2001/418/EC: Commission Decision of 7 June 2000 relating to a proceeding pursuant to Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case COMP/36.545/F3 — Amino Acids) (Text with EEA relevance) (notified under document number C(2000) 1565)
Date: 2000-06-07
Institutions: European Commission
Subjects: economic sanctions, infringement of EU law, inter-company agreement, merger control, organic acid, restriction on competition

L 152/24

EN

Official Journal of the European Communities

7.6.2001

COMMISSION DECISION

of 7 June 2000

relating to a proceeding pursuant to Article 81 of the EC Treaty and Article 53 of the EEA
Agreement

(Case COMP/36.545/F3 (cid:151) Amino Acids)

(notified under document number C(2000) 1565)

(Only the German, English and French texts are authentic)

(Text with EEA relevance)

(2001/418/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to the Agreement on the European Economic
Area,

Having regard to Council Regulation No 17 of 6 February
1962, First Regulation implementing Articles 85 and 86 of the
Treaty (1)
(EC) No
as
1216/1999 (2),

by Regulation

amended

last

volumes of undertakings, producing and offering for
sale synthetic lysine to distributors and/or industrial
users established in the EEA, for the use in animal feeds.
The present Decision covers the period September 1990
to June 1995.

B. THE UNDERTAKINGS AND THE ASSOCIATION
CONCERNED

Having regard to the Commission decision of 29 October
1998 to open a proceeding in this case,

1. Archer Daniels Midland Company

(2)

Having given the undertakings concerned the opportunity to
make known their views on the objections raised by the
Commission pursuant to Article 19(1) of Regulation No 17,
Commission Regulation No 99/63/EEC of 25 July 1963 on the
hearings provided for in Article 19(1) and (2) of Council
Commission
and
Regulation No
Regulation (EC) No 2842/98 of 22 December 1998 on the
hearing of parties in certain proceedings under Articles 85 and
86 of the EC Treaty (4),

subsequently

17 (3),

consulting the Advisory Committee on Restrictive

After
Practices and Dominant Positions,

(3)

WHEREAS:

I. THE FACTS

A. SUBJECT OF PROCEEDINGS

(1)

This case concerns agreements on prices, sales volumes
and the exchange of firm specific information on sales

(1) OJ 13, 21.2.1962, p. 204/62.
(2) OJ L 148, 15.6.1999, p. 5.
(3) OJ 127, 20.8.1963, p. 2268/63.
(4) OJ L 354, 30.12.1998, p. 18.

(4)

Archer Daniels Midland Company (ADM) is the ultimate
parent company of a group of companies processing
cereals and oil seeds worldwide. Worldwide ADM has
over 200 plants including substantial assets in the EEA,
soya bean
among which are
the world’s
processing facility in Europoort,
the
in Hamburg,
world’s
Germany, and the world’s largest soft-seed crushing
plant in Erith, United Kingdom.

largest multi-seed

the Netherlands,

complex

largest

returns

ADM is a manufacturer of starch and starch products
and entered into the biochemicals market because they
from the production of
expected higher
than on their
chemicals based on starch products
traditional products. ADM’s BioProducts Division was
formed
time, ADM’s
management decided to start producing lysine when it
became aware that two other undertakings were about
to set up production facilities in North America (but
both undertakings gave up on ADM’s
expansion
announcement). ADM’s production facilities for lysine
were completed in June 1992.

in 1989. At

about

that

(ADM
Archer Daniels Midland
Ingredients)
is a wholly owned subsidiary of ADM,
dealing with ADM’s European amino acids business
during the period covered by the present investigation.

Ingredients

Ltd

7.6.2001

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Official Journal of the European Communities

L 152/25

(5)

(6)

(7)

(8)

(9)

In the year ending 30 June 1995, all companies
belonging to the ADM group had a total turnover of
approximately USD 12,6 billion (EUR 12,6 billion); in
the year ending 30 June 1998, the total turnover was
approximately USD 16,1 billion (EUR 16,1 billion). In
lysine was
1995, ADM’s worldwide
approximately USD 202 million (EUR 202 million), of
which approximately USD 41 million (EUR 41 million)
was made in the EEA.

turnover

for

2. Ajinomoto Company, Incorporated

of

group

Ajinomoto Company, Inc. (Ajinomoto) is the ultimate
a
parent
companies
of
company
including lysine, and food
manufacturing chemicals,
products. Backed
in amino acid
technology, the group of companies is also engaged in
the development and manufacture of pharmaceuticals.
Ajinomoto’s operations encompass manufacturing and
marketing bases in 21 countries.

capabilities

by

Ajinomoto operates amino acid feed grade production
plants in Japan, the EEA (Eurolysine SA (cid:151) (cid:145)Eurolysine(cid:146)),
in the United States, Thailand, China, and Brazil.

a plant

In 1974, Eurolysine was established as a joint venture
between Ajinomoto and Orsan to manufacture and
market feed grade lysine in Europe. In 1976, Eurolysine
also started
in Amiens. Eurolysine
built
producing lysine in Italy through its wholly owned
subsidiary Bioitalia Biopro Italia SpA. The total number
of employees of Eurolysine is currently 338. Eurolysine
is the sole producer of feed grade lysine in the EEA.

September 1994. At

Ajinomoto and Orsan each owned 50 % of Eurolysine
until
time, Ajinomoto
increased its interest to 75 % by purchasing additional
shares from Orsan. In 1996, Ajinomoto acquired all of
the Eurolysine shares then held by Orsan, and made
Eurolysine its wholly owned subsidiary.

that

production

development,

of
the
and
pharmaceuticals,
animal
alcoholic
health
beverages. Kyowa has amino acid production plants in
Japan, Hungary and Mexico. Kyowa introduced the
lysine fermentation process in 1958.

and marketing
agricultural

food,
products,

chemicals,

alcohol,

and

(12)

(13)

Kyowa’s European subsidiary is Kyowa Hakko Europe
GmbH (Kyowa Europe), which is responsible for the
marketing of lysine in the EEA.

