co. has announced that it will appeal the order issued by a federal court last week to pay a fine of $1.2 billion for allegedly fixing prices of urethane chemicals, used for making foam products in cars, furniture and packaging.

The company confirmed in an official statement that it would challenge the court's decision. The fine was imposed by the U.S. District Court in Kansas City, as Dow was named one of the companies involved in a price fixing suit. It was one of five firms alleged to have overcharged clients between 1999 and 2003 by conspiring to set prices for the foam materials. Other manufacturers that allegedly participated in the scam have already settled the accusations but denied having taken part in the conspiracy. German chemical companies BASF Corporation and Bayer AG agreed to pay $51 million and $55 million, respectively, while U.S. manufacturer Huntsman International LLC will pay $33 million.

Dow stated that it believed the jury's findings should have led to a judgment in Dow's favor and that the class should have been decertified based on the Supreme Court's decision in the Comcast case, which involved the same plaintiffs' expert. The company had always denied being responsible for or involved in price fixing, Dow insisted and noted that the case had already been investigated by the U.S. Department of Justice between 2005 and 2007. That investigation was closed without any charges being pressed, the company pointed out.

RELATED: Dow receives $2.2 billion in legal settlement

In January 2013 Dow was put to trial in Kansas City and a month later a federal jury rendered a $400 million verdict against the chemical company, after ruling that it had conspired to fix prices of urethane. Last week, U.S. district judge John W Lungstrum denied the company's request to overturn that verdict and the $400 million in damages was tripled under U.S. antitrust law, bringing Dow's overall payment to $1.2 billion.

David Bernick, an attorney for Dow, commented that the company would appeal the judgment on the grounds that the statistical formula which an expert used to calculate the price-fixing was not reliable. Other grounds for appeal will also be featured in Dow's legal documents, Bernick said.

Meanwhile, the plaintiff's attorney, Joe Goldberg, expressed his satisfaction with the court's decision. During the investigation it was found that the conspiracy caused an estimated $400 million in damages to businesses around the United States, he stated.

Dow is still likely to face claims from numerous clients, mostly in the automobile and construction industries, who believe they have been overcharged by the company. They opted out of the class-action case and are likely to look for individual settlements. Dow explained that these clients were "large volume purchasers" and their claims referred to alleged price-fixing between 1999 and 2004. The company added that they were identical to the class-action suit.

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