THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, August 27, 1994 TAG: 9408270252
SECTION: LOCAL PAGE: B5 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: Medium: 69 lines
Reynolds Metals Co. said Friday it was part of an industry-wide investigation by the U.S. Justice Department into the production of aluminum.
The two-sentence release said the company would cooperate in the investigation and ``is confident that its conduct has been in compliance with U.S. antitrust laws.'' The company declined to comment further.
About the same time, a Justice Department spokeswoman announced the investigation.
``The antitrust division is conducting an investigation into the possibility of anti-competitive practices in the aluminum industry,'' said the spokeswoman, Gina Talamona.
She wouldn't say when the investigation began or give any more details.
Al Posti, a spokesman for Pittsburgh-based Aluminum Company of America, said his company also had been notified of the probe.
The U.S. Aluminum Association, which represents Reynolds and its competitors, also has been notified, said spokeswoman Yvonne Folkerts.
``The association intends to cooperate fully with the Department of Justice in this investigation,'' Folkerts said. ``We are confident that the association's programs have been conducted in compliance with the antitrust laws.''
An industry analyst told the Richmond Times-Dispatch that it appears the Justice Department is taking a second look at a deal that reduces the amount of aluminum on the world market.
Vahid Fathi of Kemper Securities in Chicago said a treaty, signed by the United States, a number of European nations and the Russian Federation, was designed to stop Russia's dumping of aluminum on world markets.
The dumping, caused by Russia's desire to make money off its old defense industry, had driven prices of industrial aluminum to record lows. As a result, American producers suffered huge losses. Reynolds lost $322.1 million last year.
Under the agreement, the United States and five other leading aluminum-producing nations agreed to cut production by up to 2 million metric tons a year in an attempt to boost prices.
In return, the Russian Federation agreed to drastically lower its production. The accord is to expire in 1996.
During the winter negotiations in Brussels, Belgium, Fathi said the aluminum producers made sure the talks were between representatives of the governments.
``The aluminum companies weren't physically present at the discussions, but they were available for consultations,'' he said.
Because news reports have said the Justice Department provided legal counsel during the talks, Fathi said he was surprised that the government now is going after Reynolds and its peers.
``It's the interpretation of the law that sometimes gets to be a sticking point, and maybe this is one of those situations,'' he said.
The Brussels treaty helped Reynolds climb out of the financial doldrums of the past year. Reynolds posted a second-quarter profit this year of $11.9 million, its first money-making quarter in more than a year.
Aluminum prices on the world markets have increased 22 percent since the agreement.
Richard G. Holder, Reynolds' chairman and chief executive officer, is chairman of the Aluminum Association and was one of the chief proponents of the February accord. by CNB