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Corporate honesty............
Former Bayer AG executive Wolfgang Koch will plead guilty to colluding in a price-fixing scheme that drove up the cost of rubber chemicals used to make tires, outdoor furniture and shoes in the United States during a three-year period, the U.S. Department of Justice said.
The plea agreement announced Monday marks the latest development in a long-running antitrust investigation into an international price-rigging ring formed by some of the world's biggest rubber chemical manufacturers.
The probe, anchored in San Francisco by the Department of Justice, has revealed the dealings of competitors that secretly plotted to raise the prices of their rubber chemicals.
The chemicals improve the elasticity and durability of many widely used rubber products, including an assortment of tires, furniture and shoes. About $1 billion of the rubber chemicals are sold in the U.S. annually, the Justice Department said.
By conspiring to raise the cost of their rubber chemicals, the manufacturers harmed millions of consumers, said R. Hewitt Pate, who heads the Justice Department's antitrust division. Investigators so far haven't tried to prove that the higher prices for rubber chemicals were passed on to U.S. consumers.
Koch, formerly Bayer's product manager of rubber chemicals, admitted rigging prices from January 1999 through December 2001. He is the fourth industry executive to be swept up in the investigation. Another former Bayer executive, Martin Petersen, previously pleaded guilty, as did two former Crompton Corp. executives, Joseph B. Eisenberg and James J. Conway.
The conspiracy dates back to 1995, according to court documents filed during the Justice Department's investigation.
Both Bayer and Crompton also have pleaded guilty for their roles in the conspiracy. Leverkusen, Germany-based Bayer paid a $66 million fine for its misconduct while Middlebury, Conn.-based Crompton paid $50 million.
A native of Germany, Koch has agreed to pay a $50,000 fine and serve four months in federal prison. His crime carried a maximum penalty of three years in prison and a $350,000 fine. Koch's sentencing agreement still requires court approval.
