Monday, 2 November 2009

Inside 'Big Ice'

An interesting legal case came to a close in the U.S. earlier this month. It involved FBI wiretaps, cartels, conspiracy, price fixing and millions of dollars in fines. The commodity in question ? Ice. Plain old ice. One of the ringleaders of Big Ice ? Winnipeg's own Arctic Glacier with 38 production plants and 48 distribution facilities in North America.
Arctic Glacier HQ on Henry St.
Arctic Glacier Building
My initial reaction was a bit of a chuckle, remembering a thanksgiving episode of 'Mad About You' when Paul buys bags of ice from a convenience store. The owner says to him: "Ice. My biggest profit margin. Just water, cold and time". (Later, when Paul's father warns how much it will cost to get a plumber to come out on thanksgiving day, his mother retorts "What do they care ? They buy ice". Heh !)

Packaged ice, though, is no laughing matter. It's almost a $1b industry in the U.S. with three main players. The largest is Reddy Ice of Dallas TX, next is Arctic Glacier's Minneapolis-based subsidiary and Home City Ice of Cincinnati OH.

The U.S. Department of Justice says that the companies "
engaged in a conspiracy to suppress and eliminate competition by allocating packaged-ice customers" in Michigan between 2001 and 2007. Home City Ice plead guilty in June 2008 and charges are still expected against ReddyIce. Arctic Glacier and three U.S. executives plead guilty October 12, 2009 and were given a $9m fine.

Taking Up Ice at Gimli c 1922 source
For their part, Arctic Glacier say they bought into that area December 31, 2004 by assuming a local company and were unaware of the practices carried out in the region. They suspended executives of their U.S. subsidiary in March 2009 after a Board investigation. Those executives, who plead guilty along with the company, have yet to be sentenced.

It was good news for Arctic Glacier to to get the matter resolved but there is still a class action lawsuit in the U.S. that could have great consequences. Also, this isn't the first time that Arctic Glacier has been in competition-related trouble. In 2007 they were successfully sued by an Alberta ice company that claimed they had offered a bribe in exchange for a contract.

Who new that such an innocent-sounding industry could be so dramatic. After all, it's just water, cold and time !

News Release U.S. Department of Justice Oct 12 '09
News Release Arctic Glacier Inc Oct 13 '09
$9m Fine Good News for Ice Firm WFP Oct 15 '09
A Conspiracy That Drove Up the Price of Ice Globe and Mail Oct 22 '09

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