Lysine price-fixing conspiracy

The lysine price-fixing conspiracy was an organized effort during the mid-1990s to raise the price of the animal feed additive lysine. It involved five companies that had commercialized high-tech fermentation technologies, including Archer Daniels Midland (ADM), Ajinomoto, Kyowa Hakko Kogyo, Sewon America Inc. and Cheil Jedang Ltd. A criminal investigation resulted in fines and three-year prison sentences for three executives of ADM who colluded with the other companies to fix prices. The other four companies settled with the United States Department of Justice Antitrust Division in September through December 1996. Each firm and four executives from the Asian firms pleaded guilty as part of a plea bargain to aid in further investigation against ADM. The cartel had been able to raise lysine prices 70% within their first nine months of cooperation.[1]

The investigation yielded $105 million in criminal fines, a record antitrust penalty at the time,[2] including a $70 million fine against ADM. ADM was fined an additional $30 million for its participation in a separate conspiracy in the citric acid market and paid a total fine of $100 million. Three former high-ranking ADM executives were convicted in September 1998 after a ten-week jury trial.[3] Buyers of lysine in the United States and Canada sued and recovered $80 to $100 million in damages from the five cartel members, and ADM paid $38 million to settle mismanagement suits by its shareholders.[4]

The lysine cartel was the first successful prosecution of an international cartel by the U.S. Department of Justice (DOJ) in more than 40 years.[5] Since then, the DOJ has discovered and successfully prosecuted nearly 20 international cartels.[6]

ADM's role

The company and senior ADM executives were indicted on federal criminal charges for simultaneously engaging in price-fixing in the international lysine and citric acid markets. Three of ADM's top officials, including vice chairman Michael D. Andreas, were eventually sentenced to federal prison in 1999 to a total of 99 months, an antitrust record at the time. Moreover, in 1997, the company was fined $100 million, the largest antitrust fine in U.S. history at the time.[7] ADM was later fined almost $50 million by the antitrust authorities of Canada, Mexico, and the European Union.[8]

The FBI learned of the lysine price-fixing conspiracy from Mark Whitacre, then Divisional President of ADM's BioProducts Division, because his wife threatened to inform the FBI if he did not.[9] Whitacre only then told the FBI that he and other ADM executives were involved in price-fixing agreements with other rival businesses around the world. The FBI and Whitacre attended and listened in on the cartel’s meetings in cities such as Tokyo, Paris, Mexico City, and Hong Kong. During Whitacre's undercover tenure, the FBI collected hundreds of hours of video and audio tapes that documented crimes committed by executives from around the world fixing the prices of food additives in the largest price-fixing case in history at the time (1996).

Popular adaptations

The Informant is a nonfiction thriller book written by journalist Kurt Eichenwald and published in 2000 by Random House[19] that documents the case and the involvement of ADM executive Mark Whitacre. It was the primary source for episode 168 of This American Life titled "The Fix Is In"[20] and was adapted into the 2009 film The Informant! starring Matt Damon, which was released September 18, 2009.

See also

• United States v. Archer Daniels Midland Co.
• Antitrust
• Price fixing cases

External links

• This American Life episode on the conspiracy
• Video Segment Showing True Story of Lysine Price-Fixing Conspiracy