Lysine price-fixing conspiracy

Lysine price-fixing conspiracy

The lysine price-fixing conspiracy was an organized effort during the mid-1990s to raise the price of the animal feed additive lysine. It involved several agricultural companies including Archer Daniels Midland (ADM), Ajinomoto, Kyowa Hakko Kogyo (two Japanese companies), and Sewon America Inc. (a Korean subsidiary). A criminal investigation resulted in fines and three-year prison sentences for executives of ADM who colluded with the other companies to fix prices. The foreign companies settled with the United States Department of Justice Antitrust Division in September 1996. Each firm and one executive from each plead guilty as part of a plea bargain to aid in further investigation against ADM. The cartel had been able to raise lysine prices 70% within their first nine months of cooperation. [James M. Griffin, Deputy Assistant Attorney Gen., Antitrust Div., Dep't of Justice, [ The Modern Leniency Program After Ten Years: A Summary Overview of the Antitrust Division's Criminal Enforcement Program] , Aug. 12, 2003]

The investigation yielded nearly $100 million in criminal fines which was a record antitrust penalty at the time, [Meredith E. B. Bell and Elena Laskin, " [ Antitrust Violations] ", 36 Am. Crim. L. Rev. 357] including a $70 million fine against ADM. ADM was fined an additional $30 million for its participation in a separate conspiracy in the citric acid market and paid a total fine of $100 million. Three former high-ranking ADM executives were convicted in September 1998 after a ten-week jury trial. [ [ An Antitrust Primer for Federal Law Enforcement Personnel] , US Department of Justice, Antitrust division]

ADM's role

The FBI learned of the lysine price-fixing conspiracy from Mark Whitacre, a former Divisional President of ADM's BioProducts Division, who was working with FBI agents investigating a different case at the time. [ [ Nov/Dec Gazette: Off the Shelf ] ] Whitacre told his FBI handlers that he and other ADM executives were involved in price-fixing agreements with agricultural businesses around the world. The FBI and Whitacre flew to multiple countries as far as Tokyo, Paris, Mexico City, and Hong Kong to listen in on the cartel’s meetings. During Whitacre's undercover tenure, the FBI collected hundreds of hours of video and audio tapes that documented crimes committed by executives from around the world fixing the prices of food additives in the largest price-fixing case in history at the time [1996] . [ [ Rats In The Grain ] ]

ADM ultimately settled federal charges for more than US$100 million and paid hundreds of millions of dollars more ($400 million alone on the high fructose corn syrup class action case) to plaintiffs and customers.cite book |author=Greenwald, John |title="The fix was in at ADM" |publisher=Time Magazine |year=1996, October 28 [,9171,985379,00.html] ] cite book |author=Wilson, J.K. |title="Price-Fixer to the World" | |year=2000, December 21 [] ] cite book |author=KaplanFox |title="Archer Daniels Settles Suit Accusing it of Price Fixing" |publisher=KaplanFox Law Firm Press Release |year=2004, July 19 [] ] cite book |author=Editorial Staff |title="Sweetner Settlement for ADM" |publisher=FoodNavigator |year=2004, June 18 [] ] Furthermore, several Asian and European lysine and citric acid producers, that conspired to fix prices with ADM, paid criminal fines in the tens of millions of dollars to the U.S. government. Several executives, including the former Vice Chairman of ADM, did federal prison time. The ADM investigation, in turn, convinced antitrust prosecutors that price-fixing was a far more pervasive problem than they had suspected and led to prosecutions of cartels in vitamins, fax paper, and graphite electrodes. European and Canadian regulators are starting to crack down on the problem, too. Once a crime that rarely attracted the notice of federal authorities, price-fixing is now under attack by governments around the world. Billions of dollars have already been paid in antitrust fines to the U.S. government since Whitacre first blew the whistle in 1992.cite book |author=France, Mike |title="Pulp Nonfiction at Archer Daniels" |publisher=Business Week |year=2000, September 25 [] ]

The investigation and prosecution of ADM and some of its executives has been reported to be one of the "best documented corporate crimes in American history".cite book |author=Krebs, A.V. |title=Review of "Rats in the Grain" |publisher=The AgriBusiness Examiner (Issue # 85) |year=2000, August 16 [] ] Whitacre was later charged with committing a $9 million fraud which occurred during the same time period he was working for the FBI.cite book |author=Department of Justice |title="Former ADM Executive Pleads Guilty to Fraud" |publisher=Department of Justice Press Release |year=1997, October 10 [] ] cite book |author=Editorial Staff |title="ADM's Lawsuit Could Hurt Company" |publisher=Associated Press Wire Service |year=1996, September 19 [] ]


External links

* [ This American Life episode on the conspiracy]

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