Cartel Digest

Food and Feed Additives (Lysine)

Food and Feed Additives (Lysine)
  Overall Cartel Period 1992-1995
  Participants Archer Daniels Midland Co.; Ajinomoto Co., Inc.; Kyowa Hakko Kogyo Co., Ltd.; Sewon America Inc.; Cheil Jedang Ltd.
  Total Fines (DOJ) $91.6 million
  Total Fines (EC) No fines imposed

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.
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Company Conspiracy Period Fine (USD) Plea Date No. of Excluded Individuals Plea Agreement
Archer Daniels Midland Co. 6/92-6/95 $70 million 10/15/1999 N/A  
Ajinomoto Co. Inc. 6/92-6/95 $10 million 08/27/1996  
Kyowa Hakko Kogyo Co., Ltd. 6/92-6/95 $10 million 08/27/1996  
Sewon America Inc. 6/92-6/95 $300,000 08/27/1996  
Cheil Jedang Ltd. 6/92-6/95 $1.3 million  
Individual Company Prison Sentence Fine (USD) Plea Date Plea Agreement
Michael Andreas, Vice Chairman Archer Daniels Midland Co. 36 months $350,000 09/22/2000  
Mark Whiteacre, Head of Bioproducts Disvision Archer Daniels Midland Co. 30 months $350,000 07/09/1999  
Terrance Wilson, Corn Products Division Archer Daniels Midland Co. 33 months $350,000 10/15/1999  
Kanji Mimoto, General Manager, Feed Additives Division Ajinomoto Co., Inc. None $75,000 08/27/1996  
Masaru Yamamoto, General Manager, Agricultural Products Department Kyowa Hakko Kogyo Co., Ltd. None $50,000 08/27/1996  
Jhom Su Kim, President Sewon America Inc. None $75,000 08/27/1996  
Elmore Roy Anderson, President Bilhar International Establishment 36 months $25,000 05/20/2002  
Canada
Company Fine Date
Ajinomoto Co. Inc. $ 3.5 million 07/23/1998
Sewon America Inc. $ 70,000 07/23/1998
Kyowa Hakko Kogyo Co., Ltd. Immunity 07/23/1998
Archer Daniels Midland Co. $ 14 million 05/27/1998