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US foam buyers sue more producers

March 11/2011

(ICIS) -- US buyers have sued five more polyurethane (PU) flexible-foam producers, alleging that they conspired to fix prices and allocate the market, a development on which the companies had no immediate comment on Thursday. In the lawsuit, the foam buyers allege that the producers have been fixing prices since at least 1 January 1999. As a result, the buyers said they paid too much for foam, since the market was no longer competitive.


The alleged price fixing came to light in February 2010, when producer Vitafoam approached the anti-trust division of the US Department of Justice, saying it and others had illegally fixed prices.


Vitafoam has since been cooperating with investigators.


According to the buyers, about two to three times a year, the producers would allegedly discuss how they would allocate the market and raise prices.


These price hikes were often prompted by increases in the raw materials used to make foam, such as toluene di-isocyanate (TDI) and polyether polyols, the buyers said.


The producers viewed price fixing as a necessity because, the buyers allege, if the producers did not increase prices by the same percentage and at the same time, their initiatives would fail.


The producers even policed themselves to ensure that they all raised their foam prices, the buyers said. For example, the producers would share draft letters of proposals before announcing price increases.


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