Tub of Trouble

When some executives of the bathroom fixtures industry gathered at their trade association meeting seven years ago, it seemed only natural that they get together over cocktails in the Sheraton-Chicago Hotel room of Daniel Quinn. He was then president of the Plumbing Fixture Manufacturers Association and a vice president of American Standard Inc., the industry leader. Congeniality was the order of the day.

William Kramer, executive secretary of the P.F.M.A., thought that the conversation centered more on price-fixing than football. As a result, he used a hidden recorder to keep track of subsequent conversations among industry executives. In 1963, Kramer fled to the Caribbean with $175,000 of the association's money and a stack of potentially damaging tapes. Later he was arrested and sentenced to 18 months in prison for writing bad checks and several other offenses. Soon afterwards, his tapes turned up at the Justice Department, whose subsequent investigation uncovered evidence of widespread price-fixing in the industry. Justice won two indictments charging 15 companies, eight high executives and the association with using the Chicago hotel-room meeting--and other gatherings --to rig prices.

Collective Bargaining. Two weeks ago, a federal court jury in Pittsburgh handed down a guilty verdict. Convicted of violating the Sherman Act were American Standard, Kohler Co., and Borg-Warner Corp.--along with Daniel Quinn, Vice President Norman R. Held of Kohler and Joseph J. Decker, manager of product coordination at American Standard. Last year the other twelve companies,* the P.F.M.A. and five executives had decided not to fight the charges; all pleaded "no contest." The courts levied fines totaling $712,500, and the executives served jail sentences of from one to 30 days.

The companies that chose to fight --American Standard, Kohler and Borg-Warner--were accused of conspiring to boost the prices of bathroom fixtures, collectively regulating trade discounts and agreeing to drop cheaper lines. The charges held that an informal cartel operated from 1962 to 1966.

Avoiding the Stains. The three companies and the executives are appealing the decision. They point out that the price of bathtubs, for example, fell from $49.59 to $40 during the first year that the so-called conspiracy was in operation. Further, they contend that the lines dropped from production were inferior products that could be stained by modern detergents and no longer met standards set by the Department of Commerce.

The real impact on the companies is yet to come. Already more than 500 suits have been filed by individuals, cities and states, most seeking triple damages from the companies. If the guilty verdicts survive appeal, and precedents involving the electrical and drug industries continue to serve-as guidelines, the damages could ultimately total billions of dollars.

* Crane Co., Universal-Rundle Corp., Briggs Manufacturing Co., Gerber Plumbing Fixtures Corp., Ogden Corp., Mansfield Sanitary Inc., Peerless Pottery Inc., Kilgore Ceramics Corp., Lawndale Industries Inc., Georgia Sanitary Pottery Inc., Wallace-Murray Corp., Rheem Manufacturing Co.

This file is automatically generated by a robot program, so reader's discretion is required.