Safety-Kleen Rival Files $400M Suit


An Elgin, Ill., parts cleaner services company filed a $400 million antitrust lawsuit Monday against Safety-Kleen Corp., alleging that the bankrupt market leader has used monopoly power to stifle competition.

Heritage-Crystal Clean LLC accused Plano, Texas-based Safety-Kleen of a variety of unfair practices, from intimidating employees who considered going to work for Heritage-Crystal Clean to sabotaging its equipment and even industrial espionage.

We want to compete with Safety-Kleen in the marketplace, not in the courtroom, according to HCC President Joe Chalhoub, former head of Safety-Kleens oil recovery division. Safety-Kleen’s tactics, however, have left us no choice but to file this suit.

Safety-Kleen scoffed at the allegations, claiming that HCC is just trying to get even for an ongoing court case brought against it by Safety-Kleen. Spokesman John Kyte of Safety-Kleen noted that his companys 2001 case in South Carolina state court led to a judges order for HCC not to engage in alleged unfair business practices.

This is simply a reaction to our legal action against them and probably an attempt to divert attention from the fact that we are about to emerge from bankruptcy, Kyte said. We think their lawsuit is clearly without merit and we will defend ourselves vigorously in court.

Both companies sell parts cleaners and related services to businesses such as auto repair shops, auto dealerships and manufacturers. Parts cleaners are sink-like machines that dispense solvent used to wash oil and grease from dirty parts.

According to HCC, Safety-Kleen has dominated the business for more than 30 years and now claims more than 85 percent of the U.S. market. Kyte said he believes Safety-Kleens market share is somewhat smaller, although he did not attempt to pinpoint it. Safety-Kleen has been in bankruptcy since June 2000 but filed a reorganization plan in November. HCC says it is one-tenth the size of Safety-Kleen, doing business in 28 states.

HCCs lawsuit, filed in the U.S. District Court for the Northern District of Illinois, accuses Safety-Kleen of unfairly trying to prevent customers from switching to HCC and to prevent current and former Safety-Kleen employees from joining HCC.

HCC spokesman John Feeley said Safety-Kleen uses evergreen contracts with fine print allowing customers only a narrow window to cancel. He said Safety-Kleen has also threatened legal action against current and former employees who go to work for HCC, even when doing so would not violate non-compete clauses in their contracts with Safety-Kleen.

Feeley said Safety-Kleen has also stolen solvent and parts from HCC equipment used by mutual clients in an attempt to damage HCCs reputation. Finally, the suit accused Safety-Kleen of trying to plant an individual at HCC in order to steal company secrets. Feeley declined to discuss specifics of the latter allegation, saying the company wants to save them for court.

Kyte declined to respond specifically to HCCs allegations, saying Safety-Kleen will do so in court.

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