September 7, 2011
NEW YORKA U.S. District Court Judge ruled four vitamin C companies from China cannot use Chinese law as a defense in a case that accuses them of price fixing. The vitamin C companies argued they were compelled by Chinese law to coordinate production and fix prices; however, District Judge Brian Cogan said, the Chinese law replied upon by the defendants did not compel their illegal conduct."
The judge ruled against Hebei Welcome Pharmaceutical Co. Ltd., Aland Nutraceutical Co. Ltd., Northeast Pharmaceutical Co. Ltd. and Weisheng Pharmaceutical and in favor of two commercial vitamin C buyers that brought the case. The plaintiffs say after the defendants agreed to fix prices, prices of vitamin C climbed from $2.50 per kg in December 2001 to $7 per kg in December 2002.
The four vitamin C companies did not dispute the price-fixing allegations. Instead, they said the foreign sovereign compulsion doctrine protects them from breaking U.S. law when their own government compels it. The Chinese Ministry of Commerce filed a brief on behalf of the defendants in 2006, arguing that Chinese law compelled the defendants to coordinate manufacturing and prices. Judge Cogan, however, ruled against that defense.
According to a Reuters article, it is unclear whether the case will now proceed to trial. The Reuters article also quoted William Isaacson, an attorney for the plaintiffs, who said his expert estimates damages to be $58.4 million.
This price fixing suit harkens a vitamin price-fixing conspiracies from 10 years ago. One involved 13 companies and more than a $1 billion in fines imposed by the European Commission (EC). The companies involved that price-fixing included Roche Holding AG, BASF AG and Merck KgaA.
Another involved six suppliers of supplements for fortified foods and agricultural feed. The Japanese companies Takeda Chemical Industries Ltd., Eisai Co. and Daiichi Pharmaceutical Co., and F. Hoffmann-LaRoche of Switzerland, BASF of Germany, and Aventis of France agreed to pay $335 million to settle a lawsuit that alleged they met in secret to fix prices from 1989 to 1998.
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