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Case 2:12-cv-00485-SSV-JCW Document 1 Filed 02/22/12 Page 1 of 23

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA



SPS SERVICES, LLC d/b/a Premier Pools
& Spas, on Behalf of Itself and All Others
Similarly Situated,


Plaintiff,


v.


POOL CORPORATION, SCP
DISTRIBUTORS LLC, and SUPERIOR
POOL PRODUCTS LLC,


Defendants.


CIVIL ACTION NO.

COMPLAINT

CLASS ACTION ALLEGATIONS
AND JURY TRIAL DEMANDED

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Plaintiff SPS Services, LLC, d/b/a Premier Pools & Spas (“Plaintiff”) on behalf of itself

and all others similarly situated, brings this action against Pool Corporation (“PoolCorp”), SCP

Distributors LLC (“SCP”), and Superior Pool Products LLC (“Superior”) (collectively,

“Defendants”), and alleges as follows, based on personal information as to itself, and on

information and belief as to other allegations and facts made public by the Federal Trade

Commission (“FTC”):

I.

INTRODUCTION

1.

Defendant PoolCorp is the world’s largest distributor of pool supplies, with over

200 nationwide service centers. Its products include pumps, filters, heaters, covers, cleaners,

railings, liners, and parts necessary to maintain personal and commercial swimming pools

(collectively, “pool products”). Defendants have engaged in an unlawful scheme to monopolize

the market for pool products by blocking potential new entrants to the market for distributing

pool products from gaining access to the pool products necessary for business. Defendants’

anticompetitive conduct, detailed below, consists of preventing new distributors from entering



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the distribution market by threatening pool product manufacturers and forcing them to not do

business with new market entrants. If the manufacturers refuse to comply, Defendants threaten

to cease purchasing (and reselling) those manufacturers’ products, depriving the manufacturers

of an essential income stream. The effect of Defendants’ conduct is to artificially inflate prices

paid by Plaintiff and other similarly-situated direct purchasers of pool products.

II.

NATURE OF CLAIM

2.

On November 21, 2011, the FTC filed an administrative complaint and proposed

consent agreement detailing PoolCorp’s anticompetitive conduct. In its complaint, the FTC

alleges that the acts and practices of PoolCorp constitute monopolization and unfair methods of

competition. Prior to issuing a complaint, the FTC must have a “reason to believe” that a

violation has occurred. See 15 U.S.C. §45(b). Having issued a complaint, therefore, the FTC

has reason to believe that PoolCorp has engaged in anticompetitive conduct.

3.

PoolCorp’s long-standing, unlawful monopolization of the market for wholesale

distribution of residential and commercial swimming pool products (the “Pool Product

Distribution Market”) in the United States as a whole, and/or in numerous local geographic

markets throughout the country, triggered the FTC’s investigation and complaint.

4.

PoolCorp calls itself the world’s largest wholesale distributor of pool supplies –

and the only truly national one. With roughly 80,000 wholesale customers and nearly 300 sales

centers throughout North America and Europe, PoolCorp – according to its own website – “leads

the pack.”

5.

PoolCorp has engaged in unlawful exclusionary acts and anticompetitive practices

to acquire and maintain monopoly power in the Pool Product Distribution Market. Specifically,

PoolCorp has unlawfully: (1) intimidated manufacturers; (2) threatened to refuse to deal with any

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manufacturer that sells its pool products to new distributors entering the market; and (3) acquired

competitors and thereafter shut down their businesses.

6.

These tactics have foreclosed and continue to foreclose competitors from

obtaining the pool products necessary to compete in the Pool Product Distribution Market. They

also deter and impede new entrants, raise competitors’ costs, and result in higher prices, reduced

output, and less consumer choice in the market for pool products.

7.

Based on this anticompetitive conduct, the FTC began an investigation of

PoolCorp’s unlawful practices, which culminated in a January 10, 2012 consent agreement in

which the company agreed to refrain from engaging in certain anticompetitive tactics.

III.

JURISDICTION AND VENUE

8.

The claims set forth in this Complaint arise under Section 2 of the Sherman

Antitrust Act, 15 U.S.C. §2. Plaintiff seeks treble damages pursuant to Section 4 of the Clayton

Act, 15 U.S.C. §15(a).

9.

This Court has subject matter jurisdiction over this action pursuant to 15 U.S.C.

§15, and 28 U.S.C. §§1331, 1337, in that this action arises under the federal antitrust laws.

10.

