Settlement Paid in ‘97 Paper Price-Fixing Case

Distributor-plaintiffs can use website to trade coupons allowing for easier redemption

In late March, several hundred distributors of away-from-home tissue products began to receive payment in the form of cash and product coupons — the settlement reached in the 1997 class action antitrust lawsuit against nine of the largest tissue manufacturers in the United States. In response to the allegations of price-fixing, and the resulting lawsuit, the paper producers agreed to a settlement of $56.2 million, payable to to 811 companies, many of which are jan/san distributors.

The compensation for the price-fixing settlement is being separated between cash payments ($18 million) and coupons redeemable for commercial tissue products ($38.2 million).

“I believe that the trial was very successful,” says Ruth Anne Gordon, attorney with Berger & Montague, Philadelphia, a firm involved in the case from the beginning. “What we have is the best solution available to us, and now distributors can benefit from the trial results.”

One problem, however, is that plaintiff companies are receiving combination packages which are made up of $100 coupons from each of the defendant manufacturers. Because of the partnerships many distributors have with particular manufacturers, many of the coupons might have gone unused. However, a website was created in response to the dilemma that allows distributors to trade unusable coupons for usable ones.

“Our role is on the back end, to help issue the coupons and make sure people can buy or sell coupons that would benefit them most,” says Douglas Fink, administrator of SettlementCoupons.org, based in Scranton, Pa. “We’re trying to get the word out to all the distributors so that they can receive their payments.”

According to Fink, the settlement was the result of a class action suit brought by all direct purchasers of the defendants’ commercial (away-from-home) tissue products between January 1, 1993 and July 22, 1998. In all, 35,000 companies were eligible to receive payment from the lawsuit, but only 811 filled out the paperwork necessary to claim the benefits.

“Depending on the dollar amount of purchases during that amount of time for each plaintiff, the settlement is now being distributed accordingly,” says Fink. “So of the 811 distributors, some will receive a lot of money, and others will receive very little.”

According to Berger & Montague, the nine defending toilet tissue manufacturers are Bay West Paper Corp.; Wisconsin Tissue Mills (subsidiary of Chesapeake Corp.); Encore Paper Co.; Fort Howard Corp.; Georgia Pacific Corp.; James River Corp. of Virginia; Kimberly-Clark Corp.; Marcel Paper Mills; and Scott Paper Co.

“Hopefully we’ll see a 100 percent return for those companies who are trying to claim their settlement,” says Fink. “The website has been up for a couple of weeks, and companies just recently began receiving coupons which they can reimburse for toilet tissue products.”

Three separate state lawsuits against commercial toilet tissue manufacturers have also cropped up in the last two years regarding price-fixing claims in New York, West Virginia and Maryland.

On June 5, 2000, Maryland attorney general J. Joseph Curran Jr. announced that the state settled with six major manufacturers of commercial tissue products for $175,000 in cash and $500,000 in products.

“These companies conspired to raise their prices in a collective effort to gouge the state of Maryland and its taxpayers,” said Curran. “I am pleased with this settlement and hope it sends a message that price-fixing will not be tolerated.”

Similarly, an agreement was made on July 17, 2001, between West Virginia attorney general Darrell V. McGraw Jr., and the same six commercial tissue manufacturers that were involved in the Maryland settlement. The state received $65,000 in cash and $75,000 in products from the accused manufacturers.

—Alex Runner

Data Shows E-Commerce Increasing Among Wholesaler-Distributors

In late March, the U.S. Census Bureau released its E-Commerce 2000 “E-Stats” report, tracking e-commerce sales for manufacturing, wholesale distribution, retail and certain service sectors. Census data shows rapid adoption of e-business by wholesalers, who were responsible for more than one-fifth of all e-commerce sales in the economy as measured by the bureau.

Wholesalers achieved e-commerce sales of $213 billion in 2000, which is equal to 7.7 percent of total merchant wholesaler-distributor sales. Overall, e-commerce sales by wholesaler-distributors grew by 17 percent over 1999.

“Savvy wholesalers are using the Internet to communicate more frequently and strategically with suppliers and customers,” says Adam Fein, Ph.D., president of Pembroke Consulting, Philadelphia. “Contrary to many predictions, e-commerce technologies are strengthening the wholesaler’s position in the supply chain.”

“What’s interesting is that just a couple of years ago, this technology was perceived as a threat to ‘bricks-and-mortar’ wholesale distribution,” says Dirk Van Dongen, president of the National Association of Wholesaler-Distributors (NAW).

Small Business Optimism Growing

Small business owners are increasingly optimistic about the nation’s economy, according to a February survey conducted by the National Federation of Independent Business (NFIB). “Small-business owners were almost as optimistic in February as they were in January, continuing at a level significantly higher than the doldrums numbers of late 2001,” the report said.

The economy’s recovery will continue to be gradual but new optimism is based on concrete evidence, said NFIB chief economist BIll Dunkelberg. “As first predicted in the June 2001 survey, small business is in a ‘long-L’ recovery,” says Dunkelberg, meaning that growth will continue to be slow but steady.

News Makers

The Dow Chemical Co., Midland, Mich., announced in March that chlorine chemistry will continue to be a pillar of the company’s cleaning strategy and that it has formed a research and development team within its industrial business to further the science and technology of its surfactants.

Basic Maintenance Supply, Philadelphia, was recently named Century 400 Dealer of the Year 2001 for outstanding sales and service. Basic is a family-run business that distributes a wide range of products for the carpet cleaning, floor care and janitorial industries.

Advantage Marketing Associates (AMA), Chicago, an international alliance of wholesalers, recently announced the winner of its 2nd Annual Awards Sweepstakes. Bob Phillips, Tidewater Restaurant Supply, Norfolk, Va.; Gary Tuero, Kormo Supply, St. Louis; and Dave Tonniges, A-BEST Wiping Materials, Scottsdale, Ariz., were the winners of trips for two to Tahiti.

The Freedonia Group Inc., Cleveland, predicted in a March report that industrial and institutional cleaning chemical sales will increase 4 percent annually from 2001, reaching $8.2 billion in 2006.

Mergers & Acquisitions

SCA Tissue, Stockholm, Sweden, has agreed to take over French packaging company AR Fegersheim, formerly a subsidiary of A&R Carton AB, following a bankruptcy court’s decision. SCA will pay 250,000 Euro for the company and will take over operations completely by April 8, 2002.

AFFLINK, Tuscaloosa, Ala., recently announced that it has several new member distributors: Bancroft Paper, Monroe, La.; Gulf Coast Paper, Victoria, Texas; Pioneer Janitorial Supply, Albuquerque, N.M.; and Sunbelt Paper & Packaging, Alabaster, Ala.

Regulatory News

ISSA Takes Stand Against N.Y. Warning Label Bill

The International Sanitary Supply Association (ISSA), Lincolnwood, Ill., has announced that it officially opposes Assembly Bill 9294, recently introduced by the New York State legislation. The bill would require warning labels on all products containing known carcinogens or ingredients with reproductive toxicity within the state of New York. The ISSA argues that such legislation would negatively affect the jan/san industry for the following reasons:

    First, “the bill does not consider the unique attributes of chemical cleaning products and, based on their undeniable, crucial role in maintaining safe and healthy conditions, they should be exempt from the requirements,” says the ISSA.

    Second, the bill will “unduly burden small businesses who may simply choose not to sell in New York rather than comply with the law.”

    Third, the bill gives the state of New York more authority than it should have, impeding on the U.S. Environmental Protection Agency’s territory.

    And lastly, the bill does not provide compliance options.




    POSTED ON: 4/1/2002