Two Former Auto Glass Shop Owners Indicted for Price-Fixing
by Penny Beverage
A federal grand jury in Lubbock, Texas, recently indicted two former owners and officers of Fort Worth, Texas-based Windshield Sales and Services Inc., which does business as Auto Glass Center, for allegedly participating in conspiracies to raise and maintain the prices of automotive replacement glass in the central North and Lubbock areas of Texas, according to the U.S. Department of Justice.
The first count of the two-count indictment, filed in U.S. District Court in Lubbock, charges James D. Kuhn and Eldon Flyn Simmons with conspiring with competitors to raise and maintain the prices for the sale and installation of automotive replacement glass in the central North Texas area from January 1998 to May 1998. The second count charges them with conspiring with competitors to raise and maintain the prices of automotive replacement glass in the Lubbock area from March 1998 to May 1998. During this time, both Kuhn and Simmons served as owners, officers and directors of Auto Glass Center, which sold and installed automotive replacement glass in the central North Texas area. In addition, Kuhn served as a supervisor for Auto Glass Center’s operations in the Dallas area.
The Detailed Charges
Kuhn and Simmons are charged with violating Section One of the Sherman Act, which carries a maximum penalty per count for individuals of three years imprisonment and a $350,000 fine, if convicted. The maximum fine may be increased to twice the gain derived from the crime, or twice the loss suffered by the victims of the crime if either of those amounts is greater than the statutory maximum fine, according to the Sherman Act.
The trial could take from six months to a year, according to officials at the Department of Justice. The trial is set for December 2002.
According to court documents, the charged combination and conspiracy consisted of a continuing agreement, understanding and planned actions among the defendants and their co-conspirators, who were not named in the case, with their end goal being to raise and maintain the prices for automotive replacement glass sold by retail glass stores in the central North Texas area. This alleged plan of action included:
• Discussing a discount floor for automotive replacement glass, and a plan to refrain from soliciting certain of each other’s customers by offering
lower prices for automotive replacement glass sold to such customers in the central North Texas area;
• Agreeing to establish a discount floor for automotive replacement glass and agreeing to refrain from soliciting certain of each other’s customers
by offering lower prices for automotive replacement glass sold to such customers in the central North Texas area; and
• Establishing a discount floor for automotive replacement glass and monitoring and enforcing compliance with the agreement to refrain from
soliciting certain of each other’s customers by offering lower prices for automotive replacement glass sold to such customers in the central
North Texas area.
According to Coleen Sewell, the “discount floor” to which the indictment refers has to do with offering no more than a certain percentage from NAGS.
“What they allegedly did was they agreed that they would not discount more than X amount off of the NAGS price,” Sewell said.
The indictment resulted from an ongoing investigation being conducted by the Antitrust Division’s Dallas field office and the Dallas and Lubbock offices of the FBI.
“This case reflects the Antitrust Division’s commitment to prosecute those who seek to deny customers the benefits of competition,” said Charles A. James, assistant attorney general in charge of the Antitrust Division.
While most auto glass shops were not aware that Kuhn and Simmons were allegedly attempting to fix prices, some, including Bill Alexander of Lubbock-based Zip Auto Glass, said it was apparent that they did not want other auto glass shops in business.
“I got into the business in 1998 and they did everything they could to keep me out of the business,” Alexander said. “I couldn’t buy glass in town even. I had to buy my glass in Albuquerque, N.M., and other places.”
However, despite these circumstances, Alexander said his business persevered and now completes at least 200 windshield installations a week, and also conducts a number of repairs.
Jim Potts of Jim Potts Auto Glass, also of Lubbock, agreed that his business had been affected, but offered no other comment. “That’s kind of a touchy subject around here,” he said. “We’ve had a lot of problems with [price-fixing] in this town.”
Neither Kuhn nor Simmons was available for comment.
This is not the first time a price-fixing case has been brought to trial in the Texas auto glass industry. In November 1998, A-1 Auto Glass Inc. of Fort Worth, Texas, which was owned by Roger McDonald, pleaded guilty to participating in a conspiracy to fix auto glass replacement prices. The Department of Justice charged the company with conspiring to raise auto glass replacement prices by increasing installation labor rates and lowering discounts on automotive replacement glass. According to the Department of Justice, A-1 Auto Glass participated in the conspiracy from as early as February 1998 to at least April 1998. (See November 1998 USGlass, page 76, for related story.) Just months before A-1 Auto Glass was brought to trial, Crafton’s Glass of Lubbock also pleaded guilty to price-fixing.
James D. Kuhn and Eldon Flyn Simmons of Auto Glass Center in North Texas allegedly begin conspiring with competitors to raise and maintain the prices for the sale and installation of automotive replacement glass.
A-1 Auto Glass of Fort Worth, Texas, begins conspiring to fix auto glass replacement prices.
Kuhn and Simmons allegedly (according to indictment) begin conspiring with competitors to raise and maintain the prices of automotive replacement glass in the Lubbock area.
A-1 Auto Glass allegedly discontinues auto glass replacement price-fixing at this time.
According to the indictment issued, Kuhn and Simmons discontinue both counts of the indictment at this time.
Crafton's Glass Inc. pleads guilty to conspiring with other auto glass shops to fix automotive replacement glass prices in the Lubbock area.
A-1 Auto Glass pleads guilty to participating in a conspiracy to fix auto glass replacement prices.
Lubbock Glass & Mirror Co. of Lubbock is charged with a one-count felony for rigging bids to supply architectural flat glass to general contractors in the area.
KK Glass Inc. of Lubbock is charged with rigging bids to supply architectural flat glass to general contractors in the area.
Kuhn and Simmons are charged with two-count indictment for activities occurring between January and May 1998.
Kuhn and Simmons will be tried for both counts of indictment by the Department of Justice.
Penny Beverage is the editor of AGRR magazine.
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