Five international pharmaceutical companies that supply most of the bulk vitamins used in Canadian food as supplements have been slapped with the largest corporate fine in Canadian history -- $61 million (U.S. funds) -- after pleading guilty to price-fixing.
The five -- F. Hoffman-La Roche of Switzerland, BASF AG of Germany, Rhone-Poulenc SA of France and two Japanese companies, Eisai and Danchi Pharmaceutical -- admitted they plotted to divide up the Canadian market and fix prices above competitive levels for nearly a decade.
The five companies -- and others still under investigation -- rigged the price of a range of vitamins that are used in milk, bread, orange juice, cereals and animal feed.
The companies recorded Canadian sales of more than $460 million (U.S.) during their 1990-1999 marketing conspiracy when prices were pushed up by as much as 30 percent over competitive levels.
Dan McTeague, a consumer advocate and member of Parliament for the Liberal Party, said the global plot to fix vitamin prices fell apart after a lengthy grand jury investigation in Texas earlier this year pushed the companies into admitting their collusion.
Canadian prosecutor Martin Low said the companies' top executives would hold annual meetings in Switzerland to divide up the global vitamin market.
To reduce the fines they faced in Canada, Low said, the executives traveled to Ottawa this spring to confess their crimes and offer evidence of their wrongdoing.
But the fines were small by U.S. standards. After plea bargaining in the U.S., Hoffman-La Roche was hit with a $500 million fine, BASF $225 million and other conspirators $65 million.
By contrast, La Roche received a fine of $33 million (U.S) in Canada, while BASF paid about $12.5 million (U.S.), followed by Rhone-Poulenc at $12.6 million (U.S.) and the two Japanese companies, which were fined about $1.5 million (U.S.) each.
Along with those fines, Roche also pleaded guilty to a separate scheme with Archer Daniels Midland to fix the market for citric acid and paid an additional fine of $2 million (U.S.) following ADM's penalty of $11 million (U.S.), which it paid last year.
While the fines close the door on most of the government's actions against the companies, Low said eight class-action lawsuits still are pending.