In 1995, all companies belonging to the Kyowa group
had a turnover of approximately JPY 375 billion (EUR
2,8 billion). In that year, Kyowa’s worldwide turnover
for lysine was approximately JPY 10 million (EUR 73
million), of which approximately DEM 30 million (EUR
16 million) was made in the EEA. In the year ending 31
March 1998, the total turnover of the Kyowa group was
approximately JPY 398 billion (EUR 2,8 billion).

4. Daesang Corporation

a
of which

(14) Daesang Corporation is a Korean undertaking and the
group operating
company of
ultimate parent
include
the
activities
worldwide,
the
feeds, and amino
manufacture of seasonings, animal
acids.
It was created through a merger of Daesang
Industrial Limited and Miwon Corporation Limited.
formerly known as
Daesang Industrial Limited was
Sewon Corporation
Foods
and Miwon
Limited
Corporation Limited (together Sewon). In the first half
of 1998, Sewon transferred its worldwide
lysine
business to an undertaking belonging to a group of
companies unrelated to any addressees of this Decision.

(15) At the beginning of 1992, Miwon Handels GmbH was
established and dealt with Sewon’s amino acids business
in Europe. In November 1994, Miwon Handels GmbH
changed its name to Sewon Europe GmbH (together
Sewon Europe).

(10)

In the year ending 31 March 1995, all companies
belonging to the Ajinomoto group had a total turnover
of approximately JPY 725,7 billion (EUR 5,1 billion). In
the year ending 31 March 1998, the total turnover was
approximately JPY 836,0 billion (EUR 5,8 billion).
In
1995, Ajinomoto’s world-wide turnover for lysine was
approximately USD 239 million (EUR 239 million), of
which approximately FRF 483 million (EUR 75 million)
was made in the EEA.

(16)

1995,

Sewon’s

turnover

worldwide

In
was
approximately Korean Won 225 billion (EUR 227
million). In that year, its worldwide turnover for lysine
was approximately DEM 125 million (EUR 67 million),
of which approximately DEM 28 million (EUR 15
million) was made in the EEA.
In 1998, Sewon’s
worldwide turnover was approximately Korean Won
1,47 trillion (EUR 946 million).

3. Kyowa Hakko Kogyo Company Limited

5. Cheil Jedang Corporation

(11)

Kyowa Hakko Kogyo Company Limited (Kyowa) is the
ultimate parent company of a group of companies
established and operating worldwide, and involved in

(17)

Cheil Jedang Corporation (Cheil) is the ultimate parent
company of a group of companies established and
operating worldwide. It was established as the Korean
Samsung Group’s first manufacturing affiliate in 1953.

L 152/26

EN

Official Journal of the European Communities

7.6.2001

(23)

(24)

(25)

(26)

(27)

(28)

In 1993, Cheil became
a
diversified company focusing among other things on
pharmaceuticals and foodstuffs.

independent. Cheil

is

(18)

Cheil entered the lysine market in 1991. In 1995, Cheil
had a turnover of approximately USD 1,9 billion (EUR
1,9 billion). In that year, Cheil’s worldwide turnover for
lysine was approximately USD 52 million (EUR 52
million), of which approximately EUR 17 million was
made in the EEA.
In 1997, Cheil had a turnover of
approximately USD 1,4 billion (EUR 1,4 billion).

(19)

(20)

(21)

6. Fefana

The Federation EuropØene des Fabricants d’Adjuvants
pour la Nutrition Animale (Fefana) has its central office
in Brussels. It is a body that represents and promotes
the scientific, technical and economic interests of animal
feed additive manufacturers.

Fefana was conceived in order
to deal with the
numerous Community legislative proposals impacting
on the area of animal nutrition. The existing national
professional associations dealing with the feed additive
industry
required a
representation at European level and, for this reason,
Fefana was founded in 1963.

considered that

industry

the

C. THE PRODUCT

Lysine is an essential amino acid. Amino acids are
building blocks of protein, a major component of body
tissues. Animals synthesise body proteins from amino
acids released during digestion. Twenty-two different
amino acids account for all the proteins found in life.
Animals can synthesise only some of these. The others,
designated as essential, must be supplied by the diet,
either bound naturally to protein or in a chemically
pure form. The main sources of amino acids for animals
are proteins of vegetal or animal origin: soybean meal,
rapeseed meal, corn gluten feed, peas, fishmeal, meat
and bonemeal,
skimmed milk and other products.
Another source of certain amino acids is industrial
production. These amino acids are identical to those
amino acids found in feed protein.

(22)

In most cases, a single feedstuff or the combination of
feedstuffs does not supply each amino acid in the
precise amount required by animals to exactly meet
their dietary requirements. Hence, certain amino acids
end up being supplied in excess of requirements to
provide an adequate amount of other amino acids. The
addition of amino acids in pure form provides a better
balance to the dietary protein.

diets.

formulating

Significant progress has been made in defining the
precise amino acid requirements of different classes of
livestock and nutritionists have long realised the benefits
of
diets with
individual amino acids allows for a reduction in crude
in the diet while maintaining amino
protein content
acids at adequate levels. Research has shown that the
level of dietary protein in a standard maize soybean
meal can be reduced if the diet is adequately fortified
with lysine, tryptophan and threonine.

Supplementing

The availability of
synthetic amino acids provides
nutritionists with the flexibility to formulate diets with
amino acid profiles that more closely resemble those of
the animal’s requirements than would be the case if
only conventional raw materials were available. This has
the effect of not only reducing the usage of relatively
expensive protein sources, but also animal performance
is enhanced.