Venue is proper in this District under 28 U.S.C. §1391(b), and Sections 4 and 12

of the Clayton Act, 15 U.S.C. §§15, 22, because Defendants reside, transact business, or are

found within this District, and a substantial part of the events giving rise to the claims arose in

this District.

IV.

PARTIES

11.

Plaintiff SPS Services, LLC d/b/a Premier Pools & Spas is a pool builder and pool

service and repair company located at 648 Tanager Drive, Mandeville, Louisiana, 70448.

During the Class Period, Premier purchased pool products directly from SCP and Superior.

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12.

Defendant PoolCorp, formerly known as SCP Pool Corporation, is a Delaware

corporation headquartered in Covington, Louisiana.

13.

Defendant SCP is a Delaware limited liability company headquartered in

Covington, Louisiana. SCP is a wholly-owned subsidiary of PoolCorp.

14.

Defendant Superior is a Delaware limited liability company headquartered in

Anaheim, California. Superior is a wholly-owned subsidiary of SCP.

15.

PoolCorp distributes pool products through SCP and Superior, its two wholly-

owned distribution networks for pool products. Both distribution networks operate throughout

the United States and distribute similar product lines. Unless otherwise noted, all references

hereinafter to “PoolCorp” include SCP and Superior.

V.

INTERSTATE TRADE AND COMMERCE

16.

Throughout the Class Period, PoolCorp manufactured, produced, sold, and/or

shipped substantial quantities of pool products in a continuous and uninterrupted flow of

transactions in interstate commerce throughout the United States, including within this District.

PoolCorp’s unlawful activities that are the subject of this Complaint were within the flow of, and

have had a direct and substantial effect on, interstate trade and commerce.

VI. RELEVANT MARKET

17.

There are over nine million residential pools in the United States, and over

250,000 commercial pools operated by hotels, country clubs, apartment buildings,

municipalities, and others. In 2010, the distribution of pool products was an estimated $3 billion

industry in the United States.

18.

The relevant product market is the Pool Product Distribution Market. Pool

products are the equipment, products, parts, or materials used for the construction, renovation,

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maintenance, repair, or service of residential and commercial swimming pools. Pool products

include, among other things, pumps, filters, heaters, covers, cleaners, steps, rails, diving boards,

pool liners, pool walls, and “white goods” (the parts necessary to maintain pool equipment).

Pool products do not include pool toys or games, products used solely for landscaping or

irrigation, products used in Olympic-style pools, or products used in pools in commercial water

parks.

19.

Pool products are designed and manufactured specifically for residential and

commercial swimming pools. There are no close substitutes for pool products, and no other

products significantly constrain their pricing.

20.

Wholesale pool distributors, such as PoolCorp, purchase pool products from

manufacturers, warehouse them, and then resell those products to pool builders, pool retail

stores, and pool service and repair companies (collectively, “pool dealers” or “dealers”). Dealers

then sell the pool products to owners of residential and commercial pools.

21.

Pool product manufacturers consider wholesale distributors to be a unique and

essential channel for the efficient distribution of their products. Distributors purchase and

warehouse significant volumes of pool products throughout the year, allowing manufacturers to

operate their factories year-round notwithstanding the seasonal nature of the pool industry.

22.

Distributors also provide one-stop shopping, timely delivery, and the extension of

credit to thousands of pool dealers, thereby providing pool dealers and manufacturers with

significant transactional efficiencies. Additionally, distributors often help manufacturers

administer their dealer rebate and warranty programs and provide expertise to answer dealers’

product-related questions.

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23.

While manufacturers make a small amount of direct sales to larger dealers, they

cannot easily expand their operations into distribution because of the cost, lack of expertise in

distribution, and difficulty of obtaining products to distribute from competing manufacturers.

24.

Distributors are the only available source of pool products for the vast majority of

dealers, which are small “mom-and-pop” operations that do not have the inventory, size, or

resources to purchase pool products directly from manufacturers. Dealers that buy direct from

manufacturers are not permitted by the manufacturers to participate more broadly in the

wholesale distribution market and sell pool products to other dealers.

25.

The relevant geographic market is the United States. In the alternative, there are

numerous local relevant geographic markets, including, among others: (1) Alabama; (2)

California; (3) Florida; (4) Louisiana; (5) Missouri; (6) Oklahoma; (7) Tennessee; and (8) Texas.

VII. FACTUAL BACKGROUND

A.

26.

