FOR IMMEDIATE RELEASE AT
WEDNESDAY, MARCH 26, 1997 (202) 616-2771
TDD (202) 514-1888
JUSTICE DEPARTMENT'S ONGOING PROBE INTO THE FOOD AND FEED
ADDITIVES INDUSTRY YIELDS $25 MILLION MORE IN CRIMINAL FINES
Investigation has Recovered More Than $195 Million in Fines
WASHINGTON, D.C.--Two international Swiss chemical
companies--F. Hoffmann-La Roche Ltd. and Jungbunzlauer
International AG--have agreed to plead guilty and pay criminal
fines totaling $25 million for participating in an international
conspiracy to fix prices and allocate market shares in the citric
acid market worldwide, the Department of Justice announced today.
Two of the companies' executives also agreed to plead guilty and
pay criminal fines totaling $300,000 for their part in the
conspiracy.
With today's fine, the Department's food and feed additives
investigation has recovered more than $195 million in criminal
fines.
"The Department will continue to seek out and prosecute all
international conspiracies that increase prices for consumers and
unfairly impede free and open competition in our markets," said
Joel I. Klein, Acting Assistant Attorney General in charge of the
Department's Antitrust Division.
Hoffmann-La Roche has agreed to pay $14 million and
Jungbunzlauer has agreed to pay $11 million for their
participation in the conspiracy.
Udo Haas, the former Managing Director of SA Citrique Belge
NV--the citric acid-producing affiliate of Hoffmann-La Roche, and
Rainer Bichlbauer, the Chairman and President of Jungbunzlauer,
have also agreed to plead guilty and each pay a $150,000 criminal
fine for their role in the international citric acid conspiracy.
Haas is a German citizen and Bichlbauer is Austrian.
This is the fifth round of cases filed as a result of the
Department's ongoing investigation into illegal, collusive
practices in the food and feed additives industry.
In October 1996, Archer Daniels Midland Co. agreed to plead
guilty and pay a $100 million criminal fine--the largest criminal
antitrust fine ever--for its participation in international
conspiracies involving two such additives--citric acid and
lysine. In January 1997, Haarmann & Reimer Corp., a New Jersey-
based subsidiary of the Germany-based pharmaceutical and chemical
giant Bayer AG, agreed to plead guilty and pay a $50 million
criminal fine for its participation in the citric acid
conspiracy.
Today's charges mark 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 and Springfield,
Illinois, and the U.S. Attorneys' Office in Chicago.
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 worldwide.
The charges against Hoffmann-La Roche, Haas, Jungbunzlauer,
and Bichlbauer were filed today in U.S. District Court in San
Francisco. The pleading parties have authorized the government
to disclose the basic terms of the plea agreements under which
the charges were filed. As part of their plea agreements, which
must be accepted by the court, the parties have agreed to
cooperate in the ongoing government investigations.
"With our new global economy, the Antitrust Division's top
priority in criminal enforcement is to investigate and prosecute
international cartels that hurt American consumers," said Gary R.
Spratling, the Antitrust Division's Deputy Assistant Attorney
General for Criminal Enforcement. "Today's charges against
Swiss, Austrian and German defendants, coupled with earlier food
and feed additives industry cases against Japanese, Korean,
German and American defendants, demonstrates that we will
prosecute members of price fixing cartels wherever they are
located."
The felony cases charge that Hoffmann-La Roche and
Jungbunzlauer, through several of their 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 27, 1995.
The Department charges that representatives of Hoffmann-La
Roche and Jungbunzlauer met with their co-conspirators in the
citric acid markets to set the prices and allocate the market
shares of citric acid that each participating firm could sell.
The single-count felony informations charge that the
companies and executives:
Agreed to charge citric acid prices at certain levels
and to increase those prices accordingly.
Agreed to allocate among the corporate conspirators the
market shares of citric acid that each participating
firm could sell.
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.
Hoffmann-La Roche is a Swiss company headquartered in Basel,
Switzerland, and is a wholly owned subsidiary of Roche Holding
AG, also based in Basel. During the conspiracy, Hoffmann-La
Roche produced citric acid at its Belgian affiliate, SA Citrique
Belge NV, located in Tienen, Belgium.
Jungbunzlauer is also a Swiss company headquartered in
Basel, Switzerland, and a subsidiary of Jungbunzlauer Holding AG,
also located in Basel. During the conspiracy Jungbunzlauer
produced citric acid at its plants in Perhofen, Austria and
Ladenburg, Germany.
Hoffmann-La Roche, Haas, Jungbunzlauer, and Bichlbauer are
charged with violating 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.
Since August 1996, the Department has filed charges against
the following companies and executives for their roles in the
lysine and citric acid conspiracies:
* Anjinomoto 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 for their
participation in the lysine conspiracy. 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 for their
participation in the lysine conspiracy. 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 for their participation
in the lysine conspiracy. 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.
* Archer Daniels Midland Co., located in Decatur, Illinois,
pleaded guilty to two felony counts for its participation in
the lysine and citric acid conspiracies and was fined $100
million.
* Three former top Archer Daniels Midland executives,
Michael D. Andreas, Mark E. Whitacre, and Terrance S.
Wilson, and a Japanese executive, Kazutoshi Yamada were
indicted for conspiring to fix prices and allocate sales in
the lysine market worldwide. A trial date has yet to be
set.
* Cheil Jedang Ltd., a Korean corporation, pleaded guilty and
agreed to pay $1.25 million for its participation in the
lysine conspiracy.
* Haarmann & Reimer Corp., a New Jersey-based subsidiary of
the Germany-based pharmaceutical and chemical giant Bayer
AG, pleaded guilty and was fined $50 million, and Hans
Hartmann, a senior executive at the Germany-based Haarmann &
Reimer Gmbh, pleaded guilty and was fined $150,000 for their
participation in the citric acid conspiracy.
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