PRICE-FIXING: Six Foreign Companies to Pay $335M
Six foreign vitamin companies have agreed to pay $335 million to settle a lawsuit accusing them of price-fixing, the Wall Street Journal reports. The litigation accused the Swiss company Hoffmann-La Roche (a unit of Roche Holding Ltd.); BASF AG of Germany; France's Aventis SA; and the Japanese companies Takeda Chemical Industries Ltd., Eisai Co. and Daiichi Pharmaceutical Co. of meeting secretly to fix prices on vitamin pills and supplements for fortified foods from 1989 to 1998. The companies will pay $305 million to 22 states, Washington, D.C., and Puerto Rico. In addition, 43 state governments, plus Washington, D.C. and Puerto Rico, will net $30 million for overcharges on products they purchased from the companies. As part of the settlement, some businesses will be eligible to receive part of a $107 million claim fund (Wall Street Journal, 10/11). According to New York Attorney General Eliot Spitzer (D), the scheme by the six companies targeted not only the prices of vitamins, but "[v]irtually anything to which vitamins are added," including bread, juice and even cosmetics. "It's not just the vitamin pill that you take in the morning, [but] everything from the milk that we drink to the cattle, the red meat," Spitzer said. The U.S. government reported that the conspiracy affected "vitamins most commonly used as nutritional supplements or to enrich human food and animal feed," such as A, B2, B5, C, E and beta carotene (Jochnowitz, AP/Albany Times Union, 10/11). Roche Holding will pay more than half of the $305 million portion of the settlement. Hoffmann-La Roche spokesperson Martin Hirsch commented, "We have cooperated fully with the authorities since this situation came to light and we've taken steps to see that this is not repeated in the future" (Baltimore Sun, 10/11). Representatives from Eisai and Daiichi could not be reached for comment on the settlement, but Aventis spokesperson John Abrams said his company has "taken provisions already to adequately account for [its] portion of the settlement" (Wall Street Journal, 10/11). The companies admit no wrongdoing in the settlement. Last year, Hoffmann-La Roche and BASF were ordered to pay $725 million in criminal fines for "colluding to divide up markets and fix prices" (Jochnowitz, AP/Albany Times Union, 10/11).
Many states stand to gain money as a result of the settlement. The New York Times reports that New York will receive $25 million from the litigation. Spitzer said that the state will return $19 million of its share to the public through not-for-profit groups and municipalities for programs dealing with prenatal care, child nutrition and hunger. The state will keep the remaining $6 million as "compensation" for the elevated prices it paid for vitamins and vitamin-enriched products. Connecticut will receive $45,000 from the settlement (Fried, New York Times, 10/11). The Los Angeles Times reports that California will acquire $85 million through a separate deal the state reached with the companies. California Attorney General Bill Lockyer (D) said that the state would provide $42 million in refunds to state businesses, $5 million to the state for government purchases and $38 million to fund projects "of general benefit" to California residents (Reuters/Los Angeles Times, 10/11).