Some of the world’s largest pharmaceuticals companies were fined a massive £534m for operating an illegal price-fixing cartel on the supply of vitamins throughout the 1990s.
Mario Monti, the European Union’s competition commissioner, said the cartel could be dubbed Vitamins Inc, and was the most damaging and serious it had ever investigated and had cheated European consumers of billions of pounds since vitamins were used in and affected the price of a whole range of products.
He described how senior executives in 13 companies had cynically collaborated to ensure that consumers paid over the odds for vitamins used on their own and in products such as cereals, biscuits, drinks, pharmaceuticals and cosmetics.
“It is particularly unacceptable that this illegal behavior concerned substances which are vital elements for nutrition and essential for normal growth and maintenance of life,” Mr Monti said.
“The companies’ collusive behavior enabled them to charge higher prices than if the full forces of competition had been at play, damaging consumers and allowing the companies to pocket illicit profits.”
Roche, the Swiss pharmaceuticals company, received particular criticism and was given the biggest fine of all – £288m – while German firm BASF was deemed to be the second worst offender and made to pay a fine of £185m.
When Mr Monti was asked whether the 13 firms were in effect just one big global monopoly which could be dubbed Vitamins Inc, he agreed. Others fined included Aventis (£3m), Solvay (£5.7m) and Merck (£5.7m), together with three Japanese firms which were fined a total of £46m.
The commission described how the companies had operated a highly organised cartel holding regular meetings to collude on prices, exchange sales figures and coordinate price increases.
The cartels were run, Brussels said, “at the most senior levels of the undertakings concerned”.
The commission concluded after its two-year investigation: “The prime mover and main beneficiary of these schemes was Hoffman La Roche, the largest vitamin producer in the world, with some 50% of the overall market.
“The involvement of some of its most senior executives tends to confirm that the arrangements were part of a strategic plan conceived at the highest levels to control the world market in vitamins by illegal means.”
The investigation was helped by one of the offenders – French company Aventis – which agreed to “defect” and furnished the commission with what Mr Monti called “decisive information”. As a reward, Aventis was fined just £3m instead of a figure nearer to £70m.
A similar story enlightens us with another price fixing by European Glass makers. And here.
Original Article Source
Vamsi Krishna Duvvuri
MBA Class of 2009
Goizueta Business School
Sometimes I do think... 