Nexsen Pruet Antitrust Team Tackling International Paper Case

Columbia, SC -Timber landowners from North and South Carolina filed a class action lawsuit in federal court today against International Paper (IP) and one of its suppliers, charging widespread price fixing of pulpwood timber that has cost the landowners many millions of dollars.

The lawsuit describes a process by which IP reaped substantial profits by unlawfully controlling and driving down pulpwood timber prices in South Carolina and neighboring states. It further details how IP worked out illegal agreements with a select group of timber dealers to set uniform prices at which they would buy pulpwood timber from timber landowners

As a result, the timber landowners allege prices were illegally fixed at depressed levels. For example, two landowners in Richland County, S.C., were forced to sell their timber well below competitive market rates because they received identical low bids from both of IP's chosen suppliers.

Connecticut-based IP is the world's largest paper and forest products company, and the largest purchaser of pulpwood timber in South Carolina. Also charged in the filing was CWC of North Carolina, Inc. (Canal Wood), a North Carolina corporation whose principal place of business is in Georgetown, S.C. Canal Wood supplies millions of tons of pulpwood to IP every year.

"What we have alleged is another example of a major corporation engaging in illegal activities to enhance its profits," said Marguerite Willis, an attorney with NEXSEN PRUET JACOBS & POLLARD. "Only this time, it is at the expense of individuals, families and business entities that own timberland. By the time all the facts are out, I believe we are going to see that hundreds, if not thousands, of timber landowners have been injured by IP's actions."

The filing says that IP's own internal manual outlines this price-fixing process under the benign-sounding name of a "Quality Supplier Program." The manual states that "the elimination of ‘gaming' is an objective of the program," which IP has implemented in South Carolina, Georgia, North Carolina, and Virginia. In those states, landowners are frequently getting identical bids from IP suppliers - and are then forced to sell at those below-market prices.

"IP may call it ‘gaming' but in the business world it's called competition," said Russell Burke, an attorney with NEXSEN PRUET JACOBS & POLLARD. "Without competition, landowners are in effect held hostage by IP. The landowners deserve to reap fair market prices for their timber. With IP's program, private landowners are losing millions of dollars each year. "

In South Carolina the average pulpwood timber "stumpage" price has declined by more than 35%, or more than $3 per ton, since IP began implementing this price fixing scheme in 2000. That decline is significant given that the average price for pulpwood is now only slightly more than $5 per ton.

The timber landowners brought their action under the Sherman Antitrust Act, which is aimed at eliminating restraints on trade and competition. Price fixing - which is defined as any effort to raise, depress, fix, peg, or stabilize the price of a commodity - is specifically prohibited under this federal law.