PaintSquare.com
      | Connect Follow us on Twitter Like us on Facebook
About | Subscribe | Advertise
  

 

Download our free Marine Industry Coating Systems eResource Book

Paint and Coatings Industry News

Main News Page


Rival ‘Vigorously’ Pressing Graco Suit

Thursday, February 9, 2012

More items for Coating Application

Comment | More

While Graco Inc. prepares to parry federal antitrust action aimed at stopping its takeover of ITW Finishing, an industry competitor is “vigorously” pushing its own antitrust lawsuit against the nation’s largest spray equipment maker.

Polyurethane Machinery Corp. (PMC), based in Lakewood, NJ, has announced that “it continues vigorously to pursue its claims against Graco, Inc. for violation of federal antitrust laws.”

 technorati.com

 technorati.com

The Federal Trade Commission and a competitor are both accusing Graco of anticompetitive practices.

The manufacturer of urethane spray and pour equipment has been prosecuting antitrust claims against Graco since 2008 in U.S. District Court in New Jersey.

‘Retaliation’ Concerns

PMC alleges that after Graco acquired Gusmer Corp. and GlasCraft Inc., it “systematically raised the prices of spray foam equipment, while simultaneously attempting to inhibit PMC’s entry into the market by threatening distributors with retaliation if they choose to do business with PMC.”

Graco did not respond Thursday to a request for comment on the case or on PMC’s latest statements.

The claims are similar to those made in December by the Federal Trade Commission, which announced that it would attempt to block Graco’s $650 million proposed takeover of chief rival ITW Finishing LLC from Illinois Tool Works Inc.

The FTC said it had filed an administrative complaint and would follow with federal-court action to halt the deal.

‘A Bad Deal’

Richard Feinstein, director of the FTC's Bureau of Competition, called the Graco-ITW transaction “a bad deal for manufacturers and consumers [that] would leave them facing higher prices and reduced innovation.”

The acquisition would create a monopoly, squelch product innovation, discourage potential new entrants to the industry, and harm manufacturing nationwide, the FTC said.

ITW Finishing owns five of the industry’s oldest, best-known brands: Binks, DeVilbiss, Gema, Ransburg and BGK Finishing Systems.

Distributors: ‘The Sweet Spot’

PMC specifically notes FTC’s allegation that, if the Graco-ITW deal is completed, distributors would “fear retaliation from Graco if they carry other brands.” 

The FTC complaint says that distributors would have “no recourse” after the acquisition “to curb the loss of this competition.”

The complaint says:

“Graco’s president acknowledges that Graco already enjoys power over its distributors and industrial end users: ‘Number one is that you’ve got lots of end users out there. Oh, by the way, those end users like Graco. And oh, by the way, if they already have Graco and they know Graco, the switching costs are significant for them to switch away from Graco.

“’So . . . not only do you have thousands of end users, you have hundreds of distributors. And for a manufacturer, that’s a nice spot to be. . . . The ideal place to be, the sweet spot, for having the buyer power be low is to have lots of customers and lots of distributors.’”

‘Anticompetitive Consequences’

PMC says such “anticompetitive consequences” are “remarkably similar to those about which PMC has been complaining in the polyurethane spray foam equipment market.”

PMC says Graco has offered in the FTC case to notify distributors that they were free to carry competing brands and that Graco “would refrain from unusually large price increases for three years.”

In the spray foam equipment market, however, “Graco has offered its distributors no such peace of mind,” says PMC.

A hearing on the FTC’s administrative complaint has been set for May 15.

   

Tagged categories: Graco; ITW Industrial Finishing; Lawsuits; Polyurethane; Spray equipment; Spray polyurethane foam; Urethane

Comment Join the Conversation:

Sign in to our community to add your comments.

Commercial Sandblasting & Painting Ltd.
Reliable Service & Superior Workmanship

We’re ready to meet any of your protective coating and lining needs. We can work on your site or in our facilities, with large shops (60,000 sq ft), 40 acres of yard space, and cranes and forklifts on site.


Armorthane
Corrosion Coatings for Protection and Repair

Buy POLYURETHANE or POLYUREA coatings and spray surfaces for years of proven chemical resistance, water- and weather-proofing, and structural improvements.


HoldTight Solutions Inc.
NO FLASH RUST -
NO CONTAMINANTS

Our HoldTight®102 salt remover & flash rush inhibitor prevents flash rust by removing surface contaminants.
Contact us for your nearest distributor. (800) 319.8802 sales@holdtight.com


Sidewinder/Persyst Enterprises, Inc.
The Sidewinder Model M2 Solvent Recycler

Combat the rising cost of gunwash, thinners, acetone & more while drastically reducing waste disposal coat.


Clemco Industries Corp.
Global engineering-trusted solutions

For more than 70 years, Clemco has provided the highest quality blast equipment with a total commitment to comfort and safety.


Graco Inc.
Graco M680 Mortar Pump

Compact and portable. Great for concrete resurfacing and repairs. Handles mortars, cementitious and filled materials.
Call 877-844-7226 or info@graco.com.


GMA Garnet USA
GMA Garnet™
Natural Abrasives

- Superior cleaning
  performance
- Even Profile
- Low Dust
- Cost-Effective
- Environmentally friendly
- Recyclable up to 5 times
Tel : +1 832 243 9300


BASF
New resins from BASF will have metals loving water:

Excellent corrosion resistance, low VOC, high gloss, thin films basf.us/industrialcoatings
polyorders@basf.com
800-231-7868

 
 
 
Technology Publishing

The Technology Publishing Network

The Journal of Protective Coatings & Linings (JPCL) PaintSquare
Durability + Design Paint BidTracker

 
EXPLORE:      JPCL   |   PaintSquare News   |   Interact   |   Buying Guides   |   Webinars   |   Resources   |   Classifieds
REGISTER AND SUBSCRIBE:      Free PaintSquare Registration   |   Subscribe to JPCL   |   Subscribe to PaintSquare News
MORE:      About PaintSquare.com   |   Privacy policy   |   Terms & conditions   |   Site Map   |   Search   |   Contact Us
 

© Copyright 2000-2015, Technology Publishing / PaintSquare, All rights reserved
2100 Wharton Street, Suite 310, Pittsburgh PA 15203-1951; Tel 1-412-431-8300; Fax 1-412-431-5428; E-mail webmaster@paintsquare.com