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USG Accused in Lawsuit of Fixing Drywall Prices

USG Corp. and seven other makers of drywall used in residential and commercial construction were sued for allegedly conspiring to fix prices for the gypsum board product since September 2011.

Sierra Drywall Systems Inc., a drywall installation company, claims the defendants violated federal antitrust laws and is seeking unspecified money damages for all people or entities that bought drywall from the defendants in the U.S. this year, according to a complaint filed Dec. 13 in federal court in Chicago.

USG, whose largest shareholder is Warren Buffett’s Berkshire Hathaway Inc., said the suit is “without merit,” in a filing today with the U.S. Securities and Exchange Commission.

“USG denies that it participated in any alleged conspiracy or has engaged in unlawful conduct, and believes that its pricing decisions were, and continue to be, made and implemented in full compliance with the law,” the Chicago-based company said in the filing.

USG is the leading supplier of drywall in the U.S., accounting for 25 percent of gypsum board sales in 2011, according to the complaint.

More Targets

Other companies targeted in the suit include Charlotte, North Carolina-based National Gypsum, Reston, Virginia-based LaFarge North America Inc. and Atlanta-based Georgia-Pacific LLC.

Nancy Spurlock, a spokeswoman for National Gypsum, said the company hasn’t been served with the suit.

“We would certainly deny any wrongdoing,” she said in a phone interview today. She said the company would fight the claims.

Representatives of Georgia Pacific and LaFarge didn’t immediately return calls seeking comment on the lawsuit.

According to the complaint, the companies began telling customers in September 2011 that they would raise prices on drywall products by as much as 35 percent. Around the same time, the companies also halted a longstanding practice of letting customers lock in prices for the duration of a construction project, Sierra Drywall said.

The changes came when the companies were expecting no increase in demand for gypsum board, according to the complaint.

“Faced with a weak market with no immediate prospect of rebound, the defendants nevertheless announced a large spike in the price of gypsum board,” Sierra Drywall said. “This increase was not supported by competitive conditions and thus could not have been sustained absent the defendants’ agreement to raise prices.”

The case is Sierra Drywall Systems Inc. v. USG Corp., 12-cv-09949, U.S. District Court, Northern District of Illinois (Chicago).

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