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 Glass and Legal Issues in the News 

March, 2000

 

Aloca Files Suit Against  Glass Makers

Price Fixing Alleged Against PPG, LOF, AFG, Guardian, and Asahi


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.

source: Tribune Review