There is increasing pressure in European countries to
the amount of nitrogen and phosphorous
reduce
animal production
effluent
arising from intensive
systems. According to Fefana,
increased use of amino
acids combined with reduced crude protein levels in
feeds
to reduce
nitrogen excretion by up to 20 % to 25 %.

is estimated to have the potential

The removal of government subsidies on cereals in the
Community under
the common agricultural policy
reforms is expected to reduce the cost of cereals in the
European countries. This could be expected to increase
the proportion of
in
European livestock diets. The net effect of this is that
demand for
increase,
everything being equal, as amino acids are no longer
supplied by high levels of oilcakes in these diets.

amino acids will

to oilcakes

synthetic

relative

cereals

The production of synthetic amino acids is one of the
oldest and probably the most widely used applications
of biotechnology in the animal feed industry. It involves
the fermentation of a suitable carbohydrate source, such
as sugar and starch, by an organism which has been
genetically modified to produce an excess of the amino
acid in question.

Feedgrade lysine has been produced commercially for
some 30 years and the growth in the use of this amino
acid worldwide has been remarkable. Whereas total
world usage was approximately 30 000 t
in 1979,
consumption is currently in the region of 250 000 t per
annum. Although this rise in consumption is partially
attributable
and poultry
increase
production that has occurred worldwide, it also reflects
an increasing sophistication in the formulation of
livestock diets.

to the

in pig

7.6.2001

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Official Journal of the European Communities

L 152/27

D. THE MARKET FOR LYSINE

to indirect sales by appointed agents and/or independent
distributors established in different Member States.

1. Supply side

(a) Production

(37) Until May 1995, ADM Ingredients had two sales agents.
One of them, BASF, was then replaced by direct sales
and a number of other distributors or sales agents.

(29)

(30)

(31)

(32)

synthetic
technology whereby

amino acids
The production process of
employs
a
a high level of
genetically modified bacterium is used to ferment
carbohydrates. The major challenges to the process are
the creation and maintenance of sterile conditions that
allow for growth of
the organism while preventing
contamination by any other micro-organism. The
improved
has
technology
significantly over the years,
leading to substantial cost
reductions.

production

the

for

The carbohydrate source used in fermentation process
constitutes by far
the largest production cost. As
production requires substantial amounts of electrical
energy to agitate and aerate the fermentors, access to
cheap electrical power is also crucial. Manufacture of
intensive. Production
amino acids
requires
for
equipment
in
fermentation, extraction and purification, and pollution
control.

is highly capital

investment

heavy

Before 1991, there were only three lysine producers,
these being: Ajinomoto/Eurolysine, Kyowa, and Sewon.
Ajinomoto/Eurolysine was the biggest producer, with a
manufacturing capacity of around 80 000 t. Kyowa and
Sewon had smaller capacities of around 50 000 t and
30 000 t respectively. In 1994, Sewon started to expand
its capacity up to 50 000 t.

doubled

In 1991, ADM entered the lysine market. ADM’s plant
the world’s
essentially
lysine production
capacity. In addition,
it was known that ADM had a
very strong financial background and cheap access to
raw material resources.

(33) Also in 1991, Cheil entered the lysine market with a
production capacity of around 10 000 t. At the end of
1993, Cheil started expansion of its production capacity
up to 40 000 t. This continued through the beginning
of 1994 and was finally completed in July 1995.

(34) During the period covered by the present proceeding,
there was no other significant entry into the lysine
market.

(35)

Eurolysine is the sole lysine producer in the EEA.

(b) Distribution

(38)

(39)

through a number of
Eurolysine sold amino acids
distributors. Ajinomoto’s direct
in the
European lysine market was confined to its interest in
Eurolysine (see paragraphs 8 and 9).

involvement

Kyowa Europe appointed two Japanese trading houses
as
and
representatives in various EEA Member States.

lysine who had offices

agents

sales

for

(40)

Sewon Europe sold lysine to distributors and industrial
users.

(41)

Cheil has no sales subsidiary in the EEA.
Its lysine
business in this region is run by a sales office selling
mainly to industrial users.

2. Demand side

(42)

(43)

feedmills

spread over

The European compound feed industry turns out more
than 150 million tonnes of animal feed every year in
thousands of
the continent.
Feedmills formulate, mix and, if needed, further process
feedstuffs and micro-ingredients into compound feeds
that meet quantitative and qualitative nutritional needs
at
In
particular,
the feed formula must ensure adequate
content of each essential amino acid.

the lowest possible cost per

tonne of

feed.

3. Market information

(a) Factors influencing the determination of lysine prices

contain

Synthetic lysine is, to a large extent, used to add lysine
to feedstuffs that do not, or not sufficiently, contain
natural lysine, e.g. cereals. Feedstuffs to which lysine is
added are therefore substitutable to feedstuffs which
naturally
soybean.
Therefore, the amount of synthetic lysine demanded by
the European feed industry and, consequently the price,
is influenced in particular by European cereal prices and
world soybean prices, the latter being quoted by the
Chicago Board of Trade. The price of soybean minus the
price of cereals is known as the lysine (cid:145)shadow price(cid:146).

sufficient

lysine,

e.g.

(36)

In the EEA,
the lysine producers concerned by this
Decision have operated various distribution systems,
ranging from direct sales to industrial users (feed mills)

(44) Nutritionists use computers to optimise feed formulas
via a least-cost formulation technique. After inputting

L 152/28

EN

Official Journal of the European Communities

7.6.2001

data on available feedstuffs and their current prices,
successive substitutions are made between feedstuffs
until
formula is found that supplies all
the cheapest
nutritional requirements.

far as it
is necessary to better balance the diet
general, and in particular to prevent protein excesses.

in

(b) Average monthly lysine prices

(45) When a change occurs on the market, the feed industry
reacts quickly to movements in the price of ingredients,
and immediately recalculates new formulae for the same
sets of nutritional constraints. This can prompt swings
in the volumes of lysine supplemented to feeds. If the
cost of the feedstuff to which synthetic lysine is added
exceeds the price of alternative naturally amino acid-rich
feedstuffs, synthetic amino acids will only be used in so

(46)

(47)

From the beginning of 1981 until the end of 1988,
lysine prices had almost doubled. After this period
lysine prices started to fall.