The Pool Product Distribution Market

The Pool Products Distribution Market is generally very fragmented. There are

over 100 manufacturers that produce a small number of product lines, such as pool heaters or

diving boards and rails. However, there are only three full-line manufacturers that sell nearly all

the pool products necessary to operate and maintain a pool: Pentair Water Pool and Spa, Inc.

(“Pentair”); Hayward Pool Products, Inc. (“Hayward”); and Zodiac Pool Systems, Inc.

(“Zodiac”). Collectively, these three full-line pool products manufacturers represent more than

50% of sales at the wholesale level.

27.

Distributors generally carry all brands of pool products across all manufacturers

to satisfy any and all orders from their pool dealer customers. It is necessary to sell the products

of at least one of the three full-line manufacturers to be able to compete effectively as a

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distributor. The products of the full-line manufacturers are “must have” products for wholesale

distributors because of the volume of products they represent and the considerable consumer

demand for their products. A positive relationship with these and other manufacturers is critical

to the success of a pool products distributor. Pool products distributors that are unable to offer

this one-stop shopping to their customers are at a severe competitive disadvantage.

28.

In general, manufacturers are willing to sell their products through any

creditworthy distributor that has a physical warehouse and personnel with knowledge of the pool

industry. Manufacturers typically prefer to have two or more distributors selling their products

to ensure that their pool dealer customers receive competitive service and prices.

29.

Manufacturers advertise and promote their products directly to pool dealers to

create pull-through demand at the distribution level and also offer year-end rebates to distributors

based on the volume of a distributor’s purchases. These year-end rebates represent a significant

component of the ultimate price paid for pool products by distributors. Failure to qualify for

these rebates can have a significantly detrimental impact on a distributor’s ability to compete on

price.

B.

PoolCorp’s Monopoly Power in the Pool Product Distribution Market

30.

PoolCorp is the world’s largest distributor of pool products and operates over half

of all pool supply distribution facilities in the United States; in many parts of the United States,

that figure can exceed 80%. Worldwide, PoolCorp claims to have over 80,000 customers,

including swimming pool builders, retail swimming pool stores, and swimming pool repair and

service providers. Between SCP and Superior, PoolCorp operates over 200 service centers

across the United States. According to Zacks Investment Research, PoolCorp, by reason of its

market share, has a dominant position in the Pool Product Distribution Market. By virtue of this

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31.

PoolCorp purchases pool products directly from manufacturers and then sells

them to pool dealers. Unlike other distributors that operate in a few local markets or a specific

region, PoolCorp is the only United States distributor to operate nationwide. According to

PoolCorp’s 2010 Form 10-K filed with the Securities and Exchange Commission, PoolCorp is

the only truly national wholesale distributor focused on the Pool Product Distribution Market in

the United States.

32.

Through a series of acquisitions, PoolCorp has grown to operate over 200

distribution centers throughout the United States. By way of comparison, the next largest United

States distributor operates less than 40 centers. In 2010, PoolCorp had roughly $1.5 billion in

net sales revenue.

33.

PoolCorp has even greater monopoly power in numerous localities across the

country, including, among others: (1) Alabama; (2) California; (3) Florida; (4) Louisiana; (5)

Missouri; (6) Oklahoma; (7) Tennessee; and (8) Texas. In these localities, PoolCorp has

maintained a market share of approximately 80% or higher for at least the past five years.

34.

PoolCorp’s dominance in these markets is enhanced by its status as the largest

nationwide buyer of pool products, often representing 30% to 50% of a manufacturer’s total

sales. PoolCorp obtains a significant competitive advantage in the downstream market by

qualifying for large volume discounts from manufacturers that are not available to any other

distributor.

35.

By virtue of the anticompetitive conduct hereinafter alleged, PoolCorp foreclosed

new entrants from obtaining pool products directly from manufacturers, which created

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C.

PoolCorp’s Exclusionary Practices

36.

Beginning as early as 2003, PoolCorp engaged in anticompetitive conduct by

foreclosing access to essential inputs and impeding entry into the Pool Product Distribution

Market by potential rivals. PoolCorp’s conduct is intended to and effectively does enable it to

improperly maintain and enhance its monopoly power in the Pool Product Distribution Market.

PoolCorp’s conduct has caused injury to competition and purchasers.

37.

