WSSC Files Federal Antitrust Lawsuit Against Water Treatment Chemical Companies
Lawsuit Alleges Conspiracy to Increase Prices of Aluminum Sulfate
OFFICE OF COMMUNICATIONS AND COMMUNITY RELATIONS
FOR IMMEDIATE RELEASE
LAUREL, Md. – October 19, 2017: WSSC filed a lawsuit today in U.S. District Court for the District of Maryland alleging that numerous chemical companies and individuals violated federal and State of Maryland antitrust laws by conspiring to increase the prices of aluminum sulfate (Alum) – a chemical used by WSSC to produce safe, clean drinking water and to purify wastewater. Alum is added to water to make minute particles stick together so they can be filtered out during the water and wastewater treatment processes.
“This lawsuit is about protecting the investment our customers made in safe, clean water,” said WSSC General Manager and CEO Carla A. Reid. “The suppliers named in this suit conspired to deprive us of a competitive price for this essential product and we will hold them accountable.”
The lawsuit alleges that executives of several companies, including the companies that WSSC purchased Alum from during the conspiracy period, Delta Chemical Corporation and USALCO, LLC, met to discuss their Alum businesses and formulated a plan to suppress competition. It includes allegations that the companies intentionally submitted losing bids that favored a particular company or withdrew winning bids, and unlawfully discussed the price and terms of their quotes. The lawsuit stems from a criminal investigation into the Alum industry that has resulted in guilty pleas to federal charges of price fixing and bid rigging.
The conspiracy period covers the years 1997 through 2011, but impacted the cost WSSC paid for Alum into 2016 due to the duration of some of the contracts. During this timeframe, the cost of producing Alum remained relatively stable. However, the price manufacturers charged for Alum increased substantially. The unexplained price increases have led to antitrust investigations by federal prosecutors. From 1997 to 2016, WSSC spent approximately $9 million on Alum and conducted business with some of the manufacturers that have been involved in the alleged conspiracy.
It is estimated that at least seven Alum manufacturers took part in the conspiracy. To date, more than 68 civil suits have been filed in federal court by water utilities, local governments and private entities - either individually or as part of a class action lawsuit – in an attempt to recoup costs lost due to the artificially elevated prices.
WSSC, represented by the antitrust lawyers at the national law firm Ballard Spahr, filed an individual suit separate from other class action lawsuits. Ballard Spahr filed similar lawsuits on behalf of the cities of Richmond and Baltimore in late May.
Antitrust law allows a successful plaintiff to recover treble damages - three times its losses. While the lawsuit was filed in Maryland, it likely will be transferred for pretrial proceedings to the federal court in Newark, New Jersey, where dozens of similar lawsuits arising from the alleged scheme are coordinated in multidistrict litigation. A trial would take place in Greenbelt at the United States District Court.
WSSC Water is the proud provider of safe, seamless and satisfying water services, making the essential possible every day for our neighbors in Montgomery and Prince George’s counties. We work to deliver our best because it’s what our customers expect and deserve.