Sept. 30, 2004
Bayer Unit to Pay $33 Mln Fine, Plead to Price Fixing
Bayer AG's U.S. unit agreed to plead guilty and pay a $33 million fine for conspiring to fix prices of a chemical used to make plastic grocery bags, shoe soles and other consumer products.
The guilty plea by Bayer Corp. would be the first in a U.S. government investigation into price fixing for the chemical additive used in a variety of products, the Justice Department said in Washington. In July, Bayer AG, based in Germany, agreed to pay a $66 million fine to settle a U.S. charge it conspired to fix the price of chemicals used to make rubber products.
The latest scheme took place between 1998 and 2002 with another producer of aliphatic polyester polyols made from adipic acid, court papers said. The government didn't identify the other producer of the chemicals, which keep plastic bags from sticking and also are used to make automotive coatings, filters, belts, seals, gaskets, textiles, adhesives and sound-proofing material.
Bayer Corp., based in Pittsburgh, said in an e-mailed statement that it agreed to enter the guilty plea in federal court in San Francisco to resolve "all criminal charges'' related to the chemical additive. The U.S. unit of Germany's second-largest drug and chemical maker said it cooperated with the investigation.
The investigation of the plastics-additive cartel is an outgrowth of Justice Department investigations into collusion by makers of other chemicals, said agency spokeswoman Gina Talamona.
Besides Bayer AG's plea bargain, the Justice Department's rubber chemicals investigation has netted a guilty plea from Crompton Corp., which was fined $50 million. Two former Crompton vice presidents have also agreed to plead guilty to fixing the price of rubber chemicals.
Both Bayer and Crompton are cooperating in the Justice Department's investigation of the global cartel to fix prices of chemicals used to improve the durability, elasticity and strength of tires, outdoor furniture, hoses, belts and shoes, the government said.
The European Commission and authorities in Canada are conducting separate investigations.
The criminal probes have also exposed Bayer, Crompton and other companies to the threat of triple monetary damages sought by companies that used the companies to make rubber products. U.S. antitrust law allows customers to collect three times the amount they were overcharged by a price-fixing conspiracy.
At least 13 suits filed in U.S. courts accuse BASF AG, the world' largest chemical maker, Crompton and Bayer of fixing the price of urethane, a component of plastics and synthetic rubber.
Goodyear Tire & Rubber Co., the largest North American tire maker, accused Crompton, Bayer and other companies of conspiring to overcharge for synthetic rubber called ethylene propylene diene monomer, or EPDM.
DuPont Dow Elastomers LLC, a joint venture of DuPont Co. and Dow Chemical Co., the two largest U.S. chemical companies, agreed in June to pay a $36 million fine to settle civil claims it overcharged customers for neoprene, a synthetic rubber. (Bloomberg)