PoolCorp willfully obtained its monopoly power through a strategy of

aggressively acquiring its competitors. Once acquired, former competitors’ sales centers are

routinely merged with existing PoolCorp centers or simply shuttered. Since 2001, PoolCorp has

purchased the following wholesale pool product distributorships in the United States:











In January 2001, PoolCorp acquired the pool division of Hughes Supply,
Inc., a major pool products distributor with 31 service centers in the
Eastern United States

In August 2002, PoolCorp acquired Fort Wayne Pools, Inc. (“FWP”), a
large regional pool distributor with 22 service centers in 16 states. FWP
was PoolCorp’s then largest, and sometimes only, competitor in numerous
locations within the United States. In the fourth quarter of 2002, PoolCorp
closed one center and consolidated 13 of the 22 service centers acquired
from FWP.

In October 2003, PoolCorp acquired the assets of Litehouse Products,
Inc.’s (“Litehouse”) distribution division. Litehouse’s primary business
was the retail sales of swimming pool and other leisure products in the
Midwest.

In January 2005, PoolCorp acquired a substantial stake in Latham
International L.P., an Albany, New York manufacturer of vinyl swimming
pool liners, polymer and steel panels, steps, and other swimming pool
products, and its Canadian subsidiary, Pool Tech Distribution Inc.

In November 2005, PoolCorp acquired the assets of Direct Replacements,
Inc., a Marietta, Georgia packaged pool distributor.

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In March 2008, PoolCorp acquired National Pool Tile Group, Inc.
(“NPT”), a leading wholesale distributor of pool tile and composite pool
finishes. By April 2009, PoolCorp had consolidated seven of the 15 sales
centers acquired from NPT.

In October 2009, PoolCorp acquired General Pool & Spa Supply, Inc.
(“GPS”), a leading regional swimming pool and spa products distributor.
By December 31, 2009, PoolCorp had consolidated three of the 10 sales
centers acquired from GPS.

38.

Over a third of PoolCorp’s cash since the company’s inception has been used for

these and other competitor acquisitions.

39.

PoolCorp has continued its aggressive acquisition strategy, even in the face of a

difficult market for the pool industry. Even as new construction dropped to 20% of PoolCorp’s

business from 40%, PoolCorp has completed several large acquisitions of competitors over the

past three years.

40.

Consistent with PoolCorp’s routine business practice, it aggressively sought to

remove any competitors it perceived as a competitive threat. PoolCorp not only acquired rivals it

perceived as competitive threats but thereafter closed them down. For instance, soon after

acquiring FWP, PoolCorp closed a FWP distribution facility in Baton Rouge, Louisiana. This

left PoolCorp as the only remaining distributor in the area, thereby enabling it to impose a 5%

price increase.

41.

Pool dealers have been aware of, and troubled by, PoolCorp’s monopolization of

the Pool Product Distribution Market for some time. For example, after PoolCorp’s acquisition

of GPS in late 2009, one dealer was concerned by the dwindling number of major pool product

distributors. Another echoed that concern over diminished competition: “If it gets down to one

player in the distribution line, it’s going to get tough for us.”

42.

PoolCorp not only dwarfs its nearest competitors in size, it uses its dominance to

further enhance and solidify its monopoly power. Because of its size, PoolCorp is able to

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purchase large volumes of product, allowing it to receive favorable pricing, rebates, and terms.

PoolCorp’s competitors, however, who are significantly smaller, are simply unable to match its

volume, and thus cannot obtain the same pricing and terms to compete effectively. Because of

PoolCorp’s extraordinary purchasing clout, pool product manufacturers take PoolCorp’s threats

quite seriously and reasonably fear losing its business if they do not comply with PoolCorp’s

threats and demands.

43.

In the spring of 2003, a former dealer with almost 20 years of experience in the

pool products industry opened a distribution business in Baton Rouge, Louisiana. PoolCorp

responded to this new competition by notifying all major pool product manufacturers that it

would stop dealing with any manufacturer that sold any of its products to the new entrant. If

those manufacturers failed to comply with its warnings, PoolCorp threatened to terminate not

only its purchases and sales of their pool products in the local Baton Rouge area, but would also

stop selling those manufacturers’ pool products throughout country.

44.

As PoolCorp was the manufacturers’ largest customer, its threat was ominous.

No other distributor could replace the large volume of potential lost sales to PoolCorp,

particularly in those markets where PoolCorp remains the only distributor. In fact, according to

the FTC, the manufacturer’s loss of sales to PoolCorp could be “catastrophic” to the financial

viability of even the largest manufacturers of pool products.

45.

Without expending tens of millions of dollars to enter dozens of markets

simultaneously, it is virtually impossible for any new potential pool products distributor to offer

any economic incentive to manufacturers that could compete with the purchasing and

distribution power of PoolCorp.

