Baltimore sues chemical companies over water treatment price-fixing

Baltimore sues chemical companies over water treatment price-fixing
The city of Baltimore has filed a federal lawsuit against 18 chemical manufacturers, alleging it was subject to a price-fixing scheme to drive up the costs of water treatment chemical from $1.2 million to $2.2 million per year over a decade.

The suit alleges that two Baltimore-based companies, USALCO and Delta Chemical Corporation, were in on the conspiracy with 16 other companies conspired to fix prices of aluminum sulfate (alum) and rig bids, defrauding the city.

"When people violate the law by getting together and devising a scheme to stifle competition and overcharge us, they are cheating the taxpayers — and we take that very seriously," Mayor Catherine Pugh said in a statement, according to the Baltimore Sun. "Managing the city budget to fund essential services like clean water, safe streets, and opportunities for youth is extremely important. We are committed to getting fair deals, and going after the perpetrators of fraud."

The city argued its annual costs for alum almost doubled in the decade between 1999 and 2009, from $1.2 million to more than $2.2 million.

The defendants manufacture and distribute alum, a chemical used in water purification which causes impurities to coagulate into larger particles and then settle to the bottom of a container, to be filtered out more easily.

For years, the city bought the chemical from Delta. The lawsuit alleges that even though GEO Specialty Chemicals had an alum plant in Maryland, it never bid for the city's business. Neither did USALCO, until it acquired Delta, the suit claims.

Delta claimed it needed to raise prices because of an increase in raw materials for alum, according to the suit, but the city alleges that’s untrue and the raw materials had gotten cheaper.

The FBI and federal prosecutors have been investigating alleged antitrust violations in the aluminum industry for years.

A US Department of Justice investigation of the conspiracy led to Frank Reichl, a vice president of sales and marketing of General Chemical Company, pleading guilty to conspiracy for price-rigging between 1997 and 2010.

At least 68 other civil suits have been filed over the alleged conspiracy, mostly by local governments.

The cases are being overseen by a federal judge in New Jersey, but a law firm helping the city with the case said any trial would be held in Baltimore.