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Date Posted: 21:05:24 08/04/06 Fri
Author: United States v. Kyowa Hakko Kogyo Co. Ltd.
Subject: United States v. Kyowa Hakko Kogyo Co. Ltd., (N. D. Ill. 1996) (Japanese firm, $10 million fine)

Lysine
The lysine investigation broke up an international price-fixing and volume allocation agreement among the world’s major producers of lysine. Lysine, a feed additive used by farmers in livestock feeds, is a $600 million-a-year industry worldwide. The members of the lysine cartel reached agreements to carve up the world market by allocating sales volumes among themselves and agreeing on what prices would be charged to customers worldwide. As a result, prices went up about 70 percent in the first three months of the conspiracy alone.

Beginning with the first round of charges in August 1996, the investigation has resulted in the conviction of five companies, including two Japanese and two Korean companies, and six of their executives; it has also yielded nearly $100 million in criminal fines, including a $70 million fine against Archer Daniels Midland Company (ADM). (ADM was fined an additional $30 million for its participation in a separate conspiracy in the citric acid market and paid a total fine of $100 million.) The investigation culminated with the jury trial of three former highranking ADM executives for their participation in the lysine cartel. In September 1998, after a ten-week trial, a Chicago jury returned guilty verdicts against all three executives. The ADM executives were subsequently sentenced to serve lengthy prison sentences ranging from 24 to 30 months, and two of the executives were fined $350,000 each.

ADM’s $100 million fine, imposed in October 1996, represented the first time that the Division utilized the alternative fine provision in order to obtain a fine greater than the Sherman Act statutory maximum of $10 million. The alternative fine provision, found in 18 U. S. C. Section 3571(d), permits imposition of a fine equal to twice the gain to the cartel or twice the loss to the victims. As a result, the landscape for corporate antitrust fines has changed dramatically. Whereas prior to ADM’s sentencing there were no fines above the $10 million Sherman Act statutory cap, fines of $10 million or more are now common, and five defendants have been fined $100 million or more.

A list of all of the lysine cases follows:

United States v. Ajinomoto Co., Inc., (N. D. Ill. 1996) (Japanese firm, defendant agreed to $10 million fine in plea agreement)
United States v. Kyowa Hakko Kogyo Co. Ltd., (N. D. Ill. 1996) (Japanese firm, $10 million fine)
United States v. Sewon America, Inc., (N. D. Ill. 1996) (U. S. subsidiary of Korean company, $328,000 fine)
United States v. Kanji Mimoto, (N. D. Ill. 1996) (Japanese citizen, $75,000 fine)
United States v. Masaru Yamamoto, (N. D. Ill. 1996) (Japanese citizen, $50,000 fine)
United States v. Jhom Su Kim, (N. D. Ill. 1996) (Korean citizen, $75,000 fine)
United States v. Archer Daniels Midland, Co., (N. D. Ill. 1996) (U. S. firm, $100 million fine: $70 million fine for lysine and $30 million fine for citric acid)
United States v. Cheil Jedang, Ltd., (N. D. Ill. 1996) (Korean company, $1.25 million fine)
United States v. Michael D. Andreas; Mark E. Whitacre; Terrance S. Wilson; and Kazutoshi Yamada, (N. D. Ill. 1996) (Andreas, Whitacre and Wilson, all U. S. citizens, convicted at trial; Andreas and Wilson each sentenced to serve 24 months incarceration and to pay fines of $350,000; Whitacre sentenced to serve 30 months incarceration with 10 months to be served concurrently with a prison sentence he was already serving for another offense and 20 months to be served consecutively. Yamada, a Japanese citizen, did not appear at trial and remains a fugitive.) Website - http://www.usdoj.gov/atr/public/4523d.htm

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