Skip to main content
Sister Publication Links
  • European Rubber Journal
  • Plastics News
  • Tire Business
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Automotive
    • Tire
    • Non-Tire
    • Suppliers
    • Silicone
    • Online Exclusive
    • Latex
    • Technical Notebooks
    • Executive Action
    • Government/Legal
    • Opinion
    • Rubber Division IEC
    • ITEC
    • Blogs
    • Sustainability
    • Products
    • Wacky World of Rubber
  • War in Ukraine
  • Custom
    • Sponsored Content
    • White Papers
  • Resources
    • Directory
    • Classifieds & Mold Mart
  • Data
  • Events
    • RN Events
    • RN Livestreams/Webinars
    • Industry Events
    • Past Events
    • Rubber News M&A Live
    • 2022 Hose & Belt Manufacturers Conference
    • 2022 International Silicone Conference
    • 2022 International Tire Exhibition & Conference (ITEC)
  • Advertise
  • DIGITAL EDITION
MENU
Breadcrumb
  1. Home
  2. News
December 13, 2004 01:00 AM

Crime & punishment

Mike McNulty
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Producers of rubber chemicals, EPDM, nitrile rubber, polyurethanes, carbon black and polyols facing industry-wide price-fixing scandals hoped the situation wouldn't get worse in 2004.

    It did-and antitrust officials are far from done.

    Price-fixing probes launched by U.S., Canadian and European authorities since late 2002 into possible collusive behavior by rubber chemicals suppliers-when Crompton Corp. alerted them about the conspiracy-widened in 2004. The investigations resulted in stiff fines for major companies, while high-ranking officials pleaded guilty to participating in the conspiracy.

    By early December, Crompton, Bayer A.G. and Degussa U.K. Holdings Ltd. had pleaded guilty to charges of price-fixing.

    Two high-ranking officials at Crompton and one at Bayer admitted they participated in the conspiracy, and other individuals involved apparently were fired or disciplined by their companies. Lawsuits popped up all year and suppliers began setting aside funds to handle a growing number of civil suits.

    Crompton admitted its involvement in the rubber chemicals conspiracy in March and agreed to a $50 million fine in the U.S. and $7 million in Canada.

    The firm also said it was cooperating with U.S., Canadian and European authorities about another alleged ``cartel,'' this one involving polyurethanes and urethane chemicals.

    Bayer also admitted its guilt in the chemicals conspiracy, which allegedly occurred between 1995 and 2001, in July. Bayer agreed to pay a $66 million criminal fine in the U.S.

    In addition, Bayer pleaded guilty to price-fixing charges in two other actions.

    The company was fined $33 million for participating in a conspiracy from 1998 to 2002 to fix prices of aliphatic polyester polyols and received a $4.7 million fine for fixing prices of nitrile rubber for eight months during 2002 by conspiring with unnamed co-conspirators to suppress and eliminate competition for nitrile rubber.

    Bayer said it would take a provision against second-quarter earnings to account for the fines.

    Crompton and Bayer still are being investigated by European authorities and face a number of civil suits from rubber processors in the U.S. and Canada seeking compensation for being overcharged during the investigation period.

    Degussa U.K. Holdings pleaded guilty and was fined $1.5 million for participating in a conspiracy that suppressed competition in world markets for organic peroxides. It was charged with one count of conspiring to fix the prices of t-butyl perbenzoate and t-butyl peracetate organic peroxides sold in the U.S. and elsewhere from August 1997 until March 1998.

    Degussa U.K., which is now a subsidiary of German chemical giant Degussa A.G., operated independently at the time under the name Laporte P.L.C.

    It was the second company to admit its involvement in that conspiracy. In March 2002, French chemical producer Elf Atochem pleaded guilty and was fined $3.5 million.

    Like Crompton and Bayer, Degussa U.K. agreed to cooperate with the ongoing federal investigation of anti-competitive behavior in the organic peroxides industry.

