ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, January 30, 1997 TAG: 9701300036
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
A U.S.-based unit of the drug and chemical giant Bayer AG agreed to pay a $50 million fine Wednesday to settle criminal price fixing charges involving citric acid, a widely used ingredient in soft drinks and processed foods.
The Justice Department said the penalty against Haarmann & Reimer and a senior executive, Hans Hartmann, was the second largest criminal antitrust fine in the department's history.
Citric acid - an additive to detergents, cosmetics and foods - has a worldwide market value exceeding $1 billion a year, said Joel Klein, the agency's antitrust division chief.
``We will not tolerate international conspiracies that defraud American consumers,'' Attorney General Janet Reno said in a statement.
The case is the fourth round of charges in the department's international investigation of price fixing in the food and feed additives industry, which reaches from the U.S. to Europe and Asia. It's one of the largest conspiracies the department has ever prosecuted.
Last year, the Justice Department fined Archer Daniels Midland $70 million for price fixing of lysine, a popular additive to animal feed, and $30 million for price fixing of citric acid. In addition, two Japanese companies and a Korean firm agreed to settle charges last August involving lysine price fixing.
So far, the department has recovered $170 million in criminal fines since the first charges were brought in August 1996.
Klein said the plea agreement with Haarmann and the executive Hartmann was expected to be presented to a federal judge in San Francisco later in the day. Details about Hartmann's plea agreement were being withheld until the court hearing. The scope of the case and the potential harm to consumers also would be revealed at that hearing, he said.
Haarmann & Reimer is a New Jersey-based affiliate of Bayer AG, the German industrial giant that's best known as the maker of Bayer aspirin.
The company agreed to plead guilty to one count of price fixing of citric acid and pay the $50 million fine in installments over five years. Hartmann, a former director of Haarmann & Reimer, also pleaded guilty to one count.
Justice Department investigators allege Hartmann and Haarmann & Reimer worked with a group of unidentified corporations to suppress and eliminate competition in the citric acid market from July 1991 to June 1995. They're also charged with meeting with co-conspirators to set prices, officials said.
Haarmann & Reimer issued a brief statement saying the company agreed to the guilty plea and that it cooperated fully with the Justice Department's investigation.
Gary Spratling, a deputy assistant attorney general for antitrust, said the government plans to ask the federal judge in San Francisco to depart from federal sentencing guidelines by assessing a $50 million fine, which is lower than the potential penalty in the case. Under the Sherman Act, a company can be fined twice the gain reaped from the crime or twice the amount of loss suffered by the victims.
LENGTH: Medium: 61 linesby CNB