NEWS BRIEFS
Fastenal Battles Feds over Price Dispute
Fastenal Co. is negotiating with federal officials over allegations the company overcharged government customers, the Winona Daily News reports.
Company documents indicate Fastenal recently offered $2.75 million to settle the matter.
But the U.S. Department of Justice is pushing for $8.5 million to settle the matter before it reaches the courts, SEC documents show.
The “timing and outcome of these discussions are uncertain and could include settlement or civil litigation by the DOJ,” Fastenal reported in its third quarter report.
“While this matter is not expected to have a material adverse effect on our financial position, an unfavorable resolution could result in payments by the company in excess of the amounts reserved.”
Company officials first addressed the matter in their second-quarter report issued in July.
A 2006 federal audit of a U.S. General Services Administration contract the company serviced from 2000 to 2005 found Fastenal “potentially overcharged government customers under the contract.”
Fastenal disputes that claim.
In July the Justice Department sent a letter to the company “advising that they intended to be ready to commence litigation,” unless the company paid $9.5 million.
Fastenal also faces a seperate lawsuit on a different matter.
B&B Hardware filed a lawsuit accusing Fastenal of violating an April 1999 contract that made B&B Fastenal’s exclusive supplier for self-sealing fasteners.
B&B’s lawsuit claims that in April 1999, B&B and Fastenal signed an agreement making B&B the exclusive supplier and manufacturer of self-sealing fasteners sold by Fastenal. The suit alleges Fastenal broke that agreement by marketing and selling competing products at a lower cost.
In August a U.S. district judge denied Fastenal’s motion to dismiss the suit.
Fastenal unsuccessfully argued that the contract expired shortly after it was signed, pointing to a provision in the contract automatically terminates the agreement “upon any change of more than 25% ownership in (Fastenal),” which the company argued occurred in May 1999. ©2010 GlobalFastenerNews.com
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