European Court Slashes Citric Acid Cartel Fine

(CN) - A lower court's decision unfairly labeled Archer Daniels Midland as a citric acid cartel "ringleader," Europe's high court ruled, slashing the company's fine from $51.5 million to $41.2 million.

The Commission of the European Communities, the executive branch of the European Union, penalized Archer Daniels Midland and four other companies for running a price-fixing scheme for citric acid production from 1991 to 1995.

A 1995 U.S. Department of Justice investigation included an FBI report detailing "Masters" (planning-level) and "Sherpa" (implementation-level) meetings, as well as participation by a key Midland representative referred to as "The Wise Old Man" or "The Preacher."

The European Commission based its fines, in part, on market share, adding 35 percent to Midland's fine because of its purported instigating role in the cartel.

The Court of Justice removed the extra leadership fine, which had been upheld by a lower court. The Luxembourg-based high court determined that Midland was never granted the right to defend itself from the allegations in the FBI report and in another statement filed by Cerestar Bioproducts, a competitor that had also participated in the cartel.

"[O]bservance of the rights of the defense is a fundamental principle of Community law which must be complied with," the court wrote in certifying the reduced fine.

Citric acid is used as a preservative and an environmentally benign cleaner, and adds a sour kick to food and drink.

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