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46.

As a result of PoolCorp’s threats and demands, many manufacturers of pool

products, including the three biggest manufacturers, Pentair, Hayward, and Zodiac, refused to

sell pool products to the new entrant and canceled all pre-existing orders with the company. In

essence, PoolCorp effectively flexed its distribution muscle and forced this company to exit the

market by locking in manufacturers of 70% of pool products.

47.

Without direct access to pool products, the new entrant’s business ultimately

failed in 2005.

48.

A new entrant cannot reasonably overcome PoolCorp’s efforts to crush a potential

competitor. PoolCorp’s exclusionary tactics in Louisiana mirror its conduct throughout the

country. For instance, new entrants could not overcome PoolCorp’s exclusionary tactics by

purchasing pool products from other distributors, rather than directly from manufacturers. As a

general rule, distributors do not sell pool products to other distributors. Even when possible, this

alternative is not a viable long-term economic strategy because it substantially increases a

distributor’s costs and lessens its quality of service.

49.

For example, a new entrant distributor who buys from another distributor must

pay transportation costs from that distributor’s location, rather than receiving free shipping under

well-established manufacturer programs. Such distributor purchases are also at a marked up

price and do not qualify for key manufacturer year-end rebates. These higher costs would

prevent the new entrant from being able to compete aggressively on price. Additionally, without

full control of its inventory, this attempted work-around hampers the new entrant’s ability to

provide timely and quality service to its dealer customers.

50.

Because of PoolCorp’s monopoly power and

its nationwide pattern of

exclusionary conduct, pool product manufacturers are faced with a Hobson’s choice: (1) accede

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to PoolCorp’s threats and demands and refuse to sell pool products to smaller, less powerful

distributors, or (2) refuse to play by PoolCorp’s rules and permanently lose their largest

customer.

D.

PoolCorp’s Anticompetitive Conduct Has Recently Been the Subject of a
FTC Consent Decree

51.

On November 21, 2011, the FTC issued a complaint (the “FTC Complaint”)

against PoolCorp for violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C.

§45. See In the Matter of Pool Corporation, FTC File No. 101 0115.

52.

The FTC Complaint states:

This action addresses PoolCorp’s exclusionary acts and practices
in the market for the distribution of residential and commercial
swimming pool products. PoolCorp has unlawfully maintained its
monopoly power by threatening to refuse to deal with any
manufacturer that sells its pool products to a new distributor
entering the market, thereby foreclosing potential rivals from an
input necessary to compete. PoolCorp’s conduct deters and
impedes entry, raises its rivals’ costs, and results in higher prices,
reduced output and less consumer choice.

53.

The FTC Complaint alleges that beginning in at least 2003 and continuing to

today, PoolCorp has implemented an exclusionary policy that effectively impeded entry by new

distributors by preventing them from being able to purchase pool products directly from

manufacturers. Specifically, when a new distributor attempted to enter the market, PoolCorp

threatened manufacturers that it would not deal with them if they also supplied the new entrant.

PoolCorp threatened to terminate the purchase and sale of the manufacturer’s pool products for

all of the more than 200 PoolCorp distribution centers located throughout the United States.

PoolCorp’s policy did not exclude existing rivals from obtaining pool products from

manufacturers.

54.

Following a public comment period, the FTC approved a final order settling the

charges against PoolCorp on January 10, 2012.

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VIII. ANTICOMPETITIVE EFFECTS OF POOLCORP’S CONDUCT

55.

The effects of PoolCorp’s anticompetitive and exclusionary acts have been to

capture and/or maintain a large percentage of the relevant market, to substantially impair and

foreclose competition from rivals from a substantial share of the relevant market, and to

significantly raise barriers to entry for potential rivals.

56.

The acts and practices of PoolCorp have had the purpose, capacity, tendency, and

effect of impairing the competitive effectiveness of rivals, raising its rivals’ costs, and deterring

and impeding market entry. PoolCorp’s unlawful conduct has contributed significantly to the

enhancement and maintenance of its monopoly power.

57.

PoolCorp’s conduct adversely affected competition and consumers by:

(1) increasing or maintaining prices for pool products at artificially high levels; (2) reducing the

output of pool products; (3) eliminating or significantly reducing price competition for pool

products; (4) deterring, delaying, and impeding the ability of actual or potential competitors to

enter or to expand their sales in the Pool Product Distribution Market; and (5) reducing consumer

choice among competing pool product distributors.

