When one downtown roller skating rental outfit touched off a vicious price war last summer by slashing prices 60 percent, the regulars decided they had to do something to protect the trendy and lucrative business they had staked out.
So one weekend in July, six competing roller skating rental group met at Rumors, a bar at 19th and M streets NW, to work out a solution.
Their solution, interviews with several participants indicate, was to agree to set the hourly rental fee at $2.50 rather than the $1 that the new competitor had charged. They also made arrangements regarding the placement and number of concession stands at the busy corner, where most of the thriving downtown roller skating business is conducted.
It was, said one participant, a model of "cooperative capitalism."
It also was, according to the Justice Department, illegal price-fixing.
"It's a felony," said Jerry Connell, chief of the Justice Department's general litigation section. "It has been for years. The kinds of statements [the outfits have been making about setting their prices] suggest that they might not be terribly aware of the provisions of the law."
At the same time, Connell confessed a certain amount of uncertainty -- and bemusement -- about the prospect of prosecuting the vendors.
"My goodness, I don't know for sure," he said, when asked what the department would do with what might well be its smallest case ever. "It sounds fascinating. It's kind of small. It's not IBM, it's not that kind of thing."
Roller skating on the streets of downtown Washington, especially in the area centering on 19th and M streets NW, has become a new city phenomenon. It is a common sight to see young men and women skating along the sidewalks and streets, weaving in and out of strollers or motorists.
Interviews with eight persons affilitated with six other skate rental outfits -- For Heaven Skates, Roller Skate Bazaar, CRW Street Skate America, Hot Skates, The Roller Skating Co. and Super Skates Inc. -- show the existence of a cooperative pricing arrangement.
"We all got together and said, 'Hey, we're all pushing the same product, let's treat each other like friends,'" said Al Edwards, a Georgetown financial consultant who also owns The Roller Skating Co. "Let's have one blanket price, $2.50 an hour, and we'll leave it at that and anybody else is going to have to deal with each one of the companies if they try and go down lower than $2.50 an hour."
"We have to have these kinds of agreements with each other and we do have informal, unwritten agreements," said Sharon Briley, a Federal Communications Commission analyst who is co-owner of Super Skates Inc.
"The price agreements," Briley said, "are that basically the rate is $2.50 an hour . . . "
Marc Fleisher, proprietor of Hot Skates and one of the people at the meeting at Rumors, said, "It was a matter of some people wanted to [charge] $3 [an hour] and we didn't, and at the same time it had to do with how many stands an individual vendor could have on the corner so as to not get everybody trying to set up three or four tables . . . "
Edwards recalled a night last summer when one rental outfit was squeezed out of a spot on the lucrative corner and retaliated that evening with a 50-cent price cut, free T-shirt and free socks.
That event led to the price war ("It was a terrible, terrible scene," Edwards said) and the meeting at Rumors.
The applicable federal law is the Sherman Antitrust Act, Connell of Justice said. It provides for maximum corporate penalties of a $1 million fine and, for individuals, a maximum jail term of three years and a maximum fine of $100,000.
Asked what steps the Justice Department might take, Connell replied, "I would decline to say what we will do, what we could do, and I don't want to get into a iffy answer on things like that. We've not gotten any formal complaints on this."