A federal jury in Texas has heard opening arguments from a defunct steel distributor claiming that it was run out of business by a group of suppliers and manufacturers, including Nucor Corp. and Reliance Steel & Aluminum Co.
During opening arguments of the antitrust lawsuit, MM Steel LP’s attorney said that the larger companies had organized a boycott that cut off MM Steel’s access to supplies, locking it out of the steel distribution market.
Matt Schultz and Mike Hume founded MM Steel after decades working for American Alloy Steel Inc. and for Reliance. Now, they claim that the two companies asked steel manufacturers JSW Steel (USA) Inc. and Nucor Corp. to refrain from doing business with them. That action stands in violation of federal antitrust statutes, MM Steel’s attorney argued.
MM Steel claims lost future profits as high as $80 million from the point when its supply of steel was cut off by the alleged boycott. The company is also seeking exemplary and treble damages under antitrust law.
An attorney for Reliance said the company had the right to refuse to do business with anyone associated with Schultz and Hume, who committed a “betrayal” by raiding key employees and clients from their former employers.
Attorneys for the defendants added that MM Steel’s failure was due in part to undercapitalization and the fact that it began operating at a time when steel supplies were low.