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Vitamin firms to pay $1.1B
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September 7, 1999: 3:36 p.m. ET
Lawyers say Roche and five others agree to settle U.S. price-fixing suit
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NEW YORK (CNNfn) - Six of the world's leading vitamin makers have agreed to pay more than $1.1 billion to settle claims that they orchestrated a vast, nine-year conspiracy to fix prices and allocate market share for wholesale vitamins.
Switzerland's Roche, BASF of Germany and Rhone-Poulenc of France, and Japan's Eisai Co., Daichi Pharmaceutical and Takeda Chemical Industries will settle with the 1,000 corporate buyers of bulk vitamins who filed the class-action suit.
The payment is meant to compensate for the overcharging during the period of the conspiracy. The plaintiffs' lawyers told CNNfn that the settlement will likely be brought before a federal judge as early as Friday.
The settlement comes less than four months after the Justice Department wrested a record $750 million from the three European vitamin makers in a criminal case that charged the firms with colluding to drive up vitamin prices on the world markets.
The conspiracy, U.S. officials alleged, led to artificially high prices for a wide range of food and beverages, from milk to breakfast cereal, that use vitamins as dietary supplements.
Of the firms involved, Roche is the clear market leader, controlling about 60 percent of the global market for vitamins used in everything from food processing to animal feed.
Roche agreed to pay $500 million in the criminal case.
A company spokesperson confirmed Tuesday that talks in the civil claims case are "well advanced." But he declined to elaborate on the prospective terms of the settlement.
Officials at BASF could not immediately be reached for comment Tuesday and a Rhone-Poulenc spokesman declined to comment on the case.
The six companies named in the case are all based outside the U.S. but are collectively estimated to control about 80 percent of the worldwide market for some of the most popular vitamins.
A $3 billion industry
The global vitamin market is a $3 billion industry and 63 percent of Americans use vitamins as regular dietary supplements.
The settlement follows months of lurching negotiations that broke off in June, but resumed last month.
The estimated 150 law firms involved in litigating the case will receive about $125 million -- or about 11 percent of the settlement.
Ian Broadhurst, a health-care analyst at Enskilda Securities in London, said the reported terms of the settlement were "as expected." He noted that, together with potential damages from a pending investigation by the European Union, the price-fixing scandal could end up costing Roche about $2 billion.
In its first half, Roche set aside a provision of $640 million to cover the costs of the U.S. lawsuit. Roche's recent float of a 17 percent stake in U.S. biotech Genentech (DNA) reaped $1.6 billion for the firm, which analysts say will help offset some of the downside from the settlement.
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