| FOR IMMEDIATE RELEASE
WEDNESDAY, JANUARY 29, 1997
TDD (202) 514-1888
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 finethe second largest criminal antitrust fine everfor 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 millionthe largest criminal antitrust fine ever for its participation in international conspiracies involving two such additivescitric acid and lysine.
In December, a Chicago federal grand jury indicted three former top ADM executives and a Japanese executiveMichael D. Andreas, Mark E. Whitacre, Terrance S. Wilson and Kazutoshi Yamadafor 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 companyCheil 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 productsand 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 investigationthe 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:
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: