Megadistributor PoolCorp and the pool-equipment manufacturers
dubbed by many “The Big Three” are being accused of
anti-competitive activity. A lawsuit has been filed and plaintiffs
are hoping it gains class-action status.
The claim originally was filed in 2011 solely against the
Covington, La.-based distributor. Now the plaintiffs have amended
their suit to include the others — Hayward Pool Products of
Elizabeth, N.J., Pentair Aquatic Systems of Sanford, N.C., and
Zodiac Pool Systems in Vista, Calif.
All are accused of violating the Sherman Antitrust Act, which
prohibits activities that restrain trade or commerce. PoolCorp also
is accused of violating the section of the law prohibiting
The case against PoolCorp was spurred by an investigation
involving the Federal Trade Commission. After a 1-1/2-year-long
inquiry, the FTC accused the company of pressuring manufacturers
not to sell to new distributors entering the market. PoolCorp
maintained its innocence, but entered into a settlement in which it
agreed to certain conditions.
“They’ve done what the FTC required,” said
David Bamberger of DLA Piper, an attorney representing
But within days of the settlement, dealers began to file
The plaintiffs, consisting of 11 dealers and consumers, accuse
PoolCorp of using its Preferred Vendor program as a way to motivate
and even intimidate manufacturers to refuse selling to competing
distributors. According to the claim, manufacturers often would
have to agree because they couldn’t easily replace business
lost by PoolCorp, the only national distributor.
“To achieve efficient and timely substitute distribution
throughout many parts of the country would be challenging and
problematic, if not infeasible,” plaintiffs stated in court
The dealers and consumers also accuse the distributor of buying
competing companies for the purpose of shutting them down. Through
the alleged behavior, the plaintiffs said, PoolCorp and the
manufacturers removed enough competition to artificially raise
“PoolCorp unlawfully acquired, maintained and exercised
monopoly power in the relevant market through the anticompetitive
conduct set forth,” court papers read.
Hayward, Zodiac and Pentair now are accused of conspiring with
PoolCorp by agreeing to its terms. Their market dominance means
distributors have to sell those products in order to run a viable
business, plaintiffs said. So if “The Big Three”
refused to do business with a competitor of PoolCorp, it
essentially constituted a death sentence to that distributor, the
“With the assistance and agreement of the only full-line
pool products vendors … PoolCorp eliminated various existing
distribution competitors, and prevented other would-be rivals from
obtaining the products necessary to compete … , ” the
Plaintiffs are asking the court to certify the class, a
procedural step that would make the plaintiffs become
representatives of unnamed parties who qualify to receive part of
an award if the case is found in their favor. For this to happen,
the judge must determine that enough parties have been affected,
they have enough in common and meet other criteria.
The plaintiffs are seeking, among other things, triple the
damages proven in court. They also want the defendants to give up
any profits received as a result of their alleged conduct.
In response, PoolCorp and the manufacturers have filed motions
to dismiss the case. Defendants claim allegations are not specific
PoolCorp said the alleged behavior, even if it had occurred,
doesn’t meet the definition of antitrust, and plaintiffs
haven’t proven the alleged behavior had enough of an impact
on the market to fall under the antitrust category.
The distributor also said it doesn’t have enough market
share to constitute a monopoly. According to PoolCorp’s
motion for dismissal, the company holds about one-third of the
market, and several courts have stated that a firm must have more
than 50 percent market share to be considered a monopoly.
In the motions for dismissal, the defendants didn’t
address the issue of guilt, which is common at this phase, said
attorney Mark Stapke, a partner in Michelman & Robinson, LLP,
in Los Angeles, who has represented a number of pool firms.
Defendants answer the individual accusations if the case goes to
PoolCorp maintains its innocence. “We’ve denied all
the allegations of unlawful conduct,” Bamberger said.
The manufacturers declined to comment, citing pending
As of press time, a hearing on the motions to dismiss was
pending, but regardless of the outcome, the case may not end there.
If the judge upholds the motion to dismiss, plaintiffs usually can
modify their complaints and refile, Stapke said. “It’s
by the second or third time that you actually get traction on a
dismissal,” he explained.
If the cases move forward, it will become the plaintiffs’
job to prove that the classes deserve certification. If the judge
is convinced it should be a class-action case, defendants generally
settle shortly thereafter.