Brussels, 21/11/2001 (Agence Europe) - The European Commission imposed a record fine totalling EUR 855.22 million on eight pharmaceutical companies guilty of having formed several illegal cartels in the vitamin sector. Five other companies, also involved, but for whom prescription applies, escape the fine. This concerns of the most serious cases of agreements that the Commission has tackled until now as vitamins are not interchangeable products and arise in the manufacturing of a wide range of products, both foods and pharmaceuticals and even cosmetics, indicated Commissioner Mario Monti. Through their behaviour, the companies in question where able to apply prices above those that resulted from competition, and also lead to "unacceptable" profits, to the detriment of consumers, added Mr Monti.
Opened in May 1999, the Commission investigation allowed to gather evidence on several illegal agreements between 13 European and non-European companies on the market for vitamins A, E, B1, B2, B5, B6, C, D, biotin (H), folic acid (M), beta-carotene and carotenoids. Concluded on the initiative of Hoffmann-La Roche and BASF, these agreement had as aim to eliminate competition by submitting the markets concerned to several pressures: price fixing of vitamin products, allocation of sales quotas, agreements on price increases and price announcements according to agreed modalities. Other than the Swiss and German companies, the other companies involved are Solvay Pharmaceuticals (Netherlands), Merck KgaA (Germany), Daiichi Pharmaceuticals Co Ltd (Japan), Eisai Co Ltd (Japan), Tadeka Chemical Industries Ltd (Japan), which have all been condemned to a substantial fine. The largest fines have been imposed on Roche (EUR 462 million) and on BASF (EUR 296 million), at the origin of the cartels and respectively the largest and second largest world producers of vitamins. The French Aventis SA, as for it, benefits, with regards to its participation in the agreements on vitamins A and E, from full immunity for having collaborated in the investiigation by providing the Commission with decisive information. It is the first time, since the implementation of the Commission's Communication on clemency, that a company enjoys a 100% reduction on the fine that should have been imposed upon it, illustrating the European Executives desire to be magnanimous with companies that co-operate. Aventis (Rhone-Poulenc at the time of the facts) sees itself, on the other hand, forced to pay a fine for having taken part, in a passive manner, in the agreement over vitamin D3 on which it did not provide any information. Finally, the Japanese companies Kongo Chemical Co Ltd, Sumitomo Chemical Co Ltd, Sumika Fine Chemical Ltd and Tanabe Saiyaku Ltd, as well as the German Lonza AG escaped the fine as they withdrew from the agreement at least five years before the opening of the investigation. In fact, Community law in the matter foresees that the prescription is applicable in this case. There was also prescription for the agreements relating to vitamins B1 and B6. Commissioner Monti illustrated in a few figures the considerable influence of these cartels on the market and the importance of the profits earned by the companies in question. For example, the earnings generated in Europe by vitamin C have collapsed from EUR 250 million in the last year of the cartels functioning (1995) to less than half this amount (or EUR 120 million) three years later.
Roche promises not to do it again
In a press release issued from the seat of the company in Basel, the Roche group, that is to pay over half of the amount of the fine, states its determination to operate "in strict respect of the laws in force at national and international level".
It indicates that "over 8000 Roche managers have followed (…) a special training programme entitled "Behaviour in Business".
A special team has also been formed in the company's internal audit service to ensure respect of all the laws in force, especially regarding competition. "Since these illegal practices have been revealed, Roche has fully cooperated with the European Commission", states the Swiss group, recalling that "the vitamin affair" had already given rise to an inquiry and to a settlement with the American and Canadian authorities in 1999.
Roche is examining the European Commission's decision with a view to possible appeal.