Wanhua’s US Subsidiary Files Settlement Application, Marking the Third Settlement in the Case
On July 31, 2026, a judicial document submitted to the U.S. District Court for the Western District of Pennsylvania disclosed that Wanhua Chemical America Co., LTD. has reached a settlement agreement with the plaintiffs in the diisocyanate (MDI/TDI) antitrust class action, with a settlement amount of US$7.75 million, equivalent to approximately RMB 52.3 million.
The timeline indicates that the parties finalized a principled settlement framework on June 3, 2026, and simultaneously signed confidentiality agreements as the basis for the settlement; the full settlement text was formally signed on July 9; and on July 31, documents were formally submitted to the court to apply for judicial approval of the settlement plan. This is also the third settlement agreement reached in this diisocyanate antitrust case, which has lasted for many years.
First Two Settlements Concluded, Court Grants Preliminary Approval
Prior to the settlement by Wanhua’s US subsidiary, two corporate settlements had already been completed in this case.
On May 4, 2026, BASF took the lead in reaching the first settlement in this case, paying a settlement amount of US$3 million to the plaintiffs, breaking the ice in the case. Following closely, on May 8, Covestro‘s US subsidiary, Covestro LLC, also reached a settlement with the plaintiffs, with a settlement amount of US$7 million.
On July 23, 2026, both settlement agreements from BASF and Covestro’s US subsidiary received preliminary approval from the U.S. District Court for the Western District of Pennsylvania. The court scheduled the final approval hearing for December 7, 2026; the two settlement agreements can only officially take effect and be implemented after the hearing is completed.
Origin of the Case: Downstream Buyers Sued Chemical Companies in 2018 for Alleged Price Fixing Conspiracy
The entire lawsuit originated in June 2018, when downstream buyers of MDI and TDI initiated a class action, listing several global chemical manufacturers such as BASF, Dow Chemical, and Huntsman as defendants. The plaintiffs alleged that multiple companies artificially tightened supply by actively limiting production and colluded to raise market prices for MDI and TDI; they utilized the market structure of highly concentrated supply and scarcity of substitute products to implement price collusion.
The MDI and TDI involved are core raw materials for polyurethanes and are widely used in fields such as home furnishings, construction materials, automobiles, and insulation materials. Regarding the plaintiffs’ allegations, all implicated companies denied them. The companies argued that the lawsuit was initiated following relevant investigation reports by the U.S. Department of Justice, and that the Department of Justice’s investigation ultimately did not bring any charges.
In March 2020, District Judge Donetta Ambrose denied the defendants’ motion to dismiss the case, ruling that the clues submitted by the plaintiffs were supported by evidence and the case should proceed to trial. The judge cited multiple clues, including records of simultaneous price increases in industry products, planned plant shutdowns, supply disruptions, and communications between companies before price adjustments, as well as materials related to industry conferences. In the same ruling, the judge denied motions by BASF, Covestro, Mitsui Chemicals, MCNS, and Wanhua Chemical to dismiss the case on the grounds of lack of jurisdiction, and the case continued to proceed through the litigation process.
Major Ruling on Jurisdiction: Lawsuits Against Overseas Parent Companies Terminated, US Subsidiaries Continue to Defend
In 2022, the presiding judge in this case was changed, and a specialized factual investigation on jurisdiction was launched. Covestro and Wanhua Chemical’s parent companies again submitted motions to dismiss, arguing that the U.S. courts did not have judicial jurisdiction over the overseas parent companies.
In January 2026, Judge W. Scott Hardy made a key ruling, approving the two companies’ motions to dismiss. The ruling clarified that U.S. courts cannot exercise personal jurisdiction over China’s Wanhua Chemical and Germany’s Covestro, the two overseas parent companies. The plaintiffs’ claims against the two parent company entities were completely terminated, and they cannot sue the parent companies on this ground again. The ruling emphasized that the independent status of legal entities should be respected, and a simple equity relationship between a parent and subsidiary is insufficient to bring an overseas parent company under U.S. judicial jurisdiction.
This ruling only targets overseas parent companies; Covestro’s US subsidiary, Covestro LLC, remains a defendant in this case, and its status in the lawsuit is unaffected by this jurisdiction ruling; the entity reaching the settlement this time is also Wanhua Chemical’s US subsidiary, not the Wanhua Chemical parent company entity.
Future Outlook: Awaiting Court Approval for Settlement, Remaining Defendants to Continue Litigation
As of now, the US$7.75 million settlement by Wanhua’s US subsidiary is still pending court approval, and whether it takes effect depends on the results of judicial review. The settlements by BASF and Covestro’s US subsidiary await final confirmation following the hearing on December 7.
Following these three settlements, the remaining defendants, such as Dow Chemical and Huntsman, have not yet reached settlements, and the plaintiffs will continue to advance antitrust claim procedures against the remaining defendants. The progress of the settlements in this case will also serve as a reference sample for global MDI/TDI industry trade and for overseas companies responding to U.S. antitrust class actions.
