VITAMIN CARTEL: Drug Makers Agree to $1.17B Settlement
Seven of the world's largest drug companies -- Roche, BASF, Rhone-Poulenc, Hoechst, Takeda Chemical, Eisai and Daiich -- have agreed to pay more than $1.1 billion to settle a case that charges that for almost a decade they plotted to artificially inflate the prices of raw vitamin blends that go into products like milk and breakfast cereal. The companies who filed the lawsuit, including Kellogg, Kraft and Tyson Foods, stand to receive an average of 18-20% reimbursement for vitamin purchase made between 1990 and 1998 (AP/Baltimore Sun, 11/4). The agreement includes $122.4 million in attorney's fees and the top three manufacturers, Roche, BASF and Rhone Poulenc will pay about $900 million of the settlement. Rhone Poulenc, which cooperated with authorities will pay about $86.8 million. Robert Silver, a lead attorney for the plaintiffs, said, "The global settlement provides unprecedented relief, and shows how effectively the U.S. private enforcement system can respond to a global conspiracy to eliminate competition." The agreement still must get the approval of Federal District Judge Thomas Hogan.
The Wall Street Journal reports that settlement negotiations were stalled because of "concerns that many of the largest companies in the case ... would opt out of the settlement and file an individual lawsuit on their own." Attorney Ken Adams said many of his 87 clients intend to opt out, which would decrease the size of the settlement. He said that "the settlement falls short of reaching even single damages," claiming that the vitamin overcharges averaged 33%, not the 20% plaintiffs would receive in agreed-upon reimbursements. Michael Hausfeld, another lead attorney, disagreed, saying that the deal is "the best terms that could be negotiated for any member of the class" (Warren/Wilke, 11/4). Vitamin makers still face state class-action suits that are intended to compensate consumers, and antitrust investigations in Europe. The companies have already settled charges in Canada and agreed to pay almost $2 billion in government and class-action settlements for fixing prices in the United States (Barboza, New York Times, 11/4).