Joining the United Sates and Canada, the European Union in June levied combined fines of $105 million against Archer Daniels Midland Co. ("Supermarkup to the World") and four Asian companies -- Ajinomoto Co. and Kyowa Hakko Kogyo Co. of Japan; and Sewon Co. and Cheil Jedang Ltd. of South Korea -- for their involvement in a price-fixing scheme.
The EU's competition commission said it imposed fines of $45 million against ADM and $26.9 million against Ajinomoto, the leaders of the cartel. In addition, EU competition regulators imposed fines against Kyowa Hakko Kogyo of Japan totaling $12.5 million while Cheil Jedang Ltd. of South Korea was fined $11.6 million and the Sewon Corp. of South Korea was fined $8.5 million. The EU action was based on ADM's conspiring with four Asian competitors to rig the $650 million-a-year market for lysine, a popular livestock-feed additive made by ADM.
The investigation found that the five companies fixed lysine prices world-wide, including in the EU. The investigation also determined that the companies fixed sales quotas for the EU market and exchanged information concerning those quotas from "at least" July 1990 through June 1995.
ADM commented that it is considering whether to contest the fine levied by the European Commission, although it claimed that the size of the fine wouldn't have a material impact on its earnings.
The EU fines stem from a probe that began in 1997 when ADM disclosed the EU was conducting an inquiry into its European units and other companies. In 1996, the US Justice Department fined ADM $100 million after the company pleaded guilty to fixing prices for lysine and citric acid. In 1998, ADM also paid a fine of US$10.83 million for price fixing on the Canadian market.
Scott Kilman in the Wall Street Journal reports that ADM's total legal tab "for one of the biggest global price-fixing scandals of the 1990s" has now climbed to more than $250 million, including criminal fines, civil settlements and lawyer bills and that tab "will probably rise as more governments pile on" as "antitrust regulators in Mexico and Brazil are mulling whether to levy their own penalties."
However, a check of ADM's May 12, 2000 10-Q report filing with the US Securities and Exchange Commission (SEC) reveals that "the Company has made provisions of $21 million in fiscal 1999, $48 million in fiscal 1998 and $200 million in fiscal 1997 to cover the fines, litigation settlements related to the federal lysine class action, federal securities class action, the federal citric class action, the federal sodium gluconate class action, and certain state actions filed by indirect purchasers of lysine, certain actions filed by parties that opted out of the class action settlements, certain other proceedings and the related costs and expenses associated with the litigation described above."
Excluding the $45 million EU fine the above total of $269 million also excludes the years of 1995 and 1996 when the original legal action by the Federal Bureau of Investigation and the US Department of Justice began.
In 1999, a US federal judge sentenced Michael D. Andreas and Terrance S. Wilson to two-year prison terms and fined both former ADM executives for their role in the price-fixing scandal. Mark E. Whitacre, an ADM executive-turned-informant, who played the key role in the Federal Bureau of Investigation's ability to crack open the price-fixing case was stripped of his immunity in the case after prosecutors learned he had allegedly embezzled millions of dollars from ADM.
Applauding the fines, Nicholas E. Hollis, president of the Agribusiness Council (ABC) pointed out that "Europe's action sends an unmistakable message that anti-competitive behavior such as practiced by ADM against consumer and farmer interests will not be tolerated. But simply fining predators like ADM, isn't enough to contain their apparent white collar brigandry.
"As we've seen in the US, we need to take the 'Supermarket to the World' and its management behind the woodshed ... I find it a bit ironic that our Department of Justice crows about dismantling one of our computer software giants while practically allowing ADM to walk with a fine, and permitting the company to maintain its business with the government, in spite of felony convictions," he added.
The European Commission action may "help remind policymakers where the real problem is -- and it isn't in our software," Hollis continued, "rather it is in our food system and our farmers continue to suffer for it." Hollis observed that ADM was and is one of the largest campaign contributors to both US political parties while Microsoft, until fairly recently had not been a major player in Washington.
At the urging of state lawmakers from Minnesota the US Department of Justice has announced that it is investigating whether a business-to-business Internet Web site being designed by six meatpacking companies -- an alliance which includes Cargill's red meat division, Excel Corp.; IBP; Smithfield Foods, Gold Kist Inc., Farmland Industries Inc and Tyson Foods -- violates federal antitrust law.
State Rep. Doug Peterson, one of the Minnesota lawmakers who called for the investigation, told Dow Jones News Service that participants in the $20 million e-commerce venture might try to control supply by jointly marketing their products and staying away from each other's customers. The six packers have combined annual sales of about $40 billion.
"I'm extremely pleased that federal authorities responded to our call to take a look at this plan, which we are concerned will create an 'OPEC of meat' damaging to both farmers, consumers and small business," Peterson added.
Joel Klein, head of the US Department of Justice's antitrust division, indicated that the agency "is aware of this new venture and is taking steps to determine if its formation or operation is likely to have anticompetitive effects on producers and consumers. You can be assured that if we conclude that the venture violates the antitrust laws, we will take appropriate action," Klein wrote in a letter received by state officials.
