June 1997

Feds Investigate Glass
Industry Price-Fixing

By Noelle Knox
Detroit News Washington Bureau

June 8, 1997 article reprinted
with permission from the Detroit News

WASHINGTON - JUNE 1997 - The Justice Department is investigating the $5-billion U.S. glass industry for possible collusion to set prices and overcharge customers on everything from windows to wine glasses.

But federal antitrust investigators may never complete the inquiry into what could be one of the largest examples of price fixing. Sources involved in the investigation said conflicts between two arms of the justice Department over crucial witnesses have stymied the probe.

The Justice Department, which started looking into glass prices in 1992, could be running out of time to get indictments from a federal grand jury in Dallas. That's because the five-year federal statute of limitations on potential violations could expire as soon as this year.The agency's investigation began in Dallas, where antitrust officials questioned the pricing of glass used for buildings in the southwestern United States. But the case has been expanded to include virtually all forms of glass, including, bathroom mirrors, car windshields and beer bottles.

Antitrust officials are looking into whether major glassmakers colluded to inflate worldwide prices for various forms of glass over several years, leading to more expensive products.

Exactly how much more consumers may have paid for glass products is unclear. The scope of the investigation remains behind the grand jury's veil. But sources say the case could be far larger than last year's price-fixing action against agricultural giant Archer Daniels Midland Co., which resulted in a record $100 million fine.

Justice antitrust officials have sent subpoenas to the six major glass companies in the United States that control over 95 percent of the market. Among the firms: Guardian Industries Inc. of Auburn Hills and Ford Motor Co.'s glass business.

Being served a subpoena means a company must provide information possibly related to the case, but does not indicate whether a company is a target of an investigation.

Much of the controversy has focused on Libbey-Owens-Ford Co., the nations second-largest glass maker, and two of its former executives, Ronald Skeddle and Edward Bryant, who were fired from the Toledo company in 1993.

Records reflect that Libbey-Owens-Ford, which is owned by Britain’s Pilkington plc, filed a request with the Justice Department for amnesty from possible price-fixing charges.

While that request remains under seal in federal court, Justice Department guidelines on amnesty requests show a company must report on its illegal activities, show it "took prompt and effective action to terminate" its involvement and help antitrust investigators continue their probe.

Instead of accepting the Libbey-Owens-Ford amnesty plea, though, antitrust investigators offered legal immunity to Skeddle, who was chief executive officer, and Bryant, who was a company vice-president, according to court documents and sources familiar with the case.
In exchange, investigators wanted the two executives to provide details about how the glass industry divvied up contracts and agreed on price increases.

But the U.S. attorney for the northern district of Ohio, Emily Sweeney, had indicted Skeddle and Bryant on separate charges of money laundering and defrauding Libbey-Owens-Ford. She has made it clear to the antitrust arm of Justice that the two men should not get immunity before their criminal trial on Sept. 9.

Antitrust officials opposed that, sources said, fearing criminal convictions of Skeddle and Bryant would taint the credibility of their testimony on potential price-fixing practices involving their former employer.

Antitrust cases, including last year's action against Archer Daniels Midland, often hinge on the testimony of former employees.

"This is the most difficult of accusations to prove because any conversation with a competitor can be construed as price fixing," said Mark Barron, a glass industry analyst for Ducker Research Co., a firm in Bloomfield Hills.

"The only time they've been able to bust people is to get confessions because they usually don't have the hard evidence "Barron said.

The tug-of-war and delays inside the Justice Department have already taken a toll on the price-fixing investigation. Last November, Gary Rosenberg, resigned as lead antitrust prosecutor on the case.

"Things happened a lot slower than I or anyone expected " said Rosenberg, who now has a private law practice in Miami. He declined to comment further, saying the case is still before the jury.

Justice officials refused to be interviewed for this story or respond to a faxed list of questions.

The agency also rejected a request by The Detroit News for copies of public documents related to the case, saying: "The (antitrust) division’s price fixing investigation is ongoing. The disclosure of any documents relating to that investigation could reasonably be expected to interfere with enforcement proceedings and are, therefore exempt from public disclosure."

