| Alcoa Inc. has sued PPG Industries
Inc. in U.S. District Court in Pittsburgh alleging the glass maker
fixed prices for plate glass and divided up the U.S. market with other
top glass producers.
If the allegations are true, they
paint a stunning picture of how executives conspired behind closed
doors at industry trade meetings in the United States and Germany to
set glass prices.
While PPG, the largest U.S. glass
producer, has been named in the lawsuit, which was filed in late
January, the central character in the case and others like it is
Toledo-based Libbey-Owens-Ford Co., which, the Alcoa complaint
indicates, has been the subject of a criminal prosecution in Ohio by
the U.S. Justice Department.
For Alcoa, whose aluminum product
prices are guided by the daily vagaries of supply and demand through
the London Metal Exchange, the possibility that suppliers were fixing
prices must be particularly galling.
Alcoa jumped into the fray by filing
its lawsuit in late January because its subsidiaries - Alcoa
Extrusions Inc., Cressona, Pa., and Kawneer Co. Inc., Norcross, Ga. -
buy plate glass to produce windows for commercial buildings.
The Pittsburgh aluminum maker
acknowledged it has come late to the party - because settlement of a
large number of ongoing cases had already been proposed. And it said a
notice of the settlement in the class action in August was the first
it had heard of the pending cases.
In the complaint, Alcoa said a who's
who of plate glass producers conspired to "fix, raise, maintain
or stabilize prices" from 1986 through 1995.
Plc. Asahi has a joint
venture with PPG in the United States, and Pilkington owns 80 percent
of Libbey-Owens-Ford.
Pilkington invented a float glass
process to produce plate glass that was universally accepted under a
license agreement by producers in the United States.
Alcoa's complaint stated:
"Pilkington, defendants and their other co-conspirators agreed on
a variety of restrictive practices which enabled defendants and their
co-conspirators to control the production capacity of float glass, and
thereby fix, maintain and stabilize its price and allocate
business."
And Alcoa quotes a criminal case
against a former Libbey-Owens-Ford executive which "contain
admissions by former senior officers and directors" of
Libbey-Owens-Ford that companies, including PPG, allegedly
participated in a conspiracy to fix prices.
Alcoa is far from alone in seeking
damages from the alleged conspiracy.
In a routine document recently filed
with the Securities and Exchange Commission, PPG said it was named in
29 lawsuits in federal courts and 11 in various state courts. The
federal complaints were consolidated in U.S. District Court in
Pittsburgh and allowed to go forward as a class action.
PPG said Ford Motor Co. is also a
defendant in the federal class-action complaint.
According to PPG's SEC filing, it and
Ford were the only two companies that have not entered into settlement
agreements on the class action complaints filed prior to Alcoa's
involvement.
In the SEC filing, PPG said,
"The company believes it has meritorious defenses in these
lawsuits."
Alcoa suggested many of the alleged
discussions on prices occurred at industry meetings such as Glass Week
each February or March after which price announcements were routinely
made and at the biennial Glass Fair in Germany after which price
changes generally became effective.
Alcoa's complaint indicates the
alleged conspiracy began to unravel as far back as 1993, when several
Libbey-Owens-Ford directors began raising concerns about how prices
were set. In 1995, the Alcoa lawsuit states, Libbey-Owens-Ford sought
criminal immunity under the Justice Department's Corporate Leniency
Policy, but was later turned down. |