Baltimore Joins Localities Nationwide Alleging Water Treatment Chemical Conspiracy

Following years of investigations by the FBI and federal prosecutors into alleged antitrust violations committed by manufacturers of the municipal water treatment chemical alum, the City of Baltimore is suing 18 such manufacturers, alleging that they colluded to divvy up customers and drive up alum’s cost. The lawsuit seeks $5 million in damages. Some company executives have already admitted involvement in the scheme to stifle competition.

Baltimore City is not the only local government to file suit over the alleged conspiracy – at least 68 other suits have been filed throughout the country over the same potential antitrust activity, reports The Baltimore SunFrom that article:

Alum, or aluminum sulfate, is used to force impurities in water to settle so they can be removed. For years, the city bought the chemical from Delta [Chemical Corp., a local company]. The lawsuit alleges that even though GEO Specialty Chemicals had an alum plant in Maryland it never bid for the city’s business. Neither did USALCO, [an alum manufacturer based in Wagner’s Point in South Baltimore,] until it acquired Delta [in 2011], the suit alleges.

If a member of the conspiracy inadvertently won business they weren’t supposed to, the company would withdraw its bid, federal prosecutors say.

GEO pleaded guilty in the criminal case last year and was fined $5 million.

The result of the scheme, the city says, is that its annual costs for alum almost doubled in the 10 years up to 2009, from $1.2 million to more than $2.2 million.

The president of Delta told the city that it needed to dramatically hike prices because of an increase in the cost of raw materials for alum, according to the suit. But the city alleges that’s untrue and that the raw materials actually got much cheaper.