The Global Vitamins Industries

Basel, Switzerland is an historic city of about a half million people located at the intersection of the French, German, and Swiss borders. Home to Switzerland's first university established in 1460, the city played a pivotal part in the Protestant Reformation. Although the city houses many architecturally important medieval buildings, manuscript and art collections, and a pretty late-Gothic Rathaus fronting the central market place, Basel receives more business visitors than tourists. Aided by its fortuitous location on the Rhine River, Basel was the Swiss city most affected by the 19

th

century forces of industrialization. By the turn of the century, it had become the center of Switzerland's chemical and pharmaceutical industry, second only to Germany's in Europe. Basel pharmacist Felix Hoffmann-La Roche was the founder of a pharmaceutical manufacturing partnership that would become a global leader in medicinal products. Its corporate successor, Roche Holdings, remains headquartered in the city of its birth and is still controlled by the founding families.

Most of the conspiracies were exposed to the world one day in May 1999 at a widely publicized Department of Justice press conference in Washington DC. Eventually, the antitrust authorities of at least nine countries and the European Union would open formal investigations of the vitamins cartels, and several of them would impose record fines on the companies involved.4 For the first time in the history of the 1890 Sherman Act, the United States imprisoned several high-ranking foreign executives for price fixing. In addition to actions of government prosecutors, more than 100 law suits were filed by buyers of bulk vitamins in the United States, Canada, Australia, and the United Kingdom seeking compensatory and punitive damages. In 2004 the U.S. Supreme court became involved in the vitamins cartels by issuing a ruling that significantly altered the way in which defendants in international cartels can be sanctioned. By the end of 2005, the members of these cartels had in absolute dollar terms become the most harshly punished antitrust violators in the history of the world.

Despite the heavy sanctions imposed by prosecutions around the world, the most somber lesson to be drawn from these dreary episodes is that the crime of price fixing pays.