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March 21, 2012 10:43 pm
The state of Ohio has accused two road salt vendors including Cargill of conspiring to inflate prices in one of the US’s snowiest regions, putting a spotlight on an obscure corner of the commodities business.
Cargill, the world’s biggest agricultural trader, and Morton Salt agreed not to compete in selling ice-melting salt to governments across the state, Mike DeWine, Ohio attorney-general, alleged in a civil lawsuit.
Known for trading grains, cotton and sugar, Cargill is also one of the biggest suppliers of salt to US highway departments. Sales are usually agreed on terms of a year or more, shielding governments from the vicissitudes of winter weather.
One of Cargill’s salt mines is 1,750 feet beneath downtown Cleveland, Ohio. Morton Salt, owned by German salt and fertiliser producer K + S Group, owns another mine along the Ohio lakeshore. The lawsuit said the two companies misused a state programme giving preference to Ohio-based products for government contracts.
The state claims the two companies “conspired to corrupt the market by allocating customers among themselves without competing, and by using artificially high price quotes and other artifices to feign competition among themselves, thereby raising rock salt prices above competitive levels”. The attorney-general is seeking as much as $50m from the companies.
Mr DeWine, a Republican, ousted Richard Cordray as Ohio attorney-general in a 2010 election. Barack Obama, US president, this year appointed Mr Cordray to head the new US Consumer Financial Protection Bureau.
Cargill said: “We emphatically deny the allegations. We are extremely disappointed by this lawsuit.”
The Minnesota-based company said a previous report by the Ohio inspector general’s office did not support the allegations contained in the lawsuit, adding that a similar lawsuit filed by the Ohio county of Erie was dismissed.
Morton Salt said it sells road salt to states and towns “in accordance with our high ethical standards and in compliance with the law. We believe the allegations contained in the lawsuit filed by the state of Ohio to be baseless and not supported by the facts.”
The Ohio inspector general’s report, issued in January 2011, said that a salt shortage and late bidding by the Ohio Department of Transportation drove its salt costs up 236 per cent in the winter of 2008-09.
The investigation found evidence that Cargill and Morton Salt had “engaged in anticompetitive market allocation practices” that cost the state tens of millions of dollars and created a salt market duopoly. But the probe did not uncover evidence that the companies communicated on salt bids.
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