ADM Agrees to Settle Price-Fixing Suit
Archer-Daniels-Midland Co. agreed Friday to pay $25 million to settle a class-action lawsuit accusing the company that calls itself “supermarket to the world” of fixing prices for an animal feed supplement.
The agricultural giant still could be hit with criminal charges relating to the supplement, called lysine. The company also faces dozens of lawsuits accusing it of fixing prices on products such as citric acid and corn syrup used in soft drinks.
“This is not a sweetheart deal for ADM,” said Robert Swift, an attorney for the class-action suit’s plaintiffs--600 feed mills and livestock and poultry companies, including Ralston Purina Co. and Tyson Foods Inc.
Payments from two other major lysine distributors will push the settlement past $45 million.
Lysine speeds animal muscle growth. ADM, based in Decatur, Ill., controls more than 40% of the $600-million market.
The settlement is subject to approval by a federal judge. A hearing is scheduled for next week.
Analysts said ADM got off relatively easily.
“Twenty-five million is hardly a slap on the wrist, but for a company that has $3 billion in cash on its balance sheet, it just isn’t a lot,” Prudential Securities analyst John McMillan said.
ADM reportedly had set aside as much as $45 million to cover civil litigation, he said. The settlement appeared to ease investor concern; ADM shares rose 37.5 cents to $18.50 on the New York Stock Exchange.
“Without admitting to any of the conduct alleged, but to avoid the enormous uncontrollable costs of protracted litigation, ADM has agreed with other companies to contribute to a settlement fund,” the company said.
The U.S. units of Japan’s Ajinomoto Co. and the BioKyowa Inc. U.S. unit of Kyowa Hakko Ltd., both major distributors of lysine, would pay $10.175 million each to settle their portions of the case, Swift said.
The Justice Department is still investigating whether ADM and other companies colluded to fix prices on lysine and other crop-based products, and whether turncoat executive Mark E. Whitacre illegally diverted money to a Swiss bank account, as ADM contends. Whitacre helped the FBI secretly record high-level meetings with ADM managers and executives from competing companies.
ADM also faces dozens of lawsuits brought by shareholders and companies alleging price fixing in markets for citric acid and the high-fructose corn syrup used to sweeten soft drinks.
Justice Department officials have indicated that ADM Vice Chairman Michael D. Andreas and Terrance S. Wilson, head of the corn-processing division, could face criminal charges.
