Johns Manville’s Berkshire unit will face renewed antitrust lawsuit

Jonathan Stempel

(Reuters) – A federal appeals court on Monday reopened an antitrust lawsuit accusing Johns Manville, a unit of billionaire Warren Buffett’s Berkshire Hathaway, of monopolizing the market for calcium silicate, a substance used in thermal insulation of pipes.

The Tenth U.S. Circuit Court of Appeals in Denver found that a trial judge in that city erred in dismissing a lawsuit from rival Chase Manufacturing, also known as Thermal Pipe Shields (TPS).

TPS entered the calcium silicate market in 2018 with a product imported from China that it said was better and cost 20-25% less.

He accused Johns Manville of threatening to stop doing business with distributors if they purchased TPS calcium silicate, and that with these threats Johns Manville still controlled 97.3% of the market by August 2021.

Writing for a three-judge appellate court panel, U.S. District Judge Gregory Phillips found sufficient evidence that Johns Manville exerted monopoly power over distributors.

He cited testimony that Johns Manville enjoyed significantly higher gross margins on calcium silicate than on other products for which it had greater competition.

Phillips also cited an email shortly after TPS entered the market in which Johns Manville told sales staff that they might have to “bring a sword” and warn distributors that their relationship could change “significantly” if they purchased the TPS product.

“Looking at the evidence most favorably for TPS, we see that JM is leaving its distributors with an all-or-nothing choice: stop doing business with TPS or lose access to JM’s vast inventory of thermal insulation,” Phillips wrote.

The appeals court also upheld the dismissal of a claim that Johns Manville could have tied sales of other products to distributors who agreed not to purchase TPS calcium silicate.

TPS sought at least $60 million in damages.

“We are reviewing the feedback carefully and considering next steps,” Johns Manville spokesman Eric Brown said in an email.

Luke Hasskamp, ​​a lawyer for TPS, declined to comment.

Berkshire owns dozens of companies, including railroad insurers BNSF and auto insurers Geico, as well as stocks such as Apple. In 2001, it bought Johns Manville for about $1.8 billion.

The case is Chase Manufacturing Inc v. Johns Manville Corp, 10th U.S. Circuit Court of Appeals, No. 22-1164.

(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)