An antitrust lawsuit against a chemical manufacturer is time barred following a Sixth Circuit ruling. Affirming dismissal in Z Technologies v. Lubrizol, the Sixth Circuit decided several statute of limitations issues applicable in antitrust cases arising out of a merger or acquisition.
Z Technologies alleged that the Lubrizol Corporation established a monopoly in the market for petroleum wax-based oxidates when it acquired the business of a rival company in 2007. The acquisition included a non-compete clause. After the acquisition, Lubrizol allegedly increased prices on its products several times. Z Technologies purchased the (now more expensive ) oxidates as an input for its anti-corrosion products. Over 5 years after the acquisition, Z Technologies sued Lubrizol under the Sherman Act, Clayton Act, and state antitrust laws Those claims, however, are subject to a 4-year statute of limitations (plus a brief suspension during proceedings by the Federal Trade Commission). Z Technologies nonetheless disputed that its suit was out of time.
With respect to the Sherman Act claim, Z Technologies theorized that price increases after the acquisition constituted a “continuing violation” which restarted the clock. The Sixth Circuit disagreed, holding that the continuing violations doctrine does not apply to price increases following a merger or acquisition. The court reasoned that the harm in such cases is the merger itself (which establishes the monopoly from the outset). Even were the doctrine to apply, said the court, neither price increases nor implementation of a non-compete clause constitute the “overt acts” necessary to restart the clock. Such acts constitute reaffirmations of the previous acquisition rather than new and independent injuries.
With respect to the Clayton Act claim, Z Technologies argued that Lubrizol’s alleged use of the non-compete clause after the acquisition constituted a “hold and use” violation extending the statute of limitations. The argument is similar to a continuing violations theory: a new and different use of an acquired asset can constitute a new injury. The Sixth Circuit again disagreed, holding that enforcement of a contractual provision agreed to at the outset cannot constitute a “new” use. In rejecting these applications of the continuing violations and hold-and-use doctrines, the Sixth Circuit set clear boundaries on statutes of limitations arguments in antitrust cases.