Competition: Commission welcomes judgment of the Court of Justice in Archer Daniels Midland case (Amino Acids cartel)

Brussels, 18th May 2006

The European Commission welcomes today’s judgment by the European Court of Justice rejecting Archer Daniels Midland’s appeal in respect of the Amino Acids cartel. In particular, the Court confirmed that, when setting the level of fines, the Commission does not have to take into account fines paid by a company in other jurisdictions and is entitled to change its methodology for setting fines.

On 7 June 2000, the Commission fined Archer Daniels Midland of the US, and four other companies for operating a world-wide price fixing cartel for amino acids (lysine). The fines imposed by the Commission were appealed to the Court of First Instance which upheld the Commission’s decision in all important aspects, but reduced the fines slightly from €110 million to €103 million - the fines imposed on ADM were reduced to €43.9 million from €47.3 million. ADM appealed this judgment to the Court of Justice.

ADM is a US company active in various food processing sectors including the production of synthetic amino acids. Amino acids are building blocks of protein either of vegetal or animal origin, or can also be manufactured. ADM participated in a cartel that fixed prices and sales volumes of the synthetic amino acid, lysine. Lysine is the most important amino acid used in animal foodstuffs. The availability of synthetic amino acids allows nutritionists to compose protein diets that better meet the animal's feed requirements.

ADM has also been fined by the Commission for its participation in two other cartels. In 2001 the Commission imposed a fine of €10.1 million on the company for participating in the Sodium Gluconate cartel (see IP/01/1355 ) and €39.7 million for participating in the Citric Acid cartel (see IP/01/1743 ), both cases currently pending before the Court of First Instance.

The judgment of the European Court of Justice

In the present appeal the ECJ rejected ADM’s claim that in setting the fine, the Commission should have taken account of penalties paid by ADM in other jurisdictions (USA and Canada) in respect of the Amino Acids cartel. The Court of Justice rejects ADM’s arguments and confirms that the Commission did not have to take into account the fines paid in the USA and Canada.

The ECJ also confirmed that the Commission may decide at any time to raise generally the level of fines. The Commission is thus free to exceed the level of fines previously imposed in other cases and also to change the methodology of calculating the fines. In this context, Competition Commissioner Neelie Kroes has previously announced that she is examining the Commission’s Notice on Fines (see SPEECH/05/205 ).

The Commission’s investigation

The Commission’s investigation started in July 1996 when Ajinomoto, a Japanese company, informed the Commission about the cartel. Ajinomoto's action came immediately after the Commission adopted its Leniency Notice on the non-imposition or reduction of fines in cartel cases (O.J. C 207 of 18 July 1996, replaced in 2002 by O.J. C 45 of 19 February 2002, see IP/02/247 and MEMO/02/23 ).

The investigation showed that ADM, Ajinomoto Co (Japan), Cheil (Korea), Kyowa Hakko (Japan) and Sewon (Korea) had fixed prices and sales volumes, and had exchanged individual information on sales volumes of synthetic lysine. The arrangements covered the whole of the EEA and lasted at least from July 1990 to June 1995. The Commission found that the cartel represented a very serious infringement of the EC competition rules that justified imposing heavy fines on the companies involved.

The judgment of the Court of First Instance

ADM, Kyowa Hakko Kogyo, Daesang-Sewon and Cheil Jedang appealed against the decision, in particular the fines, to the Court of First Instance (cases T-220/00, T-223/00, T-224/00 and T-230/00). The Court of First Instance upheld the Commission decisions but amended the arithmetic of the Commission’s calculations for aggravating and attenuating circumstances, leading to a small reduction in the fines.

Further information

For more information about the Commission’s 2000 decision see IP/00/589 .

For more information on the Commission’s action against cartels, see MEMO/06/184 .

Companies wishing to approach the Commission in order to benefit from the Commission notice on immunity from fines and reduction of fines in cartel cases (see IP/02/247 and MEMO/02/23 ) should consult:

http://ec.europa.eu/comm/competition/antitrust/leniency/

Item source: MEMO/06/209 Date: 18/05/2006