MSM

Vitamin Industry Data

Results Of US Justice Department Anti-Trust Investigation

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May 20, 1999

Law

Vitamin Makers Plead Guilty to Charges,
Will Pay Record Fine of $725 Million

(same story, one day later, additional data)

Associated Press

WASHINGTON -- Two giant European drug and chemical companies agreed Thursday to plead guilty and pay a record $725 million criminal fine for engaging in a world-wide conspiracy to raise and fix the prices of vitamins, the Justice Department announced.

The $500 million fine to be paid by Roche Holding AG, the Swiss pharmaceutical giant, is the largest federal criminal fine ever imposed in any type of case, Justice spokesman Myron Marlin said.

A German firm, BASF AG, also agreed to plead guilty and pay a $225 million fine for its role in the scheme.

"The vitamin cartel is the most pervasive and harmful criminal antitrust conspiracy ever uncovered," Assistant Attorney General Joel I. Klein, head of Justice's antitrust division, told a news conference. "The criminal conduct of these companies hurt the pocketbook of virtually every American consumer -- anyone who took a vitamin, drank a glass of milk, or had a bowl of cereal."

The conspiracy lasted from January 1990 into February 1999 and affected the vitamins most commonly used as nutritional supplements or to enrich human food and animal feeds -- vitamins A, B2, B5, C, E and Beta Carotene, the government said.

The department also confirmed that Rhone-Poulenc, SA, a French pharmaceutical giant, has been cooperating with the investigation and been accepted into the antitrust division's corporate leniency program. That program protects companies from criminal prosecution if they voluntarily report their involvement in a crime before prosecutors learn of their role.

In a statement, the company said, "Rhone-Poulenc and its animal nutrition subsidiary, Rhone-Poulenc Animal Nutrition, have cooperated fully and voluntarily. .. Rhone-Poulenc Animal Nutrition has acknowledged there were instances in the past in which the company's global business practices did not meet U.S. legal standards. However, the company has since put into place practices and procedures and organizational changes to ensure compliance with applicable antitrust laws."

Gary R. Spratling, deputy assistant attorney general for criminal antitrust enforcement, said, "The information provided by Rhone Poulenc was what the division needed to crack the largest antitrust conspiracy uncovered to date." He added that Hoffmann-LaRoche and BASF also have begun cooperating with the probe.

In March, a Swiss vitamin manufacturer and five U.S. executives agreed to plead guilty to participating in a worldwide conspiracy to fix the prices of vitamins. The company agreed to pay a $10.5 million fine.

The corporation, Lonza AG, was charged in previously sealed court documents with scheming to fix the prices and allocate the sales of vitamin B3, also known as niacin and niacinamide, the department said.

The five executives were charged with plotting to fix prices and allocate customers and sales of vitamin B4, also known as choline chloride.

Both vitamins are used to enrich human and animal nutritional products and are sold around the world.

These were the first cases made public from the antitrust division's investigation of the vitamin industry. Both the company and the executives agreed to cooperate in the continuing probe, which is centered in Dallas, where the charges were filed in U.S. District Court.

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