Jail term for firm

Press, 24 September 1988, Page 24

Jail term for firm

“STONE walls do not a prison make.” Thus Mr Robert Doumar, a federal judge in Norfolk, Virginia, as he imposed an unusual sentence on Allegheny Bottling Company on August 31. Judge Doumar fined the company SUSI million for its part in a pricefixing scheme, then sent the firm itself to prison for three years. Putting a company in jail is thought to be without precedent. The sentence was imposed after the Department of Justice had successfully argued that Allegheny and its competitor, MidAtlantic Coca-Cola Bottling, had engaged in illegal price-fixing between 1982 and 1985.

Executives of the firms — Mr Morton Lapides of Allegheny and Mr James Harford of Mid-Atlan-tic — had already been sentenced for their part (they will each serve about six months of longer, suspended prison terms), when Mr Doumar turned his attention to Allegheny Bottling itself. Judge Doumar made it clear that he did not actually expect to have the company incarcerated, but said that he could have all Allegheny’s facilities padlocked for the full three years of the sentence. He said that it was unfair for a company to make large illegal profits and then get away with a simple fine.

In the event, Mr Doumar relented a little. He suspended the sentence (and SUSSO,OOO of the SUSIM fine), placed the company on probation and ordered four of its senior executives to work full-time for the community for up to two years. Lawyers for the company (and for PepsiCo, which was not involved in the case but which now owns Allegheny) nonetheless say they will appeal. Other companies — including some defence contractors — may well be interested in the result. Copyright — The Economist