EU fines price-fixing citric acid cartel

- Last updated on GMT

Related tags: Citric acid, European union, European commission

The European Commission said on Wednesday it had fined five
companies a total of 135 million euros ($120.5 million) for
participating in a price-fixing and market-sharing cartel in citric
acid.

The European Commission said on Wednesday it had fined five companies a total of 135 million euros ($120.5 million) for participating in a price-fixing and market-sharing cartel in citric acid. Swiss chemical giant Hoffman-La Roche AG was fined 63.5 million euros, U.S. firm Archer Daniels Midland Co. 39.69 million, Jungbunzlauer AG 17.64 million, Haarmann & Reimer Corp, a unit of Bayer AG , 14.22 million and Dutch firm Cerestar Bioproducts BV 170,000 euros.

The announcement comes not even one month after the European Commission imposed 855.22 million euros fines on Roche and seven other producers, for violating antitrust laws on bulk vitamin sales.

Critical words came from the Commission when it announced the fine on Wednesday.

"As with the vitamins case, the behaviour of ADM, Hoffmann-La Roche and others shows a disregard for their customers and, ultimately, the consumers which paid more for the products concerned than if the companies had engaged in healthy price competition,"​ said Competition Commissioner Mario Monti. "The fact that some of the companies have only recently been sanctioned for similar conduct, ADM and Jungbunzlauer in the Sodium Gluconate case; Roche in the Vitamins case, illustrates how widespread these secret practices are, or at least used to be. I am confident that the message is now being clearly received. Companies must by now be fully aware of the risks they are taking should they be tempted to collude."

In a statement on Wednesday Roche claimed that it is to review the European Commission's decision in order to decide on the appeal against the sentence. The company added that it has fully co-operated with the EU commission since these practices came to light and that a special corporate training programme has been implemented at Roche world-wide to reinforce its commitment to conducting business in full compliance with all local and international laws.

Citric acid is one of the most widely used additives in the food and beverage industry both as an acidulant and preservative. It is found in non-alcoholic beverages as well as in jams, gelatine-based deserts and tinned vegetables and fruit.

From 1991 and 1995 all companies fined this week participated in a worldwide cartel through which they fixed the price and shared out the market for citric acid. The Commission began investigating the citric acid cartel in 1997. It said the cartel started in March 1991 at a Swiss hotel where founding members ADM, Haarmann & Reimer, Roche and Jungbunzlauer agreed on the main features of their plan to eliminate competition between them. Cerestar joined the group in May 1992 shortly after it entered the citric acid market.

The fined companies revealed an arrogant disregard for competition, they deceived the consumer and believed they were above the law and, as such, untouchable.

On Wednesday the message from Romano Prodi, President of the European Commission, was clear.

"The Commission will not tolerate attempts to cheat the European public and undermine the competitiveness of our economy. If you try to sew up the market in secret deals, we will catch you and make you pay."

Related topics: Policy

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