AG, DCP settle in HVAC industry bid rigging scheme
Attorney General Richard Blumenthal and Department of Consumer Protection Commissioner Jerry Farrell Jr. announced a settlement with Industrial Steel & Boiler Services Inc. and its part owner related to illegal bid rigging in the heating, ventilation and air-conditioning industry over the course of several years.
Blumenthal and Farrell have settled with all companies and individuals sued for their participation in HVAC bid rigging that was orchestrated by B-G Mechanical Services. The settlements have obtained over $500,000 in penalties and restitution. Consumers harmed by the scheme include the state, CT Transit, Vernon Waste Water Pollution Control Authority and others.
Under the settlement announced today, ISB of Chicopee, Mass., a company specializing in boiler repairs, steel fabrication and related services, and one of its owners, William O'Neil, will pay a civil penalty of $50,000 and institute an antitrust compliance and training program at the company.
The antitrust investigation has revealed evidence of bid rigging on 14 projects in Connecticut and Massachusetts - 11 instances where bids were rigged and a contract was signed and three instances of bid rigging in which bids were submitted, but the contract was never consummated. O'Neil allegedly offered bogus bids as a favor to a mid-level manager at B-G Mechanical Services.
"Today's settlement, the ninth reached in this industry-wide probe, caps our action against a surreptitious scheme that undermined consumer choice and disadvantaged competitors in the air conditioning and heating industry," Blumenthal said. "These conspirators were orchestrated by B-G Mechanical's former president to submit false or 'cover' bids to skew competitive bidding processes. These bogus bids were designed to drive business to pre-determined contractors under the illusion of a fair and open competitive market. Such anticompetitive schemes distort the market, harming both consumers and businesses."
Blumenthal and Farrell have already settled with B-G Mechanical Services, former B-G President John J. Haggett, Christopher Link and his company Link Mechanical, and B-G salesmen George Pelletier and Francis J. Fallon. All are now cooperating in the attorney general's investigation, which is ongoing.
Most of the bids involved year-long Contract Maintenance Agreements - from at least 1997 through 2004 - to provide preventative maintenance and service for a set price. The contracts were often worth more than the face value of the contract because customers often used the CMA vendor for any additional repair work above and beyond the contract.
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