A Court Decision for the History Books

By Tara Taffera

When the ruling ordering Jeld-Wen to divest its Towanda, Pa., plant was issued, DWMeditors started plowing through the court documents and quickly discovered that this is one for the door and window history books. I am sure you realized that as well when you read the news. I think we would also agree that this case is far from over. It’s way too complicated for me to go into detail here. The court ruling was 149 pages and DWM editor, Drew Vass, went over every single one of them, in order to bring you the news analysis on page 10. But here is a super quick summary to get you up to speed.

This court ruling, dated October 5, brought a more than yearlong legal battle between door manufacturers Jeld-Wen and Steves and Sons Inc. (Steves) to a close. As a result of a trial, a jury found that Jeld-Wen’s acquisition of Craftmaster International (CMI) violated antitrust provisions. As a remedy, the court has ruled that returning the Towanda-based operation to an independent status would likely restore appropriate levels of competition to the domestic door skins market. This ruling is especially significant, due to the fact that it involves antitrust issues. I’ve been covering the door and window industry for almost 21 years now, but our company president, Debra Levy, has been involved in the glass, doors and window industries for more than 30 and she immediately commented on this ruling.

“I have not in all my 30-plus years, seen something undone like this. I have seen where mergers have been blocked, etc., but this is an amazing ruling,” said Levy. “It involves the old antitrust issue of controlling the chain and it will have implications beyond just this ruling.”

And she is almost certainly right.

The Court found that following the acquisition of CMI, Jeld-Wen violated conditions of a supply agreement established between the two companies, by continuing to increase prices despite declining input costs, while also hampering its commitments to reimburse the full cost of doors in the event of defective skins. Records show that Steves was unable to adequately fulfill its needs for doorskins via foreign suppliers. Of course, there are far more details involved than just that, but the bottom line is: the court and jury found what they believe to be significant impacts to competition in Jeld-Wen’s actions. As industry-based journalists, those are the sort of allegations we’re accustomed to hearing here and there (mostly in elevators), but to read an actual court ruling to that effect? It was a bit surreal.

That’s not to say that the case is completely over. Jeld-Wen issued a statement following the ruling saying it would appeal, and that process will undoubtedly drag through the courts for years. With that will come a high price tag as well. When reporting its third quarter financial results on October 15, Jeld-Wen said it expects to spend $76.5 million in the third quarter due to this ongoing litigation. So you can expect a lot more coverage to come.

To view the laid-in version of this article in our digital edition, CLICK HERE.