Catálogo de publicaciones - libros

The vitamins industries were ripe for collusion. Nearly 100 international cartels were formed in the chemical industries in the early 20 century (Leiden University 2005). One of them formed in 1928 pooled patents and divided world exports in vitamin D (Hexner 1946:347–349). Makers of organic chemical intermediates have one of the highest rates of cartel formation of any industry, and vitamins are organic chemicals (Connor and Helmers 2006). Among international cartels discovered since 1990, 30% were in chemical markets. International cartel conduct is also more common among European and Japanese manufacturers than among North American firms. Because vitamins production was even more highly concentrated and more difficult to enter in the 1970s and 1980s than in the 1990s, it seems likely that overt collusion was practiced at least among firms within the Western European and Japanese markets prior to 1990.

The consuming public has a high regard for the benefits and efficacy of vitamins. There is something particularly reprehensible about price-fixing schemes that affect products destined for vulnerable populations. Children, pregnant or lactating mothers, the sick, and the elderly often need supplementary vitamins to achieve full health. These groups, as well as practically every household, ultimately paid the price of price fixing in vitamins. The purpose of this section is to document as precisely as possible the extent of these economic injuries.

The United States Department of Justice (DOJ) began investigating allegations of price fixing in the market for lysine in late 1992. Tape recordings made by an informant of conversations among the lysine conspirators contained language that suggested that parallel conspiracies were ongoing in the citric acid and corn sweeteners industries. Separately, information about possible price fixing in the markets for bulk vitamins came to the attention of the DOJ. In 1995–1997 four grand juries were formed to consider the evidence held by the DOJ. Three of the four grand juries determined that there was probable cause for indicting certain companies and individuals for criminal violations of the Sherman Antitrust Act. The DOJ negotiated guilty pleas with a large number of companies and key managers of those companies. However, three executives who refused to such a plea bargain were tried and found guilty in a 1998 federal court. In the late 1990s, officials in an unprecedented number of countries piggybacked on the DOJ's indictments and brought charges against many of the same defendants for violations of their competition laws.

The purpose of this chapter is to recount and assess the investigations and prosecutions of three alleged price fixing schemes by the DOJ and its investigative arm, the FBI: lysine, citric acid, and vitamins. The following chapters 14 and 15 will consider enforcement actions overseas and civil suits, respectively, against the same set of defendants.

The Sherman Act was 115 years old in the year 2005. Because of active antitrust enforcement by public and private parties and frequent appeals of decisions, the United States has the richest body of legal decisions of any jurisdiction in the world. Even cartel cases, one of the more settled areas of federal antitrust law, often receive the attention of the high courts. Recent court opinions have addressed the extent of extraterritoriality and the limits of the rule in cartel cases. However, the changes in cartel laws and enforcement have been greatest outside the United States.

This section summarizes the non-U.S. antitrust investigations and sanctions as they had evolved to late 2000 in the cases of the lysine, citric acid, and vitamins conspiracies. These three are simply among the better documented of hundreds of international cartels prosecuted by the world’s antitrust authorities (Connor and Helmers 2006). In many cases these agencies release far more details about the conduct of cartels than does the DOJ (e.g., EC 2001, 2002, 2003, and 2005).

Earlier chapters have recounted how low antitrust fines were prior to 1990 and how these fines have grown in the 1990s in the case of price fixing. This chapter will demonstrate that civil settlements for price fixing have grown apace. In part, the increased size of criminal and civil financial sanctions reflects the growth in the size of corporations and the markets that they exploited. In order to deter managers from contemplating the formation of future price fixing conspiracies, the penalties must be pegged to the size of the injuries that would be caused. However, there is evidence that the harmfulness of price fixing infractions has increased. The proportion of discovered cartels prosecuted since 1995 been international cases, and they are larger markets than the national or regional cartels discovered in prior years. Combined with the newly assertive stance of antitrust agencies and the expanded opportunities for private suits, fines and settlements have increased faster than the size of the affected markets.

This chapter focuses on the civil cases generated by the lysine, citric acid, and vitamins cartels. Federal class-action suits were filed in the United States and Canada by direct buyers in each case and are fairly well documented. Some of the members of the federal class opted out of the purposed settlements, and many of them settled by means of private negotiation. Much less is known about the opt-out settlements because terms of the settlements typically include non-disclosure clauses. Indirect buyers of these products launched suits in several U.S. states and Canadian provinces with varying degrees of success. One action by large number of state attorneys general was successfully concluded. Finally, related suits for fraud and mismanagement were decided in the lysine case. The global cartels chosen for inclusion in this book will allow the full panoply of civil actions to be illustrated.

The proliferation of cartels in the 1990s has generated large fees for law firms with expertise in antitrust law. Large civil settlements mean large legal fees for plaintiffs' law firms. The antitrust revenues of major U.S. law firms reached historic highs ( July 15, 2000). At one leading firm with 120 antitrust lawyers, antitrust revenues were $64 million in 1999, up 13-fold from 1992. Five U.S. law firms employed from 100 to 150 antitrust lawyers each, most of them working in Washington, D.C. or New York City. Most of the work was generated by merger approvals, but price fixing conspiracies probably rank second in antitrust revenues. The global scope of the cartels has stimulated U.S. law firms to expand abroad. Several U.S. firms now derive more than one-quarter of their revenues from work outside the United States.

Formerly derided for drumming up business in a manner akin to that of personal-injury lawyers, antitrust plaintiffs attorneys are now increasingly accorded somewhat greater respect for their skills and methods of operation. Instead of being pejoratively referred to as “ambulancechasers,” class-action law firms are now more often described as entrepreneurial firms assisting social justice. In some cases the legal fees earned in prosecuting large cartels are used to subsidize complex, riskier suits that will compensate victims of war crimes and other injustices.

Awareness of antitrust enforcement matters has entered the U.S. public's consciousness to a degree that could hardly be imagined just a decade ago. The nation's leading newspapers and magazines have many times devoted prominent space to news about price-fixing fines, trials, and related enforcement activities. Antitrust has not been as fashionable for decades, if ever.

The ground swell of popular interest is partly a response to the scandalous behavior of the conspirators, whom Joel Klein skewered as “well dressed thieves.” Their intrigues and deceptions are the stuff of racy mystery novels.1 Yet, the story of the global cartels goes beyond mere fascination with aberrant behavior. It is also high drama pregnant with ethical lessons about contemporary business and politics.

This chapter reviews the facilitating factors that give rise to these conspiracies and the major impacts that the management and prosecution of these global cartels had on the conspirators, on stockholders and customers, on the antitrust agencies, and on the politics of antitrust. The sizes of the corporate and personal penalties for price fixing are reviewed with four questions in mind. Will the corporate penalties deter future conspiracies? Is there evidence of reform of corporate governance structures that will be less hospitable to collusion? What were the ultimate impacts on companies and industries? How much did global price fixing cost society?