Dyno Nobel: The Quarry Customer Was Already Taken

The Justice Department’s criminal antitrust charges against Dyno Nobel tied commercial explosives prices and customer allocation together: competing suppliers allegedly agreed which customers they would serve and what prices they would quote. If you were told to leave a quarry account to a rival, you may know the decision behind an offer the customer thought was competitive.

The Justice Department announced on September 6, 1995 that Dyno Nobel had agreed to plead guilty. Its charges described price fixing across a region centered on western Kentucky and a separate agreement over limestone quarry accounts in central Texas.

The Explosives Business Behind the Quotes

Dyno Nobel manufactured, distributed and sold commercial explosives throughout the United States. The criminal information, the government’s charging document, described a Salt Lake City headquarters and a network of partly or wholly owned distributors serving the western Kentucky region and Texas. That distribution structure matters to an insider’s account: the person quoting the customer and the person setting the commercial instruction may sit in different parts of the business.

The document describes commercial explosives as high explosives, blasting agents, initiating devices and accessories used in coal and metal mining, quarrying and construction. The announcement names dynamite and ammonium nitrate mixed with fuel oil, or ANFO. Products manufactured outside the charged regions were shipped to customers within them. The product, distributor and quote connect the alleged agreement to an actual sale.

For an insider, that means the revealing comparison may sit across records: the account instruction in sales, the price approval elsewhere and the offer sent by the distributor. We would examine those links together, using the product and customer the employee actually knows.

Two Agreements, Different Customers

The criminal information charged a regional arrangement and a separate agreement covering particular Texas quarries. It alleged both allocation and coordinated prices, making the customer decision part of the price-fixing story.

Western Kentucky, Southern Indiana and Southern Illinois

The first count alleged conduct beginning in the fall of 1988 and continuing at least into mid-1992. It covered western Kentucky, southern Indiana and southern Illinois, which the document called the West Kentucky Region. The information charged that Dyno Nobel and other suppliers agreed on price increases, divided certain customers and agreed on bids or price quotes to certain customers.

Those allegations put several decisions inside the same arrangement. A supplier could agree to raise a price while also agreeing which rival would retain the customer. For someone who worked on the bids, the important question is how the competitor discussion became the quote the customer received.

The announcement separately described a charge against Mine Equipment & Mill Supply, an explosives distributor based in Dawson Springs, Kentucky, that Dyno Nobel partly owned. That distributor’s charge concerned the western Kentucky conspiracy.

Three Limestone Quarries in Central Texas

The second count alleged that, from the fall of 1990 through 1992, Dyno Nobel and other suppliers allocated three limestone quarry accounts: Lafarge Corporation in New Braunfels, Redland Stone in San Antonio and Texas Crushed Stone in Georgetown. The information also charged that the suppliers coordinated the prices presented to those customers.

The charging document described the connection in the suppliers’ alleged actions:

The quarry asks suppliers to compete, while the suppliers allegedly agree how to answer. We see a purchasing process kept on paper after the independent choice has been taken out of it.

How a Quarry Quote Can Reveal the Assignment

A hypothetical quarry quote makes the connection concrete. Suppose a sales manager prepares an offer from the product requirements and delivered-cost estimate, then receives an instruction to raise it because a rival is supposed to keep that account. The changed quote carries the effect of the assignment. The instruction explains why it changed.

For that sales manager, customer allocation would show up as a restriction on which business the company could pursue. The same account might remain assigned even when the sales team wanted to offer a better price. We would examine who gave that instruction, what competitor contact preceded it and whether the offer followed it.

An estimator might know that the delivered-cost calculation remained unchanged while the approved price moved. A distributor employee might know that a request for a competitive quote was redirected through someone who already knew which supplier was supposed to win. Each points to the same question: what connected the customer assignment to the commercial decision?

The Records Behind the Customer’s Offer

The strongest account connects the agreement to the price or bid that followed. In this explosives case, the criminal information itself joins discussions of customers, price increases and quotes. An insider can explain how those decisions passed through the business.

Customer records identify the mine or quarry and the distributor responsible for the account. We compare an allocation instruction with the company’s ordinary sales plan: which accounts the team was pursuing, which it was told to leave alone and who authorized the change. That comparison gives a customer list its meaning.

Quote versions show the commercial result. We would compare the proposed price, the approved price and the offer actually sent for the same customer and products, alongside any delivered-cost estimate or surcharge approval the employee knows. The point is to understand the reason for the change, especially when the explanation came from a competitor conversation.

Communications can supply that missing connection. A sales manager who heard the rival’s request may understand an instruction that looks unremarkable in isolation. A pricing employee may know why an exception was approved for one quarry and refused for another. We build the account around those specific decisions and the transactions they affected.

When Distance and the Quote Tell Different Stories

Geography can help explain a quote, and it can also make an unexplained price decision easier to see. A 2018 paper in the Proceedings of the Creative Construction Conference, Review of Collusion and Bid Rigging Detection Methods in the Construction Industry, reviews an Ohio school-milk study comparing cartel participants with other suppliers. It reports a striking relationship between the customer’s location and the cartel members’ offers:

The review explains that transportation costs would ordinarily push prices upward with distance. Its finding concerns school milk, but it supplies a useful question for an explosives estimator who knows the delivery costs: why did the quote move the other way? The cost estimate and the instruction behind the offer are what we would examine with that insider.

This is where knowledge of the business adds something a table of prices cannot. An employee may be able to explain why a supposedly expensive account was easy to serve, or why an attractive nearby customer remained off limits. That explanation directs attention to the transactions and conversations that matter.

Assigned Jobs and Sales Quotas Leave Different Records

Argos USA admitted under its criminal deferred prosecution agreement that it coordinated ready-mix concrete jobs, fuel surcharges and environmental fees with competitors. The admitted account also described a cement salesperson carrying rival price-increase letters. It shows how allocating business and coordinating individual price components can work together, with sales, dispatch and accounting employees seeing different parts.

A sales-volume agreement presents a different question. In the criminal case against ADM executives, the government described fixing lysine prices and allocating sales volume. That quota arrangement concerned how much the suppliers could sell. The Texas explosives charge identified quarry accounts the suppliers allegedly agreed to divide.

For the person inside sales, the distinction changes which instruction needs explaining. A limit on volume points toward a sales ceiling. An assigned quarry points toward a customer the team has been told to leave to someone else. We follow the decision the insider actually saw.

Would This Have Qualified Under Today’s Reporting Routes?

Comparable conduct today could support an antitrust whistleblower reward under the Justice Department and Postal Service agreement. Our whistleblower experts assess whether your evidence fits the program, starting with the conduct and transactions you know.

Where an explosives bid also involves false claims for government money, we examine the False Claims Act connection. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The customer, the payment and the information behind the bid give that conversation its starting point.

You Know Why the Quarry Quote Changed

If you know who assigned the quarry account or why the quote changed after a competitor’s call, speak with our whistleblower experts. We work with you to build your strongest antitrust whistleblower case around those decisions and bring in antitrust whistleblower lawyers who understand supplier pricing and customer allocation. From the first account of what happened, we stay beside you as partners in pursuing the case.