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Four Top Soft-Drink Executives Charged in Price-Fixing Case

October 15, 1987|DOUGLAS JEHL | Times Staff Writer

WASHINGTON — The Justice Department, as part of an ongoing investigation of price fixing in the soft-drink industry, Wednesday filed criminal price-fixing charges against three soft-drink bottling companies and four of their top executives.

Among those charged was James J. Harford, the former president of Mid-Atlantic Coca-Cola Bottling Co. who is now president and chief executive officer of Seven-Up Co.

The charges--filed in Washington, Norfolk, Va. and Gainesville, Ga.--allege that the companies and individuals engaged in conspiracies to increase the prices of soft drinks in parts of Maryland, Virginia, Georgia and the District of Columbia between 1982 and 1985.

The accusations stem from a three-year Justice Department investigation of price fixing in the industry. Grand jury investigations are under way in 11 cities across the country, including Sacramento, said Charles F. Rule, assistant attorney general in charge of the antitrust division.

The companies and executives involved in the cases agreed to set and adhere to prices published in their respective promotional letters, the Justice Department charged.

Soft-drink bottlers, who sell and distribute drinks to supermarkets, hotels and other institutions, typically compete by offering discounts to volume customers, who then pass on those discounts to consumers, Rule said.

"Price fixing is a very serious charge," Rule said. "Price fixers don't simply violate the antitrust laws. They take money out of the pockets of every consumer who buys a price-fixed product."

Two of the companies, Mid-Atlantic Coke of Silver Spring, Md., and NEG Holding Co. of Athens, Ga., agreed to plead guilty to the charges, which are a violation of the Sherman Act.

Mid-Atlantic Coke agreed to pay $2 million in fines, paying the maximum $1-million penalty in Norfolk and Washington. NEG and the government will recommend to a Gainesville court that the company be fined $400,000, the Justice Department said.

The third company, charged in an indictment returned in Norfolk, was Allegheny Bottling Co. of Timonium, Md.

One of the executives, Walter A. Sams, former treasurer of Athens Coca-Cola Bottling Co., predecessor to NEG, agreed to plead guilty to one count of price fixing. The government recommended that Sams be incarcerated.

Among those charged in the Norfolk indictment was Harford, who went to Seven-Up in February. The company said in a statement that it believes that Harford is innocent and has exhibited "integrity of the highest order" before and during his tenure at Seven-Up.

The others charged were Morton M. Lapides, the former chairman of Allegheny Pepsi, predecessor to Allegheny Bottling, who is now chairman of Allegheny Beverage Corp., and Odis R. Allen, former vice president of Mid-Atlantic Coke.

Mid-Atlantic Coke and NEG are now subsidiaries of Coca-Cola Enterprises, the huge new Coca-Cola bottling company that is 49% owned by Coca-Cola Co. Allegheny Bottling is now a subsidiary of Pepsico Inc.

But the Justice Department emphasized that it alleged no wrongdoing by the parent companies, which in some cases did not acquire the bottling firms until after the alleged price fixing took place. Coca-Cola Co. and Pepsico Inc. issued statements distancing themselves from the charges.

"Price fixing is a betrayal of everything we stand for, and the crooks should be drummed out of the business," Pepsico President Roger A. Enrico said.

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