H Food Additive Makers Sued For Price-fixing
State Attorney General Spitzer has charged manufacturers and distributors of food additives with unlawfully restraining competition in the United States and elsewhere by entering into a global conspiracy to fix the price of sorbates and to allocate market share among themselves. Sorbates are preservatives widely used to inhibit the growth of microbes in food and beverage products, such as cheese and other dairy products, baked goods, processed foods, fruit juices and soft drinks.
The suit, filed Wednesday in New York State Supreme Court in Manhattan, names as defendants five major sorbates producers located in the United States and abroad, as well as various related companies involved in sorbates sales. All five manufacturers have pleaded guilty to criminal charges brought by the United States Department of Justice, and have paid criminal fines totaling $132 million.
New York is pursuing a separate legal action seeking restitution, damages and civil penalties on behalf of damaged consumers in New York.
"This lawsuit seeks to recover damages to New York consumers for years of illegal price fixing," Spitzer said. "We intend to see to it that large corporations, whether located in the United States or abroad, return their ill-gotten gains to consumers who paid inflated prices for daily purchases."
According to the suit, the defendants' price-fixing conspiracy, which began in 1979, artificially increased the prices paid to purchase sorbates used to produce many everyday items offered for sale to consumers. Companies that purchased sorbates at these artificially high prices, in turn, passed on all or part of their added cost of production which caused New York consumers to overpay at the cash register. The lawsuit seeks an award of damages against the cartel members in an amount equal to three times the damages proven at trial to have been sustained by New Yorkers who purchased sorbates or products containing sorbates, as well as restitution, civil penalties and injunctive relief.
The defendants in the lawsuit are alleged to have participated in a price-fixing conspiracy that affected approximately $1 billion in U.S. commerce between 1979 and 1997.
The state's lawsuit alleges that the companies involved in the conspiracy held numerous meetings to set the price of sorbates in the global market and to allocate market share. These meetings took place in Vienna, Prague, Helsinki, Stockholm, Tokyo, and Athens, among other locations.
Companies named in the lawsuit are:
- Daicel Chemical Industries, Ltd. of Tokyo, Japan;
- Eastman Chemical Company of Kingsport, Tennessee;
- Hoechst Aktiengesellschaft of Frankfurt, Germany;
- Celanese AG of Kronberg im Taunus, Germany;
- Nutrinova Nutrition Specialties & Food Ingredients, GmbH of Frankfurt, Germany;
- Hoechst Celanese Corporation a/k/a CNA Holdings, Inc. of Warren, New Jersey;
- Nutrinova, Inc. of Sommerset, New Jersey;
- Aventis, S.A. of Strasbourg, France;
- Nippon Gohsei a/k/a Nippon Synthetic Chemical Industry Co., Ltd. of Osaka, Japan; and
- Ueno Fine Chemicals Industry, Ltd. of Osaka, Japan.
Sorbates are used in a wide array of foods, beverages and feedstuffs, including margarine, butter, mayonnaise, salad dressings, cheese, yogurt, pickles, preserved meats and fish, dried fruit, jams, cakes, confectionary fillings, fruit juices, soft drinks, wine and high-moisture pet foods.
Worldwide sales of sorbates are approximately $200 million annually.
The case is being handled in the Attorney General's Antitrust Bureau by Assistant Attorneys General Gary P. Weinstein and Aimee Pollak.