Small Firm Wins Antitrust Case : Jury Awards $3.9 Million Against Big Pool Supplier

A small company based in the City of Orange has won a $3.9-million jury award against Pool Water Products of Garden Grove, California’s largest distributor of swimming pool supplies and equipment.

In a verdict issued late Thursday in U.S. District Court in Los Angeles, a jury ruled in favor of APS Industries, a distributor of swimming pool products. APS had alleged in a 1983 suit that Pool Water had violated federal antitrust laws and monopolized the distribution of swimming pool supplies and equipment in Southern California.

Antitrust Violations

After a seven-week trial, the jury determined that APS, which has annual revenue of about $2.5 million, deserved $500,000 for antitrust violations--automatically tripled to $1.5 million under federal law, plus $1.4 million in damages for acts of unfair competition and for interfering with APS business opportunities, and another $1 million in punitive damages.

Pool Water could not be reached for comment. Executives at the company’s Garden Grove office did not return repeated phone calls on Friday. Gary Van Delden, president of APS Industries, said he was gratified by the verdict.

Dominant in Industry

Privately held Pool Water, founded in 1964 by Marvin Allred, is believed to dominate the distribution of pool supplies and equipment, accounting for about 50% to 60% of the $100-million industry in Southern California.

Two other Orange County firms, Superior Pool Products and Orcal, are estimated to each have 15% to 20% of the market. APS and 11 other small firms share about 10% of the market, according to APS lawyers.

APS was formed in 1979 by former franchisees of Allred’s Pool Supplies Stores, a retail chain also founded by Marvin Allred.

Until then, Pool Water, by contractual agreement, had been the exclusive distributor to the franchise stores.

The franchise stores were freed of their contractual obligation to use Pool Water as their distributor when APS was created to purchase back franchise agreements from the Allred family.

Allegedly Pressured Suppliers

APS thus replaced Pool Water as the stores’ franchiser and distributor.

In its suit, APS had contended that Pool Water pressured, intimidated and coerced manufacturers of swimming pool supplies and equipment not to sell to APS. As a result, APS claimed, it “has not only been unable to supply its own franchisees’ needs for major products, but also has been thwarted in expanding its base of operations to satisfy the needs of prospective retail dealers the way Pool Water Products did when it commenced its operations in the mid-1960s.”