Major corporations busted for price fixing

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Major corporations busted for price fixing

Post by BASEL » Sat Feb 06, 2010 10:06 pm

Talk to Charles Wright for only a half-hour and the question has to be asked:

"Does it ever occur to you that the entire world is corrupt?"

Wright chuckles.

"It doesn't occur to me. I just understand it is," he says, only half joking.

On the surface, Wright is a mild-mannered London lawyer filling file boxes with paperwork from the less-than-exciting sounding world of "price-fixing cartel litigation."

In reality, he and teammates Andrea DeKay and Linda Visser wage war in the shadowy world of international conspiracies and secret deals that take millions of dollars from unsuspecting victims, and by extension, the public.

The three lawyers work for Siskinds, which has carved a niche in Canada by tackling multwinational corporations that flout the laws of competition by fixing their prices artificially high, hurting customers and consumers.

They recently won a decision that Wright calls "a game changer" against price-fixing.

Not that he needs the help. Siskinds is 15-0 on price-fixing cases, with 16 more cases on the go.

In one of those 16, two London companies -- and Nutech Brands -- are suing a dozen airlines, claiming they fixed the price of air freight cargo through secret meetings held around the world.

In another London case, Fanshawe College is suing seven major electronics firms, claiming the companies have 80% of the market share and conspired to fix the price of LCD panels used in televisions and computer monitors.

The stakes are high.

Lufthansa, the smallest player in the airline case, has already settled for $5.3 million.

One of Siskinds' first successes, against a cartel fixing the prices of vitamins, brought in $148 million.

The risks are high as well.

"They are very complicated cases. The economics are very complicated, the law is very complicated, the defence counsel is very good and very experienced," Wright says.

Before the cases get anywhere near court, a legal team has to put out about $250,000 just in finding documents, travelling to informants and finding expert witnesses, he says.

"In Canada, if we lose, the client can be ordered to pay some of the other side's costs."

The dry legal documents filed in court give hints of the mysterious world of price-fixing.

In the LCD case, the group meetings at which prices were set were called "crystal meetings" and participants used a hotline to contact each other.

Sometimes participants will set up an industry convention to cover the secret meetings they hold in hotel rooms and coffee shops.

"They often create a common story for why prices are high. They may go to the press and say there are supply shortages. They may agree to close their plants a few weeks of the year to restrict supplies."

The very nature of price-fixing cartels keeps the victims in the dark, which changes the usual relationship of clients and lawyers.

Clients don't walk into the door complaining they were victims of price-fixing. Instead, Wright and his team comb through price-fixing investigations around the world, determine if there is a Canadian element, and tell shocked clients they are victims.

That prompts criticism from corporations and their legal teams that the lucrative price-fixing cases are driven by greedy lawyers, not ordinary businesspeople.

There's also dirty work involved - leaning on or haggling with members of price-fixing cartels to turn on their partners and provide valuable inside information.

"What we will do is go to one defendant early in the litigation . . . and we will make an agreement with them, might give them some discount on how much they have to pay by a settlement, but they will have to agree to co-operate and give us evidence," Wright says.

Does he ever appeal to an informant's conscience?

"That seems to have very little impact," Wright says.

Once the informant and clients are in place, Wright faces the biggest hurdle -- convincing a judge to certify the case as a class action and that it can continue.

In general, lawyers working for the alleged price fixers argue it's too complicated to figure out who got hurt.

More often than not, legal analysts say, that side has won in the past -- Siskinds' winning record is based on settlements. Not once until last fall has a case been certified and gone to trial.

The lawyers working for the alleged victims have traditionally argued the price fixers acted illegally, and experts can figure out later how people got hurt, Wright says. But lawyers can't go too far in trying to claim victims.

One law firm tried to prove that the suppliers of the iron oxide that make bricks red were fixing prices and in the process raising house prices for homebuyers.

"You and I both know how much you pay for a house will depend on school district, the bathrooms, whether your wife really wants it or not and a whole bunch of other things that have nothing to do with the cost of pigment in brick," Wright says.

Even so, Siskinds won a decision in a London court last September that certified a class that could include all Canadians who bought hydrogen peroxide or products containing the bleaching agent in an 11-year period.

The decision caused ripples in the legal and corporate world, with some analysts suggesting it will open the door to more class-action suits being certified and going to trial.

"Price-fixing is hugely harmful to the economy,'' Wright says. "The companies are realizing inflated profits at the expense of everybody else." ... 48426.html
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