Justice Dept. investigating vitamin price-fixing

Data About The Wholesale Vitamin Industry

B & B International
Exclusive Agents For
The United States
And Canada

Representing a Factory
Capable of producing 5,000+ tons of MSM per annum

Quantities up to one ton
Immediately Available From Inventory
In California

Call
800 225-2308
or eMail

U.S. Vitamin Probe Targets 3 European Companies

The Justice Department is investigating the $3 billion wholesale vitamin industry for possible antitrust violations Original Story in November, 1997

May 21st WSJ Advance Story (includes video link)

May 21, 1999, Final Story, Vitamin Firms Settle U.S. Charges, Agree to Pay $725 Million in Fines  (below)

May 21, 1999

Law

Vitamin Firms Settle U.S. Charges,
Agree to Pay $725 Million in Fines

By JOHN R. WILKE and SUSAN WARREN
Staff Reporters of THE WALL STREET JOURNAL

WASHINGTON -- The world's two biggest vitamin makers agreed to pay a total of $725 million to settle Justice Department charges that they and other manufacturers engaged in a massive price-fixing conspiracy that inflated the cost of everything from breakfast cereal to hamburgers over the past decade.

Hoffmann-La Roche Ltd., a unit of the Swiss drug giant Roche Holding AG that has 40% of the global human and animal vitamin market, agreed in U.S. District Court in Dallas to pay a record $500 million fine and plead guilty as part of the settlement. BASF AG, a major German chemical maker that has 20% of the market, will pay $225 million and enter a guilty plea as well.

Rhone-Poulenc SA of France, the world's third-biggest vitamin maker with 15% market share, also participated in the price-fixing ring. But the company began cooperating with federal investigators a few months ago under an amnesty program and helped make the case against its co-conspirators, U.S. officials said.

Members of the ring, including Rhone-Poulenc, also face potentially massive damage claims in 25 private lawsuits now pending in four federal courts. The suits were brought by livestock farmers and other purchasers of bulk vitamins who allege they were forced to pay illegally inflated prices. The first of these cases was filed in U.S. District Court in Washington, D.C., in March 1998.

Wide Effect Cited

The cartel "is the most pervasive and harmful criminal antitrust conspiracy ever uncovered," declared Joel Klein, chief of the Justice Department's antitrust division. The price-fixing ring "hurt the pocketbook of virtually every American consumer, anyone who took a vitamin, drank a glass of milk, or had a bowl of cereal," he said.

The record fines continue a trend toward stiffer penalties for price fixing and aggressive antitrust enforcement, even against foreign companies. Almost $1 billion in fines have been levied so far in the current fiscal year, ending Sept. 30, more than the total of all previous antitrust fines combined, Mr. Klein said.

"Fines of this magnitude are absolutely necessary if we are going to prevent these illegal cartels from inflicting harm," he said. Indeed, he said, a 1997 fine of $14 million in an earlier price-fixing case wasn't enough to stop Hoffmann-La Roche from continuing to meet and fix vitamin prices, even as it faced charges in the prior case.

Standing beside Mr. Klein before a bank of cameras, Attorney General Janet Reno declared that the antitrust division would hunt down violators anywhere in the world. "We will not allow international cartels to prey on American consumers in our globalized economy," she said. Corporate executives "engaged in or contemplating similar conduct should take note of the high cost of getting caught."

Vitamin executives would gather annually for two-day "summit meetings" in various cities around the world, typically in August or September, to work out a "budget" for the cartel, which one member called "Vitamins Inc.," said Gary Spratling, deputy for criminal enforcement at the Justice Department's antitrust division, who oversaw the investigation. Several smaller companies remain under investigation in the probe, he said.

Ensuring Compliance

Roche, BASF and Rhone-Poulenc issued statements Thursday admitting their wrongdoing and said they have put new measures in place to ensure future compliance with U.S. antitrust laws. Roche and BASF, which agreed to plead guilty to price fixing, said they have overhauled the management of the vitamins division to give a fresh start to those businesses.