The average monthly lysine prices which Eurolysine,
ADM Ingredients, Kyowa Europe, and Sewon Europe
charged their customers from 1991 to 1995 were the
following:

1991

1992

1993

1994

1995

(DEM/kg)

Eurolysine: 4,56
Kyowa: 4,61
Sewon: 4,22
Cheil: 4,20

Eurolysine: 4,49
Kyowa: 4,51
Sewon: 4,08
Cheil: 4,06

Eurolysine: 4,30
Kyowa: 4,33
Sewon: 4,14
Cheil: 3,92

Eurolysine: 4,23
Kyowa: 4,22
Sewon: 3,81
Cheil: 3,75

Eurolysine: 4,07
Kyowa: 4,10
Sewon: 3,81
Cheil: 3,83

January

Eurolysine: 4,80
Kyowa: 4,80
Sewon: 4,41

Eurolysine: 4,13
Kyowa: 4,01
Sewon: 3,67
Cheil: 4,23

Eurolysine: 4,12
Kyowa: 3,95
Sewon: 3,94
Cheil: 3,94
ADM: 4,35

Eurolysine: 5,15
Kyowa: 5,11
Sewon: 4,92/4,98
Cheil: 4,56

February

Eurolysine: 4,74
Kyowa: 4,81
Sewon: 4,17

Eurolysine: 3,78
Kyowa: 3,78
Sewon: 3,18
Cheil: 3,76

Eurolysine: 4,09
Kyowa: 4,06
Sewon: 4,01
Cheil: 3,79

Eurolysine: 5,12
Kyowa: 5,13
Sewon: 4,93/4,94
Cheil: 4,62

March

April

May

June

July

Eurolysine: 4,52
Kyowa: 4,60
Sewon: 3,97
Cheil: 5,15

Eurolysine: 3,51
Kyowa: 3,60
Sewon: 3,01
Cheil: 3,31

Eurolysine: 4,02
Kyowa: 4,03
Sewon: 3,82
Cheil: 3,70

Eurolysine: 5,07
Kyowa: 5,07
Sewon: 4,81
Cheil: 4,57
ADM: 5,30/min. 5,20

Eurolysine: 4,35
Kyowa: 4,30
Sewon: 3,51

Eurolysine: 3,53
Kyowa: 3,54
Sewon: 3,07
Cheil: 2,99

Eurolysine: 3,72
Kyowa: 3,71
Sewon: 3,47
Cheil: 3,26
ADM: 3,15

Eurolysine: 4,96
Kyowa: 5,01
Sewon: 4,83/4,84
Cheil: 4,72

Eurolysine: 4,22
Kyowa: 4,15
Sewon: 3,21
Cheil: 3,83

Eurolysine: 3,52
Kyowa: 3,45
Sewon: 3,08
Cheil: 3,19

Eurolysine: 3,16
Kyowa: 3,03
Sewon: 3,01
Cheil: 2,58

Eurolysine: 4,95
Kyowa: 5,01
Sewon: 4,61
Cheil: 4,70

Eurolysine: 4,12
Kyowa: 3,75
Sewon: 3,20
Cheil: 3,76

Eurolysine: 3,18
Kyowa: 3,18
Sewon: 2,97
Cheil: 2,81

Eurolysine: 2,88
Kyowa: 2,82
Sewon: 2,87
Cheil: 2,41

Eurolysine: 4,84
Kyowa: 4,87
Sewon: 4,54/4,55
Cheil: 4,67

Eurolysine: 4,04
Kyowa: 4,25
Sewon: 3,47
Cheil: 3,58

Eurolysine: 2,69
Kyowa: 2,72
Sewon: 2,49
Cheil: 2,05
ADM:
2,80/3,00/3,15/3,40

Eurolysine: 3,08
Kyowa: 3,10
Sewon: 2,81
Cheil: 3,04
ADM:
4,00/4,80/5,60

Eurolysine: 4,83
Kyowa: 4,83
Sewon: 4,49/4,56
Cheil: 4,32
ADM: 5,10

August

Eurolysine: 4,20
Kyowa: 4,50
Sewon: 3,79
Cheil: 4,78

September Eurolysine: 4,56

Kyowa: 5,10
Sewon: 4,01
Cheil: 4,52

Eurolysine: 2,74
Kyowa: 2,84
Sewon: 2,55
Cheil: 2,70
ADM: 3,50

Eurolysine: 3,00
Kyowa: 2,90
Sewon: 2,66
Cheil: 3,41

Eurolysine: 3,57
Kyowa: 3,38
Sewon: 3,45
Cheil: 3,77

Eurolysine: 4,79
Kyowa: 4,79
Sewon: 4,53/4,54
Cheil: 4,41

Eurolysine: 4,05
Kyowa: 4,01
Sewon: 3,94
Cheil: 3,95

Eurolysine: 4,81
Kyowa: 4,78
Sewon: 4,53
Cheil: 4,41
ADM: 5,10/minimum 5,00

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L 152/29

1991

1992

1993

1994

1995

(DEM/kg)

October

Eurolysine: 4,70
Kyowa: 4,90
Sewon: 4,08
Cheil: 4,61

November Eurolysine: 4,63

Kyowa: 4,65
Sewon: 4,08
Cheil: 4,20

Eurolysine: 4,53
Kyowa: 4,60
Sewon: 4,04
Cheil: 4,01

December

Eurolysine: 3,26
Kyowa: 3,01
Sewon: 3,11
Cheil: 3,33

Eurolysine: 3,42
Kyowa: 3,35
Sewon: 3,41
Cheil: 3,63
ADM: 3,75/4,35

Eurolysine: 3,64
Kyowa: 3,40
Sewon: 3,31
Cheil: 3,71

Eurolysine: 4,55
Kyowa: 4,48
Sewon: 4,55
Cheil: 4,23

Eurolysine: 4,93
Kyowa: 4,79
Sewon: 4,78
Cheil: 4,33

Eurolysine: 5,01
Kyowa: 4,92
Sewon: 4,87
Cheil: 4,49
ADM: 5,50

Eurolysine: 4,75
Kyowa: 4,79
Sewon: 4,55/4,50
Cheil: 4,48

Eurolysine: 4,69
Kyowa: 4,68
Sewon: 4,22/4,24
Cheil: 4,26

Eurolysine: 4,55
Kyowa: 4,64
Sewon: 4,21/4,22
Cheil: 4,36

(c) Annual lysine sales

(48)

