Antitrust Law Daily Executives indicted for water treatment chemical bid rigging conspiracy
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Monday, February 22, 2016

Executives indicted for water treatment chemical bid rigging conspiracy

By Greg Hammond, J.D.

Two executives of companies that manufacture and supply water treatment and other chemicals for use by municipalities and pulp and paper companies have been charged with entering into and engaging in a combination and conspiracy to suppress and eliminate competition in the sale and marketing of liquid aluminum sulfate, according to a Department of Justice Antitrust Division indictment filed in the federal district court in Newark, New Jersey (U.S. v. Opalewski, February 17, 2016).

The indictment claims that the executives agreed to rig bids and allocate customers for, and to fix, stabilize, and maintain the price of liquid aluminum sulfate sold to municipalities and pulp and paper companies in the United States, in violation of Section 1 of the Sherman Act.

The chief customers for liquid aluminum sulfate—a coagulant used to remove impurities and other substances from water—are municipalities and pulp and paper companies, the indictment asserts. Municipalities typically acquire their supplies of the chemical through a publicly-advertised competitive bidding process, while pulp and paper companies acquire their supplies of liquid aluminum sulfate through requests for price issued to suppliers.

The indictment charges that the two executives knowingly entered into and participated in the conspiracy by: (1) participating in meetings and conversations to discuss each other’s liquid aluminum sulfate business; (2) agreeing to “stay away” from each other’s “historical customers by not pursuing business from those customers; (3) tracking bid and pricing histories to determine which accounts were the “historical” customers of each co-conspirator; (4) intentionally submitting losing bids or price quotations to each other’s “historical” customers; (5) discussing the price to be quoted to a customer by the intended “winner”; (6) withdrawing an inadvertently winning bid submitted to the other’s “historical” customer; (7) bidding to lose on one of its own customers to compensate for the loss of a “historical” customer; and (8) instructing new employees on how to determine whether and how to bid on, or quote a price for, the business of liquid aluminum sulfate customers so as to comport with the agreement between the defendants and their co-conspirators not to compete.

The case is No. 2:16-cr-00065-JLL.

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