Healthy Skepticism Library item: 5641

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Publication type: news

Gettler L.
Pharmaceutical companies settle first cartel class action
Sydney Morning Herald 2006 Jul 18
http://www.smh.com.au/news/business/pharmaceutical-companies-settle-first-cartel-class-action/2006/07/17/1152988471794.html

Full text:

Pharmaceutical companies settle first cartel class action

http://www.smh.com.au/news/business/pharmaceutical-companies-settle-first-cartel-class-action/2006/07/17/1152988471794.html

Leon Gettler
July 18, 2006

A $30.5 MILLION settlement in Australia’s first-ever cartel class action
has put Amcor and Richard Pratt’s Visy on notice over allegations that
they colluded to fix prices in the cardboard box industry.

The “vitamins class action” against pharmaceutical giants Roche, BASF
and Aventis was initiated seven years ago by Maurice Blackburn Cashman
in the Federal Court.

The action was on behalf of thousands of small- and medium-sized
businesses, including manufacturers of stock feed, animal feed, pet food
and veterinary performance enhancers.

The Federal Court yesterday began the process of approving the
settlement scheme for antitrust violations relating to vitamin sales in
the 1990s. The settlement is expected to be approved at the end of August.

Kim Parker, a principal with Maurice Blackburn Cashman, said the
settlement would set a precedent for other cases, including the $200
million class action the law firm had launched against Amcor for alleged
price fixing.

Ms Parker warned there could be more cartel class actions against other
companies.

“This settlement I am sure will be closely watched by those involved in
that case,” she said.

“That cartel case is a bigger case than this one. This was Australia’s
first cartel class action, that’s the second and hopefully there will be
more to follow.”

Amcor filed a cross-claim against Visy earlier this month seeking to
bring its rival into the class action. Visy, which has indicated it will
run a hardball defence against the Australian Competition and Consumer
Commission’s cartel allegations, has yet to respond.

In 2001, the three animal vitamin suppliers were fined a total of $26
million for price fixing and market sharing, following action by the ACCC.

Roche Vitamins Australia was fined $15 million, BASF Australia $7.5
million and Aventis Animal Nutrition $3.5 million.

Ms Parker said the settlement was vindication for the many businesses
which had either lost market share or paid inflated prices for animal feed.

She would not indicate the scale of the overcharging until the court had
approved the settlement, nor indicate the size of the biggest potential
payout.

If the court approves the settlement, there will be winners across the
supply chain. End users who had not bought more than $2000 worth of
vitamins will be excluded.

“The person that buys a chicken at home is not able to come forward and
make a claim because it’s unworkable,” Ms Parker said.

Roche would not return calls yesterday but BASF said it had admitted
responsibility for the violations and had taken measures to ensure they
would not recur.

“The events giving rise to the Federal Court proceedings took place in
the 1990s and finished more than eight years ago,” BASF said in a
statement. “BASF is confident that there have been no repetition of
these problems.”

It said newspaper advertisements would be placed informing class members
of the proposed settlement scheme and giving them the opportunity to be
heard next month when the court decides whether or not to approve the
scheme.