Neoprene maker DDE guilty of price-fixing

January 20, 2005 Thursday

SECTION: BUSINESS; Pg. 7B

LENGTH: 432 words

HEADLINE: Neoprene maker guilty of price fixing; DuPont Dow Elastomers fined $84 million in antitrust case

BYLINE: RICHARD SINE

BODY:
By RICHARD SINE The News Journal

DuPont Dow Elastomers LLC pleaded guilty to a felony antitrust charge and agreed to pay an $84 million fine for price fixing of the synthetic rubber Neoprene, the U.S. Department of Justice announced Wednesday.

The Wilmington-based rubber company also disclosed on Wednesday that it had agreed to a $25.4 million settlement of a civil class action suit charging price-fixing for another form of synthetic rubber, known as EPDM. The settlement is related to ongoing government investigation of EPDM sales, the company said.

The company said it would take a $100 million charge against earnings, or about 9 cents per share, in the fourth quarter of 2004 to replenish its litigation reserve in the wake of the fine and the settlement.

DuPont Dow Elastomers spokeswoman Cathy Branciaroli said in a statement the plea agreement and settlement "are significant steps in resolving these matters and moving forward to serve customers with a commitment to the highest standards of ethical and legal compliance." She would not comment further.

Federal attorneys said DDE, as it is known, and its conspirators shared information on rubber sales, met to agree on prices and then issued price announcements based on the agreed prices.

"These types of cartels harm millions of American consumers, and companies that participate in them face great risks of being caught and punished," said R. Hewitt Pate, assistant attorney general in charge of the department's antitrust division.

The plea agreement is part of a broad prosecution of price-fixing among rubber manufacturers. The cases have yielded $200 million in fines so far, federal antitrust attorney Scott Hammond said.

DDE agreed to cooperate with ongoing investigations as part of the deal, which must be approved by a federal judge.

About $350 million of the rubber is sold each year. The rubber is used in the automotive, adhesive and construction industries.

A Justice Department spokeswoman declined to say how much the companies overcharged their customers. But the Sherman Antitrust Act allows a fine for up to twice the conspirators' gains or twice the victims' losses. The price-fixing occurred between 1999 and 2002, the government said.

In June, DDE agreed to pay $36 million to settle civil claims that it overcharged its customers for Neoprene.

DuPont and Dow joined forces in 1996 to create DDE, but its rubber sales were slower than expected. Dow agreed to pull out of the venture this month.

Contact Richard Sine at 324-2878