Three of the world’s largest potash miners have agreed to settle two multidistrict class action antitrust cases that accuse them of collectively reducing supply in order to inflate prices.
The settling defendants, Potash Corp. of Saskatchewan Inc., Minnesota-based Mosaic Co. and Calgary-based Agrium Inc., have agreed to pay $80 million to plaintiffs that directly purchased potash, a key agricultural fertilizer, which farmers use to enhance crop yields and fight crop diseases.
Businesses and individuals that rely on fertilizers indirectly affected by the increase in potash prices filed a separate complaint. The settling defendants have agreed to pay $17.5 million to settle the indirect purchaser claims.
The direct purchasers’ complaint in In re Potash Antitrust Litigation, in the U.S. District Court for the Northern District of Illinois, accuses eight Russian, Canadian, and American companies of using trade association meetings and an executive “exchange” program to collectively decrease the supply of potash.
According to that complaint, in one example of coordinated action, defendant JSC Silvinit announced a sinkhole would force them to halt excavation. Four of the other defendants then suspended their sales, citing Silvinit’s sinkhole as the reason.
Plaintiffs argue that the suspension of sales suggests a cartel existed. “Had the market truly been competitive, defendants would have the incentive to increase, not suspend, production to take advantage of their competitor’s reduced output,” the complaint stated.
According to plaintiffs, from 2003 and 2008 these halts in production were used to increase prices from $150 per ton to $1,000 per ton.
The non-settling defendants have a petition for writ of certiorari pending with the Supreme Court that seeks to resurrect a motion to dismiss the case under the Foreign Trade Antitrust Improvements Act (“FTAIA”), which bars claims involving foreign trade or commerce that does not sufficiently affect U.S. commerce.
Although the district court rejected the FTAIA argument, the U.S. Court of Appeals for the Seventh Circuit initially reversed the district court and dismissed the case. However, an en banc panel of the appeals court reversed its earlier ruling and reinstated the claims against the defendants.