Reiner Sees ‘Pervasive’ Cartel Conspiracy by Trash-Hauling Firms

Major trash-hauling firms have engaged in an ongoing conspiracy to wipe out competition and set artificially high prices for commercial trash disposal business in Los Angeles County, Dist. Atty. Ira Reiner charged in a press conference Tuesday.

“This is a pervasive, long-standing practice in the commercial trash-hauling business,” said Reiner in announcing details of criminal antitrust charges of conspiracy against trade filed this week against three trash-hauling firms and five officials of firms.

Facing fines of up to $1 million and possible loss of the right to do business in California if convicted are Waste Management of California Inc., Western Waste Industries and Angelus Hudson Inc.

Major Industry Factors

Waste Management is a subsidiary of Waste Management Inc., which, with 1986 solid waste services revenues of about $1.57 billion, is considered the largest waste disposal company in the country. Western Waste has annual sales revenues of about $70 million and Angelus Hudson has annual sales estimated at about $2 million, according to authorities.

The five individuals, including Wiley A. Scott Jr., operations manager for Waste Management of Sun Valley, and George Osepian, a vice president of Western Waste, could face maximum three-year prison sentences and $100,000 fines if convicted.

Called a Secret Cartel

According to Reiner, the defendants, along with other, smaller uncharged firms, have operated as a secret cartel, dividing up commercial accounts “so they could charge any price . . . without fear of competition.”

Occasionally, the system would be thrown into a state of flux when commercial clients sought to switch their haulers due to poor service or high prices, Reiner said.

In some instances, the client would be quoted higher prices by competing firms to discourage them from switching. When clients did switch, however, the old haulers would demand compensation, either in cash or with the replacement of the old client with a new one.

Firms that refused to participate would be the target of sales “blitzes,” Reiner charged, in which their clients would be offered prices too low to refuse. Later, the blitzing firms would raise prices back up to, and often higher than, the old level, Reiner said.

“The crime here amounts to a theft from the public which uses the myriad of businesses which are paying artificially high fees to have their trash hauled away,” said Reiner. “The high prices ultimately are passed on to the public.”

At his press conference, Reiner displayed copies of internal company memos obtained in court-authorized searches of hauling firms.

A typewritten “1986 Business Plan” memo on Waste Management of Gardena stationery states, “In March, 1985, we lost a major account to Genstar and were never compensated . . .. “

Handwritten notes of sales meetings seized at Western Waste headquarters list the names of other trash-hauling firms, followed by such comments as “go after,” “1 enemy,” and “get at any price.” Reiner said charges may also eventually be filed against some of the other 400-plus hauling firms in Los Angeles County. However, this week’s felony complaint covers many of “the major players,” Reiner said.

18-Month Investigation

The charges were filed after an 18-month investigation resulting from a tip to authorities by a small Pico Rivera-based hauling firm that has since gone out of business.

About 15 trash industry officials eventually were subpoenaed to answer questions before the Los Angeles County Grand Jury earlier this year, but no indictments were sought at the time by the district attorney’s office, officials said.

Richard Haft, vice president of Western Waste, disputed Reiner’s allegations Tuesday, saying “we’ve been in business over 30 years and it’s a highly competitive industry and we compete with everybody.”

William Plunkett, a spokesman at Waste Management’s national headquarters outside Chicago, said, “Waste Management has more than 400 divisions. While we take any alleged infraction of the law very seriously, those isolated infractions are just that, alleged and isolated.”

Last week, Waste Management was reported by the Wall Street Journal, quoting unamed sources, as being the subject of federal grand jury probes in at least six states, including California.