Record Fine In Vitamin Case
International pharmaceutical heavyweights Roche Holdings and BASF AG will pay $725 million in fines and a Roche executive will likely go to jail to settle charges they conspired to divide markets and fix prices for a host of vitamins commonly added to food and animal feeds.
"The vitamin cartel was as bad as they get. Nothing was left to chance, or more accurately, competition," said Gary Spratling, chief of criminal enforcement for the Justice Department's antitrust division.
The Justice Department also charged the former head of Roche's global marketing division, Kuno Sommer, with participating in the vitamin cartel and lying to Justice Department investigators in 1997.
Sommer, a Swiss citizen, has agreed to appear in court, plead guilty to both charges, serve a four-month jail term, and pay a $100,000 fine.
From 1990 until February of this year, the international cartel brazenly conspired to divvy up markets and coordinate prices, said Assistant Attorney General Joel I. Klein, the Justice Department's antitrust division chief. Officials of the companies gathered to hold "annual meetings," and kept in near-constant contact to ensure compliance with their scheme, he said.
The conspiracy affected vitamins A, B2, B5, C, E and beta carotene, which are commonly used as nutritional supplements or as premixes that are added to food and animal feed.
The Justice Department estimates the conspiracy affected more than $5 billion of commerce.
Attorney General Janet Reno said the prosecution sends a clear signal that the Justice Department will not allow international cartels to prey on American consumers.
"If you're currently engaged in or contemplating similar anticompetitive conduct, take note of the high cost of getting caught Â… We mean business," Reno said.
The firms, including Rhone, still face a host of private lawsuits, charging that the alleged price fixing cost consumers and agribusinesses millions of dollars in overcharges over the past decade.
Shares of Rhone-Poulenc were up 7/8 at 49 13/16 in trading early Thursday afternoon.
Written By William L. Watts, CBS MarketWatch