As I have previously noted on this site (for example, here), a long-standing and frequently recurring litigation pattern has been the filing of a corporate or securities lawsuit in the wake of an antitrust enforcement action. In the latest example of this pattern, a plaintiff shareholder has alleged that Atkore, a PVC pipe manufacturer, misled investors by failing to disclose that its product pricing was being propped up by an alleged scheme with its competitors to fix prices. The securities suit filing follows a prior civil antitrust action against the company and its competitors. The securities suit, which in addition to representing an example of antitrust follow-on securities litigation, is also an example of a lawsuit arising out of a company’s post-COVID business operations. A copy of the February 21, 2025, complaint can be found here.
Background
Atkore manufactures polyvinyl chloride (PVC) water and electrical conduit pipes. During COVID, shipping costs skyrocketed, and foreign PVC pipe manufacturers were unable to profitably sell PVC pipes in the U.S. Atkore was able to sell its PVC products at higher prices. The subsequently filed securities suit complaint alleges that Atkore and its competitors “took advantage of the absence of foreign competition, exchanging confidential and competitively sensitive data in order to artificially inflate PVC Pipe pricing.”
However, as the pandemic eased, pricing did begin to “normalize.” Atkore, according to the securities suit complaint, “assured the market” that it “would continue to be successful in a post-COVID market.” Atkore also maintained that the company “enjoyed a price premium” over its competition due to its “reputation,” “quality,” and “ability to ship.”
On July 24, 2024, ManBear, a short seller, published a report claiming that Atkore and three other PVC pipe manufacturers were using a commodity pricing service to coordinate pricing actions, fixing PVC pipe prices. Among other things, the report claimed that the pricing scheme “massively inflated” PVC pipe prices. A company official called the report as “unsubstantiated.”
In August 2024, Atkore was named as a defendant in multiple civil antitrust lawsuits in which it was alleged that Atkore and the other manufacturers conspired to artificially inflate the price of PVC pipes by exchanging competitively sensitive business information, including information regarding future PVC pipe pricing.
In November 2024, press reports began to circulate stating that Atkore and other manufacturers were the subject of a Department of Justice antitrust investigation. In February 2025, Atkore announced that it had received a subpoena from the Department of Justice’s antitrust division, with respect to PVC pricing.
On February 4, 2025, Atkore announced its financial results for its fiscal first quarter of 2025. The company reported declining revenue from PVC pipe sales. The company also reduced its guidance for the remainder of the fiscal year, which most of the reduction attributed to anticipated declining PVC sales revenue. An analyst, commenting on the guidance reduction, noted that “essentially all the pricing gains since COVID have been given back.” According to the securities lawsuit complaint, the company’s share price declined nearly 20% on this news.
The Lawsuit
On February 21, 2025, a plaintiff shareholder filed a securities class action lawsuit in the Northern District of Illinois against Atkore and certain of its directors and officers. The complaint purports to be filed on behalf of a class of investors who purchased the company’s securities between February 1, 2024, and February 3, 2025.
The complaint alleges that during the class period the defendants failed to disclose to investors that: “(1) Atkore engaged in an anticompetitive price-fixing scheme that artificially inflated the price of PVC Pipes; (2) Atkore reaped significant, unsustainable financial benefits from its anticompetitive conduct; (3) as Atkore’s price-fixing scheme was exposed, the Company and its price-fixing co-conspirators were no longer able to artificially inflate the price of PVC Pipes, resulting in a substantial decrease in the price of PVC Pipes; (4) Atkore’s business and operations were negatively impacted; and (5) as a result, Defendants’ positive statements [about the] Company’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.”
The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the class.
Discussion
As I noted at the outset, this new lawsuit fits within the pattern of companies getting hit with securities suit after first being the subject of an antitrust enforcement action. While this company represents an example of this type of antitrust follow-on securities suit, there are also a couple of distinctive features to this suit as well.
First, many of the prior antitrust follow-on securities followed in the wake of the filing of a governmental antitrust enforcement action. In this circumstance, there is no governmental antitrust action, at least not yet. Instead, the prior antitrust action is a private civil action brought on behalf of businesses whose financial interests allegedly were harmed by the alleged price-fixing scheme.
Second, in addition to fitting within the pattern of antitrust follow-on securities suits, this lawsuit also falls within the pattern of COVID-related securities suits, the likes of which have proliferated since the initial outbreak in the U.S. in March 2020. At least according to the new securities suit complaint, the competitors’ price-fixing scheme appears to have grown out of their desire to preserve pricing advantages they enjoyed early during the pandemic as a result of supply chain disruption. The conspirators apparently were trying to keep a good thing going. Indeed, after the company revealed it was reducing its guidance because of declining PVC pricing, one analyst specifically noted that the because of the declines “all pricing gains since COVID have been given back.”
In any event, follow-on securities litigation in the wake of an antitrust enforcement action is an established phenomenon. In numerous prior posts, I have discussed circumstances in which companies caught up in antitrust enforcement actions have become the target of follow-on securities litigation.
For example, as discussed here, numerous companies in the poultry production industry were hit with follow-on securities lawsuits, after a number of companies in the industry were targeted with private antitrust litigation alleging that companies in the industry had engaged in price-fixing.
Similarly, as discussed here, a number of generic drug companies were hit with securities suits after news that the federal antitrust authorities were pursuing criminal antitrust charges against certain companies in the industry on price-fixing charges.
In addition, plaintiffs’ lawyers initiated a number of securities suits against auto parts companies (refer, for example, here) following news that the DOJ and the EU were investigating companies in the auto parts industry for possible collusion and price-fixing.
While plaintiffs’ securities lawyers have shown an interest in pursuing these kinds of follow-on claims, that does not mean that the cases have been particularly successful; indeed, many of them have in fact been dismissed outright, and, as I have previously noted, the dismissals arguably represent a strong signal that merely because a company is caught up in antitrust proceedings does not mean that the company has committed or is liable for securities fraud. Indeed, some courts have evinced a skepticism of the plaintiff’s efforts to try to “piggyback” a securities fraud claim onto allegations of antitrust misconduct.
The attempt to translate antitrust enforcement actions into potential liabilities under the securities laws has significant implications from a D&O insurance perspective. Under most public company D&O insurance policies, the policies’ entity coverage extends only to securities claims. Many antitrust enforcement actions target the entity; but antitrust enforcement actions against the corporate entity would not trigger the D&O insurance policies’ entity coverage. A securities claim against a publicly traded company typically would trigger the company’s D&O insurance policy’s entity coverage. In other words, the follow-on suit transforms a matter that would not trigger the policy into something that does trigger the policy. The follow-on suits accordingly are a phenomenon that should be of concern to D&O insurers.