Four of the six major US. Glass firms said they have sent documents to antitrust officials under subpoena. Guardian Industries and AFG Industries Inc. did not respond to requests for comment.
"We recently mailed boxes (of data) to the government in response to their subpoena," said glassmaker Cardinal's IG's attorney, John Grimstad. "Cardinal is not aware of any wrongdoing it has committed."

Officials from PPG Industries Inc. and Ford's glass operations in Dearborn said they provided papers on business transactions, pricing and contracts. But PPG and Ford officials stressed their companies compete aggressively on prices to attract customers.

In September 1995, Libbey-Owens-Ford sought to escape charges altogether under the Justice Department's, corporate leniency policy. To qualify for amnesty, the glass maker had to confess its antitrust activities and those of its competitors, and then explain what it bad done to stop it.

David Bricknell, general counsel for Pilkington, would not confirm or deny that the company's U.S. subsidiary asked for amnesty.

However, the district court judge in the criminal case against Skeddle and Bryant has ordered the Justice Department to provide him with a copy of the amnesty request under seal, according to transcripts of a hearing on March 12.

Instead of accepting the Libbey-Owens-Ford amnesty request, antitrust prosecutors called Skeddle and Bryant to Dallas, offering them immunity and grilling them in at least a dozen meetings about the significance of industry documents the department obtained under subpoena.

Justice asked Skeddle, who was chief executive officer from 1986 to 1993, to explain papers that allegedly showed Libbey-Owens-Ford was directed by its parent company not to sell or ship any glass products into Mexico in direct competition with Vitro Vidrio Plano, the Mexican glass giant, according to court documents filed in the Toledo federal case against Skeddle.

The government also wanted details about meetings between Libbey-Owens- Ford and its competitors "to fix prices of glass products sold on a worldwide basis" the documents say.

A spokesman for Vitro Vidrio Plano said he did not know about the grand jury investigation or any price-fixing activities.

"I am not aware of any price-fixing, full stop" Pilkington's Bricknell said.

In pursuing their case, antitrust investigators may have underestimated how hard Sweeney, the U.S. attorney in northern Ohio, would fight to protect her criminal case against the former executives.

Sweeney indicted Skeddle, Bryant and seven accomplices in June 1995 for laundering almost $8 million from Libbey-Owens-Ford through a series of shell companies. They also allegedly got Libbey-Owens-Ford to sell them its stake in some gas wells in a rigged bid for $1.3 million, according to court documents. All the men charged have pleaded not guilty.

Sweeney's spokesman said she could not comment during litigation.

Traditionally, disputes between the criminal and antitrust divisions over immunity are decided by the deputy assistant attorney general for the criminal division.

But there isn’t a full-time deputy in that position in Washington. John Keeney is only the acting assistant attorney general. His boss is acting deputy attorney general, Seth Waxman. And Waxman's boss is acting associate attorney general John Dwyer.

"There is no one around there running the show, everyone is acting," said Jonathan Rose, who teaches antitrust law at Arizona State University.

Justice’s internal disputes over pursuing antitrust charges in the glass industry contrasts with the Clinton administration’s tough stand with other cases.

Justice Department investigators have extensively subpoenaed documents from leading New York art dealers and international auction houses to probe price fixing in the art world.

The Federal Trade Commission in April blocked the merger between Office Depot Inc. and Staples Inc. And the Justice Department spent four years probing Archer Daniels Midland's practices on the pricing for lysine and citric acid before levying a $100-million fine.

The glass industry in the United States and Europe regularly attracts the scrutiny of antitrust regulators. That's largely because it is dominated by about 10 companies worldwide that often work closely together to share technology.

Except in a recent case. The Justice Department in 1992 sued Libbey-Owens-Ford and Pilkington for "'monopolizing the world market for the design and construction" of plants that use a specialized technology to make glass. The companies settled the claims in 1994, without admitting any wrongdoing.