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There's no shortage of contestants for 'The Price is Fixed'
© St. Petersburg Times, published October 22, 2000 TV's long-running game show, The Price is Right, has it all wrong. In today's business world, the new game show should be called The Price is Fixed. Price-fixing. The term describes the secret and illegal agreements made by "competing" companies to raise their prices together and preserve profit margins. Sounds mind-numbing. But consider this: price-fixing is rapidly becoming the in and chic corporate fraud of the decade. And suspected price-fixing is the new favorite target of antitrust busters in federal and state governments. Compact discs. Food preservatives. Steel. Art auctions. Chemicals. Building materials. Capitol Records. Warner Music Group. Sotheby's. Christie's. Mitsubishi. Hoffman-LaRoche. Ever since Archer Daniels Midland, self-appointed "supermarket to the world," became the modern mother of all price-fixing, it's getting tougher to name products and companies not influenced by price-fixing. James Griffin, head of the Justice Department's cartel-enforcement effort, says his department is negotiating one plea bargain a month with people wishing to expose price-fixing rings. Forget Wheel of Fortune. We need a Wheel of Misfortune. As consumers and business owners, Floridians often end up paying the extra costs of products whose prices are artificially driven up by secret agreement. On occasion, Floridians even get paid back a bit when price-fixing is discovered. Just ask Liz Leeds about vitamins. Leeds is one of Florida's assistant attorneys general. She spent much of the past year negotiating a federal and multistate agreement with six vitamin manufacturers (three European, three Japanese). Through the 1990s, the six companies conspired to set artificially high prices for vitamins used in vitamin pills, breakfast cereals, bread, livestock feed and milk. In all, the companies agreed to pay $255-million to settle the case. Florida's piece of the settlement pie: $19.6-million. Of that, $16.4-million will be used for programs in the state to advance health and nutrition. More bucks may follow. The Florida deal unveiled this month was big. But it got lost amid the chaotic news of the Middle East, the USS Cole explosion and the stock market's wild ride. The price-fixing settlement on vitamins is the largest by the Florida attorney general in at least a decade, since the state won a settlement on fixed dairy prices for school lunch milk programs. More and more cases will involve overseas companies. "It is the globalization of the economy," Leeds says. "But if you do business in this country and in this state, you've got to follow our laws." Promises Leeds: "We will see more price-fixing cases." Plenty already are under investigation nationally and in Florida, including the pricing of CDs by the music industry. Even the glamorous world of art auctions has not escaped the temptation of price-fixing. Both Sotheby's and Christie's recently agreed to pay $512-million to settle class-action claims that the two elite auction houses had decided to form a cozy duopoly. They cheated buyers and sellers in a price-fixing scheme that dates back to 1992. This month, former Sotheby's chief Diana D. Brooks, once considered the art world's most powerful woman, pleaded guilty to fixing commission fees with Christie's. She faces up to three years in prison and a fine that could soar into the hundreds of millions of dollars when she is sentenced Jan. 5. Other executives also are under investigation. Business records show how Brooks and Christie's chief executive, Christopher M. Davidge, held secret conversations and meetings in apartments, restaurants and limousines to discuss fixing the commissions paid by thousands of customers. Their goal: to split wealthy clients, suppress competition and spur profits. When asked by a New York judge this month to explain her guilt, Brooks read from handwritten notes. She said she was just following orders and blamed Sotheby's chairman, Alfred Taubman. Time to revive Robin Leach's career as host of the new show: Price Fixes of the Rich and Famous. At the other end of the business spectrum, price fixing recently hit the gritty steel business. In Tampa, plaintiff AmeriSteel played such a prominent role in a key price-fixing investigation that it became known as the "AmeriSteel case." Ucar International and SGL Carbon Group, makers of graphite electrodes used to generate heat in the production of steel, colluded to raise prices. As users of electrodes, AmeriSteel and other operators of steel mini-mill plants filed a class-action suit against the companies seeking reimbursement for overcharges. After the Justice Department found evidence of a price-fixing scheme, Ucar and others paid criminal fines of $245-million for rigging the price of steel-making components. A former president of Ucar agreed to plead guilty and serve 17 months in jail. Bob Muhlhan, AmeriSteel's vice president of procurement during the lawsuit, said the involved mini-mill companies combined paid $500-million for electrodes during the period. Alone, AmeriSteel spent $10-million to $12-million annually on electrodes. As part of its settlement last year, AmeriSteel received $5.5-million from electrode suppliers. Muhlhan thinks the price-fixing settlement sends a message: Play fair -- or else. "This is a textbook case on how not to treat customers," he said after the settlement. Price-fixing. It's going to be a long season. Regis, get ready for your next show: Who Wants to be (Fined Like) a Millionaire? - Robert Trigaux can be reached at (727) 893-8405 or trigaux@sptimes.com.
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From the Times Business report
From the AP
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