Names In the News

The Price-Fixing Series

The astonishing series of U.S. civil and criminal prosecutions for international price-fixing has continued in 2003, with three major pleas over a month-long period from late January to late February.

ï A Japanese manufacturer of a coating for videotape pled guilty and was sentenced to pay a $5 million fine for its role in a conspiracy to fix the prices of and allocate customers for the sale of video magnetic iron oxide (MIO) particles in the United States and elsewhere. In federal court in Philadelphia, Ishihara Sangyo Kaisha Ltd. (ISK Japan) of Osaka, Japan was charged with participating in a conspiracy to fix prices and allocate customers for the sale of video MIO particles in the United States and elsewhere from January 1995 until April 1998.

ï Gemstar-TV Guide International agreed to pay a record $5.67 million in civil penalties and agreed to certain restrictions to resolve federal charges that Gemstar and TV Guide had fixed prices, allocated customers and violated pre-merger waiting period requirements prior to their merger in July 2000.

The civil penalties are the highest ever paid in a case of what is known as "gun jumping." Federal officials alleged that, starting in mid-1999, and before a proposed merger between the two entities had been approved, Gemstar and TV Guide agreed to stop competing for customers, decided together on prices and terms to be offered, and jointly managed their interactive program guide business during the mandatory pre-merger waiting period of the Hart-Scott-Rodino Act of 1976.

ï Hoechst Aktiengesellschaft, an international chemical conglomerate based in Germany, agreed to plead guilty and pay a $12 million fine for its participation in a conspiracy that suppressed competition in the world markets for an industrial chemical used in the production of commercial and consumer products, including pharmaceuticals, herbicides and plastic additives. The chemical, monochloroacetic acid (MCAA), has annual U.S. sales of approximately $50 million. Hoechst was charged with fixing prices and allocating market shares of MCAA sold in the United States and elsewhere from September 1995 until June 1997. Hoechst will be the third company to plead guilty to participating in this conspiracy.

"Organic" at Risk

U.S. standards for organic food are only a few months old, but already are threatened by a Congressional proposal that may render the organic label meaningless -- for the benefit of one Georgia poultry producer.

House Speaker Dennis Hastert added a provision to the omnibus federal spending bill approved in February that will allow chicken and other poultry products to be labeled "organic" even if the animals are not fed organically grown feed.

Hastert inserted the provision as a favor to Nathan Deal, R-Georgia.

Deal and other Georgia Republicans failed last year to win permission for Fieldale Farms of Baldwin, Georgia to market its chickens as "organically grown" even though the animals are raised on feed mixed from conventionally produced grain.

The federal organic standards established by the Department of Agriculture require that "USDA Organic" chickens be raised on feed that is mixed from grain harvested from land to which no chemical fertilizer, pesticide or herbicide has been applied for the previous three years.

"For the sake of one Republican constituent, Congress is threatening the entire organic foods industry and throwing away 12 years of hard public policy work," says Environmental Working Group President Ken Cook.

After passage of the bill, which was effectively not open to amendment, and a deluge of negative publicity, Republican and Democratic lawmakers rushed to say they would reverse the anti-organic loophole.

Even Tyson Foods, the giant chicken company, announced its support for repeal of the loophole. Tyson plans to enter the organic chicken market in a major way.

Makes Blood Pressure Rise

Two major drug companies accused of conspiring to keep a generic version of a widely used blood pressure medication off the market entered a settlement with attorneys general from 29 states in January.

Under the settlement, the drug manufacturers -- Aventis and Andrx -- must pay $80 million to compensate consumers, state agencies and insurance companies who overpaid for Cardizem CD and its generic equivalents.

The settlement marks the first time that consumers will receive direct compensation in a case involving collusion between brand-name and generics companies to keep generic versions of drugs off the market.

The average consumer will be eligible to recover 20 percent of the amount they spent on the drug during a 14-month period in 1998 and 1999. For many individuals, this will mean a refund of several hundred dollars.

The case, co-led by New York and Michigan, charged that for a year beginning in July 1998, Hoechst, a pharmaceutical company acquired by Aventis in 2000, paid Andrx just under $100 million not to market a generic version of Cardizem CD.

The delay in the availability of the generic form of Cardizem CD meant that consumers, medical insurance companies and the government were forced to purchase the higher priced brand name version of the drug for at least an extra year.

-- Russell Mokhiber