Federal Court Imposes $3.28 Million in Fines for International Conspiracy under the Competition Act

OTTAWA, October 26, 1999 — The Competition Bureau announced today that the Federal Court of Canada imposed fines totalling $3.28 million under Canada's Competition Act for an international price fixing and market sharing conspiracy relating to sorbic acid and potassium sorbate (known together as "sorbates"). Sorbates are chemical preservatives used primarily as mold inhibitors in high moisture and high-sugar foods such as cheese and other dairy products, bakery products, and other processed foods.

Hoechst AG of Germany pleaded guilty and was convicted for having participated in a price fixing and market sharing conspiracy involving sorbates that spanned 17 years - from 1979 until 1996. Eastman Chemical Company, of the United States also pleaded guilty and was convicted for price fixing in the same conspiracy for the years 1995 until 1997. Hoechst will pay a fine of $2.5 million and Eastman a fine of $780,000.

In addition to these fines, the court imposed a Prohibition Order on each firm prohibiting them from committing or repeating these offences in Canada.

These charges are the result of an extensive criminal investigation of a worldwide conspiracy among the major producers of these products, all foreign entities, who agreed to artificially raise prices and allocate their sales. A co-conspirator was granted immunity from prosecution in exchange for evidence in furtherance of the Commissioner's investigation.

"This conviction is an example of how the Competition Bureau's Co-operating Parties Program is effective in fighting international conspiracies that target Canadian consumers", said Konrad von Finckenstein, Q.C., Commissioner of Competition. "The Bureau has been, and will continue to be, vigilant in pursuing convictions against companies involved in this type of anti-competitive behaviour."

Total sales of sorbates in Canada during the period of the offence were approximately $37 million, with Hoechst's sales at approximately $12 million. Eastman's sales were approximately $3.9 million during the period of its involvement.

These convictions are the first in the sorbates industry and the inquiry is ongoing.

Copies of the documents filed before the Federal Court of Canada, Trial Division, in Toronto are available here:

Hoechst AG
Agreed Statement of Facts (PDF: 163 KB)
Indictment (PDF: 61 KB)

Eastman Chemical Company
Agreed Statement of Facts (177 KB)
Indictment (59 KB)

Certified copies of the filed documents may be obtained from the Federal Court Registry - (Court File numbers T-1828-99, T-1829-99).

For further information, please contact:

Cynthia Grant
819-994-0349