In re Sulfuric Acid Antitrust Litigation

Noranda, Inc., and Falconbridge, Ltd. (collectively, the Canadian producers) (defendants) were Canadian mining companies that produced sulfuric acid as a byproduct of their mining and smelting activities. Canadian laws required the Canadian producers to capture the sulfuric acid, but sulfuric acid was expensive to store and transport, and the market for it in Canada was small. To deal with their oversupply, the Canadian producers wanted to sell their sulfuric acid in the United States. Producers of sulfuric acid in the United States, where sulfuric acid was more expensive to produce, feared that the Canadian producers would drive them out of business, flooding the market with sulfuric acid and reducing prices. The Canadian producers entered into agreements with several United States producers, under which the United States producers would cease producing sulfuric acid and instead distribute the Canadian producers’ sulfuric acid. A group of chemical companies that purchased sulfuric acid (the chemical companies) (plaintiffs) filed a lawsuit in federal district court, alleging that the agreements between the Canadian producers and the United States producers constituted per se illegal price-fixing. The chemical companies believed that the agreements involved per se illegal price-fixing because they were meant to restrict output and increase prices of sulfuric acid. The district court dismissed the case, holding that the case could not proceed under a theory of per se illegality. The district court would have allowed the case under a rule-of-reason approach. The chemical companies appealed, arguing that the case should be reinstated under a theory of per se illegality.