Vitamin Price Fixing Lawsuits

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Vitamin Price Fixing Lawsuits

http://www.therubins.com/legal/vitamsuit.htm

 

Vitamin Price Fixing Lawsuits

 

New York State's Attorney General Eliot Spitzer announced that the state would

distribute its $18.5 million share of the money that the state received as its

share of the $225 million vitamin price fixing lawsuit to 106 health programs.

New York was one of 21 states involved in the lawsuit as we discuss below.

 

New York's share will go to programs involving prenatal care, nutrition and

other health measures. The largest allotment, $600,000 will go to the New York

Sate Coalition Against Domestic Violence. The largest allotment in the city,

which is $300,000, will go to Food For Survival, a food-distribution program in

the Bronx.

 

The European Commission fined 8 vitamin producers a total of 855 million euros

($752 million) to settle the European end of the cartel price fixing suits that

began in the early 1990s. " This is the most damaging series of cartels the

commission has ever investigated, " said Mario Monti, the union's competition

commissioner. " It is particularly unacceptable that this behavior concerned

substances which are vital elements for nutrition essential for normal growth

and maintenance of life " .

 

Hoffman-La Roche was singled out as the ringleader and ordered to pay 462

million euros ($406 million). BASF of Germany was fined 296 million euros ($260

million). Roche and BASF were found to have been involved in all 12 separate

cartels. The other companies involved were Takeda Chemical Industries of Japan,

Merck of Germany, Rhone-Poulenic of France, now part of Aventis, Daiichi

Pharmaceuticals of Japan, Eisai and E. Solvay Pharmaceuticals of Holland.

 

The vitamins involved in the cartels price fixing action were vitamin C for

human consumption, vitamin A and E used in animal feed, vitamin D3, B1, B2, B5,

B6, biotin (H), folic acid (M), beta carotene and carotenoids. Aventis was

exempted from fines for its involvement in the vitamin A and E cartels, because

it was the first company to cooperate with the authorities in investigating the

cartels. Roche's fine was the equivalent of 2.6 percent of the company's total

sales last year, even though the fine could have been as much as 10 % of the

companies total sales last year.

 

In the United States a settlement in the amount of $225 million was reached in

the decade-long vitamin price fixing suit brought against 6 of the world's

largest vitamin producing companies by consumers, businesses and governments in

21 states, the District of Columbia and Puerto Rico. The total settlement is

divided into 3 parts: $118 million to 21 states for higher costs to consumers as

a result of the price fixing; $30 million to 47 states for higher charges the

states themselves paid for vitamin products; and $107 million to businesses,

like farms and retail stores, that were penalized in having paid higher prices

for the vitamins than would have ordinarily occurred. The 6 companies agreeing

to make the payments were: Roche Group, BASF, Aventis, Takeda, Eisai, and

Daiichi. Farmers and retail stores claiming damages are to file compensation

claims with the court under procedures still to be announced. The companies

still face regulatory scrutiny by the European Union antitrust watchdogs.

 

New York State will receive $25 million out of the settlement. As announced by

New York State's Attorney General Eliot Spitzer $19 million of the state's share

will go to nonprofit groups and municipalities for programs dealing with

prenatal care, child nutrition and hunger. The state will keep $6 million as

compensation for the higher prices it paid for vitamin-containing products. The

State of California is expected to settle the matter separately with these same

companies for $80 million.

 

Several of the largest plaintiffs in the civil suit against the vitamin

manufacturers have opted out of the $1.17 billion class action settlement in the

raw vitamin blends price-fixing case. Plaintiff's attorneys informed a federal

judge in Washington, D.C. that 224 companies representing 75 % of the vitamins

purchased chose to opt out of the class of 4,000 plaintiffs. Those who opted out

felt that they could get a fairer amount on an individual basis by pursing the

court action to completion on their own. U.S. District Court Judge Thomas Hogan

has approved a $242 million agreement to settle charges for the remaining

plaintiffs. Those pulling out of the settlement include Tyson Foods and Quaker

Oats.

 

On November 3, 1999 seven of the world's largest drug companies agreed to settle

for $1.17 billion a class action law suit for vitamin price fixing. The price

fixing had been going on for nearly a decade and involved the price fixing of

the raw vitamin blends of most food items. The class action suit had been

instituted by the large food, beverage and animal feed companies. The ordinary

consumer will not benefit from this settlement. State class action suits are

being brought that will hopefully compensate the ordinary consumer for their

losses. The seven companies that settled were as follows:

 

Roche Group

 

BASF

 

Takeda Chemical

 

Rhone-Poulenic

 

Eisai

 

Daiichi Pharmaceutical

 

Hoechst Marion Roussel

$632 million

 

$281.1 million

 

$100.9 million

 

$85 million

 

$44.9

 

$24.7

 

$4.4

 

 

Please note that Rhone-Poulenic and Hoechst Marion Roussel merged in 1999 to

form Aventis.

 

The settlement figure represents about 20 cents on every dollar of sales by

these companies during the period of 1990 through 1997. Class action suits are

still being pursued against a smaller group of vitamin manufacturers that deal

in niacin and choline chloride.

 

In May of 1999, in the largest criminal antitrust fine in United States history,

Roche Holding A.G. and BASF A.G. agreed to pay more than $725 million for

illegal price fixing that caused fraudulent inflation of vitamin prices

throughout the world. These two companies, along with a third defendant,

Rhone-Poulenc took part in this conspiracy for over a decade, but was not

penalized since they were protected from criminal prosecution because of their

cooperation in the case. The vitamins affected were vitamins A, B2, B5, C, E,

and beta-carotene. These three companies together control almost 90% of the

vitamin market.

 

By Allan Rubin

updated March 22, 2001

 

http://www.therubins.com

 

To e-mail: rehabstrat1 or rubin

 

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