Antitrust - Graco Inc. v. PMC Global, Inc., et al., No. 3:08-CV-01304 (FLW) (D. N.J. June 30, 2008)
Introduction
On June 30, 2008, Gama Machinery USA, Inc. (“Gama”) filed counterclaims against Graco Inc. and Graco Minnesota Inc. (collectively, “Graco”) in Graco’s lawsuit,
filed in the United States District Court for the District of New Jersey, against Gama and others that alleges theft of trade secrets, breaches of contract and unfair competition.
Alleged Antitrust Behavior
According to its counterclaims, Graco, through a series of acquisitions between December 2004 and December 2007, has established a monopoly position in the market for “in-plant
polyurethane processing equipment (‘IPPE’)….” Gama alleges that “[t]here is a distinct market for IPPE materials and equipment, with substantial technical barriers to entry.”
Gama alleges that Graco has a “nearly 100% market share and no significant competitors in the IPPE space.” Gama further alleges that, in 2007, it was approached by Garraf Maquinaria S.A., (“Garraf”) a
co-defendant in the lawsuit, to distribute IPPE manufactured by Garraf. The counterclaims assert that Garraf has “a tiny foothold in the European market but essentially no market penetration in the United States.” According
to Gama, Graco’s response to Garraf’s attempts to enter the IPPE market was to engage in conduct that went “well beyond legitimate competition and into the realm of abuse of monopoly position.”
For example, Gama’s counterclaims allege that, in October 2007, Graco sent an open letter to all IPPE distributors that carried Graco products that threatened the possible elimination of distributorship agreements if distributors
began marketing “a competitive product line.” Citing Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 409 (2004), Gama asserts that Graco’s October 2007 is “actionable
as an illegal unilateral refusal to deal because it was sent to Graco’s prospective and current customers – including customers who were, at the time, carrying both Graco and Garraf products.” (Emphasis
in original).
Citing Graco’s October 2007 letter, as well as additional “false and predatory communications intended to block Garraf products from being distributed in the United States,” Gama’s counterclaims assert
causes of action for the unlawful acquisition and maintenance of monopoly power in the IPPE market in violation of Section 2 of the Sherman Act (15 U.S.C. § 2) and, alternatively, for attempted monopolization and conspiracy
to monopolize in violation of Section 2 of the Sherman Act. Under both federal antitrust counts, Gama seeks trebled damages pursuant to Section 4 of the Clayton Act (15 U.S.C. § 15). In addition, Gama’s counterclaims
include causes of action for tortious interference with business advantages, unfair competition, trade libel and disparagement and violation of the New Jersey Fair Trade Act (N.J. Stat. Ann. § 56:4-1).