The quantities of lysine which the undertakings concerned by this Decision sold each year were as follows (in tonnes):

1991

EEC

World

1992

EEC

World

1993

EEC, EU

World

1994

EU

EEA (excluding EU)

World

1995

EU

EEA (excluding EU)

Ajinomoto

30 378

81 812

Ajinomoto

31 529

83 737

Ajinomoto

31 808

80 517

Ajinomoto

30 772

Kyowa

4 475

Sewon

3 505

38 590

32 429

Kyowa

6 455

Sewon

3 998

Cheil

1 115

5 480

Cheil

3 352

46 003

33 515

12 782

Kyowa

6 223

Sewon

4 802

Cheil

8 294

43 777

34 516

16 570

Kyowa

6 847

838

Sewon

4 815

994

Cheil

8 425

763

ADM

2 000

15 000

ADM

12 000

54 000

ADM

14 000

70 000

ADM

12 000

94 687

47 638

36 698

17 806

75 000

Ajinomoto

38 947

Kyowa

8 704

21

Sewon

8 056

Cheil

8 943

186

ADM

16 000

World

99 607

45 688

42 583

22 216

87 000

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7.6.2001

E. DESCRIPTION OF EVENTS

(55)

(49) Until the early 1990s Ajinomoto/Eurolysine, Kyowa and
Sewon were the only producers of synthetic lysine.
Ajinomoto/Eurolysine was the market leader worldwide
and also in Europe. At the beginning of the 1990s,
ADM and Cheil were investing in lysine production
capacity and prepared for their entry into the lysine
market.

1. Asian/European cartel

(50)

(51)

(52)

the

incumbent Asian

The Commission has indications, that in the 1970s and
1980s,
producers,
Ajinomoto, Kyowa and Sewon, in one form or the other
cooperated with the aim of fixing prices and volumes in
Europe.

lysine

The first collusion the Commission is able to prove took
place in July 1990. Moreover, when it became apparent
that ADM and Cheil were investing in lysine production
capacity in order
the
Asian/European cartel was the forum used to monitor
closely the development of the new entrants’ potential
to influence the competitive situation on the market.

the lysine market,

to enter

(a) The beginning

to a meeting between these

In a letter to Ajinomoto dated 6 December 1990,
two
Sewon refers
undertakings, which took place in July 1990.
In this
letter Sewon stated that, after the meeting, it was able to
raise sharply the price of
(cid:145)with the help of
(Ajinomoto)(cid:146). In the light of the cooperation between
the two companies on lysine prices and sales volumes,
the
which followed the meeting of
Commission takes the view that Ajinomoto and Sewon
during this meeting agreed on lysine prices
to be
applied in the world market.

July 1990,

lysine,

(53) On 20 September 1990, Ajinomoto and Sewon met in
Seoul. Ajinomoto informed Sewon that, the day before,
its US subsidiary had announced a price increase, and
that the new price would be the worldwide standard
price (the European price was DEM 4,60/kg). Ajinomoto
also referred to Kyowa’s intention to announce, on 24
September 1990 and in the USA, a corresponding price
increase. Ajinomoto, Kyowa and Sewon had discussed
the new prices by telephone prior to meeting and
reached
Sewon’s
understanding that Ajinomoto requested Sewon to
follow the price move. Sewon agreed to follow the
prices indicated by Ajinomoto.

agreement.

tentative

It was

a

(54)

In December 1990 Ajinomoto and Sewon discussed the
possibility for a further price increase. On 12 December
1990 Sewon informed Ajinomoto that it agreed to the
worldwide increase of the lysine price.

considered

From the events concerning the price fixing of 20
September 1990 it is clear that Kyowa also participated
in price agreements concerning Europe, as the American
price was
standard world price.
the
Moreover, the Commission takes the view that the price
agreements reached between Ajinomoto and Sewon in
July and December 1990 were not limited to these two
companies. Firstly, the sharp raise of the lysine price in
July 1990, to which Sewon’s letter of 6 December 1990
referred, would not have been possible without
the
lysine producer.
involvement of
Secondly,
the Asian/European cartel
demonstrates that Kyowa’s participation in the cartel
was essential. Finally,
in an internal document setting
out the market allocation within the Ajinomoto/Orsan
Group as discussed during the 23 June 1992 Mexico
meeting, which Ajinomoto prepared in view of the 10
July 1992 Tokyo meeting, Kyowa is included under the
title Old Club along with Ajinomoto, Sewon and Cheil.
This is consistent with Ajinomoto’s suggestion that in
the period prior
for
discussions of the European market did not come from
Ajinomoto but rather from Sewon and Kyowa.

the second largest

to mid-1992 the

the operation of

initiative

(b) Meeting of 18 February 1991

(56) On 18 February 1991, representatives of Ajinomoto,
Kyowa and Sewon met and fixed the world market price
for lysine, and in particular the price for Europe, being
the then current Eurolysine sales price (i.e. DEM
4,70/kg).

(57) As to quantities, Sewon agreed to limit its sales to the
level of the previous year until ADM achieved full-scale
production and sales, which was expected to happen in
April or May 1991,
in order to maintain the price.
Kyowa insisted on the home-market principle. The
participants agreed to sell, in 1991, within the export
quantities of 1990.

