Caustic Soda Conspiracy Class Action Lawsuit Filed By Soap Company

A Canadian soap company has filed a class action lawsuit accusing a group of defendants of engaging in a conspiracy to fix, raise, maintain and/or stabilize the price of caustic soda sold throughout the world, causing consumers to pay inflated prices for the products.

Caustic soda is a chemical known as sodium hydroxide (NaOH) and is commonly called lye. It is sold in liquid and solid forms. It is reportedly produced as a co-product of chlorine production from the electrolysis of salt water.

A variety of industries use caustic soda to create products, including paper, soaps and detergents, aluminum, pharmaceuticals, textiles, and other products.

Plaintiff Topher’s Beard Company is a sole proprietorship with its principal place of business in Brantford, Ontario. The company purchases caustic soda to use in the manufacture of the soaps and other bath products that it sells.

Class Action Lawsuit: Defendants Conspired to Increase Caustic Soda Prices

Topher’s Beard Company alleges the defendants and co-conspirators “participated in illegal and secretive meetings and made agreements relating to the prices, market share divisions, and production levels for Caustic Soda.”

According to the caustic soda conspiracy class action lawsuit, the defendants and co-conspirators intended that their conspiracy would result in caustic soda being sold at inflated prices.

The defendants named in the caustic soda conspiracy class action lawsuit include Olin Corporation, K.A. Steel Chemicals Inc., Olin Canada ULC, 3229897 Nova Scotia Co., Occidental Petroleum Corporation, Occidental Chemical Corporation, Oxy Canada Sales Inc., Westlake Chemical Corporation, Axiall Canada Inc., Shin-Etsu Chemical Co. Ltd., Shintech Incorporated, Formosa Plastics Corporation, and Formosa Plastics Corporation U.S.A.

The caustic soda conspiracy class action lawsuit also claims a variety of unnamed co-conspirators also engaged in the caustic soda conspiracy and seeks to hold them accountable for their role in the scheme.

Class Members of the proposed caustic soda conspiracy lawsuit include all persons in Canada who purchased caustic soda during the conspiracy period, which the statement of claim defines as “a period spanning from at least October 1, 2015 until the present.”

The Alleged Caustic Soda Price-Fixing Scheme

According to the caustic soda price-fixing class action lawsuit, there are several characteristics within the caustic soda industry that allowed the defendants and their co-conspirators to engage in the alleged price-fixing scheme.

Topher’s Beard Company notes that the defendants controlled a significant share of the caustic soda market internationally.

“Collectively, the Defendants are the major producers and suppliers of Caustic Soda in North America,” the caustic soda class action lawsuit says. “They are also among the largest producers in the world.”

“Given the concentration in the market, it would have been difficult for the proposed Class to avoid the effects of the Defendants’ conspiracy.”

Further, the plaintiff alleges that there are high barriers to entry in the market for the manufacture of caustic soda, making it less likely that new competitors will enter the market and undercut the defendants’ prices.

The plaintiff also points out that caustic soda is a commodity chemical and that different grades of the product are interchangeable. “As a result, price is the primary factor driving customer choice between Caustic Soda of the manufacturers and is the most important competitive factor for manufacturers of Caustic Soda,” the lawsuit argues.

Because demand for caustic soda is relatively inelastic and there is no viable substitute for the product, Topher’s Beard Company says that the defendants were able to inflate the prices during the conspiracy period.

“But for the illegal price-fixing conspiracy, the price of Caustic Soda would have been significantly lower, would have declined faster, would not have been stable, and/or would not have increased in the manner that it did,” the caustic soda class action lawsuit states.

Trade Association Meetings Allegedly Facilitated Scheme

According to the caustic soda conspiracy class action lawsuit, there are several industry-wide meetings facilitated by trade associations that enabled the defendants and their co-conspirators to collude about the pricing of caustic soda.

The complaint says that most of the defendants are members of these trade associations, which held multiple meetings and conferences attended by the defendants and their co-conspirators: American Fuel & Petrochemical Manufacturers, The Chlorine Institute, The Vinyl Institute, Association of Chemical Industry of Texas, Texas Chemical Council, Louisiana Chemical Association, and the European Petrochemical Association.

This caustic soda conspiracy class action lawsuit is not the first to be filed over price-fixing allegations. Another caustic soda price-fixing class action lawsuit was filed earlier this month in Quebec and seeks to represent a Class of Canada residents who purchased caustic soda and/or products that contain caustic soda since Oct. 1, 2015.

What are your thoughts about this alleged caustic soda conspiracy? Let us know in the comments section below.

Topher’s Beard Company is represented by Charles M. Wright, Linda J. Visser and Bridget M. Moran of Siskinds LLP.

The Caustic Soda Conspiracy Class Action Lawsuit is Topher’s Beard Company v. Olin Corporation, et al., Case No. T-1365-20, in Canada Federal Court.

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