© Reuters. FILE PHOTO: Berkshire Hathaway logo is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 10, 2023. REUTERS/Brendan McDermid/File Photo
By Jonathan Stempel
(Reuters) – A federal appeals court on Monday revived an antitrust lawsuit accusing Johns Manville, a unit of billionaire Warren Buffett’s Berkshire Hathaway (NYSE:), of monopolizing the market for calcium silicate, a substance used in thermal pipe insulation.
The 10th U.S. Circuit Court of Appeals in Denver said a trial judge in that city erred in dismissing the lawsuit by rival Chase Manufacturing, also known as Thermal Pipe Shields (TPS).
TPS entered the calcium silicate market in 2018, with a product imported from China that it claimed was better and cost 20% to 25% less.
It accused Johns Manville of threatening to stop doing business with distributors if they bought TPS’ calcium silicate, and that the threats enabled Johns Manville to still command 97.3% of the market by August 2021.
Writing for a three-judge appeals court panel, Circuit Judge Gregory Phillips found sufficient evidence that Johns Manville coerced distributors as it exercised monopoly power.
He cited testimony that Johns Manville enjoyed much higher gross margins on calcium silicate than on other products where it faced more competition.
Phillips also cited an email just after TPS entered the market, in which Johns Manville told sales staff they might need to “bring the sword” and warn distributors that their relationship might change “significantly” if they bought TPS’ product.
“Viewing the evidence most favorably to TPS, we see JM as leaving its distributors with an all-or-nothing choice: stop doing business with TPS or lose access to JM’s enormous thermal-insulation inventory,” Phillips wrote.
The appeals court also upheld the dismissal of a claim that Johns Manville might have tied sales of other products to distributors agreeing not to buy TPS’ calcium silicate.
TPS had sought at least $60 million in damages.
“We are carefully reviewing the opinion and considering our next steps,” Johns Manville spokesman Eric Brown said in an email.
Luke Hasskamp, a lawyer for TPS, declined to comment.
Berkshire owns dozens of businesses including the BNSF railroad and Geico car insurance, and stocks such as Apple (NASDAQ:). It bought Johns Manville for about $1.8 billion in 2001.
The case is Chase Manufacturing Inc v Johns Manville Corp, 10th U.S. Circuit Court of Appeals, No. 22-1164.
