Steel Industry Insight Uncategorized

Customer sues Nucor-Yamato for unfair pricing

On June 22, J.D. Fields & Co. Inc., a distributor of pipe and steel piling products, filed a $40 million lawsuit against its steel piling supplier Nucor-Yamato, a subsidiary of Charlotte, North Carolina-based Nucor Corporation. In the suit, J.D. Fields claims Nucor-Yamato consistently gave Skyline Steel lower prices, giving the company an unfair competitive edge. Interestingly, Skyline Steel was a subsidiary of ArcelorMittal, but was recently acquired by Nucor Corporation earlier this month. The acquisition closed just one day before J.D. Fields filed the suit.

According to news outlets over the past week, Nucor-Yamato has vehemently denied the claims and promised to challenge them.

The lawsuit states that in May 2005, “Fields and Nucor-Yamato entered into a seven-year supply agreement in which Nucor-Yamato agreed to be Fields’ exclusive supplier and Fields agreed to purchase its requirements for structural steel products to be sold by Fields in North America.”

The fifteen page brief included multiple instances in which Fields felt that its competitor, Skyline Steel, was given an unfair advantage.

Fields claimed that it repeatedly asked Nucor-Yamato for assurance that it received the same pricing as Nucor-Yamato’s other distributors, but in June 2010, “Fields placed an order for 14” and 10” H-pilings with Nucor-Yamato. Nucor-Yamato sent back a sales order acknowledgement indicating a shipment to Skyline of the same products. While Nucor-Yamato had provided a quote to Fields at which product was made available by Fields at an effective price of $34.00 cwt. ($750/mt or $680/nt), and acknowledgment Nucor-Yamato made to Skyline reflected a purchase prices of only $32.00 cwt. ($705/mt or $640/nt). The difference of $2.00 cwt. ($44/mt or $40/nt) on that order alone amounted to a price differential of over $20,000.” Fields said that since then, it learned that Nucor-Yamato often gave Skyline preferential pricing of at least $2.00 cwt. on other sales, giving Skyline a competitive edge when the two companies competed for projects.

“Nucor-Yamato actively worked with Skyline to undercut Fields in the relevant market on its price quotes for these projects by misrepresenting the availability of structural steel products such as H-piles.”

Fields said it lost out on a highway interchange project in San Bernardino County, California in July 2009 because both the mill price and transportation costs Nucor-Yamato offered Skyline were lower than those offered to Fields. In another case, the suit says Nucor-Yamato refused to offer price quotes for Fields to bid on projects in Puerto Rico, preventing Fields from even competing. “Nucor-Yamato had effectively given Skyline an ‘exclusive’ with respect to supplying H-pile steel for jobs in Puerto Rico.”

The lawsuit claims violations of the Clayton Act, the Sherman Act and the Robinson-Patman Act, in addition to tortious interference, conspiracy, fraud and breach of contract. Fields has asked the court for $10 million in damages and another $30 million in treble damages for alleged antitrust violations as well as other damages.

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