Maryland's largest water utility filed a lawsuit in federal court Thursday against eight chemical companies and five executives, alleging that they conspired to inflate the price of a water treatment chemical over more than 14 years.
The price-fixing and bid-rigging scheme caused Washington Suburban Sanitary Commission (WSSC) to overpay by "many millions" for aluminum sulfate, the complaint alleges.
WSSC supplies drinking water and treats sewage for nearly 2 million people in Montgomery and Prince George's counties.
The lawsuit, filed in U.S. District Court in Greenbelt, is the latest civil action in what federal prosecutors have alleged has been a years-long conspiracy among chemical companies to drive up prices for aluminum sulfate, known as alum, by eliminating competition. Utilities use alum, which dissolves solids, to purify drinking water and treat sewage.
Nationwide, 68 similar civil claims have been filed against the companies and some of their top executives by water utilities, cities and private entities trying to recoup lost money, WSSC said.
WSSC is seeking more than $5 million in compensation and punitive damages, according to the complaint. The utility spent about $9 million on alum between 1997 and 2016, the utility said.
"This lawsuit is about protecting the investment our customers made in safe, clean water," WSSC General Manager Carla A. Reid said. "The suppliers named in this suit conspired to deprive us of a competitive price for this essential product, and we will hold them accountable."
The companies named in the suit include Ontario-based Chemtrade Chemicals, Pennsylvania-based Geo Specialty Chemicals, Georgia-based C & S Chemicals, Georgia-based RGM Chemical, Atlanta-based Kemira Chemicals, Louisiana-based Southern Ionics, and Baltimore-based Usalco and Delta Chemical. The complaint also names General Chemical, as well as affiliates and subsidiaries for all the companies.
The conspiracy lasted from 1997 to 2011, WSSC alleges, but long-term contracts caused the utility to lose money into 2016.
WSSC said the companies' executives discussed their bids, agreed to "stay away" from each others' customers, and submitted intentionally high "throwaway" bids to direct contracts to each other.
Because of the alleged bid-rigging, WSSC's price for alum nearly quadrupled between 2000 and 2010, from $82 per ton to $314 per ton, according to the lawsuit.
Rohit Bhardwaj, chief financial officer for Chemtrade, said the allegations in the lawsuit precede 2014, when Chemtrade bought General Chemical. He said he couldn't comment on the lawsuit, but said General Chemical had been granted amnesty in the Justice Department's criminal investigation into the allegations.
A lawyer for Kemira declined to comment, saying the company had not seen the suit.
Officials for the other companies named in the lawsuit did not return calls late Thursday.
Ballard Spahr, a Philadelphia-based law firm that filed similar lawsuits for Baltimore and Richmond in May, will represent WSSC.
The lawsuit probably will be transferred for pretrial proceedings to the federal court in Newark, where dozens of similar lawsuits are being coordinated, WSSC said. However, any trial in WSSC's case would be held in Greenbelt.