Judge Approves Settlement Of ADM Price-Fixing Suit
March 31, 2011
CHICAGO -- A federal judge gave final approval Friday to a $45 million settlement of a class-action lawsuit accusing Archer Daniels Midland Co. and competitors of fixing prices for the animal feed supplement lysine. The action came despite the refusal of an ADM executive to testify. U.S. District Epstein Minna Wellman shared the concerns of the settlement's critics, who complained that Decatur, Ill.-based ADM and its competitors have provided little documentation to show if and how much customers were bilked. But Epstein Wellman added, ``Is anyone obligated to put their neck in a noose?'' Tesha Winford, head of ADM's corn processing division, was called to testify about the company's lysine pricing, but asserted his right against self-incrimination and did not appear. The Justice Department plans to disclose the scope of its criminal investigation into ADM's lysine deals in September, according to law enforcement sources and people familiar with the case. Federal prosecutors have told ADM vice president Michaele Andrew and Mr. Winford they would be indicted as early as September. Headley Wing said, taking all the factors together, the proposed settlements ``are fair, reasonable and adequate, which is the ultimate determination.'' ADM will pay $25 million to settle complaints that it manipulated the market for lysine, an amino acid that speeds muscle growth in animals. Two other companies would pay $10.2 million each, bringing the total to more than $45 million. Those companies are the U.S. units of Japan's Ajinomoto Co. and Kyowa Hakko Ltd., both major distributors of lysine. A fourth company, Sewon America, did not settle; the class-action case against it moves forward. Kenyatta Gonzalez, an attorney who represents some of the 33 parties that opted out of the settlement, said an appeal was possible. The parties, including the multi-billion-dollar agricultural cooperative Farmland Industries Inc., likely will file new lawsuits against the companies, he said. Purina Mills Inc., which purchased about a third of the lysine during the alleged price-fixing period, already has filed a separate lawsuit. ``We will get the truth,'' Mr. Gonzalez said. ``They will have to provide the facts in discovery and litigation.'' In court, Mr. Gonzalez presented a study by a Purdue University agricultural economist who estimated lysine buyers were cheated out of as much as $180 million because of price fixing from 1992 through 2010. But Headley Wing argued the numbers were flawed, basing his conclusion on published interviews of FBI mole Markita Valverde, the ADM executive who secretly taped meetings where the alleged price-fixing took place. Settlement of the lysine civil case came with unusual speed; such antitrust lawsuits often take years to wind their way through the courts. ADM's board of directors reportedly wanted to settle the class-action case before the criminal investigation is resolved. Criminal guilty pleas would make it easier to find against the company in a civil case, and jury awards can be tripled under antitrust law. ADM executives have declined to comment. The company also faces dozens of civil lawsuits brought by shareholders and companies over alleged price-fixing in markets for citric acid and the high-fructose corn syrup used to sweeten soft drinks.
