7 Vitamin Makers Settle Antitrust Suit for $1.18 Billion

Seven leading vitamin makers based in Europe and Japan agreed Wednesday to pay a record $1.18 billion to settle allegations that they engaged in a years-long conspiracy to fix prices, inflating the cost of everything from dietary supplements to fortified cereals.

Attorneys for the food producers and farming interests who sued the companies said that the agreement marks the biggest class-action antitrust settlement in U.S. history, surpassing a $1.03-billion pact won last year by investors who accused 37 brokerages of overcharging them for Nasdaq-listed stocks.

“We have helped stop this conspiracy,” said Jonathan D. Schiller, a Washington lawyer who helped represent about 300 food producers and other corporate buyers who claimed that the seven companies cheated them on bulk vitamin sales throughout the 1990s.

In May, five of the companies pleaded guilty to criminal charges of conspiracy to fix and inflate vitamin prices.

Hit hardest by the federal criminal charges were F. Hoffman-LaRoche, which agreed in May to pay $500 million--the biggest criminal fine in U.S. Justice Department history--and BASF, which agreed to pay a $225-million fine.

Some citizens groups are worried that consumers who ultimately footed the bill for the marked-up vitamins--but were not a party to Wednesday’s corporate settlement--have not had their day in court and must await the outcome of other pending lawsuits against the vitamin giants.

“Consumers have been getting ripped off too and they should be getting some money out of this,” said Dr. Sidney Wolfe, director of Public Citizen’s Health Research Group in Washington, an advocacy group.

Agreeing to the settlement were pharmaceutical companies F. Hoffman-LaRoche of Switzerland, Rhone-Poulenc Rorer of France, BASF and Hoechst Marion Roussel of Germany and Daiichi Pharmaceutical Co., Eisai Co. and Takeda Chemical Industries of Japan.

The agreement, which includes more than $120 million in attorney fees, must still be approved by a federal judge. Attorneys said that preliminary approval could come as soon as today.

“We wanted to resolve this lawsuit, and this settlement is a substantial step for us in resolving the pending lawsuits from our customers,” said Bill Pagano, a BASF spokesman in New Jersey.

“If this isn’t the biggest antitrust settlement ever, it’s certainly one of the very, very biggest,” said Daniel Wall, a San Francisco lawyer and past editor of the American Bar Assn.’s Antitrust magazine. “It’s a testament to the fact that very large, very serious price-fixing conspiracies can go undetected for a very long time, and they cost consumers millions and millions of dollars a year.”

Government officials said Hoffman-LaRoche and BASF, in concert with their supposed competitors, met annually to fix prices and carve up the $3-billion-a-year worldwide market. They manipulated the markets for those vitamins used most commonly as nutritional supplements for humans and animals--A, B2, B5, C, E and beta carotene--and inflated prices significantly for over-the-counter vitamins, fortified cereals, cattle nutrients and other products.

Schiller said that since his corporate clients brought their first price-fixing suit against the vitamin makers in 1997, bulk prices reportedly have dropped as much as 15% to 20% in some areas. That, in turn, has helped the pocketbooks of consumers, who have paid lower prices at the grocery store--even if they will not reap a share of the $1.18-billion settlement, he said.

At a court hearing on the agreement Wednesday, former Ohio Democratic Sen. Howard Metzenbaum, now chairman of the Consumer Federation of America, asked to be heard on behalf of consumers who are being left out of the settlement. But U.S. District Judge Thomas F. Hogan said this was not the proper time, Schiller recounted.

Under federal statute, only corporations that bought vitamins directly from the makers could be included in the class-action suit that led to Wednesday’s settlement. But Schiller said that consumers will be represented in 18 other class-action suits that have been filed around the country and are being consolidated by a mediator in Washington.

“This isn’t over yet,” he said.