DuPont, Dow unit fined for price fixing

Venture to pay $84 million after admitting crime

January 20, 2005|By BLOOMBERG NEWS

SAN FRANCISCO - A joint venture of DuPont Co. and Dow Chemical Co. agreed yesterday to pay an $84 million criminal fine and plead guilty to fixing prices of a synthetic rubber used to make auto parts, furniture and shoes.

DuPont Dow Elastomers LLC, of Wilmington, Del., was charged with conspiring with competitors to fix the price of the rubber, known as neoprene, from August 1999 to April 2002.

The charge stemmed from a federal investigation of a price-fixing conspiracy in rubber-related chemicals and products.

As part of its guilty plea, DuPont Dow agreed to cooperate with the investigation. The agreement is subject to the approval of the U.S. District Court in San Francisco.

"These types of cartels harm millions of American consumers," said R. Hewitt Pate, head of the Justice Department's Antitrust Division.

About $350 million in neoprene, known as polychloroprene, is sold each year in the United States, the Justice Department said.

DuPont Dow also said yesterday that it settled a class action antitrust lawsuit related to sales of another synthetic rubber, ethylene propylene diene monomer, or EPDM, which is used in brakes and industrial roofing.

That settlement will cost the company $25.4 million. In June, the DuPont-Dow venture agreed to pay $36 million to settle claims by customers who said they were overcharged for neoprene.

DuPont Dow said it "has cooperated fully" with the criminal investigation and called the agreement "a significant step in putting the matter behind us." It promised a new "commitment to the highest standards of ethical and legal compliance."

The two companies said this month that DuPont, the No. 2 U.S. chemical company, would pay Dow, the No. 1 company, $87 million in an agreement to dissolve the joint venture.

The companies agreed last year that DuPont would pay 100 percent of any rubber price-fixing liability under $150 million, and more than 75 percent of any amount exceeding that.

The government's investigation of rubber-related industries has produced more than $200 million in fines so far, said Scott D. Hammond, acting deputy assistant attorney general.

This month, a unit of Zeon Corp. agreed to pay a $10.5 million criminal fine and plead guilty to fixing prices for acrylonitrile-butadiene, or NBR, a chemical used to make cable, seals and sealants.

In October, Bayer AG of Germany agreed to plead guilty and pay a $4.7 million fine for participating in that conspiracy. Bayer previously agreed to pay a $66 million fine to settle another U.S. charge. Crompton Corp. agreed to pay $50 million for fixing prices of rubber chemicals.

DuPont shares fell 11 cents to $47.38 yesterday on the New York Stock Exchange. Dow's shares declined 70 cents to $49.27.

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