Pacific Steel Group Sues CMC & Danieli Sued for Monopolization
On October 30, 2020, Pacific Steel Group, a steel rebar fabricator located in San Diego in California sued US’s largest manufacturer and fabricator of steel
rebar Commercial Metals Company in federal court in San Francisco seeking damages and injunctive relief for violations of antitrust and other laws. Pacific Steel Group alleges that Commercial Metals Company conspired with Danieli Corporation to prevent Pacific Steel Group from building a Danieli micro mill to begin manufacturing its own rebar. Pacific Steel Group further alleges that CMC has priced its fabrication and installation services below cost for the purpose of injuring Pacific Steel Group and destroying competition in violation of two California statutes.
According to the complaint filed on Friday, CMC and Gerdau Reinforcing Steel, both in the rebar fabrication and installation business, responded to PSG's entry by bidding on construction projects below cost to try to starve PSG of revenues and drive it from the market. As alleged, PSG's more efficient operations enabled it to nonetheless win bids and establish itself in the marketplace. In 2019, PSG launched a plan to become an even more efficient competitor by building its own steel rebar mill. Such vertical integration had major cost-saving advantages for PSG, but would have created competition for CMC in rebar manufacturing, the complaint alleges. The only commercially viable way for PSG to manufacture rebar was to build a state-of-the-art, environmentally-friendly micro mill in California, according to the complaint. Micro mills are the most efficient rebar manufacturing mills in the world, and Danieli is the only company that has built them. The complaint alleges that when CMC learned of PSG's plans, it decided to build a Danieli micro mill in Mesa, Arizona, and secured Danieli's agreement not to build another micro mill for any competitor within a 500-mile radius of Rancho Cucamonga, California for 69 months. This agreement effectively blocks PSG and other potential competitors from manufacturing rebar for years.
Pacific Steel Group is a leading independent reinforcing steel fabricator and placer with offices throughout the Western United States. Founded in 2014 by industry veterans, PSG brings the expertise and experience of a large fabricator & installer with unparalleled independence, flexibility, and responsiveness.