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EU fines `vitamin cartel' for price fixing

The EU yesterday levied a record US$752 million fine against eight European and Japanese chemical and pharmaceutical companies for fixing vitamin prices.

The EU executive commission said the firms had been under investigation since 1999 for colluding to eliminate fair competition for vitamin pills and overcharge consumers.

The highest fine -- US$406 million -- was for F.Hoffmann-La Roche AG of Switzerland which the EU labeled the "prime mover and main beneficiary" of the cartel arrangements.

The second largest fine -- US$260 million -- was levied against Germany's BASF AG, the world's No. 2 vitamin maker after Hoffmann-La Roche. The EU also fined Aventis SA of France; Solvay Pharmaceuticals BV of the Netherlands; Merck KgaA of Germany and Daiichi Pharmaceutical Co Ltd, Esai Co Ltd and Takeda Chemical Industries Ltd, all of Japan.

"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," EU antitrust chief Mario Monti said at a news conference.

The commission said the companies had colluded to fix prices in the European market for 12 different vitamin products.

It said the cartel had a "formal structure and hierarchy" and included a regular exchange of sales figures and pricing data.

EU investigators found the price fixing started in the vitamin A and E market in the 1990s, then moved to other categories in the European vitamin market which the EU estimated was worth US$704 million in 1998.

The EU said La Roche and BASF formed a "common front" to get Japanese rivals on board of their cartel.

It also said the involvement of La Roche's most senior executives suggested "the arrangements were part of a strategic plan conceived at the highest levels to control the world market in vitamins by illegal means."

Roche spokesman Horst Kramer said in Geneva his company was yet to decide whether to appeal the EU fine.

"We have only received the amount of the fine, not the full body of the evidence," he said. "Our experts will take a close look at this before deciding whether to appeal."
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