In a fairly undramatic fashion, it seems the anti-trust case involving megadistributor PoolCorp has ended.
“This judge worked very hard to understand both the allegations and the actual facts and appropriately came to the conclusion that the evidence did not support the allegations,” said David Bamberger, PoolCorp’s attorney, a partner with DLA Piper, based in its Washington, D.C. office.
There was no big pronouncement. There was no big settlement.
Instead, the case has been decided by the gradual dismantling of accusations by a series of summary judgments. After a general winnowing down of accusations, plaintiffs were left with three claims, each of which has been thrown out. First, in January, a summary judgment was given for the accusations of a horizontal conspiracy between PoolCorp and the manufacturers to fix free freight minimums. Then in April, the same was issued for three vertical conspiracy accusations, claiming that PoolCorp and each of the Big 3 manufacturers had conspired to exclude other distributors from the market. Another decision disallowed the testimony of a key expert witness. Then on July 1, Judge Sarah S. Vance of the United States District Court, Eastern District of Louisiana, disabled the final accusations – those of attempted monopolization.
“There’s no basis for [the accusations],” said Manuel Perez de la Mesa, CEO of Covington, La.-based PoolCorp. “The allegations were a fishing expedition, and they fished and they fished and they fished – and they found no fish because there weren’t any to be found.”
The case began in 2011, immediately after PoolCorp entered into a settlement with the Federal Trade Commission. Within a matter of days, lawsuits in various states were filed. The following year, after the lawsuits were consolidated and plaintiffs stated their intent to seek a class action, the Big 3 manufacturers – Pentair Aquatic Systems, Hayward Pool Products and Zodiac Pool systems - were named as co-defendants, accused of cooperating with PoolCorp’s alleged anti-competitive behavior.
Eventually the Big 3 settled – Hayward and Zodiac together, since they entered into their settlements relatively close together; Pentair later.
“They had their own motivations and they each individually made a business decision,” Perez de la Mesa said. “… and that’s what the plaintiffs attorneys are seeking at the outset.
All the while PoolCorp CEO Manuel Perez de la Mesa vowed to see the case to fruition. “When you are falsely accused of something or there are allegations which are completely false, and they’re made and you know they’re false, in principle you want to make sure that the record shows that … the allegations did not have any merit whatsoever,” Perez said.
“But at the end of the day, when the facts and truth come out, then you’re somewhat vindicated.”
While the series of summary judgments has been issued, the judge has not declared the case over. Bamberger has filed a request that the judge issue a separate order stipulating that the case has gone in PoolCorp's favor.
Perez said that the decision came after much deliberation and were based on the facts of the case. He said plaintiffs were able to access millions of documents and pieces of correspondence, and that the case involved approximately 90 depositions. “It was incredible how much fishing was done,” he said.
He said if the case had merit, more industry firms would have signed on as plaintiffs. “Well over 99.9 percent of our customers saw this for what it was, and despite repeated solicitations on the part of the plaintiffs attorneys or their agents, refused to join the lawsuit,” he said. “I am very grateful for the fact that they have the wisdom to see things as they are and not to fall for a prank such as this.”
This latest decision addressed claims that PoolCorp attempted to create a monopoly. Plaintiffs claimed that because of PoolCorp’s dominant industry presence – they said the megadistributor’s scale matched that of the 48 competitors combined – it was able to pressure the Big 3 into restricting sales to PoolCorp rivals. They claimed that PoolCorp accounted for 47 percent of Pentair’s sales, 35 percent of Hayward’s and 41 percent of Zodiac’s.
Nine specific instances were alleged in which PoolCorp compelled manufacturers to restrict sales to new distributors. Plaintiffs said these alleged instances pointed to a widespread pattern – a claim the judge said was made without factual support. They also said PoolCorp tried to pressure Master Pools Guild into denying two distributors the ability to participate in its vendors program.
“Plaintiffs also discuss a number of other types of conduct by [PoolCorp], the exclusionary nature of which plaintiffs do not make clear,” the judge wrote.
The plaintiffs also said that, in three instances, PoolCorp was privy to rebates not available to any other distributor, placing others at a disadvantage at a time when price increases were widespread.
They also accused the distributor of pressuring manufacturers to enforce their minimum advertised prices (MAP) and lowest acceptable advertised price (LAAP) programs. Even if this were true, the judge said, this didn’t support the accusations. “[PoolCorp] points out … that the MAPP/LAAP policies applied to the price at which dealers could advertise their products, not the prices at which distributors could sell their products,” the judge wrote.
For monopolization claims to stand, it must be proven that anticompetitive or predatory behavior took place, that there was an intent to form a monopoly, and that the alleged behavior adversely impacted competitors. PoolCorp argued that the plaintiffs did not define a relevant product or geographic market and could not prove that it had “a dangerous probability of achieving monopoly power” or that the alleged conduct could have injured competitors. Judge Vance agreed.
“I’m glad that it happened in summary judgment as opposed to going to trial, because it would have cost us more to have gone to trial,” said Perez de la Mesa. “But there was no basis for any of the allegations in the first place, and therefore [it was] just a matter of time before the facts surfaced.”
Perez de la Mesa said the only change his company has had to make regarding this issue of anti-trust law came from the settlement PoolCorp reached with the Federal Trade Commission, which required the company to provide yearly training to its managers regarding anti-trust matters. Regarding the FTC settlement, he maintains that his company did not commit any wrongdoing there, either.
Plaintiffs have until August 1 to appeal. Their attorneys declined to comment for this piece, still citing pending litigation.
“When you’re falsely accused you’re hurt,” de la Mesa said. “And that’s what I thought was morally wrong, because there was no basis for it. But at the end of the day, from a business standpoint, we’re trying to serve our customers the best we can …”
