Antitrust Lawyer Blog Commentary on Current Developments

COMMERCIAL REFRIGERATION COMPANY AND EXECUTIVE INDICTED FOR RIGGING BIDS ON CONTRACTS TO SAFEWAY GROCERY STORES IN ARIZONA

On August 14, 2007, the DOJ announced that a federal grand jury in Phoenix returned an indictment charging a commercial refrigeration company and its co-owner with participating in a conspiracy to rig bids on contracts for the installation of commercial refrigeration equipment in Safeway Inc. grocery stores in the Phoenix metropolitan area.

The indictment, filed in the U.S. District Court in Phoenix, charged Alliance Mechanical LLC and its co-owner Kendall Pope, with participating in the conspiracy, which began in January 2005 and continued until May 16, 2005. At the time of the conspiracy, Mr. Pope also served as president of Alliance Mechanical LLC, a company engaged in the installation of commercial refrigeration in the Phoenix metropolitan area and elsewhere. Mr. Pope allegedly participated in the conspiracy with James Govostes, a former manager of another commercial refrigeration company.

The indictment charges that Mr. Pope, Alliance and their co-conspirators engaged in many actions involving commercial refrigeration installation projects at Safeway grocery stores that include discussing among themselves the submission of bids; agreeing to allocate bids among themselves according to which company had a maintenance agreement in place at a particular grocery store; soliciting other individuals to join and facilitate the conspiracy; designating which company would submit the low bid and submitted a rigged bid; and accepting payment from Safeway for work done as a result of the conspiracy.

This case is the second to arise from an ongoing investigation of the commercial refrigeration industry in the Phoenix metropolitan area. On June 27, 2007, Mr. Govostes pleaded guilty to conspiring to restrain trade by rigging bids submitted to Safeway Inc. grocery stores. Mr. Govostes entered into a plea agreement, subject to court approval, that requires him to serve 30 days incarceration and three months home confinement, and to pay a $20,000 criminal fine. Mr. Govostes agreed to assist the government with its continuing investigation.


Andre Barlow

(202) 589-1834
abarlow@dbmlawgroup.com