58.

There are no legitimate pro-competitive efficiencies that justify PoolCorp’s

conduct or outweigh its substantial anticompetitive effects.

59.

Absent PoolCorp’s anticompetitive conduct and the substantial foreclosure and

reduction of effective competition caused by such conduct, PoolCorp would have faced

competition and reduced the prices it charged to purchasers of pool products.

60.

Moreover, had actual or potential pool product distributors not been prevented by

PoolCorp’s anticompetitive conduct from effectively competing in the market for such products,

those actual or potential competitors would have sold more pool products, gained a larger market

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share, and achieved economies of scale and scope that could have further driven down prices for

pool products in the marketplace.

61.

By unlawfully excluding and impairing competition, PoolCorp’s conduct has

caused Plaintiff and other Class members to pay more for pool products than they otherwise

would have paid absent PoolCorp’s illegal, exclusionary conduct.

62.

As a result of PoolCorp’s unlawful, anticompetitive conduct, Plaintiff and

members of the Class were compelled to pay, and did pay, artificially inflated prices for the pool

products they purchased.

IX. DAMAGES

63.

Had potential competitors been able to prepare to enter, enter, and/or remain in

the Pool Product Distribution Market unimpeded by PoolCorp’s illegal conduct, Plaintiff and

other members of the Class would have been able to purchase pool products for lower prices.

64.

Because of PoolCorp’s anticompetitive practices, Plaintiff and other Class

members purchased pool products at artificially high prices.

65.

Plaintiff and members of the Class have, as a consequence, sustained losses and

damage to their business and property in the form of the payment of overcharges for pool

products. The full amount of such damages will be calculated after discovery and upon proof at

trial.

X.

CLASS ACTION ALLEGATIONS

66.

Plaintiff brings this class action pursuant to Federal Rules of Civil Procedure

23(a) and (b)(3), on its own behalf and as a representative of the following class of persons and

entities (the “Class”):

All persons or entities that purchased pool products directly from
any Defendant at any time between January 1, 2003 and the
present (the “Class Period”). Excluded from the Class are

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Defendants and their subsidiaries, parents, or affiliates, and
government entities.

67.

The Class is individually so numerous that joinder of all members is

impracticable. While the exact number of members of the Class is unknown to Plaintiff at this

time, based on the nature of the trade and commerce involved, Plaintiff reasonably believes that

there are at least hundreds of members in the Class and that their identities can be learned from

records in PoolCorp’s possession, custody, or control.

68.

69.

70.

Class members are geographically dispersed throughout the United States.

Plaintiff’s claims are typical of the claims of the other members of the Class.

Plaintiff and the members of the Class have all sustained damage in that, during

the Class Period, they purchased pool products directly from PoolCorp at artificial1y maintained,

supra-competitive prices, established by PoolCorp’s actions

in connection with

the

anticompetitive behavior alleged herein. PoolCorp’s anticompetitive conduct, the effects of such

violations, and the relief sought are all issues or questions that are common to Plaintiff and the

other Class members.

71.

Plaintiff will fairly and adequately protect the interests of the members of the

Class and has retained counsel competent and experienced in class action and antitrust litigation.

Plaintiff’s interests are coincident with, and not antagonistic to, the interests of the other Class

members.

72.

Common questions of law and fact exist as to all members of the Class and

predominate over any questions affecting solely individual members of the Class.

73.

The questions of law and fact common to the Class include, but are not limited to:

a.

whether the Pool Product Distribution Market in the United States

constitutes a relevant market;

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b.

whether the Pool Product Distribution Market in the following localities

constitutes relevant sub-markets: (1) Alabama; (2) California; (3) Florida; (4) Louisiana;

(5) Missouri; (6) Oklahoma; (7) Tennessee; and (8) Texas;

c.

whether PoolCorp possesses monopoly power in the Pool Product

Distribution Market and submarkets;

d.

whether, through the conduct alleged herein, PoolCorp willfully acquired,

maintained, or enhanced its monopoly power in the Pool Product Distribution Market;

e.

whether, through the conduct alleged herein, PoolCorp attempted to

monopolize the Pool Product Distribution Market;

f.

whether PoolCorp monopolized the relevant market by engaging in

unlawful exclusionary conduct to acquire or maintain or enhance its monopoly power in

the Pool Product Distribution Market;

g.

whether PoolCorp entered into exclusionary agreements to unlawfully

acquire or maintain or enhance its monopoly power in the Pool Product Distribution

Market;

h.

whether, and to what extent, PoolCorp’s conduct caused Plaintiff and

Class members to pay supra-competitive prices for pool products and, thereby, suffer

antitrust injuries; and

i.

whether Plaintiff and Class members are entitled to damages and, if so, the

appropriate measure of damages.

