September 22, 1999
Swiss drug giant, four other firms fined for price-fixing
By GORD McINTOSH -- The Canadian Press
OTTAWA -- Swiss drug giant F. Hoffmann-LaRoche Ltd. was fined $50.9
million Wednesday for its part in an international price-fixing
conspiracy affecting everything from consumers' milk to bread.
Four other multinationals also pleaded guilty in Federal Court in
Toronto to price-fixing and were fined between $2 million and $19
million to bring the total up to $88.4 million.
The federal Competition Bureau said these were the largest fines imposed
in the history of Canadian criminal law.
Roche Canada, the Canadian subsidiary, was not implicated or charged
with any offence.
Harry Chandler, deputy federal competition director, said the Swiss
parent company was operating as part of an international cartel and did
not involve the Canadian subsidiary even though some meetings took place
in Canada.
LaRoche, based in Basel, Switzerland, admitted its European executives
set prices and budgets periodically between 1990 and earlier this year
along with competitors BASF AG, Rhone Poulenc SA and two Japanese
companies -- Daiichi Pharmaceutical Co. Ltd. and Eisai Co. Ltd.
The companies admitted fixing the prices of a number of vitamins and
other products -- ranging from vitamins A, C and E, premixed vitamins
and betacarotine to B2 and citric acid.
"These are added to a whole range of products such as milk, orange
juice, cereals, breads in addition to feed additives," Chandler said.
The guilty pleas were part of a settlement agreement with the federal
Competition Bureau, which investigated after price-fixing allegations
arose in the United States.
The U.S. Justice Department blew the lid off the scam in May when it
announced Roche and BASF had agreed to pay fines totalling the
equivalent of $1 billion.
Antoinette Meinders, a spokesman for Roche Canada, said the cartel's
impact on individual Canadian consumers was likely minor, although
independent experts are only now analysing that impact.
In addition, she said company officials co-operated early and
extensively with the prosecution and saved the Canadian government
considerable expense.
Liberal MP Dan McTeague, a consumer advocate, complained the case
underscores an important point about consumer law in Canada: the
competition bureau will only act when another country has acted first.
Archaic and Byzantine laws in Canada prevent consumer watchdogs from
taking on cartels without the help of other countries, he said.
"The competition bureau couldn't have found this on its own," he said.
"Someone else had to go and dig the information. They had to connect the
dots. My two-year-old son could have done this."
Chandler said the case cost his bureau $1 million and involved half a
dozen staffers.
In a related case last week, a former business executive was given a
nine-month conditional sentence for vitamin price-fixing under the
federal Competition Act.
Russell Cosburn, former vice-president of sales for the Chinook Group
Ltd. of Toronto, was convicted of participating in an international
conspiracy to fix prices and divide up markets for choline chloride.
Choline chloride, also known as vitamin B4, is an additive used in the
animal feed industry, primarily for chickens and pigs.
Chinook was a defendant in the La Roche case, in which it was alleged
the firms made billions of dollars at the expense of Canadian consumers
as they inflated and fixed worldwide prices of vitamins for the last
decade.
In the other fines, BASF was fined $18 million in connection with the
vitamin conspiracies and $1 million for participation in the choline
chloride conspiracy.
Rhone Poulene was fined $14 million. Daiichi and Eisai were fined $2.5
million and $2 million respectively.
Hoffmann-LaRoche is behind two of the biggest drug launches in the past
year.
Herceptin, the first breast-cancer drug to work at the gene level of the
disease, was approved in Canada last month. Earlier this summer, the com
pany launched the anti-obesity drug Xenical, which helps the body
excrete excess dietary fat.
Currently under priority review by Health Canada is Hoffmann-LaRoche's
influenza drug Tamiflu, an anti-viral flu pill.
Copyright © 1999, Quebecor New Media Limited Partnership.
--
Judith Richards, London, Ontario, Canada
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