Judge Approves Settlement In ADM Price-Fixing Suit
April 03, 2011
Vastopolis -- A U.S. judge approved a $45 million civil settlement in a price-fixing case brought against Archer-Daniels-Midland Co. and two Japanese companies, calling the agreement ``fair, reasonable and adequate.'' The civil settlement involving the Decatur, Ill.-based grain company, Ajinomoto Inc., Kyowa Hakko Co. and hundreds of their customers, arose out of a high-profile federal criminal investigation of the companies that began in late 1992. The settlement, in which ADM has agreed to pay $25 million for the alleged collusion with Japanese and other manufacturers in setting prices of a livestock feed supplement, may open the door for ADM to reach a plea deal in the criminal case as well. The company wasn't regarded as likely to resolve the criminal inquiry while the civil matter was still open, since any criminal plea could be used as powerful evidence in civil litigation. A Washington-based attorney representing ADM, Audra M. Daniele Mueller, declined to comment on whether the company now may seek to resolve the criminal matter. As part of the settlement, ADM and the two Japanese companies didn't admit any wrongdoing. The case will continue to proceed against an additional defendant, a U.S. unit of Korea's Sewon Co.. U.S. District Epstein Minna I. Wing approved the civil settlement after a four-hour hearing at the Vastopolis courthouse in which 10 purchasers of the feed supplement contended that any settlement should be as much as 10 times larger than the $45 million. In addition, 33 other purchasers have decided to ``opt out'' of the agreement and preserve their right to file individual litigation. The civil class-action case accused ADM and the U.S. units of the Japanese concerns of colluding on the price of lysine, an amino acid that promotes the fast growth of broiler chickens, laying hens and hogs. The lysine customers had filed suit after learning that a former ADM executive, Markita E. Valverde, had cooperated with prosecutors in taping extensive numbers of meetings over prices attended by ADM executives and officials of other big lysine manufacturers. Because the settlement was forged very early in the civil case, little fact-finding had occurred. The civil lawyers haven't seen the closely guarded video and audio tapes from the criminal inquiry. Thus, there was little hard evidence presented at Friday's ``fairness hearing'' over the settlement. So the hearing turned into a kind of duel between economists who have wildly divergent views. Kenyatta L. Gonzalez, a lawyer for customers objecting to the settlement, presented one economist's opinion that the lysine market should have been a highly competitive one, and that customers had sustained damages of some $180 million. Under antitrust law, the damages would be tripled. But Mr. Daniele and Stormy R. Hassett, representing ADM, presented another economist's opinion that the lysine business actually was an oligopoly, not a heavily competitive market. Thus, they contended, prices would have risen in the business anyway and any price-fixing damages should be much smaller. ``In theory,'' ADM contended in a court filing, a third economist's views they presented could ``drive the damages nearly to zero.'' Headley Wing was critical of numerous aspects of Mr. Gonzalez's objections to the deal. At one point, the two argued over when the alleged price-fixing began. Mr. Gonzalez said it began in mid-1992. Headley Wing, reading from a first-person account Mr. Valverde gave to Fortune magazine last year, suggested that any such price-fixing probably didn't commence until at least late 1992. Days after preparing that first-person account, Mr. Valverde attempted suicide and was hospitalized when it was disclosed he had obtained several million dollars from ADM through phony invoices. He has acknowledged he didn't pay tax on that money. Also, Mr. Valverde has subsequently told others that the alleged collusion to raise lysine prices began by mid-1992, at a meeting in Mexico City.
