European Court upholds fines for citric acid cartel

By Anthony Fletcher

- Last updated on GMT

Related tags: Citric acid, Archer daniels midland, E number, Adm

The European Court of First Instance confirmed this week that
Jungbunzlauer (JBL) and Archer Daniels Midland Company (ADM)
engaged in an illegal citric acid price fixing cartel, and has as a
result upheld the original fines imposed.

It also found that the Commission correctly determined the amount of the fines for the applicants in accordance with the guidelines on fines, and rejected the argument that the fines imposed on the applicants were discriminatory and disproportionate.

This week's case relates to the EC's December 2001 decision to fine what it described as a worldwide citric acid cartel (Cases T-43/02 and T-59/02). Citric acid is the most widely used acidulant and preservative in the world, and is used in numerous food and drink applications.

The Commission fined five producers of citric acid a total of €135.22 million for participating in what it claims was a secret worldwide cartel between 1991 and 1995.

JBL was fined a total of €17.64 million and ADM €39.69 million. The three other companies fined for their participation in the cartel did not challenge the Commission's decision before the European Court of First Instance.

However, JBL brought an action against the Commission before the Court of First Instance on 25 February 2002, claiming that the Court should annul the Commission's decision or alternatively reduce the fine imposed on it.

The company argued that the Commission directed the decision to the wrong addressee, did not adequately establish the actual effects of the cartel on the market, did not take into account the applicant's special role in the cartel, imposed an excessive, discriminatory and disproportionate fine, did not take into account the fines already imposed in the USA and Canada and violated its right to be heard.

The Court of First Instance dismissed all JBL's claims, upheld the Commission's 2001 decision and the fine on the applicant in its entirety, and ordered the undertaking to pay all costs of the action before the CFI.

Similarly, ADM brought an action against the Commission before the Court of First Instance on 28 February 2002. The group claimed that the Court should annul the Commission's decision or alternatively annul or reduce the fine imposed on it on the grounds that the Commission did not state proper reasons regarding the impact of the cartel on competition, its decision not to use ADM's turnover in the affected product market to assess the fine, its decision to apply a 100 per cent uplift for deterrence and for assessing ADM's role as a leader.

The applicant also claimed a violation of the principles of legal certainty, equal treatment, protection of legitimate expectations and proportionality and the Commission's wrong assessment of ADM's cooperation.

The Court of First Instance dismissed all ADM's claims except for two pleas referring to two 'superfluous' factors which the Commission did not include in the Statement of Objections (that ADM restricted production capacity and that ADM designated a price leader in each national segment of the market) and upheld the fine on the applicant in its entirety.

It also ordered the undertaking to pay all costs of the action except for 10 per cent of ADM's costs to be paid by the Commission.

The Court therefore upheld the ruling that in the period 1991-1995, US companies Archer Daniels Midland (ADM) and Haarmann & Reimer (H&R), Dutch company Cerestar Bioproducts and Swiss companies Hoffmann-La Roche and Jungbunzlauer (JBL), participated in a worldwide cartel through which they fixed the price and shared out the market for citric acid.

During the infringement period, the EC said that the annual market was worth around €320 million in the EEA (European Economic Area). According to the EC, the cartel pursued four main objectives: allocating sales quotas, fixing 'target' and 'floor' prices, exchanging specific customer information and eliminating or limiting price discounts.

The European Court of First Instance also handed down this week judgements concerning an alleged sodium gluconate cartel and a lysine cartel. Coverage of these cases will be published tomorrow.

Related topics: Ingredients

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