Roche fired two of its top executives who were responsible for the company's vitamin operations. Roland Bronnimann, head of the vitamins and fine chemicals division, and Kuno Sommer, former director of the vitamins marketing division who has been serving as chief executive of Roche's Givaudan Roure unit, departed from the company, effective immediately, Roche said in a statement.

Dr. Sommer, the former director of world-wide marketing for Roche, agreed to plead guilty Thursday and pay a $100,000 fine, for lying to federal investigators in 1997 and other actions. Dr. Sommer, a Swiss citizen, agreed to serve four months in a U.S. prison and is the first foreigner to be prosecuted for U.S. criminal antitrust charges.

BASF also disclosed an executive shakeup, saying it had replaced the management of its vitamins unit in recent months but would not say if the people had been fired. "A new management team is now in place world-wide," BASF said.

Talks in Europe

The companies also acknowledged the numerous civil lawsuits and said they expect to meet with lawyers for the plaintiffs to find ways of resolving the lawsuits. BASF said it is "premature to discuss the likelihood of success or the financial costs which may be involved in any such settlement." Both companies also said they have begun talks with European antitrust authorities, which apparently had little role in the probe.

Vitamin makers have been under pressure from falling prices and shrinking profits since last summer -- about the time the conspiracy unraveled. Executives have previously blamed the weakening market on the Asian economic crisis and rising competition from China, which sharply undercut the cartel's prices for vitamin C.

Industry leader Roche said its vitamins and fine-chemicals sales, which make up about 15% of total revenue, fell 5% in 1998 to $2.5 billion, though it retained a firm grip on its huge market share and high profit margins. Samuel Isaly, an analyst with OrbiMed Advisors, said that while the $500 million fine, which was reported in Thursday's New York Times, is "big enough to make a dent" in Roche's 1999 earnings, it is only a tiny fraction of the company's $110 billion market capitalization.

"It doesn't put them in financial distress," he said. Vitamins are a smaller business for BASF, a huge industrial company in markets from gas pipelines to diet drugs.

A Rhone-Poulenc spokeswoman said the price-fixing settlement should have no effect on the company's planned merger with Germany's Hoechst AG later this year. Hoechst and Rhone-Poulenc are shedding most of their industrial chemical operations and combining their pharmaceutical, agrochemical and veterinary operations in one of Europe's biggest industrial marriages which, if successful, would create the world's biggest life-science group, to be called Aventis SA.

'Regret' From Roche

In an interview, Roche's chief executive officer, Franz B. Humer, said, "We deeply regret what happened."

"I am personally, absolutely shocked at what has happened," he said. "But we will put it behind us, and we will continue to grow [the vitamin] business very profitably." Mr. Humer also said the company will seek to settle civil suits stemming from the case. Civil suits in the 1997 price-fixing case cost Roche $10 million, though its involvement in that case was significantly smaller.

The talks with European antitrust authorities "may take some time to progress, and it is very difficult to predict what will happen at this point," he said.

Copyright © 1997 Nando.net
Copyright © 1997 The Associated Press

WASHINGTON (November 19, 1997 1:06 p.m. EST http://www.nando.net) -- The Justice Department is investigating the $3 billion wholesale vitamin industry for possible antitrust violations, a spokeswoman said today.

A federal grand jury in Dallas is considering evidence from the probe of bulk sales of vitamins for humans and animals, the Wall Street Journal reported, citing industry executives and lawyers. The paper said investigators are looking at possible price-fixing and collusion.

"The antitrust division is looking into the possibility of anti-competitive practices by vitamin producers," Justice spokeswoman Gina Talamona said. She declined to identify any companies under investigation.

Spokesmen for two major vitamin makers, Hoffman-LaRoche Inc. and BASF Corp., said they were aware of the investigation but had not been contacted by law enforcement officials. A spokesman for the U.S. unit of Rhone-Poulenc SA of France said he was not aware of the probe.

Several companies dominate most of the bulk vitamin industry's production. Roche has about 40 percent of the market, BASF 20 percent and Rhone Poulenc 15 percent, according to the trade publication Chemical Market Reporter.

Bulk vitamins are sold in tablet form for humans, in food supplements in many packaged-food products, in animal feed and in cosmetics. Animal feed represents the largest market segment.

