Corn Fructose Makers Get Sweet Pass on Price-Fixing Charges

REPRINTED AND DISTRIBUTED BY PERMISSION OF AG COMM For Freedom & Justice Group http://groups.yahoo.com/group/ForFreedomandJustice Corn Fructose Makers Get Sweet Pass on Price-Fixing Charges Farm and Food File for the week beginning September 9, 2001 By: Alan Guebert Internationally Syndicated Ag Columnist .................................................................................................................................................................................... In a 66-page summary judgment released August 23, U.S. District Judge Michael Mihm dismissed a multi-billion dollar class action lawsuit that charged the nation’s four largest high fructose corn syrup (HFCS) makers with price fixing from July 1991 through June 1995. Mihm’s opinion--the only explanatory court document made public in the lengthy case; all others are sealed by his order--states lawyers for HFCS users like Coca Cola and Pepsi did not prove their price fixing charges against corn sweetener makers Cargill, A.E. Staley, American Maize and Archer Daniels Midland. But the judge’s order contains many sweet facts that paint an often disturbing picture of the chummy HFCS industry. Disturbing for farmers, because farmers fought hard—and continue to fight hard—for federal price supports that insulate the American sugar industry from crushing global competition. These sugar price supports, re-instituted in 1981 and savagely protected since, fueled the rise and growth of the HFCS industry. The biggest beneficiaries of this farm policy, however, are the biggest ag multi-nationals—Cargill, ADM, CPC International, American Maize and Staley. As Mihm notes in his opinion, these five “accounted for an average of more than 90 percent of the production capacity for HFCS in the United States and Canada…during the time period relevant to this litigation.” The heart of the HFCS civil case relies on evidence supplied by government mole Mark Whitacre, who delivered the goods to convict ADM of price fixing in the lysine and citric acid industries in 1996. An important part of ADM guilty plea back then was a government promise not to criminally prosecute ADM for price fixing in HFCS. That promise, recall sources, was crucial to the plea. But it also implied there was ample back-rubbing going on in the growing fructose industry. The pattern, charged HFCS buyers in the civil suit, was a near-carbon copy of what occurred in citric and lysine: A front organization, the Corn Refiners Assoc., to provide cover to share production and price data; an agreement among makers to “balance”—purchase HFCS from each other—to stabilize market shares; meetings among key, competing executives; and, just as in the ADM case, audio tapes with highly suggestive references to price fixing in the tightly-held industry. In fact, some long-time sources suggest that if the abbreviation HFCS is substituted with either “citric acid” or “lysine,” Mihm’s order reads like any number of documents from the government’s ag price fixing file. That impression is buttressed by evidence HFCS users include, and Mihm quotes, in the lawsuit. For instance, Mihm, quoting the plaintiff’s sealed brief, notes: --“An April 28, 1993 statement by (former ADM official) Terry Wilson that, for secrecy, ADM should minimize the number of expense reports created and should not show the true nature of the meeting or the people involved;” --“A March 1992 statement by Staley’s plant director of operations that, ‘We have an understanding within the industry not to undercut each others’ prices;’” --“A statement by a Staley salesman that Staley could not quote a price because his boss was at an industry meeting and the pricing would not be determined until after his boss returned from that meeting;” --“A statement by Mick Andreas (who, like Wilson and Whitacre, is now in prison) in October 1993 that a then-director of Staley’s parent company had made a statement to a member of the lysine conspiracy that ‘every business I’m in is an organization…’” Despite this and other compelling “evidence,” Mihm ruled the plaintiff’s case too weak to be heard by a jury and tossed it from his Central Illinois District Court. With all the evidence, legal briefs and depositions under his lock and key, HFCS users and farmers must abide by his decision. An appeal to reinstate the suit could unlock the documents. One is planned. If successful, the case would be remanded to Judge Mihm for trial. Whatever the outcome, the case file should be made public so American farmers can read the allegations and evidence against the fructose cartel of Cargill, American Maize, Staley and ADM. Mihm’s entire opinion can be read at www.ilcd.uscourts.gov/hfcsop1.pdf. © 2001 AG COMM Aguebert@worldnet.att.net To obtain this column weekly via e-mail for one year send $20 to Alan Guebert, AG COMM, P.O. Box 648, Delavan, IL 61734 >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

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In a 66-page summary judgment released August 23, U.S. District Judge Michael Mihm dismissed a multi-billion dollar class action lawsuit that charged the nation’s four largest high fructose corn syrup (HFCS) makers with price fixing from July 1991 through June 1995.