    Three executives also agreed to plead guilty to participating in the scandal. Former Crompton executives Joseph B. Eisenberg and James J. Conway, both retired executive vice presidents, and a former Bayer vice president, Martin Petersen, all pleaded guilty to charges of participating in a conspiracy to fix rubber chemical prices and could face prison sentences of up to three years and fines of as much as $350,000 each.

    Meanwhile, a number of rubber industry suppliers on both sides of the Atlantic prepped for expensive legal action.

    DuPont Co. and its joint venture with Dow Chemical Co., DuPont Dow Elastomers L.L.C., set aside $36 million to settle civil lawsuits against DuPont Dow Elastomers pertaining to alleged price-fixing of polychloroprene. DuPont also took a charge of $150 million against earnings to cover potential liability pertaining to antitrust and price-fixing matters related to EPDM.

    The polychloroprene escrow was in response to a civil suit filed April 9 by Alco Industries Inc. of Trooper, Pa. The suit named DuPont Dow, Bayer (including Bayer Corp. and Bayer Polymers L.L.C.) and Polimeri Europa S.p.A. (including Polimeri Europa Americas Inc., Enichem S.p.A. and Enichem Americas Inc.) as co-conspirators.

    Suits also were filed by a dozen other companies, including Freudenberg-NOK G.P., Parker Hannifin Corp., Reeves Brothers Inc. and Goodyear.

    * * *

    Price-fixing fallout

    Rubber chemicals

    Companies

    Bayer: Paid $66 million fine

    Crompton/Uniroyal Chemical: Paid $50 million fine in the U.S. and $7 million in Canada

    Individuals

    James J. Conway and Joseph B. Eisenberg, former Crompton executive vice presidents, and Martin Petersen, former Bayer vice president, pleaded guilty

    NBR

    Bayer: Paid $4.7 million fine

    Crompton: Granted immunity from prosecution

    EPDM

    Crompton: Granted immunity from prosecution

    Polyols

    Bayer: Paid $33 million fine

    Organic peroxides

    Degussa U.K.: Paid $1.5 million fine

    Letter
    to the
    Editor

    Rubber News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].

    Most Popular
    1
    Wacker may add silicon metal capacity in Norway
    2
    Wacker aims to increase global silicone capacity
    3
    Freudenberg Sealing chief technology officer set to retire
    4
    Stellantis to replace North American purchasing chief amid supplier relation woes
    5
    COVID lockdowns, lower crude prices cause NR markets to slip
    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Rubber News delivered straight to your inbox, free of charge.

    Subscribe Today

    Subscribe to Rubber News to get the best coverage and leading insights in the industry.

    SUBSCRIBE
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter

    MISSION

    To serve companies in the global rubber product industry by delivering news, industry insights, opinions and technical information.

    Contact Us

    2291 Riverfront Pkwy, Suite 1000
    Cuyahoga Falls,
    OH 44221

    Customer Service:
    877-320-1726

    Resources
    • About Us
    • Digital Edition
    • Staff
    • Advertise
    • Order Reprints
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Careers
    • Ad Choices Ad Choices
    • Sitemap
    Partner Sites
    • Tire Business
    • European Rubber Journal
    • Plastics News
    • Plastics News China
    • Urethanes Technology
    • Automotive News
    • Crain Brands
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Automotive
      • Tire
      • Non-Tire
      • Suppliers
      • Silicone
      • Online Exclusive
      • Latex
      • Technical Notebooks
      • Executive Action
      • Government/Legal
      • Opinion
      • Rubber Division IEC
      • ITEC
      • Blogs
        • Products
        • Wacky World of Rubber
      • Sustainability
    • War in Ukraine
    • Custom
      • Sponsored Content
      • White Papers
    • Resources
      • Directory
      • Classifieds & Mold Mart
    • Data
    • Events
      • RN Events
        • 2022 Hose & Belt Manufacturers Conference
        • 2022 International Silicone Conference
        • 2022 International Tire Exhibition & Conference (ITEC)
      • RN Livestreams/Webinars
      • Industry Events
      • Past Events
      • Rubber News M&A Live
    • Advertise
    • DIGITAL EDITION