The U.S. Department of Justice (DOJ) has launched an investigation into allegations of price-fixing in the PVC pipe market, following a class action lawsuit filed in August 2024. The lawsuit accuses leading manufacturers of conspiring to fix, raise, and stabilize the prices of PVC products used in drinking water systems and bundled wire housing.

The lawsuit names ten major PVC pipe manufacturers and information exchange firm OPIS as defendants, while three prominent distributors — Core & Main, Ferguson, and Fortiline Waterworks (a subsidiary of Reece) — are identified as co-conspirators. These distributors allegedly colluded with manufacturers to manipulate pricing in violation of antitrust laws.

The defendants include major US PVS manufacturers including Atkore, Cantex, Diamond Plastics, IPEX, JM Eagle, National Pipe and Plastics, Otter Tail, Prime Conduit, Southern Pipe, and Westlake. These companies together control a significant portion of the U.S. PVC pipe market.

Although the DOJ has yet to make any public statements regarding the investigation, Otter Tail, one of the defendant manufacturers, disclosed in a recent SEC filing that it received a grand jury subpoena. The subpoena demands documents related to the manufacturing, selling, and pricing of PVC pipe products.

Otter Tail, which owns Northern Pipe, expressed in its filing that the ongoing probe could have a material impact on its financial standing. The company stated it would "defend itself accordingly," emphasizing that it had factual and legal defenses to the allegations.

The DOJ's investigation follows multiple legal actions against the PVC industry. In addition to the class action lawsuit, in November, the Erie County Water Authority in New York filed a nearly identical lawsuit against seven of the same PVC manufacturers and OPIS. The Erie County suit also named the same three distributors as co-conspirators but excluded others such as Cantex, Prime Conduit, and Southern Pipe.

While the distributors named in the lawsuits have not been formally charged, Core & Main responded to the allegations through a statement to the Financial Times. A spokesperson for the company strongly denied any involvement in price-fixing, calling the accusations "baseless" and reaffirming the company’s commitment to integrity and transparency in its business practices. MDM is not aware of any further comments from Ferguson or Fortiline Waterworks.

The Case

A class action lawsuit was filed on August 23, 2024, accusing leading PVC pipe manufacturers of exploiting supply chain disruptions to fix prices and overcharge customers for municipal water and electrical conduit pipes. The suit claims that manufacturers and distributors colluded to raise and stabilize prices through OPIS, a commodity pricing service. The lawsuit alleges that they coordinated price increases and shared sensitive pricing information to maintain inflated prices.

If the companies named in the lawsuit are found guilty, they could face substantial financial penalties, including heavy fines and civil damages, potentially amounting to triple the overcharges incurred by customers. Reputational damage may result in lost business, partnerships, and a decline in stock prices. The companies could face additional civil lawsuits, industry disruptions, and increased regulatory scrutiny, leading to higher compliance costs and operational challenges. The legal and financial fallout could significantly impact their market position and future profitability.