Fla. AG Bondi files suit alleging companies reduced competition for water treatment chemical

By Melissa Busch | Feb 10, 2017

TALLAHASSEE (Legal Newsline) – The Florida Office of the Attorney General is just one of several businesses and agencies going after liquid aluminum sulfate producers General Chemical Corp. and its successor and affiliated companies, GEO Specialty Chemicals Inc. and C&S Chemicals Inc., for allegedly violating federal antitrust laws. 

In January, Florida Attorney General Pam Bondi filed a complaint in U.S. District Court for the District of New Jersey that accused the companies of conducting business practices that harmed competition, which in turn harmed customers. The complaint states that the defendants conspired to restrain trade, rig bids and reduce competition in Florida for liquid aluminum sulfate. State, county and municipal governments use the non-toxic chemical to purify raw, untreated water.

“The lawsuit was filed in the U.S. District Court for the District of New Jersey because that is where several of the defendants are located and there are already consolidated class action cases against the companies in that court,” Kylie Mason, press secretary for the Florida Office of the Attorney General, told Legal Newsline.

This complaint follows many others. For insance, the cities of Fresno and Sacramento in California and other water businesses have filed suits in California and New Jersey federal courts accusing Chemtrade and its affiliates of conspiring with competitors to spike up the price of the chemical water purifier. Chemtrade bought General Chemical Corp. in 2014.

Those suits came after General Chemical Corp.’s former general manager, Frank A. Reichl, plead guilty in a federal price-fixing conspiracy investigation that allegedly occurred between 1997 and 2010, according to court documents. Several other executives have been indicted and GEO entered into a plea agreement over alleged violations of the Sherman Act. According to Florida’s complaint, GEO admitted the scheming had an overall financial impact of more than $152 million. In June, GEO was ordered to pay a $5 million antitrust penalty.

“Whenever the Department of Justice enters into price-fixing plea agreements, state attorneys general and similar entities that are involved in the purchase of relevant products are swift to follow,” Colin Kass, a partner in the litigation department and co-chair of the antitrust group with the international law firm Proskauer, told Legal Newsline.

The Florida complaint also states that the companies have allegedly violated the Sherman Antitrust Act, the Florida Antitrust Act, and the Florida Deceptive and Unfair Trade Practices Act. The defendants allegedly circumvented the competitive bidding process for liquid aluminum sulfate by holding secret meetings to agree on prices prior to bidding processes, according to court records.

“The biggest obstacle will be establishing that the alleged conduct hurt the state of Florida,” Kass said.

The Florida Attorney General’s Office emphasized the importance of keeping the playing field even when it comes to producing and selling liquid aluminum sulfate.

“Liquid aluminum sulfate is an important chemical used in the water purification process and is purchased widely by state and local governmental entities in Florida. It is important to ensure that products such as liquid aluminum sulfate are priced competitively on the open market and are not artificially high because of collusive behavior,” Mason said.

Bondi’s office is seeking civil penalties and treble damages.

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