AP-ES-11-19-97 1146EST 

U.S. Vitamin Probe Targets 3 European Companies

Wednesday, October 07, 1998

                                This page is copyright © May 20, 2008 6:24 AM by B&B International.  All rights are reserved.

Contact Karl Loren at B & B International for further information.    Within the US, Canada, Alaska and Hawaii, call toll free:  800 225-2308.    Local Phone:  (818) 558-7099.  Or FAX to:  (818) 558-7299.   Or eMail to mailto:karl@karlloren.com .   Or, mail to Karl Loren, B & B International, 1831 N. Bel Aire Drive, Burbank, CA 91504.    You may also use the contact form immediately below to send a message to Karl Loren.  You will often get a reply within minutes -- hardly ever more than a few hours.

SUBSCRIBE:  The Wednesday Letter is a free electronic monthly newsletter written and published by Karl Loren.  You can view more than 50 back issues of this publication by clicking here.  The Wednesday Letter subscription list is maintained on a secure server, no name is ever given or sold to anyone, and it is never used except for this Newsletter.  It is automatically published on the Tuesday night just before the first Wednesday of every month.  You can subscribe to this free monthly electronic letter by entering your eMail address and name below.  You will then automatically receive a request for confirmation, sent to whatever address you have entered.  If you do NOT receive this confirmation request, then you will not be subscribed.  There may have been an error with your address and you should resubmit.  The letter is never sent twice to the same address -- so you do not have to worry about a duplicate subscription.  When you receive this confirmation request you must reply to it, or your subscription will not become active.  No one can subscribe your name, and address, without you being notified, and if you get an unwanted notice of subscription you only need to DO NOTHING and the subscription will NOT be active.

REMOVAL:  You can remove yourself from the subscription list in several different ways.  Click here to read about this entire newsletter system.  Every edition of The Wednesday Letter is delivered to your address with YOUR name and address in view on the letter, with a link that allows you to remove THAT name from the subscription list.  If you try to send this removal message from an address different from the one you used to send in your original confirmation, then you will get a warning notice first, sent to the subscription address, asking you to confirm that you want to be removed from the list -- by replying to THAT request for confirmation, you will then be automatically removed.  Thus, no one else can unsubscribe you, from some other computer, without your knowledge.  But, if you send in the unsubscribe notice from the same machine used to receive the Letter, then the removal from the subscription list is automatic.

Personal Message:  When you send a personal message to Karl Loren, you will receive a personal reply as per his instructions.  Karl pledges that every personal message will get a personal answer. When you provide your mail address, we will send you free information including our free catalog and a cassette tape lecture by Karl Loren about heart disease, no charge, by mail, even if outside the US.  You can select particular information you would like to receive, along with the free cassette tape and catalog.

You can reach Vibrant Life in many ways, including by mail to Vibrant Life, 2808 N. Naomi St., Burbank, CA 91504.  Within the US and Canada, use the toll free number:  (800) 523-4521, the local number:  (818) 558-1799, the FAX:  (818) 558-7299, eMail to kimberly@oralchelation.com or any one of the hundreds of message forms throughout the 50 web sites.  Vibrant Life normally ships the same day we get an order.  There are message forms on each of the 100,000+ pages on this and other sites where you can communicate with Vibrant Life.  Check out our companion site, at:  http://www.oralchelation.net where Karl's 2000 page book is published.  Karl Loren is the author and webmaster for this BOOK, as well as for another web site about ORAL CHELATION.  His personal philosophical articles are at PHILOSOPHY. 

Copyright © May 20, 2008 6:24 AM by Karl Loren on behalf of Vibrant Life, ALL RIGHTS RESERVED.  Permission is granted for non-commercial downloading, copying, distribution or redistribution on two conditions:  One, that some form of copyright notice is included in every copy distributed or copied, showing the copyright belonging to Vibrant Life, Burbank, CA, at www.oralchelation.com . The second condition is that the material is not to be used for any purpose contrary to the purposes and objectives of this site.  This permission does not extend to materials on this site which are copyrighted by others.