(c) Meeting of 12 March 1991 in Tokyo

(58)

The meeting took place in the Okura Hotel. The
included representatives of Ajinomoto,
participants
Kyowa, and Sewon. The agenda for the meeting was
prepared by Ajinomoto who also arranged the meeting.

(59) At

this meeting, Kyowa disclosed the

following
information on ADM: ADM’s 24 fermentors would be
running normally by the middle of April; ADM would
start to sell at around the beginning of May; ADM’s
production plan was 27 000 t in the first year, 45 000 t
the second year, and 60 000 t the third year; ADM
planned to sell one half of its production on the US
for export. Kyowa
market
reported that ADM intended to sell
its product by
following the other manufacturers’ selling prices.

leaving the other half

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(60) Ajinomoto disclosed information on Cheil’s production
plant in Indonesia, gathered during a business trip to
Indonesia.

so as to maintain market shares. On 12 March 1992
the Asian producers met again to discuss ADM’s
impending full entry into the lysine market. Prices were
also discussed by telephone during this period.

(61)

to Europe,

Thereafter, the participants discussed their own market
behaviour. Sewon informed the other participants, that
it wanted to sell, in the USA in 1991, the same quantity
as in 1990, and that they would definitely maintain the
the other participants
base price. As
complained about Sewon selling under the agreed price,
i.e. DEM 4,70/kg. Sewon was requested not
to sell
under the agreed price and to maintain last year’s sales
volume. It was noted that European local meetings dealt
with the European price. The participants promised to
keep the agreements on sales quantity and price made
at this meeting until ADM and Cheil began significant
market sales.
In case of violations of the agreement,
each company agreed to immediately contact the other
parties by a (cid:145)hotline(cid:146), proposed by Ajinomoto.

(d) Meeting of 4 July 1991 in Tokyo

(62)

The meeting took place at the premises of Ajinomoto.
The participants included representatives of Ajinomoto,
Kyowa, and Sewon.

(63)

(64)

The participants exchanged information on ADM’s and
Cheil’s production capacity and sales volumes. Some
communicated the
days before
information on its production capacity and sales
volumes to Ajinomoto by telephone.

the meeting Cheil

The participants then exchanged information on their
own prices and sales volumes.
In relation to Europe
they referred to a regional meeting of 3 July 1991
where a price of DEM 4,30/kg was announced. The
participants fixed the price for the USA and for Europe
(DEM 4,30/kg). The price for Asia and Oceania was to
be discussed at a later stage. As to quantities,
the
participants concluded that (cid:145)controlling volume will be a
very tough issue(cid:146).

(e) Follow-up

(65) After ADM had commenced significant sales at

low
prices, Ajinomoto, Kyowa and Sewon met in Seoul, on
11 February 1992. They discussed ADM’s and Cheil’s
market potential and prices. On 10 March 1992,
Ajinomoto and Kyowa agreed to follow ADM’s prices,

(66) On 30 March 1992 Sewon Europe reported to the
Sewon headquarters in Korea on a (cid:145)trilateral meeting(cid:146)
which apparently took place some days before. During
this meeting Ajinomoto, Kyowa and Sewon evaluated
the then current European lysine market. In particular, it
was noted that the price increased by 5 % for Germany,
Great Britain, the Netherlands, Luxembourg, and France,
where prices were
(around DEM
3,25/kg) than in other countries. The participants agreed
that
the European market should be
maintained at DEM 3,76/kg. The next meeting was
scheduled to be held on 30 April 1992 in Basel. In its
to its headquarters, Sewon Europe expressed
report
doubts as to the likelihood that the discussed prices
would
the
participating companies were different, and ADM and
Cheil were not attending(cid:146).

relatively lower

the price for

opinions

(cid:145)because

kept,

the

be

of

(67) On 5 May 1992 Sewon Europe reported to the Sewon
headquarters in Korea on another trilateral meeting
(probably held on 30 April 1992 in Basel) where
Ajinomoto, Kyowa and Sewon had evaluated the then
current European lysine market.
the
participants confirmed that the price for the European
market should be maintained at DEM 3,76/kg. The next
meeting was scheduled to be held on 3 June 1992 at a
In its report to its
location to be chosen by Sewon.
headquarters,
to
Sewon Europe to discuss price increases in meetings
that ADM and Cheil did not attend.

it apparently seemed meaningless

In particular,

(68) On 19 June 1992 Ajinomoto, Kyowa and Sewon met.
They concluded that the possibility of increasing prices
by reducing the sales volumes of each company should
be reviewed. In particular, the participants agreed that
the problem of raising the price could be solved by
having ADM agree to operate at only 80 % capacity.
Moreover, Ajinomoto and Kyowa requested Sewon to
reduce substantially its sales to the USA and Europe on
the principle that the local producer should sell as much
as possible in its region.

2. Global cartel

(a) Background

(69) ADM’s plant essentially doubled the world’s

lysine
production capacity. Already before and shortly after its
market entry, ADM sent
to the incumbent
producers that, though it intended to be a big player in

signals

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7.6.2001

the lysine market, it preferred to achieve its part of the
market by coordination, rather than by a price war. In
this context, ADM met Ajinomoto on 12 December,
and Kyowa on 13 December 1991. On 11 February
1992, Ajinomoto and Kyowa informed Sewon of their
respective meetings with ADM.

(74)

The participants also discussed what mechanism could
be used to allocate quantities. ADM explained that
competitors in the citric acid industry used both formal
and informal means for keeping track of sales figures.

