Heritage sues Safety-Kleen for $400 million

JAN. 9–ELGIN, Ill. Heritage-Crystal Clean, LLC, a regional parts cleaner services company, today filed an antitrust lawsuit against industry giant Safety-Kleen Corp.

The suit, filed in U.S. District Court for the Northern District of Illinois, alleges that Safety-Kleen has been using its monopoly power in the parts-cleaner
services business to hinder fair competition by Heritage.

The suit seeks damages in excess of $400 million. Parts cleaners are sink-like machines that dispense solvent used to wash oil and grease off dirty parts. More than 400,000 parts cleaners are in use at U.S. businesses including auto repair shops, car dealerships, and manufacturers. For over 30 years, Safety-Kleen has dominated the parts cleaning services business, securing a share of the market estimated to be in excess of 85 percent.

Heritage is a relative newcomer to the industry, and less than one-tenth the size of Safety-Kleen. Heritage claims that since Safety-Kleen filed for bankruptcy in June 2000, it has engaged in a series of illegal, anti-competitive practices in order to protect its monopoly in the industry from competition from Heritage.

In its complaint, Heritage alleges that Safety-Kleen has made false and disparaging statements and distributed false and misleading literature about HCC to customers and government officials; sought to insulate its business against fair and open competition through the use and enforcement of illegal exclusionary contracts with its customers and employees; engaged in improper pricing practices; sabotaged Heritage equipment; used the judicial process to intimidate and harass current and former employees who considered changing employers and also its customers who considered changing vendors; and even engaged in attempted industrial espionage by trying to plant one of its people as an Heritage employee in an effort to obtain confidential strategic business information.

According to Hertiage, the result of Safety-Kleen’s conduct has not only been to injure Heritage, but also to prevent healthy and robust competition in the parts-cleaner services marketplace, thereby ultimately forcing customers to pay higher prices for parts cleaner services.

“We want to compete with Safety-Kleen in the marketplace, not in the courtroom,” says Joe Chalhoub, president of Heritage. “Safety-Kleen’s tactics, however, have left us no choice but to file this suit. The last thing they want to see is a strong new competitor in the industry, but that does not give them theright to ignore the laws against monopolization and unfair competition.”

In addition to the $400 million, the lawsuit seeks treble damages for Safety-Kleen’s alleged violations of the antitrust laws.


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