'Marine hose market was rigged' - US Dept of Justice

Washington, DC - Eight executives from the United Kingdom France, Italy, and Japan were arrested yesterday in Houston and San Francisco and charged for their role in a conspiracy to rig bids, fix prices, and allocate markets for United States sales of marine hose used to transport oil, the Department of Justice has announced.

A criminal complaint was unsealed in US District Court in Miami, against four executives: Peter Whittle, owner of the UK-based consulting firm PW Consulting (Oil & Marine) Ltd.; Bryan Allison, managing director, and David Brammar, sales and marketing director, both of Dunlop Oil & Marine Ltd.; and Jacques Cognard, the oil and marine manager of Trelleborg Industrie SA in France.

A separate criminal complaint was filed on Monday (1 May) in US District Court in Fort Lauderdale, Florida against four executives: Christian Caleca, the president of the Industrial Hose Business Unit of Trelleborg Industrie; Vanni Scodeggio, a business unit manager at Parker ITR slr in Italy; Francesco Scaglia, a product manager at Manuli Rubber Industries SpA in Italy; and Misao Hioki, an executive involved in the sale of marine hose for Bridgestone Corporation in Japan. According to the criminal complaints, the charged executives participated in the conspiracy at various times during the period from at least 1999 to the present.

Simultaneous with the arrests, agents of the Defense Criminal Investigative Service (DCIS) of the Department of Defense's Office of Inspector General executed search warrants at locations across the US. While those searches were being conducted, competition authorities abroad, the Office of Fair Trading in the UK and the European Commission, executed search warrants in Europe.

“Today's arrests, combined with the raids in the US and Europe, demonstrate our ability to work effectively with foreign competition authorities to shut down international cartels,” said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division in a statement issued yesterday (May 2). “The Antitrust Division will hold accountable executives who engage in illegal cartels, the supreme evil of antitrust.”

Marine hose is a flexible rubber hose used to transport oil between tankers and storage facilities and buoys. Marine hose is purchased by companies such as Shell, Exxon, and Chevron that are involved in the off-shore extraction and transportation of petroleum products. It is also purchased and used by the Department of Defense. Court papers allege that during the conspiracy the conspirators sold hundreds of millions of dollars worth of marine hose and related products.

According to the affidavit filed in support of the criminal complaint charging Whittle, Allison, Brammar and Cognard, the conspirators met in locations such as Key Largo, Florida, Bangkok, and London. At these meetings, the conspirators discussed and agreed to the rules for implementing their bid-rigging, price-fixing and allocation scheme. They also allegedly kept agendas and detailed “minutes” of cartel meetings.

Also, according to that same affidavit, during the conspiracy the participants devised code names to conceal their involvement and communications. In written communications, the conspirators allegedly referred to the cartel as “the club” or the “Technical Committee - Marine Hose.”

According to court papers, Whittle, the coordinator of the scheme, collected approximately $300,000 a year, with each conspirator paying him about $50,000. The conspiring manufacturers allegedly provided Whittle with information about upcoming marine hose jobs, and Whittle then designated which conspirator would win the job, referring to the winning conspirator as the “champion.”

The affidavit filed in support of the complaint charging Caleca, Scodeggio, Scaglia and Hioki alleges that members of the cartel met as recently as Monday 1 May for the purpose of carrying out the conspiracy. The Justice Department said that Monday's meeting took place in a hotel in Houston.

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Statement from US Dept of Justice