In re: Pool Products Distribution Market Antitrust Litigation
An Edgeworth Economics team—led by Chief Executive Officer Dr. John H. Johnson as the testifying expert and Partners Dr. Laila Haider and Michael Kheyfets—was retained on behalf of Pool Corporation and its subsidiaries (“Pool”) in a multi-district class action alleging violations of antitrust laws in regard to the distribution of products used for the construction and maintenance of swimming pools (“Pool Products”). Direct purchaser plaintiffs (“DPPs”)—which include pool builders, pool retail stores, and pool service and repair companies—and indirect purchaser plaintiffs (“IPPs”)—who are pool owners that purchased Pool Products—alleged that Pool entered into separate vertical agreements with the three largest manufacturers of Pool Products to restrict access to supply from the manufacturers and to foreclose competitors from selling to Pool’s customers. Plaintiffs also alleged that Pool monopolized and attempted to monopolize the distribution channel by acquiring rival distributors and entering agreements with the manufacturers to exclude Pool’s rivals.
The court dismissed many of the claims, but allowed five of them to survive motions to dismiss: (1) a Section 1 claim involving a horizontal agreement between Pool and the manufacturers; (2) three Section 1 claims involving vertical conspiracies to exclude Pool’s competitors; and (3) a Section 2 attempted monopolization claim. Pool moved for summary judgment on each of the surviving claims. DPPs, in turn, moved for class certification.
The Edgeworth team provided economic analyses of class certification, liability, and damages. Those analyses showed plaintiffs could not demonstrate economic impact on a class-wide basis. Moreover, plaintiffs’ liability theories were not consistent with the economics of distribution for Pool Products. And a formulaic method to calculating damages could not be reliably constructed on the basis of class-wide proof.
In January 2016, Judge Sarah S. Vance, Chief Judge of the US District Court for the Eastern District of Louisiana, granted Pool’s summary judgment motion on horizontal conspiracy claim. The judge found insufficient evidence of a price-fixing conspiracy between Pool and the manufacturer defendants. In April 2016, Judge Vance granted summary judgment on the vertical conspiracy claims. The court found that none of the three alleged vertical conspiracies injured competition. Then, in July 2016, Judge Vance granted summary judgment on the attempted monopolization claim. The court found the plaintiffs did not prove the alleged national geographic market existed, nor that Pool had a dangerous probability of monopolizing the market.
In failing to find triable issues of fact, Judge Vance often cited Edgeworth’s analyses. For example, “Dr. Johnson’s evidence of predominately local buying power was probative” on the issue of market definition. Similarly, the myriad examples provided of local distributors convinced the court that barriers to entry were not significant enough “to trigger judicial concern.”
The case is In re: Pool Products Distribution Market Antitrust Litigation, Case No. 12-md-2328-SSV (E.D. La. 2012). Both DPPs and IPPs have dropped their appeals to the United States Court of Appeals for the Fifth Circuit.