E-DRUG: EU to set record fines for vitamin cartel
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[Who remembers Stanley Adam's book "Roche vs Adams" of 1985, in which
he described his terrible experiences with Swiss and EU burocracies
after being a "whistleblower" in 1973 on Roche's breaking of EU
competition laws with its vitamins?
It seems that Roche hasn't improved its habits...
From the Financial Times (www.ft.com/healthcare), copied as fair use.
NN]
Brussels to set record fines for vitamin cartel
By Francesco Guerrera and Birgit Jennen in Brussels
Published: November 20 2001 20:09
The European Commission is expected to impose record fines totalling
E850m ($747m)
on Roche of Switzerland, BASF of Germany, and several other companies
for a nine-
year conspiracy to control the market for vitamins. The regulator is
believed to have
found that Roche, which is expected to be fined about E460m, and BASF,
which is set
to pay nearly E300m, played important roles in a cartel to fix the
price for some of the
most popular vitamins. At least six other companies are expected to
receive smaller
fines totalling E90m. The European competition directorate is expected
to recommend
the fines for approval by the 20 commissioners this morning. The
commissioners have
the power to change the level of the fine but usually agree with the
advice of the
competition experts. The Commission and the companies on Tuesday
declined to
comment. The fines, which dwarf the previous record penalty of E270m
imposed on a
shipping cartel, will go to the Commission's budget. The vitamins
decision comes two
years after a similar probe by US antitrust authorities led to a $500m
fine for Roche and
a $225m penalty for BASF. A former Roche executive was also jailed for
four months
and fined $100,000. Competition experts said the European case against
the vitamins
cartels was similar to the one in the US. The US investigators said
the companies were
acting as if they were working for the same business, referred to by
executives as
Vitamins Inc. In the US, the cartel controlled the most popular
vitamins, including A, C,
beta carotene and vitamin pre-mixes. The Commission has not said what
vitamins it
was investigating. Critics of the Commission say that its policy on
cartels is still lagging
the US, which has the power to jail executives found guilty of
price-fixing. But Mario
Monti, European competition commissioner, has said Brussels is
prepared to take on
more cartels with stiffer punishments. The Commission's decision will
be a further blow
for the reputation and finances of Roche and BASF, two of Europe's
largest and oldest
drug companies. Roche is believed to have made provisions of $1.4bn to
cover the
liabilities arising from the US and European investigations and
private lawsuits in the
US. The Swiss company has denied its top management knew of the
price-fixing. Since
the US ruling, the company has overhauled its vitamins business,
introducing a training
programme on anti-competitive behaviour and an internal audit to
monitor practices
throughout the group.
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