Contractors already paying higher prices for concrete because of the nation’s supply slump might have been over-charged by cheating concrete giants in one region of the country.
Irving Materials, an Indianapolis ready-mix manufacturer and road subcontractor, manipulated prices on $225 million worth of ready-mix concrete from 2000 through May 25, 2004, according to the U.S. Justice Department. Government officials said the conspiracy was so widespread it inflated the cost of most ready-mix concrete sold in the region.
IMI pleaded guilty to price fixing on June 29 and agreed to pay $29.2 million in fines, the largest antitrust fine in history. The Justice Department’s Chicago Field Office, the Indianapolis office of the Federal Bureau of Investigation and the U. S. Attorney’s Office for the Southern District of Indiana discovered the conspiracy during its ongoing investigation of the concrete industry.
“Regardless of whether you were a homeowner fixing your driveway, a business constructing a new facility, or a taxpayer funding a public construction project, consumers paid more than they should have because the defendants and their co-conspirators secretly met and fixed the prices of ready-mixed concrete,” said Scott Hammond, the U.S. Antitrust Division’s deputy assistant attorney general for criminal enforcement.
Executives at IMI allegedly schemed prices with undisclosed concrete suppliers by agreeing on specific price increases and when they would take effect, publishing the estimates based on the agreement and authorizing employees to participate in the conspiracy, according to federal agents. Senior IMI executives Daniel C. Butler, John Huggins, Price Irving and president Fred “Pete” Irving were charged additional fines ranging from $100,000 to $200,000, and agreed to serve five months in prison followed by five months of home detention.
Price Irving is the immediate past president and a current board member of the Indiana Ready Mixed Concrete Association, an industry trade association. Pat Kiel, executive director of the trade group, told reporters the organization hasn’t decided if Irving, who regularly signed antitrust compliance forms at meetings, will be allowed to serve the remainder of his term.
Officials of the Indiana Department of Transportation said the state is taking steps to terminate all contracts with IMI. “From a practical standpoint, we are letting contracts currently under way proceed to their conclusion, so the traveling public is not inconvenienced by prolonged lane restrictions, delays or closures,” said Gary Abell, communications director for the Indiana Transportation Department. E&B Paving, one of IMI’s companies, has a $5.4-million contract to rebuild McKinley Avenue through Ball State University, and another $2.5-million job to widen state highway 32 near Nebo Road.
According to Shannon Bailey, director of communications at Indiana’s chapter of the Associated General Contractors of America, it is too early to determine what effect the lawsuit will have on cement prices in the state.
“This case just recently hit the fan – I’m not sure anyone has any answers right now,” she said.
IMI’s case is only one of several expected in the industry during the Justice Department’s scavenge on manufacturers of ready-mix concrete. A separate case in May involved a former official of Lee’s Ready Mix and Trucking of North Vernon, Ind., who pleaded guilty to price fixing, according to the Justice Department.
Company officials at IMI made plea agreements to help the government in other concrete industry investigations. “In the best interest of the company, our families and our employees, we have agreed to enter into these plea agreements with the government,” Pete Irving said in a statement. “I have faith that our employees and our families will continue to support one another during this difficult time.”
IMI has 2,400 employees at operations in Indiana, Ohio, Kentucky and Tennessee, according to the Justice Department. The company’s estimated sales for 2004 were $292.7 million. Fines collected from the concrete culprits will be placed in the U.S. Crime Victims fund for disbursement nationwide. According to prosecutors, federal law allowed for $54 million to $227 million in fines for the $225 million in sales fraud.
You can reach Ebony Horton at [email protected].