According to the participating companies the venture -- still being formulated -- "would provide a single, convenient place for buyers and sellers of meat and poultry products to connect with each other and allow faster product comparison and price negotiation, reducing paperwork and other duplication."
Tyson spokesman Ed Nicholson said there would be "no collusion with regard to fixing prices. Comparing it to OPEC is completely unfounded." "We will cooperate with any review," said Mark Klein, communication manager for Excel. IBP spokesman Gary Mikelson told Dow Jones that investigators are likely to be disappointed by what they will find. "What they will learn is that it is designed as an independent company ... If anything, we believe competition will be enhanced," he said.
Meanwhile, Cargill, Louis Dreyfus Corporation's Allenberg Cotton Co. division Dunavant Enterprises, Cargill's Hohenberg division and Plains Cotton Cooperative announced that they are planning to create an Internet business-to-business marketplace for cotton, cotton-related products and services. Memphis, Tenn., will most likely be the headquarters of the "independently operated" company.
Chicken catchers, mostly African-Americans men, who grab chickens out of their houses to be slaughtered by the likes of Frank Perdue Farms Inc., the nation's number three poultry producer, are coming under siege by automated chicken catcher machines in the hope that the company will eventually be able to replace its 150 or so human chicken catchers.
Introduction of the machines comes, however, at a curious time when the current chicken catchers are organizing a union and battling Perdue in court over how much overtime the company owes them. The catchers see Perdue's attempts to automate as an effort to intimidate the union organizers.
"It's designed to scare the workers and chill the union," declared Rev. Jim Lewis, a member of the Delmarva Poultry Justice Alliance. "It's more fear and intimidation by Big Chicken."
Because Perdue has contracted the work out, chicken catchers are no longer Perdue employees and therefore have no health benefits, safe working conditions or decent wages. The catchers have signed cards to become members of a union but Perdue at this point is unwilling to acknowledge their desire to become United Food & Commercial Workers members.
"Over the past two years" Rev. Lewis notes, "the Delmarva Poultry Justice Alliance has tried to call attention to the plight of the Perdue chicken catchers. Last December television's 60 Minutes made the chicken catchers' work visible. Since then a huge support has grown around their plight.
"What we are asking people to do to is make a phone call to Perdue (1-800-473-7383) or go to http://www.perdue.com and send them an e-mail. Tell Perdue to respect the chicken catchers' right to form a union. It's as simple as that," Lewis adds.
As the Rural Advancement Fund International-USA's Mary Clouse notes: "The struggle here is all part of the larger struggle for justice in the poultry industry. When you include the work for justice for the family farmers caught in the poultry industry trap, the catchers, the plant workers, the company truck drivers, the hatchery crews, and the company environmental policies, you are beginning to get a handle on the sum total of abuse being foisted on the tax payers and consumers in the name of cheap chicken. The chicken catchers are often an overlooked part of that struggle."
Jim Dennis, vice president of roaster operations at Perdue, told the Associated Press's Christopher Thorne that the company simply wants to automate another part of its process and has been shopping for a chicken-catching machine for a while. "Long term, we'd like to be able to go to total automation," Dennis said. "The reason being we want that job easier on our people. It's a very hard job."
According to Perdue spokeswoman Tita Cherrier the five chicken-catching machines Perdue plans to buy will cost the company millions of dollars. While the machines are slower than catching chickens by hand, Cherrier points out, they aren't as rough on the birds."We've found 14 percent less bruising, which means we can sell more of the product."
Thorne reports that Perdue has said that it intends to offer processing plant jobs to the human chicken catchers who will no longer be needed.
Tests requested by India's Research Foundation for Science, Technology and Ecology (RFSTE) prove that while the corn-soya blend being distributed by the US government in Orissa, India, as food aid after the Orissa super cyclone the US was also using the Orissa victims as guinea pigs for genetically engineered products which have been rejected by consumers in Europe and elsewhere.
Samples of the GE food were collected by the RFSTE team during their relief work in Orissa after the super cyclone and tests were carried out by US-based Genetic I.D. -- the world's leading laboratory on testing for GE products The RFSTE has been involved in ecological studies and biodiversity regeneration in the cyclone devastated coastal regions of Orissa.
Of the $7.5 million given by the US as relief for Orissa $4.15 million was for food aid. The Genetic I.D. tests reveal that the US government has been using public funds, the RFSTE charges, meant for aid to create profits and markets for the biotech industry whose food products no one wants in Europe.
The RFSTE has demanded that the US government stop using money meant for relief to the poor for subsidizing the biotech industry and helping it to use emergencies to create market access and market entry for GE products. They have also called upon the Government of India and Government of Orissa to immediately withdraw the corn-soya blend from distribution in Orissa and introduce mandatory segregation and labeling of all food imports for presence of GE constituents.
The RFSTE points out that such labeling is now an international obligation under the Biosafety Protocol and that Indian citizens cannot be unwillingly used as guinea pigs in this experiment with GE foods.
A.V. Krebs is director of the Corporate Agribusiness Research Project, P.O. Box 2201, Everett, Washington 98203-0201. Email avkrebs@earthlink.net. Web: (www.ea1.com/CARP).