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April 7, 2010

Class action suit seeks damages for marine products price fixing

Back in May 2007, the news from OTC got a little different from most years with word that eight executives from the United Kingdom, France, Italy, and Japan had been arrested in Houston and San Francisco and charged for their role in a conspiracy to rig bids, fix prices, and allocate markets for United States sales of marine hose.

Since then there has been a steady stream of indictments, plea bargains and sentences involving various parties engaged in antitrust violations relating to marine hose, fendering and other products.

Today, the saga took another turn. It entered the class action arena.

Dallas-based law firm Baron & Budd, working with attorneys from Los Angeles, New York , Mobile and Galveston, reports thar a suit has been filed in federal district court in Los Angeles over what it calls "a web of conspiracies to fix prices and rig bids on several marine products." The suit has been filed against 28 individuals and corporate entities.

The Board of Trustees of the Galveston Wharves, the Board of Commissioners of the Port of New Orleans and OSG Lightering LLC, who all purchased marine products that were the subject of the conspiracies, have sued on behalf all those affected by the schemes.

OSG Lightering is a unit of Overseas Shipholding Group, Inc. (NYSE:OSG).

Baron & Budd says the interrelated conspiracies, which involved many of the same industry players, concerned three types of marine products: foam-filled fenders and buoys, marine pilings, and marine fenders. Because of the defendants' unlawful actions, says Baron & Budd. consumers of these products, including many public entities, were charged inflated prices.

"The City of New Orleans has had so many challenges and obstacles," says Burton LeBlanc, Baron & Budd shareholder and Louisiana native. "I'm proud to represent the port's commissioners in standing up to the companies that have conspired to cheat New Orleans and so many other U.S. cities."

Baron & Budd says that "some co-conspirators have already pleaded guilty in an antitrust suit brought against them by the Department of Justice" and notes that a whistleblower lawsuit has attracted the attention and participation of the Department of Justice, as well as States of California and Florida. The qui tam, or whistleblower, lawsuit was filed in 2005 but only became public in February 2010 after it was partially unsealed by Judge George H. Wu, a federal district judge in California."

The whistleblower suit to which Baron & Budd refers is presumably one in which, on February 26, 2010, Trelleborg AB and 13 other corporations and individuals, paid the government a total of $15,448,728 to resolve civil allegations that they fraudulently overbilled the Navy and other federal agencies by bid-rigging and price-fixing on sales of materials used on piers and other marine construction projects.

According to the United States Attorney's Office for the Central District of California,"the payments by the 14 companies and individuals are part of settlements that resolve allegations contained in a 'whistleblower' lawsuit filed in 2005 by an executive at a Trelleborg competitor Pursuant to the settlements, United States District Judge George H. Wu has dismissed the lawsuit against the settling defendants. Judge Wu unsealed the case last week, and the United States Attorney's Office learned of the unsealing [February 25, 2010.]

"The lawsuit alleged that Trelleborg AB and four of its subsidiaries conspired to submit rigged bids, fix prices, and allocate market shares on marine fenders and plastic pilings purchased by the Navy and other federal departments and agencies .

"As part of its settlement, Trelleborg has paid the United States $14 million to settle the lawsuit that alleged the conspiracy ran from approximately June 2000 until August 2005.

"The lawsuit also alleged that Frank March, of Sevierville, Tennessee, and two Virginia corporations he formerly held a controlling interest in -- SHI, Inc. and SII, Inc. -- .. participated in the conspiracy with Trelleborg .March has paid $1 million to resolve the allegations..

"The settlements arise from a qui tam, or whistleblower, lawsuit originally filed under seal in May 2005 by Douglas Farrow pursuant to the provisions of the federal False Claims Act. The government investigated Mr. Farrow's civil allegations, elected to intervene in the lawsuit, and negotiated the settlement. Pursuant to the False Claims Act, Mr. Farrow will receive between 15 percent and 25 percent of the recovery ..

"The lawsuit also alleged that, between approximately 1999 and May 2007, Bridgestone Corporation and Bridgestone Industrial Products America, Inc.; The Yokohama Rubber Co., Ltd.; Dunlop Oil & Marine, Ltd. and related companies Continental AG and Phoenix AG; and Trelleborg conspired to submit rigged bids, fix prices, and allocate market shares on marine hose purchased by various federal agencies. To resolve the allegations, Bridgestone has paid $178,108, Yokohama has paid $173,410, and Dunlop has paid $97,210.

"Trelleborg, March, Bridgestone, Yokohama, and Dunlop agreed to the settlements without admitting any wrongdoing," according to the U.S. Attorney's office.

"After Mr. Farrow filed his lawsuit on the behalf of the United States," says the U.S. Attorney's office," the Justice Department's Antitrust Division commenced a parallel criminal investigation of the marine products industry, which has resulted in criminal convictions of nearly two dozen corporations and individuals. Trelleborg AB subsidiaries Virginia Harbor Services, Inc. and Trelleborg Industrie S.A.S. each pleaded guilty to felony antitrust charges and were sentenced to pay criminal fines of $7.5 million and $3.5 million, respectively. The criminal fines are in addition to the $14 million Trelleborg civil settlement."

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