Vitamin Makers Settle Massive Price-fixing Case

Attorney General Spitzer today announced an historic $255 million nationwide antitrust settlement with six major vitamin manufacturers over price-fixing charges.

Three European and three Japanese companies, which together control more than 80 percent of the world's vitamin market, agreed to settle charges that they had conspired to fix prices and control the sale of vitamins and vitamin products.

The conspiracy resulted in consumers and businesses paying an extra quarter of a billion dollars for products over the past decade.

The vitamins made by the companies go into a wide variety of everyday products including bread, milk, breakfast cereal, juices, baby food, pet food, dietary supplements, animal feed, and beauty products including creams, lipstick, and hair care products.

Spitzer announced that New York's share of the settlement will be $25 million, of which $19 million will be used to fund programs in areas including prenatal care, nutrition, and hunger.

"Whether in the milk and cereal we have for breakfast, the meat, chicken, or fish we have for dinner, or any number of products from baby food to pet food to shampoo, these six companies conspired to increase the prices of products that people use every day," said Spitzer.

"The companies met in secret, in locations around the world, to carry out illegal agreements that imposed a hidden 'vitamin tax' on shoppers that drove up weekly grocery bills and cost consumers and businesses hundreds of millions of dollars over the past decade."

The six companies are: Hoffman-La Roche Inc., BASF Corp., Aventis Animal Nutrition S.A. (formerly Rhone-Poulenc Animal Nutrition), Takeda Chemical Industries Ltd., Eisai Co. Ltd, and Daiichi Pharmaceutical Co. Ltd.

The settlements are the largest ever under state laws which permit consumers and businesses to recover damages for price-fixing overcharges even though they did not buy a product (in this case vitamins) directly from the price-fixers.

Last year, the companies pleaded guilty to federal criminal antitrust violations and paid fines. Under terms of the settlements, consumers and businesses in 21 states, Puerto Rico, and the District of Columbia will receive $225 million to compensate them for the higher prices resulting from the price-fixing.

Because of the difficulty in determining how much consumers paid in higher prices, the consumer portion of the settlement, which totals $117.6 million nationwide, will be distributed to non-profit charitable groups and local governments.

In New York, Spitzer will establish an application process for the state's $19 million share of the fund. Approval of the grants and their distribution will be made by the court. Applications will be available in the near future on the Attorney General's website: www.ag.ny.gov.,or by contacting Spitzer's office.

An additional business settlement fund totaling $107.6 million will be available to businesses nationwide, including farmers and grocery store owners, that were harmed by the price-fixing. In the next few months, notice will be posted in newspapers and trade journals alerting those affected as how to file claims.

In addition, 47 state governments are entitled to receive a total of close to $30 million for overcharges on state purchases of products containing vitamins. New York will receive $6 million of the states' total.

In response to the settlements, the Chairman of the Consumer Federation of America, retired Senator Howard Metzenbaum said, "I want to thank Attorney General Spitzer and his colleagues for looking out for consumers. Consumers -- especially low income consumers -- were the ones hurt in this massive price-fixing conspiracy, and until today, they have not received one nickel in damages."

The Vice President-elect of the American Association of Pediatrics, Dr. Louis Cooper added, "Pregnancy and the early years of life are a critical period where proper nutrition can make a dramatic difference in a child's life. Funds from this settlement will be well spent in protecting America's future, which pregnant women and children represent."

John Lincoln, the President of the New York State Farm Bureau said, "Vitamins, such as those used in livestock feed, are an essential part of a livestock farmer's business. Feed is the single highest cost for these farmers and they cannot afford to be the victims of unfair pricing schemes. The work that the Attorney General has done on this issue is very much appreciated by New York farmers and the Farm Bureau. This type of support could mean the difference for our farms that have faced extremely difficult times in the last few years."

"I'm very proud that New York led the way in driving these settlements," said Spitzer. "As a result, nutritional programs will be helped, and farmers and businessmen and women will be able to recover the money that they were overcharged."

The settlement covers numerous pending private class action suits, along with suits brought by individual state attorneys general on behalf of businesses and consumers within their states. The settlements of the consumer and business suits must be approved by individual state courts.

The New York settlement will be filed in State Supreme Court in Albany. The vitamin makers admit no wrong doing. The case has handled by the Chief of Spitzer's Antitrust Bureau, Harry First and his Deputy, Kathleen Harris. They were assisted by Assistant Attorneys General James Yoon and Gary Weinstein.

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