FOR IMMEDIATE RELEASE AT
TUESDAY, OCTOBER 15, 1996 (202) 616-2771
TDD (202) 514-1888
ARCHER DANIELS MIDLAND CO. TO PLEAD GUILTY AND PAY $100 MILLION
FOR ROLE IN TWO INTERNATIONAL PRICE-FIXING CONSPIRACIES
Largest Criminal Antitrust Fine Ever
WASHINGTON, D.C. -- Archer Daniels Midland Co. today
has agreed to plead guilty and pay a $100 million criminal fine--the largest criminal antitrust fine ever--for its role in two
international conspiracies to fix prices to eliminate competition
and allocate sales in the lysine and citric acid markets
worldwide, the Department of Justice announced today.
"This $100 million criminal fine should send a message to
the entire world," said Attorney General Janet Reno. "If you
engage in collusive behavior that robs U.S. consumers, there will
be vigorous investigation and tough, tough penalties."
The Department said that feed companies, large poultry
and swine producers--and ultimately farmers--paid millions more
to buy the lysine additive. Also, the Department said that
manufacturers of soft drinks, processed foods, detergents, and
others, paid millions more to buy the citric acid additive, which
ultimately caused consumers to pay more for those products.
Today's charges arose in connection with extensive
investigations into illegal, collusive practices by the producers
of lysine and citric acid being conducted by the Chicago and San
Francisco Field Offices of the Antitrust Division, the office of
United States Attorney James B. Burns in Chicago, and the Federal
Bureau of Investigation in Springfield, Illinois and San
Lysine is an amino acid used by farmers as a feed additive
to ensure the proper growth of livestock. It is a $600 million a
year industry worldwide. Citric acid is a flavor additive and
preservative produced from various sugars. It is found in soft
drinks, processed food, detergents, pharmaceutical and cosmetic
products. Citric acid is a $1.2 billion a year industry
These are the Department's second round of charges brought
as a result of its ongoing antitrust investigation into the food
and feed additives industries. In August, two Japanese and one
U.S.-based Korean subsidiary and their executives agreed to pay
more than $20 million in criminal fines for their participation
in the lysine conspiracy.
"These fines should signal to corporations
throughout the world that they had better take a hard look at
their own behavior," said Joel I. Klein, Acting Assistant
Attorney General in charge of the Antitrust Division. "We have
reason to believe that international cartels are by no means
rare. We will vigorously pursue such violations on our own as
well as in cooperation with law enforcement authorities in other
The two-count felony criminal information against ADM
was filed in U.S. District Court in Chicago. ADM has authorized
the government to disclose the basic terms of the plea agreement
pursuant to which these charges were filed. The plea agreement
must be accepted by the court. As part of its plea agreement,
ADM has agreed to cooperate in the ongoing government
"Two of the ADM executives receive no protection from
prosecution under this plea agreement," said Gary R. Spratling,
the Antitrust Division's Deputy Assistant Attorney General for
Criminal Enforcement. "The Department's investigation is
The felony case charges that ADM conspired with the
three previously charged companies--Ajinomoto Co. Inc., Kyowa
Hakko Kogyo Co. Ltd., Sewon America Inc.--and other unnamed
corporate and individual co-conspirators, to suppress and
eliminate competition in the lysine market from June 1992 through
June 27, 1995 in violation of the Sherman Antitrust Act. ADM
produces lysine at its plant in Decatur, Illinois.
The case also charges ADM with conspiring with others
to suppress and eliminate competition in the citric acid market
from January 1993 through June 27, 1995. ADM produces citric
acid at its plant in Southport, North Carolina.
"Customers in the citric acid and lysine markets
were robbed of their ability to bargain for the best price.
Higher prices for those products translated into higher prices
for American consumers. Today's action ensures that these
markets will be competitive," said James B. Burns, U.S.
Attorney for the Northern District of Illinois.
The felony case charges that ADM met separately with
their co-conspirators in the lysine and citric acid markets to
set the prices and allocate the sales volumes of those products.
"This $100 million penalty--the largest ever
criminal antitrust fine--should put price fixers around the world
on alert, if you engage in criminal collusive behavior, you will
pay a high price for your illegal actions," said Klein.
The companies and individuals charged in the lysine
conspiracy last month were:
- The two-count felony information charges that ADM:
- Agreed to charge lysine and citric acid prices at
certain levels and to increase those prices accordingly.
- Agreed to allocate among the corporate conspirators the
volume of lysine and 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.
The corporate defendants previously charged agreed to
cooperate fully with the ongoing investigation by providing
documents and witnesses who will be available to testify in the
United States. Each of the individual defendants also agreed to
cooperate with the investigation, including giving testimony in
the United States. The corporate and individual defendants have
begun their cooperation with the government's ongoing
investigation and have provided valuable information, the
"The pleas and cooperation of the six defendants
charged last month in the lysine conspiracy were highly
significant in advancing the Department's investigation, which
resulted in ADM's guilty plea," said Spratling.
ADM is charged with violating Section 1 of the Sherman
Act, which carries a maximum fine of $10 million for
corporations. 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. The court will determine the appropriate sentence
to be imposed under the United States Sentencing Guidelines.
- -- Ajinomoto Co. Inc. of Tokyo, Japan, and its former
General Manager of the Feed Additives Division and current Associate General Manager of the
International Division, Kanji Mimoto. Mimoto lives
- -- Kyowa Hakko Kogyo Co. Ltd. of Tokyo, Japan, and its
former General Manager of the Agricultural Products
Department and current General Manager of the Food
Division, Masaru Yamamoto. Yamamoto lives in Japan.
- -- Sewon America Inc., located in Paramus, New Jersey, and
its President, Jhom Su Kim. Sewon America is a
subsidiary of Sewon Company Ltd., located in Seoul,
South Korea. Kim is from Korea and currently lives in