Chemical Company Exec Pleads Guilty to Price-Fixing

NEWARK (CN) – A chemical company executive accused of rigging municipal water treatment bids pleaded guilty in federal court Wednesday.

According to the Department of Justice, Brian C. Steppig, former director of sales and marketing at GEO Specialty Chemicals Inc., admitted to conspiring to block competition for municipal and commercial contracts to supply liquid aluminum sulfate, a chemical that is added to water to clump its microscopic impurities together so they can be filtered.

Steppig, who is represented by J. Bruce Maffeo of Cozen O’Connor, faced conspiracy charges under the Sherman Act.

GEO Specialty Chemicals is a water treatment chemicals manufacturer headquartered in Lafayette, Indiana.

Steppig and General Chemical sales executive Vincent Opalewski were accused of conspiring to fix prices, rig bids and allocate customers, forcing the utilities to pay artificially inflated prices for liquid aluminum sulfate from January 1997 through at least 2011.

According to a grand jury indictment from February 2016, Steppig and his co-conspirators agreed not to pursue each other’s “historical” customers, discussed prices to be quoted to customers and submitted intentionally losing false bids to favor their intended winner.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum fine.

In a Department of Justice press release announcing the plea agreement, Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division wrote, “Municipalities and pulp and paper companies deserve competitive prices for water treatment chemicals.”

Aluminum sulfate is also used by pulp and paper companies in their manufacturing process.

“These charges reflect our ongoing efforts to hold accountable those who conspire to cheat their customers responsible for their crimes,” Baer said.

Acting Special Agent in Charge Andrew Campi of the FBI’s Newark Division said in a statement that the charges “send a message that anyone intent on corrupting the free market will be identified and brought to justice.”

Campi added, “Our mission is to protect victims who don't see these crimes occurring, but who always end up paying the price.”

U.S. District Judge Jose Linares for the District of New Jersey is presiding over the federal multidistrict litigation of collusion in the liquid aluminum sulfate industry.

Multiple municipalities filed antitrust class action suits against the chemical company defendants for the price-fixing conspiracy.

Former senior executive at General Chemical Frank Reichl pleaded guilty to conspiracy in October 2015, admitting to gaming the bidding process from 1997 to 2010 by meeting with co-conspirators to submit fake “throw away” bids to favor one intended winner.

General Chemical is represented by attorney Richard Epstein at Sills Cummis & Gross P.C.

Representatives for Steppig and the Department of Justice did not immediately respond to requests for comment.

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