Some freight firms admit to price fixing

  • Article by: NEAL ST. ANTHONY , Star Tribune
  • Updated: October 5, 2011 - 9:21 AM

A Minneapolis electronics manufacturer that says it paid excessive freight fees because of price fixing stands to benefit from a $29 million civil settlement with several freight firms, including two that pleaded guilty to separate criminal charges.

Precision Associates, which makes and distributes industrial rubber supplies, is a lead plaintiff in a 2008 federal lawsuit brought in New York against several dozen freight-scheduling firms in the United States, Europe and Asia who allegedly colluded to set prices.

In late September, several of the accused, including Germany's Detsche Bahn AG and Schenker AG, agreed to settle the civil case for $29 million. Those firms are among 12 companies that have pleaded guilty to criminal price fixing.

"These are icebreaker cases," said attorney Joe Bruckner of Lockridge Grindal Nauen of Minneapolis, one of two Minneapolis law firms and two New York law firms that have been appointed lead counsel by a federal judge. "These companies came to us and said, 'We not only want to get out of this litigation, but we will cooperate in the case going forward.' Once these settlements are approved, we'll continue to litigate against the other defendants. We're also open to negotiate."

The Feds started their criminal investigation after the lawsuit was filed. Last week, six Japanese freight forwarders pleaded guilty to price fixing charges and agreed to pay $46.8 million in fines. According to criminal charges filed U.S. District Court in Washington, D.C., the companies conspired to fix freight-forwarding service fees -- including fuel surcharges and security fees -- charged to customers with air freight shipments from Japan to the United States from about September 2002 until at least November 2007.

Six other companies pleaded guilty to similar charges last year, according to Sharis Pozen of the Justice Department's Antitrust Division. Those companies agreed to pay $50.3 million in fines.

"Prosecuting global price-fixing conspiracies, that are harmful to the economy and consumers ... will continue to be a top priority," Pozen said.

Freight forwarders manage the domestic and international delivery of cargo for customers by packaging, preparing, documenting and warehousing cargo freight, arranging for cargo shipment through air and sea transport providers.

According to the civil and criminal charges, the companies imposed uniform freight forwarding service fees, often citing securing concerns as the reason for coordinated price bumps.

A federal judge gave preliminary approval on Sept. 23 to the proposed civil settlement, which also involved Eagle Global Logistics and Vantec. It clears the way for lawyers for Precision and several other companies to contact what could be a few thousand business customers who may be entitled to current and future settlement proceeds. Paul Kadue, the president of Precision was traveling last week and unavailable to comment.

STRATASYS EXPANDS INTO BIGGER PRODUCTION PLANT

We've got plenty of stores and restaurants in these parts, but too little manufacturing.

So it's great to see Eden Prairie-based Stratasys, maker of high-tech machines for prototyping and producing plastic parts for industrial and consumer product designers, debut a 90,000-square-foot building that doubles its production capacity.

Stratasys acquired the building last year and spent nearly $10 million refurbishing and outfitting the space. It's more than is needed for now.

"We've said we're optimistic about the economy and our prospects," said Stratasys CEO Scott Crump. "We're putting our money where our mouth is. It's evidence of our product's market acceptance."

Stratasys, which markets the Dimension 3-D and Fortus Production 3-D printers, has a lot of leading-edge applications including this one: Its technology provided a "3-D printing" of an entire car body for Urbee, a Canadian company that is designing a 200-mpg hybrid car.

Analysts expect Stratasy to earn 89 cents per share on $150 million in revenue this year.

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