http://bmj.com/cgi/content/full/323/7324/1271
BMJ 2001;323:1271 ( 1 December )
Rory Watson Brussels
The European Commission has imposed record fines of 855.22 million euros
(£534m; $753m) on eight pharmaceutical companies for operating secret market
sharing and price fixing cartels in the supply of vitamins throughout the
1990s.
The heaviest penalty of 462 million euros was handed out to the Swiss based
multinational Hoffman-La Roche. The investigators maintain that the company was
the chief instigator and was involved in all 12 cartels that they uncovered.
Hoffmann-La Roche is the largest vitamin producer in the world, with about half
of the overall market share.
The German company BASF, which is second in size only to Hoffman-La Roche,
was accused of following its lead and was handed a penalty of 296.1 million
euros. Lower fines were imposed on three Japanese manufacturers and on a
further trio of European companies—Merck KgaA (Germany), Solvay Pharmaceuticals
BV (Netherlands) and Aventis SA (France). As Aventis was the first to cooperate
with the investigation and had supplied decisive evidence, its penalty was
considerably reduced.
Mario Monti, the competition commissioner for the European Union, explained
that the companies’ collusive behaviour had enabled them to charge higher
prices than if normal competition rules had been in play.
"This is the most damaging series of cartels the Commission has ever
investigated due to the sheer range of vitamins covered, which are found in a
multitude of products from cereals, biscuits, and drinks to animal feed,
pharmaceuticals, and cosmetics," he said.
The two year investigation found that the cartels fixed prices for different
vitamin products, allocated sales quotas, agreed on and implemented price
increases, established monitoring machinery to police the agreements, and
involved regular meetings between senior executives.
The practices, which are contrary to EU competition rules, concerned bulk
synthetic substances belonging to the following groups of vitamins and closely
related products: A, E, B-1, B-2, B-5, B-6, C, D-3, biotin (H), folic acid (M),
b carotene, and carotenoids.
The commission maintains that the collusive arrangements for vitamins A and
E began in September 1989 and ran until February 1999. Those involving b carotene and carotenoids started in 1992
and 1993 respectively and lasted until December 1998, and almost all the
cartels in other areas began in 1991 and lasted three to four years.
Hoffman-La Roche, which had been fined in the United States in 1997 for an
earlier vitamin cartel, said in a statement that it had worked closely with the
European Commission "since the [price fixing] arrangements became known"
and that 8000 of its managers had taken part in training programmes to ensure
they followed national and international laws.
BASF also responded by pointing to recent measures it had taken to
strengthen compliance with anti-trust laws. It described the fine as
"inappropriately high" and said that it would be considering whether
to appeal against the penalty at the European Court of Justice in Luxembourg.
When setting fines, which can go as high as 10% of a company’s total annual
turnover, the commission takes account of the gravity of the infringement, its
duration, any mitigating circumstances, and a company’s market share.
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