News Feature | April 19, 2016

Water Exec Could Go Away For 10 Years For Price-Fixing

Sara Jerome

By Sara Jerome,

A former water industry leader could face 10 years in jail and a $1 million fine for shady business practices after cheating municipalities out of fair prices for water treatment chemicals, according to the Justice Department.

Frank Reichl of New Jersey, the former executive of water treatment chemicals manufacturer General Chemical Corp., “pleaded guilty for participating in a 13-year-long scheme to eliminate competition by price-fixing, bid-rigging and directing business to specifically-chosen pulp and paper companies across the country,” Talk Radio News Service reported.

What exactly did he do? The Justice Department explained in a statement:

According to documents filed with the court, from 1997 until July 2010, Reichl and his co-conspirators met to discuss each other’s liquid aluminum sulfate business, submitted intentionally losing bids to favor the intended winner of the business, withdrew inadvertently winning bids and discussed prices to be quoted or bid to customers.

Talk Radio News Service added:

Reichl met with the owners of liquid ammonium sulfate companies (the coagulant is used to treat drinking and waste water, and used by paper manufacturing companies), and submitted fake bids to allow intended companies win contracts.

Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division weighed in on the situation in a statement.

“By agreeing not to disturb each other’s ‘historical’ business, Reichl and his co-conspirators cheated municipalities and paper companies out of competitive prices for their supplies of liquid aluminum sulfate, a key water treatment chemical,” he said. “We continue to work with our partners at the FBI to hold offenders in this industry criminally accountable.”

Special Agent in Charge Richard Frankel of the FBI’s Newark Division explained the gravity of the crimes.

“Reichl and his co-conspirators colluded to circumvent competitive bidding and independent pricing for liquid aluminum sulfate contracts, and conspired to raise prices by submitting artificially inflated bids to their customers,” he said. “They also allocated customers in furtherance of their collusive scheme. By agreeing to violate both the spirit and the letter of the competitive process, Reichl and others defrauded municipalities as well as pulp and paper companies out of millions of dollars.”

General Chemical Corp., Reichl’s former employer, was later hit with a class-action lawsuit from a competitor.

“Pennsylvania-based Interstate, which buys aluminum sulfate — a chemical used in the purification of drinking water and wastewater treatment plants and in paper manufacturing — [said] GCC and the other defendants schemed to eliminate competition in the sale and marketing of the chemical by agreeing to fix prices, rig bids and allocate customers and markets in violation of Sections 1 and 3 of the Sherman Antitrust Act,” according to Law 360.

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