INSIGHT: US to broaden price-fixing probes

16 March 2006 17:55  [Source: ICIS news]

By Joe Kamalick

 

WASHINGTON (ICIS news)--Global chemical firms can anticipate a widening of US federal antitrust prosecutions for price-fixing over the next several years as they leverage amnesty deals into more investigations and charges.

 

US legal authorities describe the ever-widening circle of investigations and prosecutions as similar to a nuclear chain reaction. 

 

Perhaps triggered by a whistle-blower or a competitor, the Department of Justice (DoJ) will pursue one company on price-fixing charges and offer executives of that targeted firm a choice: An amnesty deal in which the company confesses to price-fixing violations, pays a hefty fine and helps DoJ pursue other conspirators - or a full-blown federal prosecution, trial and perhaps serious jail time for top executives on conviction.

 

It is not a choice most companies have to think about for very long.

 

The effect is nuclear, according to Washington, DC attorney Ray Hartwell, because the amnesty deals typically produce conspiracy targets for DoJ among other companies and among other product groups. A single investigation of one company in one product area might yield leads on several co-conspirators and tips on possible price-fixing activities in other products.

 

This week the DoJ announced that Belgium’s Solvay and Dutch company Akzo Nobel Chemicals International have agreed to plead guilty and pay $41m (Euro34m) and $32m respectively in criminal fines for price-fixing violations. The settlement involves no jail time for company executives, and both firms have agreed to co-operate fully in the DoJ’s ongoing investigation of the international hydrogen peroxide and perborates markets.

 

Almost certainly other companies will be charged.

 

Separately, Bayer Material Sciences, Dow Chemical and BASF Corp have confirmed that they have received DoJ subpoenas regarding alleged antitrust activities by polyurethane chemicals producers. There have been no charges or allegations of wrong doing.

 

Hartwell, who has defended chemical companies and executives in antitrust cases, said the Justice Department’s long-running series of chemical industry investigations might continue for several years. “The series of investigations is being driven by incentives that DoJ amnesty policies create for both companies and individuals caught up in these probes,” Hartwell said.

 

Citing DoJ investigations, settlements and convictions in rubber chemicals, monochloroacetic acid (MCAA), aliphatic polyester polyols, plastics additives, bromines and pharmaceuticals since 2000, Hartwell said: “The pattern has repeated itself over the years in the chemicals industry, and the amnesty policy has enabled DoJ to walk across multiple product lines in these investigations.”

 

Once the feds are finished with conspirator companies, he noted, those companies typically face civil litigation in which their customers seek compensation and punitive damages for inflated chemicals prices.

 

“This might well continue for several more years,” Hartwell said.

By: Joe Kamalick
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