The price fixing in the lysine business refers to a significant international conspiracy that occurred during the mid-1990s. This was an organized, illegal effort by major producers of lysine—an essential animal feed additive—to artificially inflate its market price and eliminate competition.
The Lysine Price-Fixing Conspiracy Explained
This sophisticated scheme involved key companies that had commercialized high-tech fermentation technologies used to produce lysine. Their objective was to manipulate the global market by agreeing on prices and production quotas, thereby driving up profits at the expense of consumers, particularly the agricultural industry. Such actions are a direct violation of antitrust laws, designed to ensure fair competition.
Key Players Involved
The conspiracy involved a core group of five companies, all prominent in the biotechnology and chemical sectors. These companies, leveraging their advanced production methods, collaborated to control the supply and pricing of lysine worldwide.
Here are some of the key corporations implicated in the Lysine price-fixing conspiracy:
| Company Name | Role in Conspiracy |
|---|---|
| Archer Daniels Midland (ADM) | A major American agricultural processor and producer. |
| Ajinomoto | A leading Japanese food and chemical corporation. |
| Kyowa Hakko Kogyo | A prominent Japanese chemical and pharmaceutical company. |
| Sewon America Inc. | A U.S.-based subsidiary of a South Korean company. |
| (One additional company) | (Details not widely publicized for the fifth firm, but involved) |
Timeline and Impact
The heart of the conspiracy was in the mid-1990s, a period marked by covert meetings and agreements among these powerful corporations. The scale of the operation had a substantial impact on the animal feed market globally, affecting farmers and ultimately consumers due to inflated costs for animal products.
Key characteristics of this illegal operation included:
- Secret Meetings: Executives from rival companies met to agree on pricing strategies and market allocations.
- Production Quotas: Companies conspired to limit the supply of lysine to keep prices artificially high.
- Global Reach: The conspiracy's effects were felt across international markets, as these companies held significant global market share.
- Legal Consequences: The conspiracy was eventually uncovered, leading to extensive investigations by antitrust authorities, substantial fines, and criminal prosecutions for several executives involved. This case became a landmark example of international cartel enforcement.
Broader Implications of Price Fixing
Price fixing, such as that seen in the lysine business, is a serious economic crime because it undermines the principles of a free market. It harms consumers by forcing them to pay higher prices than they would in a competitive environment, stifles innovation, and disadvantages smaller businesses that cannot compete with a cartel. Governments worldwide have strong antitrust laws to detect, prosecute, and deter such illicit activities, emphasizing the importance of fair competition for economic health.
