April 15 2015. Birmingham, AL

McWane, Inc. is extremely disappointed with the ruling by the United States Court of Appeals for the Eleventh Circuit. The Court ignored United States Supreme Court rulings and other legal precedent that required dismissal of this last remaining claim because McWane’s competitor, Star Pipe, was able to rapidly enter and steadily expand its market share. The Court also gave unjustified deference to a divided Federal Trade Commission’s conclusions, that were not based on any economic evidence but upon speculation and conjecture.

“We are very disappointed that the Court deferred to the FTC’s unsupported and erroneous findings, and allowed the FTC to ignore established antitrust law and basic economic principles. The FTC’s sharply split decision is yet another example of a regulatory agency unreasonably stretching the boundaries of its power in a way that discourages companies from investing in the US and creating jobs,” said G. Ruffner Page, President of McWane, Inc. “This last claim, like all the others, should have been dismissed. We will appeal.”

As the Eleventh Circuit acknowledged, one of the FTC’s commissioners, Commissioner Joshua D. Wright, flatly rejected the divided FTC’s conclusion, because it conflicted with long-standing legal precedent and lack any sound economic basis. Specifically, Commissioner Wright concluded that “Complaint Counsel fails totally to establish, as it must under the antitrust laws, that McWane’s conduct harmed competition” and “[t]he record is clear there is no such proof.” Commissioner Wright found Complaint Counsel’s legal arguments “at best, question begging, and, at worst, misleading,” and further noted that what was “strikingly absent” from the Commission’s decision was “any evidence establishing the requisite analytical link between what the Commission describes as ‘foreclosure’ and harm to competition.” Thus, given the “dearth of record evidence demonstrating McWane’s conduct has had an adverse effect on competition,” Commissioner Wright dissented from the Commission’s decision, finding that Complaint Counsel failed to establish a necessary element of a monopolization claim: “that McWane’s conduct was [actually] exclusionary.”

Commissioner Wright’s conclusions were consistent with those of former Commissioner Rosch, who dissented from the FTC’s pursuit of this claim at the outset, concluding that there was nothing illegal or unfair about McWane’s rebate program. When the complaint was filed by the FTC he expressed his view that: “I do not think that the Complaint against McWane adequately alleges exclusivedealing as a matter of law. In particular, there is case law . . . blessing the conduct that the complaints charge as exclusive dealing.”

Likewise, Commissioner Wright found “undisputed evidence that Star was able successfully to enter the domestic fittings industry and to succeed in expanding its business once it did enter,” and thus the “more plausible inference to draw” from Complaint Counsel’s “very weak” “indirect evidence” is that McWane’s rebate policy “had almost no impact on Star’s ability to grow its business, which, under the case law, strongly counsel’s against holding that McWane’s conduct was exclusionary.”“

Our modest, short term rebate was a price cut designed to benefit and reward our customers for helping us save the jobs of our employees during a difficult economic time, and keep our more efficient, domestic foundry operating, when every other domestic manufacturer had given up and taken their jobs overseas,” said Page. “To characterize that as unfair competition under Section 5 flies in the face of the overwhelming evidence at trial and established judicial precedent. And to claim that it somehow excluded Star and injured competition is out and out nonsense, as Commissioner Wright pointed out.

”The FTC’s theory, and ultimately the Eleventh Circuit’s opinion, rests upon multiple speculative assumptions, not evidence, that the foreign competitor would have bought or built its own foundries, operated those foundries more efficiently, and someday lowered its prices despite rising manufacturing costs. This suggestion ignores the realities and history of the fittings market, including the fact that domestic manufacturing of waterworks fittings has been in severe decline for over a generation. In the 1980s, almost 100 percent of waterworks fittings were domestic and manufactured in multiple foundries around the country. By 2008, the percentage of domestically manufactured fittings had declined to less than 25 percent. In the face of this dramatic decline in sales, all of the other manufacturers of domestic fittings closed their foundries and moved their production overseas. McWane alone continued to fight for American jobs as the only remaining US manufacturer of a full range of small, medium, and large waterworks fittings. The claim that a foreign importer would have invested millions of dollars of scarce capital in this declining industry to take advantage of the one-year ARRA program lacks support and is completely illogical.

About McWane Inc.

McWane, Inc. is a family-owned business based in Birmingham, Alabama, with companies across the United States and the world.  At the McWane Family of Companies, we cast ductile iron products--including pipe, valves, hydrants, fittings, and plumbing products--manufacture fire extinguishers, fire suppression systems, steel pressure vessels, and build network switches and monitoring equipment.  We are the leader in delivering clean, safe drinking water around the world while focusing on the safe, environmentally-friendly manufacturing of our products.  With more than 6,000 team members McWane has a longstanding commitment of support to the communities where we live and work.