Mihm’s opinion--the only explanatory court document made public in the lengthy case; all others are sealed by his order--states lawyers for HFCS users like Coca Cola and Pepsi did not prove their price fixing charges against corn sweetener makers Cargill, A.E. Staley, American Maize and Archer Daniels Midland.

But the judge’s order contains many sweet facts that paint an often disturbing picture of the chummy HFCS industry. Disturbing for farmers, because farmers fought hard—and continue to fight hard—for federal price supports that insulate the American sugar industry from crushing global competition. These sugar price supports, re-instituted in 1981 and savagely protected since, fueled the rise and growth of the HFCS industry.

The biggest beneficiaries of this farm policy, however, are the biggest ag multi-nationals—Cargill, ADM, CPC International, American Maize and Staley. As Mihm notes in his opinion, these five “accounted for an average of more than 90 percent of the production capacity for HFCS in the United States and Canada…during the time period relevant to this litigation.”

The heart of the HFCS civil case relies on evidence supplied by government mole Mark Whitacre, who delivered the goods to convict ADM of price fixing in the lysine and citric acid industries in 1996. An important part of ADM guilty plea back then was a government promise not to criminally prosecute ADM for price fixing in HFCS. That promise, recall sources, was crucial to the plea.

But it also implied there was ample back-rubbing going on in the growing fructose industry. The pattern, charged HFCS buyers in the civil suit, was a near-carbon copy of what occurred in citric and lysine: A front organization, the Corn Refiners Assoc., to provide cover to share production and price data; an agreement among makers to “balance”—purchase HFCS from each other—to stabilize market shares; meetings among key, competing executives; and, just as in the ADM case, audio tapes with highly suggestive references to price fixing in the tightly-held industry.

In fact, some long-time sources suggest that if the abbreviation HFCS is substituted with either “citric acid” or “lysine,” Mihm’s order reads like any number of documents from the government’s ag price fixing file. That impression is buttressed by evidence HFCS users include, and Mihm quotes, in the lawsuit. For instance, Mihm, quoting the plaintiff’s sealed brief, notes:

--“An April 28, 1993 statement by (former ADM official) Terry Wilson that, for secrecy, ADM should minimize the number of expense reports created and should not show the true nature of the meeting or the people involved;”

--“A March 1992 statement by Staley’s plant director of operations that, ‘We have an understanding within the industry not to undercut each others’ prices;’”

--“A statement by a Staley salesman that Staley could not quote a price because his boss was at an industry meeting and the pricing would not be determined until after his boss returned from that meeting;”

--“A statement by Mick Andreas (who, like Wilson and Whitacre, is now in prison) in October 1993 that a then-director of Staley’s parent company had made a statement to a member of the lysine conspiracy that ‘every business I’m in is an organization…’”

Despite this and other compelling “evidence,” Mihm ruled the plaintiff’s case too weak to be heard by a jury and tossed it from his Central Illinois District Court. With all the evidence, legal briefs and depositions under his lock and key, HFCS users and farmers must abide by his decision.

An appeal to reinstate the suit could unlock the documents. One is planned. If successful, the case would be remanded to Judge Mihm for trial.

Whatever the outcome, the case file should be made public so American farmers can read the allegations and evidence against the fructose cartel of Cargill, American Maize, Staley and ADM. Mihm’s entire opinion can be read at www.ilcd.uscourts.gov/hfcsop1.pdf.

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