74.

A class action is superior to other available methods for the fair and efficient

adjudication of this controversy because joinder of all members of the Class is impracticable.

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75.

The prosecution of separate actions by individual members of the Class would

impose heavy burdens upon the courts and the parties, and would create a risk of inconsistent or

varying adjudications of the questions of law and fact common to the Class. A class action

would achieve substantial economies of time, effort, and expense, and would assure uniformity

of decision as to persons similarly situated without sacrificing procedural fairness. There will be

no material difficulty in the management of this action as a class action on behalf of the Class.

XI.

FRAUDULENT CONCEALMENT

76.

Plaintiff and the members of the Class did not discover, and could not discover

through the exercise of reasonable diligence, the existence of the unlawful, anticompetitive

conduct and exclusionary tactics alleged herein until November 2011, when the FTC

investigation and related consent decree was first made public.

77.

Because PoolCorp’s agreements, understandings, and unlawful actions were not

made public until November 2011, before that time, Plaintiff and members of the Class were

unaware of PoolCorp’s unlawful conduct, and they did not know before then that they were

paying supra-competitive prices for pool products throughout the United States during the Class

Period.

78.

The affirmative acts of PoolCorp alleged herein, including the unlawful,

anticompetitive conduct, were wrongfully concealed and carried out in a manner that precluded

detection.

79.

Pool products are not exempt from antitrust regulation, and thus, before

November 2011, Plaintiff reasonably considered the Pool Product Distribution Market to be a

competitive industry. Accordingly, a reasonable person under the circumstances would not have

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been put on notice to investigate the lawfulness or legitimacy of PoolCorp’s pool products prices

before November 2011.

80.

Plaintiff and the members of the Class could not have discovered the alleged

monopolization and/or attempted monopolization at an earlier date by the exercise of reasonable

diligence because of the deceptive practices and techniques of secrecy employed by PoolCorp to

avoid detection of, and fraudulently conceal, its anticompetitive conduct and exclusionary

tactics.

81.

Because the alleged unlawful, anticompetitive conduct and exclusionary tactics

were affirmatively concealed by PoolCorp, Plaintiff and members of the Class had no knowledge

of any facts or information that would have caused a reasonably diligent person to investigate

whether PoolCorp was engaging in such unlawful, anticompetitive conduct, and exclusionary

tactics until November 2011, when reports of the FTC’s investigation of such conduct were first

publicly disseminated.

82.

As a result of PoolCorp’s fraudulent concealment, the running of any statute of

limitations has been tolled with respect to any claims that Plaintiff and the members of the Class

have alleged in this Complaint.

FIRST CLAIM FOR RELIEF



Monopolization in Violation of Section 2 of the Sherman Act, 15 U.S.C. §2

(on Behalf of Plaintiff and the Class)

83.

84.

Plaintiff incorporates by reference the preceding allegations.

PoolCorp acquired, willfully maintained, and unlawfully exercised monopoly

power in the relevant market and submarkets through the exclusionary, anticompetitive conduct

set forth above, including, but not limited to: (1) entering into exclusive dealing arrangements

with manufacturers of pool products; (2) adopting and publicly announcing a general policy of

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refusing to deal with manufacturers that sold pool products to competing pool product

distributors; (3) threatening to refuse to buy pool products from manufacturers that sold pool

products to other distributors; and (4) engaging in an aggressive strategy of acquiring competitor

pool product distributors.

85.

PoolCorp has effectively excluded competition from a significant portion of the

relevant market and each of the submarkets, unlawfully acquired and expanded its dominant

market share in the relevant market, and profited from its anticompetitive conduct by

maintaining prices at artificially high levels and by otherwise reaping the benefits of its illegally

obtained and maintained monopoly power.

86.

There is no legitimate business justification for PoolCorp’s anticompetitive

actions and the conduct through which it acquired and maintained its monopoly power in the

relevant market. The anticompetitive effects of PoolCorp’s conduct far outweigh any

conceivable pro-competitive benefit or justification. Even if such justification had existed, any

possible pro-competitive benefits could have been obtained by less restrictive alternatives.

87.

