Anti-Competition Claims and the Roofing Industry

By Trent Cotney, Cotney Construction Law.

Navigating anti-trust and restraint of trade regulations can be difficult for contractors and organizations. 

Most associations or groups have some form of an anti-trust policy which is recited or referenced at the beginning of meetings.  Rarely do issues surface like price fixing which implicate restraint of trade.  However, there have been several high-profile price fixing claims and suits in the roofing industry which underscore the importance of adhering to these policies when engaged in industry efforts.

In April 2019, a lawsuit was filed in the U.S. District Court for the Western District of Washington alleging that certain cedar shake companies conspired with the Cedar Shake & Shingle Bureau (CSSB) to raise the prices on cedar shake products.  CSSB is the primary trade association for cedar shakes and shingles in the United States and Canada. The suit alleged that certain representatives of cedar shake and shingle products agreed on pricing levels and sought to terminate members of CSSB that did not comply.  In August 2019, CSSB succeeded at having the Sherman Act claims against it dismissed from the lawsuit.

Similarly, on June 12, 2020, Roofing Today recently reported that two of the UK’s largest suppliers of rolled lead admitted to participating in anti-competitive practices in the lead roofing industry.  For years, lead suppliers had been investigated for alleged market sharing, price discussions, and excluding potential competitors.  According to Roofing Today, the two companies that admitted involvement could face fines in excess of £11 million.

As demonstrated by these two cases, anti-trust policies are critical for any group or organization, and manufacturers, suppliers and contractors also need to be mindful of discussions involving market share, excluding competition and price fixing.

What is an anti-trust policy?

Regardless of whether you are a company or a trade group, having an anti-trust policy is not only useful to educate employees and members, but it also acts as a potential shield to restraint of trade claims. 

An effective anti-trust policy should assist employees and members in understanding anti-trust, restraint of trade, and competition law issues as well as identify situations that may raise concern.  While it would not be possible in any policy to describe in detail all of the anti-trust, restraint of trade, and competition laws that affect a roofing business, the purpose of any good anti-trust policy is to make employees and members aware of the general requirements of anti-trust and competition laws and the kinds of conduct that can raise issues.

Ultimately, a company or trade group’s anti-trust policy places the responsibility of compliance with all applicable anti-trust and competition laws on every director, officer, and employee, and/or member.  This is wise for reasons other than just educating – first, a policy establishes grounds to discipline parties that are found in violation of the anti-trust policy, ideally before the situation escalates.  Second, having a policy in place can help establish that a company or group takes these issues seriously, thereby providing a potential due diligence defense should a claim be made.

Best practices for anti-trust issues

When it comes to anti-trust laws, certain states have tighter regulations than others, while Canada of course has an entirely different set of laws (the “Competition Act”), regulating anti-trust laws (they are called “competition laws” in Canada).  Therefore, there may be issues unique to your location that you should identify.  However, avoiding restraint of trade issues generally can be accomplished by following some basic, common-sense guidelines, examples of which we list below:

• Don't discuss pricing with competitors, however friendly the conversation.  If it comes up at a meeting, protest (and follow this up in writing) and immediately leave the meeting.  If you go to a restaurant or bar after the meeting, do not discuss pricing there either, or engage in any tongue in cheek references to pricing.  And of course, never attend a meeting wherein you know pricing will be discussed.

• Don’t discuss, explicitly or implicitly, excluding competitors from market access.

• Don't discuss anything to do with sharing customers, markets or territories with a competitor or someone who you know will relay the message to a competitor.

• Don't disparage a competitor's product, or installation capabilities verbally or in writing, unless you can prove your charges and even then, consider the industry ramifications.

Of course, these are general guidelines and are not a complete statement of the anti-trust laws in the U.S. or competition laws in Canada.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Cotney Construction Law is an advocate for the roofing industry, General Counsel of NRCA, FRSA, WSRCA and several other industry associations.  For more information, contact the author at 866.303.5868 or go to www.cotneycl.com.

Contact Cotney Construction Law for additional information.