(70)

In order to convince the incumbent producers of the
seriousness of its intentions and the penalties of not
agreeing, ADM granted Ajinomoto, Kyowa, and Sewon
the possibility of inspecting its production plant, and
commenced significant sales at low prices. This caused
the incumbent lysine producers, as of the beginning of
1992, to drastically lower lysine prices in an attempt to
keep market
situation,
Ajinomoto and Kyowa agreed on 10 March 1992 that
they should cooperate with ADM and begin meeting
with ADM in order to prepare an agreement on prices
and sales quantities (meetings of 14 April 1992 between
ADM and Ajinomoto in Tokyo, of 16 and 17 April
1992 between ADM and Kyowa in Hawaii, and of 19
June 1992 (cid:151) the same day that Ajinomoto, Kyowa and
Sewon met (cid:151) between ADM and Sewon in Decatur).

In response to this

shares.

(71)

These discussions led to the 23 June 1992 meeting in
the beginning of ADM’s
Mexico, which constitutes
collusion with the members of
the Asian/European
cartel.

(b) Meeting of 23 June 1992 in Mexico

(72)

and

was

meeting

attended
Kyowa

ADM,
The
representatives.
Ajinomoto/Eurolysine
chaired
the meeting. The
Kyowa
arranged
participants decided that
the Ajinomoto and Kyowa
representatives would convey any results of the meeting
to Sewon and Cheil after the meeting.

and

by

the

far as

timing was

(73) ADM’s primary goal was to have the same production
share as that of the largest competitor, which would
result in one third of total world demand for ADM, one
third for the Ajinomoto group and, one third for Kyowa
and the Korean producers. Kyowa and Ajinomoto
expressed their disagreement with this proposal at least
concerned. ADM then
as
suggested that it would implement its quota proposal
over the second year, by allocating to it all extra market
growth until it has reached Ajinomoto’s market share.
For 1992, the proposed quota scheme was: Ajinomoto
66 000 t; ADM 48 000 t; Kyowa 34 000 t; Sewon
18 000 t and Cheil 6 000 t. Ajinomoto was prepared to
accept 48 000 t for ADM in 1992 with the prospect of
growth over time. ADM indicated that it would, in any
event, implement the proposal on quantity as from 1
October 1992.

(75)

The participants agreed on the lysine price levels until
October: USD 1,05/lb delivered (at
the time USD
0,70/lb) with regard to North America (concerning
Europe the participants considered that the price could
be (cid:145)a little higher(cid:146) than in North America). Conditional
on final agreement to the sales allocation proposal, the
price was fixed at USD 1,20/lb for the end of the year.
For the other territories, the target price was USD 2,30
cif (at that time below USD 2,00/kg cif).

(cid:151) F o l l o w - u p

(76) On 2 July 1992 Kyowa received a telephone call from
ADM which indicated that it agreed to a production
quota of 48 000 t for 1992, provided it achieved parity
with Ajinomoto in three years.

(77) On 10 July 1992, Ajinomoto and Kyowa met with the
two Korean lysine producers in Tokyo at Ajinomoto’s
premises. Ajinomoto informed the Korean producers on
the sales allocation discussions with ADM of 23 June
1992. Ajinomoto and Kyowa presented an allocation
plan based on every supplier’s market power and level
of investment. It was proposed that Ajinomoto should
have 73 500 t, Kyowa 37 000 t, ADM 48 000 t, Sewon
20 500 t, and Cheil 6 000 t for the first year. As to
Europe, the allocation proposal was (out of 58 000 t):
Ajinomoto 34 000 t; Kyowa 8 000 t; ADM 5 000 t;
Sewon 13 500 t, and Cheil 5 000 t. If the demand in
North America increased,
the increased sales volume
would belong to ADM, and any future increased sales in
Europe would belong to Eurolysine. Ajinomoto said that
if agreement between participants was reached, the final
allocations would be agreed upon with ADM at the end
of July. For quantity control purposes, all the companies
should have quarterly meetings together to review and
collect information concerning the production volume
and sales figures of each company. Sewon was against a
local quota
It
proposed that each party’s future allocation should be
based on each party’s proportion of last year’s sales.
requested a worldwide quantity allocation of
Cheil
15 000 t. As no agreement was
each
participant was to return to headquarters to reconsider
the subject and inform Ajinomoto of the results of their
reconsideration by 17 July. Ajinomoto then explained
the details of the meeting with ADM concerning prices,
in particular to adjust the price to USD 1,05/lb in both
Europe and America by 30 September 1992, and then
further adjusting it to USD 1,20/lb by 30 December
1992.

system based on competitiveness.

reached,

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in order

(78) On 7 August 1992, the Asian producers met again in
Tokyo at Ajinomoto’s premises. They continued the
discussion in order to reach agreement on the reduction
of lysine production volume. Ajinomoto informed the
other participants that ADM was prepared to invite
employees of its competitors to its production plant in
Decatur
to prove its production capacity.
Sewon proposed a general reduction of production of
20 %. It suggested a revised quantity allocation plan as
follows: Ajinomoto 64 800 t, ADM 48 000 t, Kyowa
33 600 t, Sewon 26 600 t, and Cheil 12 000 t. This
revised plan was not agreed either, because Ajinomoto
was not happy with the amount proposed for itself, and
because Cheil
insisted on 15 000 t. The participants
nevertheless agreed to continue the discussion as to
reduction of production. The proposed price increase
was favourably received, but it was decided to discuss
this matter further at
the next meeting with ADM.
Ajinomoto suggested that before the five companies
to formulate a plan with
met,
different scenarios, and all the participating companies
readily accepted this suggestion. Ajinomoto suggested
that a further meeting should take place in Seoul.

it would be better

(79) On 27 August 1992, the Asian producers met again,
this time in Seoul at Cheil’s premises. They continued
the discussions of 10 July and 7 August 1992. The
participants could not reach a conclusion on the next
steps in the discussion with ADM concerning the sales
quota allocation for lysine. The participants set out what
in their view should be the purpose of the meeting with
ADM: it is not the decision of the quantity allocation,
but
the price increase and the
discussion of how, practically, to implement the price
increase. Regarding the price, the participants agreed to
the ADM plan to increase the American price to USD
1,05/lb as of 31 August 1992. The participants noted
that ADM had already offered this price to customers.
Ajinomoto’s and Kyowa’s US subsidiaries intended to
announce
from the middle of
September. A price adjustment for Europe was to be
decided by a Europe meeting.

the confirmation of

the new price as

(80) On 8 September 1992 ADM and Ajinomoto met in
Chicago. Ajinomoto suggested the allocation of lysine
sales quotas not on a worldwide basis, but to restrict
production according to the local market
situation.
ADM agreed but insisted on a total production quota of
48 000 t. Both participants confirmed the price increase
to USD 1,05/lb,
initially agreed by ADM and the
Japanese producers at the Mexico meeting of 23 June
1992 and accepted by the Korean producers at
the
Seoul meeting of 27 August 1992.

