Consumer News Release
For immediate release -- Friday, October 13, 2000.
Contact Bob Brammer - 515-281-6699
Miller: Change Iowa Law to Increase Anti-Trust Recoveries
Iowa will receive part of a huge settlement in a vitamin price-fixing case -but Iowa's share is only $45,000 of the $255 million settlement, Miller says.
DES MOINES-- Attorney General Tom Miller said today that Iowa is receiving $45,000 in settlement of a case alleging that the world's largest vitamin companies conspired to fix prices for a decade - but Miller says Iowa law should be changed to enable much larger recoveries in such anti-trust cases.
"The good news is that Iowa will receive $45,000. We are one of 47 states to share recovery of $3 million in overcharges paid directly by states to the vitamin companies as a result of the price-fixing," Miller said. "The bad news is that Iowa cannot claim a share of about $250 million going to states for overcharges paid by the states indirectly or paid by their consumers," he said.
"We need to change Iowa law, as many other states have, to enable us to recover overcharges when the state or a consumer is directly or indirectly harmed by price-fixing or anti-competitive conduct," he said.
Miller estimated Iowa would have recovered between $3 million and $4 million if Iowa law permitted recovery for indirect purchases as well as direct purchases. Miller's Office has proposed the change in the past and will do so again to the next General Assembly, he said.
The International Vitamin Price-Fixing Case
The States worked together to recover overcharges resulting from price-fixing by the world's largest vitamin makers - three pharmaceutical companies from Europe and three from Japan. The companies produce vitamin pills, and vitamin blends and supplements used extensively in agricultural feed and in fortified foods ranging from milk and bread to beverages, cereal and peanut butter. The companies controlled more than 80% of the world's vitamin market.
According to the U.S. Justice Department, the companies organized an elaborate system to divide up markets and fix prices from 1990 to 1999. The price-fixing included secret meetings, allocating markets for sales, and trying to hide the conspiracy by burning papers that might document the illegal collusion. The companies paid record-high criminal fines of $750 million last year as a result of the U.S. Justice Department's criminal case, and they also agreed to pay over $1 billion to companies that directly purchased bulk vitamins from them.
The settlement reached Monday with the States totals about $255 million. About $225 million goes to 21 states for higher costs to consumers and businesses as a result of the price-fixing. Iowa is not among those states. About $30 million goes to States in compensation for higher charges the states themselves paid for vitamin products.
Of the $30 million, about $3 million will be divided among 47 states - including Iowa -- for overcharges paid directly by the states -- for example, for vitamin pills bought by state institutions. The remaining $27 million will be shared by states that have authority to seek recovery of indirect payment overcharges - not including Iowa. Iowa law does not provide for recovering overcharges paid indirectly by the state - for example, for institution food whose price was inflated by price-fixing in vitamin supplements in the food.
"We need to be able to go after price-fixing overcharges for the State of Iowa's indirect purchases, and for overcharges paid by Iowa consumers and businesses," Miller said. "Many states have this authority, and we will once again make this important proposal to the Legislature for the upcoming session. It can mean millions of dollars to Iowa in this kind of case, and there certainly will be more cases like this in the future."
The States' settlement was filed Tuesday in Federal District Court in Washington D.C. Defendants in the case are three European companies, F. Hoffman-La Roche of Switzerland, BASF of Germany, and Aventis of France; and three Japanese companies, Takeda Chemical Industries Ltd., Eisai Co. Ltd, and Daiichi Pharmaceutical Co. Ltd. The companies also agreed to an injunction prohibiting them from engaging in this type of illegal behavior.
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