Chemical Companies Investigated - TheAdvocate.com - July 01, 2003
Chemical Companies Investigated
By Brett Barrouquere
July 1, 2003
A pair of Baton Rouge area chemical companies are the subject of a worldwide price-fixing investigation involving a rubberlike product used in car door seals and roofing.
Federal investigators are probing Crompton Manufacturing Co., which has a plant in Geismar, and Baton Rouge-based DSM Copolymer about the sale of a product called EPDM, representatives of the two companies said.
Along with the U.S. Department of Justice, Canadian and European authorities also are investigating the allegations, Crompton disclosed in a filing with the Securities and Exchange Commission.
A Crompton representative said the company, with a plant at 36191 Highway 30 in Geismar, is cooperating with the U.S. Department of Justice as well as the foreign investigators.
Crompton spokeswoman Mary Ann Dunnell, speaking by phone from the company's Greenwich, Conn., headquarters, declined to comment on specifics or whether federal agents had been to the Geismar plant.
Lloyd Tabrey, an attorney for DSM, said the company is cooperating with federal investigators but added that he couldn't give details.
"We're only a small part of the investigation," Tabrey said.
Jean Hamilton, an assistant U.S. attorney in San Francisco, where the investigation is being coordinated, could not be reached for comment.
No one would say when the investigation started, but Tabrey said DSM has been cooperating since December.
Crompton and DSM are among a handful of producers in the world of EPDM -- ethylene propylene diene monomer.
ExxonMobil, which has a plant on Scenic Highway in Baton Rouge, also makes EPDM as well as ethylene, one of the main ingredients.
Betsy Miller, a local spokeswoman for ExxonMobil, said she is unaware of any investigation of the company.
"I ran my loop, and the answer is no, we're not involved in what is going on," Miller said Monday.
DupontDow Elastomers, which has a plant in LaPlace, also makes and uses EPDM. Attempts to reach a spokesman for DupontDow were unsuccessful.
EPDM is a synthetic rubber that can be made to differing strengths and forms, depending upon how it is mixed.
The product is primarily used as the black runners around the edges of car doors and trunks, but forms of it have been used in roofing materials.
In 2002, Crompton had EPDM sales of $135 million, according to Crompton's SEC filing.
Because only a few manufacturers produce EPDM, the idea of companies illegally conspiring to set prices and product availability is especially dangerous, said Michael O'Meara, an attorney researching a possible lawsuit against the companies under investigation.
"It's a huge industry," said O'Meara, who works for the Chicago-based law firm Kenneth B. Moll & Associates. "These companies are making tons of money."
Crompton said it has had preliminary discussions with the U.S. Department of Justice about a possible plea to antitrust violations with respect to rubber chemicals.
The company has incurred antitrust investigation costs of $6.3 million through Dec. 31, 2002, and, since then, $8.5 million through March 31, 2003. O'Meara said it appears the few companies that produce EPDM illegally agreed to set prices at a certain level.
Those prices would hold, regardless of which company was selling the product and who was buying it, O'Meara said.
Along with EPDM, investigators are looking into possible antitrust violations relating to the sale and marketing of certain rubber processing chemicals and heat stabilizers, according to Crompton's filing with the SEC.