Mar. 25, LA JOLLA, CALIF.: Thermal Pipe Shields, an innovator in the pipe insulation industry, recently filed an antitrust lawsuit against the dominant supplier, Berkshire Hathaway (BRK) company Johns Manville Corporation. Before Thermal Pipe Shields entered the market, Johns Manville had the market to itself. In independent tests, Thermal Pipe Shields’ product met or exceeded the industry standard and outperformed Johns Manville’s product in several ways and at a lower cost. But Thermal Pipe Shields was forced to file an antitrust lawsuit because Johns Manville, which controls 98% of the market, resorted to disparagement and threats to Thermal Pipe Shields’ customers in an effort to maintain its monopoly.
Washington state-based Chase Manufacturing, Inc., which does business as Thermal Pipe Shields, sued industry behemoth Johns Manville Corporation and its subsidiary, Industrial Insulation Group, LLC, in federal district court in Denver, Colorado, where Johns Manville is headquartered. The complaint alleges claims for monopolization and tying under Sherman Act Section 2, as well as claims for violations of the federal Lanham Act false advertising law, and state law claims for trade disparagement and tortious interference with contract.
At the heart of the lawsuit is the market for an insulation product called “calsil,” which is an insulation that is used for piping, tanks, and other industrial applications involving equipment that operate at temperatures up to 1200 degrees Fahrenheit. Because of its unique physical properties and uses, calsil is a distinct product market with no close substitutes.
Johns Manville dominates the calsil market.
According to the complaint, when Thermal Pipe Shields first decided to enter the calsil market, “Johns Manville immediately tried to disrupt and destroy Thermal Pipe Shields’ potential entry and its attempt to break the Johns Manville monopoly.” First, Johns Manville threatened a Thermal Pipe Shield’s officer, falsely accusing him of stealing confidential information and demanding that Thermal Pipe Shields not solicit any Johns Manville customers. Thermal Pipe Shields rejected this illegal invitation to not compete.
With its threats rebuffed, the complaint alleges that Johns Manville moved onto a series of more malicious attempts to prevent Thermal Pipe Shields from breaking into the market: First, it disparaged Thermal Pipe Shields to its customers. Then, Johns Manville leveraged its dominance in other product markets, threatening to cut off customers that were considering the new calsil competitor. Thermal Pipe Shields alleges that Johns Manville executives told its customers that if they purchased the competing product, Johns Manville would cut them off from certain essential products. In one instance, the executives told a customer that “We know you have been buying from Thermal Pipe Shields because we track their import records” before threatening to cut them off from other Manville products.
“This case shows our commitment to breaking the calsil monopoly in North America by introducing meaningful competition into this under-serviced and under-utilized market to our customers,” said David Shong of Thermal Pipe Shields after the lawsuit was filed.
The case is Chase Manufacturing Inc. d/b/a Thermal Pipe Shields v. Johns Manville Corporation and Industrial Insulation Group, LLC, No. 19-cv-00872 in the U.S. District Court for the District of Colorado.
Partner, Bona Law PC