Commercial Metals Faces Antitrust Lawsuit Over Rebar Prices

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Commercial Metals (CMC.N), a major player in the steel rebar industry, is set to proceed to trial in an antitrust lawsuit accusing the company of obstructing a competitor’s efforts to establish a mill in Southern California, thereby allegedly inflating rebar prices.

In a recent ruling unsealed on Friday, U.S. District Judge Haywood Gilliam Jr. in Oakland, California, rejected Commercial Metals’ request for summary judgment in the 2020 lawsuit filed by Pacific Steel. The judge also denied Pacific Steel’s summary judgment request, paving the way for a trial scheduled for October. Pacific Steel contends that Commercial Metals’ actions resulted in overpayments of $50 million annually by purchasers of rebar.

Commercial Metals, headquartered in Irving, Texas, and Pacific Steel of San Diego did not immediately respond to requests for comment on Monday. Commercial Metals has consistently denied any wrongdoing in this matter.

Rebar, essential for reinforcing concrete in construction, is a critical material in the building industry. Commercial Metals, a leading U.S. manufacturer, reported nearly $860 million in net earnings for fiscal year 2023.

Pacific Steel, established in 2014, alleges that it had an agreement with Danieli Corp to establish a rebar mill in Southern California, aiming to serve large regions including California, Arizona, Nevada, and Utah. According to Pacific Steel, Commercial Metals influenced Danieli to withdraw from the agreement with Pacific Steel, delaying the project. Notably, Danieli is not named as a defendant in the lawsuit.

Pacific Steel claims that Commercial Metals’ actions effectively excluded a significant, lower-cost competitor from entering the market. In response, Commercial Metals stated in a filing that its agreement with Danieli only addressed one of several potential methods for producing rebar.

Both Pacific Steel and Commercial Metals indicated to the judge last month that they were not optimistic about settling the case before trial.

The lawsuit is titled Pacific Steel Group v. Commercial Metals Co., and it is being heard in the U.S. District Court for the Northern District of California under case number 4:20-cv-07683.

Legal representation includes Benjamin Brown of Cohen Milstein Sellers & Toll and Christopher Wheeler of Farella Braun + Martel for Pacific Steel, and Steve Bizar of Dechert and Bonnie Lau of Morrison & Foerster for Commercial Metals.

This legal battle underscores significant issues in the competitive dynamics of the rebar industry, highlighting the complexities involved in establishing new manufacturing facilities in key markets.