News Feature | November 2, 2017

WSSC Sues Chem Firms For Alleged Price Fixing

Sara Jerome

By Sara Jerome
@sarmje

wssc reg new

A mega-utility in Maryland is taking on the chemical industry for alleged price-fixing practices.

“Maryland’s largest water utility filed a lawsuit in federal court Thursday against eight chemical companies and five executives, alleging that they conspired to inflate the price of a water treatment chemical over more than 14 years,” The Washington Post reported.

“The price-fixing and bid-rigging scheme caused Washington Suburban Sanitary Commission (WSSC) to overpay by ‘many millions’ for aluminum sulfate, the complaint alleges. WSSC supplies drinking water and treats sewage for nearly 2 million people in Montgomery and Prince George’s counties,” the report said.

Federal prosecutors allege that chemical companies have been conspiring to raise prices for years on aluminum sulfate, known as alum, the report said. The companies eliminate competition in order to drive prices up, prosecutors claim. 

Alum, useful in dissolving solids, is critical in many drinking water and sewage treatment processes. 

“Aluminum sulfate, also known as alum, is a flocculant, meaning it is added to drinking water and wastewater to make minute particles stick together so they can be filtered out,” Chemical & Engineering News reported

The lawsuit claims that the price WSSC paid for alum nearly quadrupled between 2000 and 2010, from $82 per ton to $314 per ton, The Washington Post reported. 

WSSC, which provides water and wastewater services for customers near Washington, DC, is one of the largest water utilities in the nation. It manages a network of nearly 5,600 miles of fresh water pipeline and over 5,400 miles of sewer pipeline, according to the utility. 

The complaint stated that WSSC wants $5 million in compensation and punitive damages, according to The Washington Post. WSSC spent around $9 million on alum between 1997 and 2016, it said. 

Companies named in the suit include "Ontario-based Chemtrade Chemicals, Pennsylvania-based Geo Specialty Chemicals, Georgia-based C & S Chemicals, Georgia-based RGM Chemical, Atlanta-based Kemira Chemicals, Louisiana-based Southern Ionics, and Baltimore-based Usalco and Delta Chemical. The complaint also names General Chemical, as well as affiliates and subsidiaries for all the companies," according to The Washington Post

The Washington Post attempted to contact the chemical firms for comment. 

“Rohit Bhardwaj, chief financial officer for Chemtrade, said the allegations in the lawsuit precede 2014, when Chemtrade bought General Chemical. He said he couldn’t comment on the lawsuit, but said General Chemical had been granted amnesty in the Justice Department’s criminal investigation into the allegations. A lawyer for Kemira declined to comment, saying the company had not seen the suit. Officials for the other companies named in the lawsuit did not return calls [immediately],” the report said. 

WSSC said in a statement that it will be represented by antitrust lawyers from Ballard Spahr, a national law firm.

Image credit: "wssc," daniel lobo © 2007, used under an Attribution 2.0 Generic license: https://creativecommons.org/licenses/by/2.0/