Eight pharmaceutical companies fined for controlling the vitamin market in Europe
the European Commission (ec) has slapped a record fine of us $755.1 million on eight chemical and pharmaceutical companies. Their offence: hatching a nine-year conspiracy to fix the prices of some of the most popular vitamins.
"This is the most damaging series of cartels the ec has ever investigated," says European Union (eu) competition commissioner Mario Monti. "The collusive behaviour of the companies has led them to charge higher prices than if the full forces of competition had been at play, harming consumers and allowing these firms to pocket illegal profits," he adds. Among the errant companies are big names such as F Hoffman La Roche of Switzerland, which has had to shell out about us $406 million, and basf ag of Germany, whose penalty works out to us $260 million approximately. The fines are well above the previous record of us $237 million, imposed on a shipping cartel. They will go to the ec's budget.
In July 2000, the Brussels regulator informed 13 vitamin manufacturers that they were under the scanner. These pharmaceutical companies were suspected to be part of a cartel producing vitamins used as supplements to make human food and animal feed more nutritious. Significantly, this is not the first time that Roche and basf have been pulled up for unfair trade practices. Two years back, the two conglomerates were subjected to a similar inquiry by us antitrust authorities. While Roche was told to cough up us $500 million, basf paid us $225 million. In fact, an executive of Roche was also put behind bars for four months and fined us $100,000. The cartel had then controlled popular supplements such as vitamins a and c, beta carotene and vitamin pre-mixes.
ec critics point out that its policy on cartels is still not as stringent as that of the us, which is even empowered to imprison executives of guilty companies. But Monti feels that the ec's strong action against the 'drug cartel' shows that it has more bite now. Brussels is ready to take on more cartels with stiffer punishments, he adds.
eu can fine firms up to 10 per cent of their annual sales in such cases. Roche is said to have set aside us $1.4 billion to cover the liabilities arising from both the us and European probes. The Swiss company has also launched a training programme on anti-competitive behaviour and an internal audit group.
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