August 1997

Feds Investigate Glass
Industry Price-Fixing

August 31, 1997 article reprinted
with permission from the Detroit News

By Noelle Knox
Detroit News Washington Bureau

WASHINGTON - At least 10 class-action lawsuits have been filed nationwide this summer, charging the top manufacturers in the $5-billion U.S. glass industry with price-fixing.

The suits charge the companies conspired to set the prices of glass used in everything from windows to mirrors to appliances.

The plaintiffs, which include a commercial builder, a supplier of automotive windshields and a window manufacturer, sued the glass producers after a June 8 article in The Detroit News disclosed an ongoing, five-year investigation by the justice Department into the pricing practices of the industry.

The lawsuits filed in Chicago, Pittsburgh, Minnesota and San Jose, Calif., name the nation’s five largest glass makers, including Ford Motor Co.'s glass division and Guardian Industries Corp., the Auburn Hills company controlled by Detroit Pistons owner Bill Davidson.

"We always suspected there was something going on when we got all these price announcements" from the glass makers, said Roger O'Shaughnessy, president & Cardinal IG, who filed one of the lawsuits.

Cardinal started making its own glass in 1992, and has not been named in any of the suits.

The suits against the glass makers could be more costly than any potential government fines. Victims of price-fixing cases can collect awards three times the amount of their damages if they prevail in civil court.

For example, if prices were inflated by just 5 percent over 10 years, the $5oo million extra that customers paid could amount to 1.5 billion in damages.

"We are talking hundreds of millions of dollars of overcharges in the last 10 years," said Bill Audet, a lawyer representing Engineered Glass Walls Inc., a small commercial builder in Stockton Calif.

The glass makers deny a conspiracy to set prices. Glass prices are almost the same as they were a decade ago - 36 cents a square foot in 1995, compared with 34 cents in 1986, according to the Census Bureau.

"Glass couldn’t be cheaper than it is today," said Mark Barron a partner at Ducker Research, a consulting firm in Bloomfield Hills, Michigan.

"It's more a question of intent (to fix prices). There is anti-competitive behavior, but I don't think the customers are paying the price. It's the manufacturers."

Suspicion of conspiracy is what prompted antitrust officials in the Justice Department to send subpoenas to all six U.S. glass makers.

The companies have been asked to provide information that may be related to the case, but a subpoena does not indicate whether the company is a target of an investigation.

"We’re not a target, we've been told that," Ford attorney Rick Rogers said. He declined to discuss the class-action suits, except to say, "Obviously, we are going to defend these."

PPG Industries Inc., which is the largest glass producer in the United States, has filed a motion to have the 10 lawsuits consolidated in U.S. District Court for the Northern District of California.

"We believe the complaints have no merit," said John Ruch, a spokesman for the Pittsburgh-based company.

Of the other companies sued, Guardian Industries and AFG Industries Inc. of Kingsport Tenn., declined to comment. A spokesman for Pilkington plc of Britain, and its US. subsidiary, Libbey-Owens-Ford, said the lawsuits pegged to the federal probe are baseless.

"The Department of justice inquiry has been going on for quite some time without any indictments. It's a fact-gathering exercise at the moment," Pilkington spokesman David Roycroft said.

Libbey-Owens-Ford, though, sought amnesty from prosecution from the Justice Department in September 1995 under the corporate leniency policy, according to people familiar with the case.

What the company admitted remains under seal in federal court, but government guidelines on amnesty say the company must report its illegal activities, show it "took prompt and effective action to terminate" its involvement and help antitrust investigators continue their probe.

The Justice Department denied the company's request, according to the sources.

The Justice Department did not return a phone call or respond to a faxed list of questions.

Details of the inquiry may come out when two former executives of Libbey- Owens-Ford are scheduled to go to trial Sept. 9 on unrelated charges of fraud and embezzlement to which they have pleaded not guilty. One of the executives has claimed the company set him up on the charges to discredit his testimony about antitrust practices.