Cartel Digest

Food & Feed Additives (Citric Acid)

Food & Feed Additives (Citric Acid)
  Overall Cartel Period 1991-1995
  Participants Archer Daniels Midland Co.; Haarmann & Reimer Corp.; F. Hoffman-La Roche Ltd.; Cerestar Bioproducts BV; Jungbunzlauer International AG
  Total Fines (DOJ) $105.4 million
  Total Fines (EC) €135.2 million

In 1995 and 1997, the U.S. Department of Justice (“DOJ”) and the European Commission (“EC”) launched investigations into the food and feed additives industry.  Citric acid is a flavor additive and preservative produced from various sugars and mainly used in soft drinks, processed foods, detergents and pharmaceutical and cosmetic products.  In 1997, the citric acid industry was valued at approximately $1.2 billion.  Lysine is an essential amino acid used as a feed additive by farmers around the world.  During the cartel period, worldwide sales of lysine exceeded $600 million annually.  Regulators found that from 1991 to 1995 manufacturers of both additives had agreed on worldwide prices and markets at fictitious trade association meetings around the world.  The EC and the Canadian Competition Bureau also investigated producers of choline cloride, an animal feed additive vital to sustaining high commercial production levels of poultry and swine.  Cartel members controlled 80% of the €180 million world market for choline chloride.

 

Enforcement Highlights:

  • The DOJ imposed fines of over $197 million on nine companies for participation in either the citric acid or lysine cartel.  Archer Daniels Midland was fined $100 million for its participation in both cartels.    
  • Executives from every company, except Cheil Jedang, agreed to pay individual fines and/or serve time in prison.  Three executives at Archer Daniels Midland were convicted at trial and sentenced to a combined 99 months in prison.  Two of the executives received sentencing enhancement for their leadership roles in the conspiracy.
  • The EC imposed fines totaling over €135 million on five companies for participation in the citric acid cartel.  The Commission increased the fines for several companies for their leadership roles in the cartel.
  • The EC also imposed fines totaling more than €66 million on the three members of the choline cloride cartel.
  • Eleven companies pleaded guilty in the Federal Court of Canada to participating in either the citric acid, lysine, or choline chloride cartel, and were fined over $33 million CAD. A Canadian executive was sentenced to a nine month prison term—to be served in the community—and 50 hours of community service.
Company Conspiracy Period Fine (USD) Plea Date No. of Excluded Individuals Plea Agreement
Archer Daniels Midland Co. 1/93-6/95 $30 million 10/15/1996 N/A  
Haarmann & Reimer Corp. 7/91-6/95 $50 million 01/29/1997 N/A  
Cerestar Bioproducts BV 11/92-4/94 $400,000 06/23/1998 N/A  
F. Hoffman-La Roche Ltd. 7/91-6/95 $14 million 03/26/1997 N/A  
Jungbunzlauer International A.G. 7/91-6/95 $11 million 03/26/1997 N/A  
Individual Company Prison Sentence Fine (USD) Plea Date Plea Agreement
Hans Hartmann, Senior Executive Haarmann & Reimer Corp. None $150,000 01/29/1997  
Udo Haas, Managing Director, SA Citrique Belge NV F. Hoffman-La Roche Ltd. $150,000 03/26/1997  
Sylvio Kluzer, Managing Director Cerestar Bioproducts BV $40,000  
Rainer Bichlbauer, Chairman and President Jungbunzlauer International AG $150,000 03/26/1997  
Canada
Company Fine Date
F. Hoffman-La Roche $ 2.9 million 09/22/1999
Jungbunzlauer International A.G. $ 4.7 million 10/21/1998
Haarmann & Reimer Corporation $ 1.9 million 10/21/1998
Archer Daniels Midland Co. $ 2 million 05/27/1998
Europe
Company Fine Date
F. Hoffman-La Roche AG € 63.5 million 12/05/2001
Archer Daniels Midland Co. € 39.7 million 12/05/2001
Jungbunzlauer AG € 17.6 million 12/05/2001
Haarmann & Reimer Corporation € 14.2 million 12/05/2001
Cerestar Bioproducts BV € 200,000 12/05/2001