A 2019 antitrust lawsuit against Berkshire Hathaway's Johns Manville (JM) brought by rival calcium silicate producer, Chase Manufacturing, also known as Thermal Pipe Shields (TPS), has been revived. The Tenth Circuit U.S. Circuit Court of Appeals found that, in light of the evidence, a district judge erred in granting summary judgment to JM (Chase Manufacturing Inc. v. Johns Manville Corp., 10th Cir., No. 22-1164).
At issue is whether Johns Manville, a unit of billionaire Warren Buffett's Berkshire Hathaway, monopolized the market for calcium silicate, a substance used in thermal pipe insulation. Johns Manville had been the sole domestic manufacturer and supplier of calcium silicate for decades, facing no competition in selling its product to thermal pipe insulation distributors in the U.S., according to the complaint. That changed in 2018 when TPS entered the market with what it marketed as a superior and less expensive product imported from China.
Calcium silicate is used as a safe alternative to asbestos for high-temperature insulation materials. It's often used in industrial piping and equipment insulation. It can also be found in consumer products, like salt and antacids.
TPS accused Johns Manville of threatening to stop doing business with distributors if they bought TPS' calcium silicate. These alleged threats enabled Johns Manville to retain more than 97% of the market by August 2021, according to TPS.
The Court of Appeals wrote of sufficient evidence that JM used its monopoly power to coerce distributors into not buying TPS's competing product. The court noted that Johns Manville achieved much higher gross margins on calcium silicate than on other products when it faced more competition.
The Court of Appeals also cited an email sent when TPS first entered the market, in which Johns Manville told sales staff they might need to "bring the sword" and warn distributors that their relationship might change "significantly" if they bought TPS' product. The suit alleges JM took this action because it recognized the threat TPS's superior and less expensive product posed to Johns Manville's market share.
"Viewing the evidence most favorably to TPS, we see JM as leaving its distributors with an all-or-nothing choice: stop doing business with TPS or lose access to JM's enormous thermal-insulation inventory," the Court of Appeals wrote. The court remained the case back to the district court for further proceedings.
In its original 2019 complaint, TPS sought $60 million in damages. Well before becoming the leader in calcium silicate, throughout the 1900s, JM was the nation's largest manufacturer and distributor of asbestos products and raw asbestos. Withering under the weight massive asbestos injury litigation, the company filed for bankruptcy and created a trust fund for victims in 1988. Berkshire bought the company for $1.8 billion more than a decade later in 2001.
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