Denmark’s Rockfon settles case against firm that tried to keep it out of US market

What may have been a landmark anti-monopoly lawsuit brought by Danish company Rockfon against America’s largest maker of ceiling tiles was concluded in an out-of-court settlement yesterday.

Rockfon was objecting to Armstrong World Industries’ exclusive deals with distributors.

As Armstrong holds a 55% share of the US acoustical ceiling-tile market, Rockfon argued that this gave it monopoly power, which it was using unlawfully to prevent other companies from competing.

The suit was filed in the US District Court for Delaware in September 2017, after which both sides applied for summary judgment. Both applications were denied by Mark Kearney, the judge in the case, who wrote a memorandum setting out the issues.

Judge Kearney said the action arose after Armstrong introduced a "no Rockfon clause" in its agreement with its distributors, thereby preventing them from selling the Danish company’s tiles in any market.

The judge noted that Armstrong described Rockfon’s entry into the US in 2013 as "the most significant competitive threat in 30 years" – Rockfon, which is a subsidiary of Rockwool International, had built up a 30% share of the European market in a relatively short space of time.

Armstrong wrote to its employee, "we cannot afford this to happen in the Americas". After 2013, it began including a clause in its agreements with distributors precluding them from selling Roxul tiles, even if the distributor did not sell Armstrong’s.

The settlement dismisses all claims and prevents a judicial ruling on the whether Armstrong’s actions violated the 1890 Sherman Act and 1914 Clayton Acts, which aim to curb the harmful effects of monopoly power.  

Armstrong will make an undisclosed payment to Rockfon affiliate Roxul to cover its costs, while denying any wrongdoing. Furthermore, all its distributors will remain exclusive Armstrong distributors.

Image: Rockfon’s illustration for its Koral range of commercial tiles

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