Cartel Digest

Food & Feed Additives (Choline Chloride)

Food & Feed Additives (Choline Chloride)
  Overall Cartel Period 1992-1998
  Participants Akzo Nobel NV; BASF AG; UCB SA
  Total Fines (DOJ) No fines imposed
  Total Fines (EC) €66.3 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.
Canada
Company Fine Date
Akzo Nobel Chemicals B.V. $ 1 million 08/18/2003
Bioproducts Incorporated $ 600,000 08/19/2003
BASF AG $ 1 million 09/22/1999
Chinook Group Ltd. $ 2.2 million 09/24/1999
Europe
Company Fine Date
Akzo Nobel NV € 21 million 12/09/2004
BASF AG € 34.9 million 12/09/2004
UCB SA € 10.4 million 12/09/2004
Canada
Individual Company Prison Sentence Fine Date
Russell Cosburn, Vice President Chinook Group Ltd. 9 months No fines imposed 09/17/1999