Healthy Skepticism Library item: 2219

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Publication type: news

Guerrera F, Jennen B.
Brussels to set record fines for vitamin cartel
Financial times 2001 Nov 20

Full text:

The European Commission is expected to impose record fines totalling E850m (US$747m) on Roche of Switzerland, BASF of Germany, and several other companies for a nine- year conspiracy to control the market for vitamins. The regulator is believed to have found that Roche, which is expected to be fined about E460m, and BASF, which is set to pay nearly E300m, played important roles in a cartel to fix the price for some of the most popular vitamins. At least six other companies are expected to receive smaller fines totalling E90m.

The European competition directorate is expected to recommend the fines for approval by the 20 commissioners this morning. The commissioners have the power to change the level of the fine but usually agree with the advice of the competition experts. The Commission and the companies on Tuesday declined to comment.

The fines, which dwarf the previous record penalty of E270m imposed on a shipping cartel, will go to the Commission’s budget.

The vitamins decision comes two years after a similar probe by US antitrust authorities led to a $500m fine for Roche and a $225m penalty for BASF. A former Roche executive was also jailed for four months and fined $100,000.

Competition experts said the European case against the vitamins cartels was similar to the one in the US. The US investigators said the companies were acting as if they were working for the same business, referred to by executives as Vitamins Inc. In the US, the cartel controlled the most popular vitamins, including A, C, beta carotene and vitamin pre-mixes. The Commission has not said what vitamins it was investigating.

Critics of the Commission say that its policy on cartels is still lagging the US, which has the power to jail executives found guilty of price-fixing. But Mario Monti, European competition commissioner, has said Brussels is prepared to take on more cartels with stiffer punishments.

The Commission’s decision will be a further blow for the reputation and finances of Roche and BASF, two of Europe’s largest and oldest drug companies. Roche is believed to have made provisions of $1.4bn to cover the liabilities arising from the US and European investigations and private lawsuits in the US. The Swiss company has denied its top management knew of the price-fixing. Since the US ruling, the company has overhauled its vitamins business, introducing a training programme on anti-competitive behaviour and an internal audit to monitor practices throughout the group.