Competition on Ice?

C-store's suit alleges conspiracy to fix prices

MINNEAPOLIS -- A Wisconsin convenience store is claiming that three packaged ice producers created an international conspiracy to freeze in high prices and divide up the market so they wouldn't have to compete with each other, said the Associated Press.

In a lawsuit in U.S. District Court in Minneapolis, Ridge Plaza Inc. of Milwaukee claims the packaged ice producers violated federal antitrust laws and harmed others by inflating the price of cubed, crushed, block and dry ice sold in the United States and Canada. The lawsuit seeks class-action status.

The lawsuit was filed last week, [image-nocss] days after one of the companies acknowledged that the Antitrust Division of the U.S. Department of Justice searched its offices as part of a separate investigation.

Justice Department spokesperson Gina Talamona said the Antitrust Division is "investigating the possibility of anticompetitive practices in the packaged ice industry," but she wouldn't divulge details of the ongoing probe.

The defendants include Reddy Ice Holdings Inc., Dallas; Arctic Glacier International Inc., West St. Paul, Minn., and its corporate parents in Canada; and Home City Ice Co., Cincinnati.

Ridge Plaza claims in the lawsuit that from Jan. 1, 2002, to the present, Ridge Plaza and other people or companies "purchased packaged ice at artificially maintained, noncompetitive prices established by the actions of the defendants and their unnamed co-conspirators."

Ridge Plaza is seeking damages that have not yet been determined, as well as attorneys fees and other costs.

According to the lawsuit, the plaintiffs are the largest manufacturers of packaged ice in the U.S. and Canada. Sales of packaged ice are about $1.8 billion annually, split in half by third-party manufacturers and in-house ice machines. The three defendants make up about 70% of the manufacturer sales, according to the suit.

Among the allegations, Ridge Plaza claims the companies divided up the packaged ice market so they would not compete with each other. The lawsuit claims Reddy Ice sells its products in the Sunbelt states from Florida to Arizona and in the northwestern United States; Arctic Glacier works in the central and northeastern states and California; and Home City Ice dominates markets in the Midwest states of Illinois, Ohio and Indiana.

"There is virtually no overlap between the geographic markets in which each Defendant operates," the lawsuit claimed. "Defendants agreed not to compete head to head in any of the markets in which one of them was dominant."

The scheme reduced or eliminated price competition throughout the United States or Canada, the suit said.

All three companies declined to comment on the suit, but acknowledged the investigation. Reddy Ice said on its website that officials with the Antitrust Division searched its corporate office on March 5 and that it would conduct an internal investigation. Reddy Ice spokesperson Courtney Birck told AP that investigators took documents and information. A release on Arctic Glacier's website said the company has been subpoenaed to provide information to the Justice Department and it plans to cooperate. Spokesperson Neil Winther told AP that neither corporate offices had been searched. And Home City Ice spokesperson Joshua Hammond told AP in a prepared statement that the company was also approached by federal authorities. "We cannot discuss the specifics regarding this inquiry, as it is an ongoing legal matter. This industry-wide review will in no way affect our service to our customers."

All three companies said they are going on with business as usual.