FOR IMMEDIATE RELEASE AT
WEDNESDAY, JANUARY 29, 1997 (202) 616-2771
TDD (202) 514-1888
JUSTICE DEPARTMENT'S ONGOING PROBE INTO THE FOOD AND FEED
ADDITIVES INDUSTRY YIELDS SECOND LARGEST FINE EVER
Bayer Subsidiary Agrees to Pay $50 Million Criminal Fine
WASHINGTON, D.C.-- Haarmann & Reimer Corp., a New Jersey-
based U.S. subsidiary of the Germany-based pharmaceutical and
chemical giant Bayer AG, has agreed to plead guilty and pay a $50
million criminal fine--the second largest criminal antitrust fine
ever--for participating in an international conspiracy to fix
prices and allocate sales in the citric acid market worldwide,
the Department of Justice said today.
A senior executive at the Germany-based Haarmann & Reimer
GmbH, Hans Hartmann, a German citizen, also has been charged for
his role in the international citric acid conspiracy.
"This $50 million criminal fine is a clear message to
corporations around the world," said Attorney General Janet Reno.
"We will not tolerate international conspiracies that defraud
American consumers, and those companies that engage in collusive
conduct will be punished."
This is the fourth round of charges filed as a result of the
Department's ongoing investigation into illegal, collusive
practices in the food and feed additives industry. With today's
fine, the Department's food and feed additives investigation has
recovered more than $170 million in criminal fines since charges
were first brought in August.
In October, Archer Daniels Midland Co. pleaded guilty and
was fined $100 million--the largest criminal antitrust fine ever
--for its participation in international conspiracies involving
two such additives--citric acid and lysine.
In December, a Chicago federal grand jury indicted three
former top ADM executives and a Japanese executive--Michael D.
Andreas, Mark E. Whitacre, Terrance S. Wilson and Kazutoshi
Yamada--for conspiring to fix prices and allocate sales in the
lysine market worldwide. A trial date has yet to be set. At the
same time, a Korean company--Cheil Jedang Ltd.--pleaded guilty
and agreed to pay a $1.25 million fine for its involvement in the
conspiracy.
Citric acid is a flavor additive and preservative produced
from various sugars. It is found in soft drinks, processed food,
detergents and pharmaceutical and cosmetic products. Citric acid
is a $1.2 billion a year industry worldwide.
"This conspiracy affected literally hundreds of commonly
used household foods and products--and almost every consumer in
the United States," said Joel I. Klein, Acting Assistant Attorney
General in charge of the Department's Antitrust Division. "The
Department will continue to seek out and prosecute all
international conspiracy rings that increase prices for consumers
and unfairly impede free and open competition in our markets."
Today's charges are another chapter in the Department's
ongoing investigations being conducted by the San Francisco,
Chicago and Atlanta Field Offices of the Antitrust Division, the
Federal Bureau of Investigation in San Francisco; Springfield,
Illinois and Atlanta, and the United States Attorney's Office in
Chicago.
The felony criminal charge against Haarmann & Reimer and
Hans Hartmann was filed in the U.S. District Court in San
Francisco. Haarmann & Reimer and Hans Hartmann have agreed to
cooperate in the ongoing government investigations. They have
also played a significant role in securing the cooperation of co-
conspirators. Haarmann & Reimer has authorized the government to
disclose the basic terms of the plea agreement. The plea
agreement must still be accepted by the court.
"This is by no means the final chapter in this
investigation--the Department's investigation is continuing,"
said Gary R. Spratling, the Antitrust Division's Deputy Assistant
Attorney General for Criminal Enforcement. "With the new global
economy, the Antitrust Division's top priority in criminal
enforcement is to investigate and prosecute international cartels
which adversely affect American consumers. We will bring charges
against members of these cartels whether they are located in the
United States or abroad."
The felony case charges that Haarmann & Reimer, through
several of its employees, conspired with other unnamed major
citric acid-producing firms to suppress and eliminate competition
in the citric acid market from July 1991 to June 1995. Haarmann
& Reimer, headquartered in Springfield, New Jersey, produces
citric acid at its three plants in Elkhart, Indiana; Dayton, Ohio
and Selby, England.
The felony case charges that Haarmann & Reimer and Hans
Hartmann met with their co-conspirators in the citric acid
markets to set the prices and allocate the sales volume of citric
acid.
The single-count felony information charges that Haarmann &
Reimer Corp. and Hans Hartmann:
Agreed to charge citric acid prices at certain levels and to
increase those prices accordingly.
Agreed to allocate among the corporate conspirators the
volume of citric acid to be sold by each.
Issued price announcements and price quotations in
accordance with the agreements.
Participated in meetings and conversations for the purpose
of monitoring and enforcing adherence to the agreed-upon
prices and sales volumes.
Haarmann & Reimer and Hans Hartmann are charged with
violating Section 1 of the Sherman Act, which carries a maximum
fine of $10 million for corporations and $350,000 for
individuals. The fine may be increased to twice the gain derived
from the crime by the defendant or twice the loss suffered by the
victims of the crime, if either of those amounts is greater than
the statutory maximum fine of $10 million for corporations and
$350,000 for individuals. The court will determine the
appropriate sentence to be imposed under the U.S. Sentencing
Guidelines.
In August, the Department filed its first charges against
the following companies and executives for their role in the
lysine conspiracy:
-- Ajinomoto Co. Inc. of Tokyo, Japan pleaded guilty and
agreed to pay a $10 million criminal fine, and Kanji
Mimoto, its former general manager of the Feed
Additives Division and current associate general
manager of the International Division, pleaded guilty
and was fined $75,000. Mimoto lives in Japan.
-- Kyowa Hakko Kogyo Co. Ltd. of Tokyo, Japan pleaded
guilty and agreed to pay a $10 million criminal fine,
and Masaru Yamamoto, its former general manager of the
Agricultural Products Department and current general
manager of the Food Division, pleaded guilty and was
fined $50,000. Yamamoto lives in Japan.
-- Sewon America Inc., located in Paramus, New Jersey,
pleaded guilty and has agreed to pay a criminal fine
which will be determined by the court, and Jhom Su Kim,
its president, pleaded guilty and was fined $75,000.
Sewon America is a subsidiary of Sewon Company Ltd.,
located in Seoul, South Korea. Kim is from Korea and
currently lives in Ridgewood, New Jersey.
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