Steel Mills

Nucor and Reliance Steel to Appeal Antitrust Settlement Awarded to MM Steel

April 2, 2014

A Houston, Texas jury returned a verdict for $52 million in damages against Nucor Corp., Reliance Steel & Aluminum Co., its unit Chapel Steel Corp., American Alloy Steel Inc., and JSW Steel Inc. in an antitrust lawsuit brought by former plate steel distributor MM Steel, LP. SSAB was also named in the lawsuit but settled its dispute with MM Steel last month and was dismissed from the case.

MM Steel claimed the defendants conspired to boycott selling plate steel to MM Steel which forced the company out of business in 2012. The federal court awarded MM Steel $52 million in damages against all defendants jointly and individually, an amount that is subject to trebling (tripling) under anti-trust law. It is unknown at this time how much each company will pay.

MM Steel was formed in 2011 by two former Reliance Steel employees, Mike Hume and Matt Schultz, who ran the Houston office of Chapel Steel. The defendants in the antitrust case said they independently chose not to use MM Steel. The defendants contended that Hume and Schultz operated unethically by forming MM Steel before leaving Chapel Steel Corp and taking employees, proprietary information, and material from the company—litigation that was later settled in a separate case. American Alloy said the pair behaved similarly when leaving American Alloy Steel to open the Chapel Houston branch in 1999. American Alloy decided at that time not to do business with Hume and Schultz in the future.

SSAB contended that its policy was not to sell steel to distribution centers that did not provide substantial value-added processing or fabrication.

Reliance and Chapel Steel plan to challenge the verdict. Reliance CEO David Hannah commented, “We are deeply disappointed with the outcome of this trial and we continue to believe that Reliance and Chapel acted appropriately and within their legal rights.”

Robert J. Katerberg, a partner with Arnold & Porter and lead attorney for Nucor said, “We are disappointed with the verdict. Nucor denies violating any antitrust laws. We believe Nucor acted entirely within its legal rights. We will fight these allegations through the appeal process and we expect that Nucor will be vindicated.”