As a direct and proximate result of PoolCorp’s anticompetitive conduct, Plaintiff

and members of the Class have been injured in their business or property by PoolCorp’s

unlawful monopolization of the relevant market. Plaintiff and the other members of the Class

have been forced to pay artificially high, supra-competitive prices for pool products – prices

higher than they would have paid absent PoolCorp’s unlawful monopolization of the relevant

market and submarkets.

SECOND CLAIM FOR RELIEF



Attempted Monopolization in Violation of Section 2 of the Sherman Act, 15 U.S.C. §2 (on

Behalf of Plaintiff and the Class)

88.

Plaintiff incorporates by reference the preceding allegations.

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89.

PoolCorp unlawfully attempted to acquire monopoly power in the relevant market

and relevant submarkets during the Class Period, with the intention of doing so, through the

exclusionary, anticompetitive conduct set forth above, including, but not limited to: (1) entering

into exclusive dealing arrangements with manufacturers of pool products; (2) adopting and

publicly announcing a general policy of refusing to deal with manufacturers that sold pool

products to competing pool product distributors; (3) threatening to refuse to buy pool products

from manufacturers that sold pool products to other distributors; and (4) engaging in an

aggressive strategy of acquiring competing pool product distributors with the intention to reduce

competition.

90.

To the extent that PoolCorp has not already acquired and maintained monopoly

power in the relevant market and/or relevant submarkets during the Class Period, the conduct

described herein resulted in a dangerous probability it would acquire and maintain such

monopoly power.

91.

PoolCorp has excluded actual and potential competition from the relevant market

and relevant submarkets and, by unlawfully limiting the market shares of rivals, it has reaped the

financial benefits of its attempt to acquire monopoly power.

92.

There is no legitimate business justification for PoolCorp’s actions and conduct

through which it attempted to acquire monopoly power in the relevant market and relevant

submarkets. The anticompetitive effects of PoolCorp’s conduct far outweigh any conceivable

pro-competitive benefit or justification. Even if such justifications had existed, any possible pro-

competitive benefits could have been obtained by less restrictive alternatives.

93.

As a direct and proximate result of PoolCorp’s anticompetitive conduct, Plaintiff

and members of the Class have been injured in their business or property by PoolCorp’s attempt

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to monopolize the relevant market and each of the relevant submarkets. Plaintiff and the other

members of the Class have been forced to pay artificially high, supra-competitive prices for pool

products – prices higher than they would have been absent PoolCorp’s attempt to monopolize the

relevant market and submarkets.

PRAYER FOR RELIEF

Accordingly, Plaintiff respectfully requests the following relief:

A.

Certification of the Class defined in this Complaint pursuant to Federal Rule of

Civil Procedure 23(a) and (b)(3), and the designation of Plaintiff as the representative for the

Class and its counsel as counsel for the Class;

B.

PoolCorp’s actions described herein be adjudged and decreed to be in violation of

Section 2 of the Sherman Act, 15 U.S.C. §2;

C.

Plaintiff and the Class recover treble damages, as provided by law, that they are

determined to have sustained, and that judgment in favor of Plaintiff and the Class be entered

against Defendants, together with prejudgment interest at the maximum rate allowable by law;

D.

Plaintiff and the Class recover the costs of this suit, including reasonable

attorneys’ fees, as provided by law; and

E.

Plaintiff and the Class be granted such other, further, and different relief as the

nature of the case may require or as may seem just and proper to this Court.

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JURY DEMAND

Pursuant to Rule 38(a) of the Federal Rules of Civil Procedure, Plaintiff respectfully

demands a trial by jury.



Dated: February 22, 2011





Respectfully submitted,

/s/ Andrew A. Lemmon
ANDREW A. LEMMON (18302)
IRMA L. NETTING (29362)
LEMMON LAW FIRM, LLC
15058 River Road
P.O. Box 904
Hahnville, LA 70057
650 Poydras Street, Suite 2335
New Orleans, LA 70130
Telephone: (985) 783-6789
Facsimile: (985) 783-1333
E-mail: [email protected]

[email protected]


Christopher M. Burke
SCOTT+SCOTT LLP
707 Broadway, Suite 1000
San Diego, CA 92101
Telephone: (619) 233-4565
Email: [email protected]

Joseph P. Guglielmo
SCOTT+SCOTT LLLP
500 Fifth Avenue, 40th Floor
New York, NY 10110
Telephone: (212) 334-6444
Email: [email protected]

Attorneys for Plaintiff SPS Services, LLC, d/b/a
Premier Pools & Spas

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