(c) Meeting of 1 October 1992 in Paris

(81)

The meeting was held in the Pullman Windsor Hotel, in
Paris. The participants included representatives of ADM,

fake

Ajinomoto/Eurolysine, Kyowa, Sewon, and Cheil. The
meeting was arranged by Ajinomoto/Eurolysine, which
prepared a
agenda. The participants
discussed only prices. The five companies evaluated the
impact of
the agreed price levels and exchanged
information on the acceptance of the price increases in
the different regions.

Fefana

(82)

referred to the price increases

The participants
in
Europe, which had been fixed, first, at DEM 3,50/kg,
and then at DEM 3,75/kg in the context of the Seoul
meeting (27 August 1992). At the time of the meeting,
the price announced by the producers was DEM
4,00/kg. All participants, however, admitted that this
price was not yet applied in practice. The participants
considered in particular that the European price at that
time was 22 % higher than the US price. They were
concerned that parallel importers would be attracted if
the price differential increased and concluded that it was
not possible to increase the European price further at
that moment. Therefore the participants agreed to keep
the price at DEM 4,00/kg, and to discuss a possible
further increase at the next meeting.

(83) ADM wanted to have fewer people in the price
meetings for Europe, so ADM proposed that it would
meeting.
the
attend
not
local manager
Ajinomoto/Eurolysine
meetings the most effective forums. Therefore,
these
meetings would
President of
continue,
Eurolysine would himself report to ADM directly.

considered the

European

local

and

the

(84)

The participants fixed the prices for the other regions,
too.

(85)

The participants also discussed the possibility of
the
formation of an amino acid working group within
Fefana. Ajinomoto was asked to find out how to set this
up.

(cid:151) F o l l o w - u p

(86) On

29 October

1992 Kyowa

discussed with

Ajinomoto/Eurolysine the prices for lysine in Europe.

(87) On 2 November 1992 Ajinomoto/Eurolysine and Sewon
in Seoul. The participants discussed ADM’s
met
behaviour in the lysine market. Ajinomoto informed
Sewon that ADM would try to increase the price to the
point where market demand started to shrink, and that
at that time ADM was happy with the allocation of
48 000 t sales volume. This was the reason why ADM
did not mention quantity allocation in the Paris meeting
of 1 October 1992. Ajinomoto expected that ADM
would ask for a maximum quantity in 1993 and even
more
a
end of 1993. The
comprehensive agreement on production quotas was felt

absence of

the

at

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7.6.2001

fact

that

to be a destabilising factor in terms of the relationship
between the producers. However, this was attenuated by
the
everybody including ADM exercised
self-restraint in its sales. Nevertheless the participants
agree that more cooperation on quota would be
necessary. Sewon was prepared to give in even to a
40 % reduction.

(93)

Because the producers believed their inability to come
to a comprehensive volume agreement helped initiate
and prolong the return to low prices, talks on sales
quantity
and
Ajinomoto’s intention to have a meeting on the (cid:145)global
(lysine) market(cid:146) around mid-January 1993. On 21
January 1993, ADM proposed to Kyowa a regional
volume allocation.

allocation resumed.

It was ADM’s

(88) At this meeting Ajinomoto/Eurolysine requested Sewon
to stop sales in Europe for the next two weeks, to keep
the price at DEM 4,25, and to limit sales quantity to
6 000 t per year. Unless Sewon reduced its sales volume
in Europe, Eurolysine would institute an anti-dumping
action against Sewon. Sewon confirmed its willingness
to stick to the agreed prices, and agreed to limit its sales
to Europe to 6 000 t per year. The participants agreed
to have open and direct communication at the highest
level if staff broke the agreement.

no

specific

agenda, Ajinomoto

(94) On 26 February 1993, Ajinomoto, Kyowa, Sewon and
Cheil met at Ajinomoto’s premises in Tokyo. As there
was
proposed
exchanging ideas about the lysine price decline on the
world market and how prices could be raised again.
Concerning Europe, the participants noted that the price
was maintained,
Sewon
restricted their sales volumes. As to the global situation,
the participants concluded that no progress could be
made.

because Ajinomoto

and

(89) On 4 November 1992, ADM and Ajinomoto discussed
their lysine sales policies by telephone. The prices for
Asia, North America and Oceania were confirmed in
accordance with the Paris meeting of 1 October 1992.
The price for Europe was set at DEM 4,25/kg. The
participants noted that Sewon deviated from the agreed
price levels in some respect. They considered that ADM
should sell lysine in Korea (cid:145)so that Sewon will behave
elsewhere(cid:146).

(95)

In order to revive the quota discussion, ADM’s and
Ajinomoto’s upper management arranged to meet
to
enhance the relationship between the two market
leaders and accelerate the process of developing a
comprehensive volume agreement. Since Kyowa and
Eurolysine wanted to express their views prior to the
intended meeting between ADM and Ajinomoto,
meetings were arranged between ADM and Kyowa on
15 April 1993, and among ADM and Eurolysine on 28
April 1993.

(90) On 2 and 5 November 1992 Ajinomoto met Cheil in
in terms of
informed Ajinomoto that
Seoul. Cheil
cooperation, the lysine price increase was a substantial
success and expressed their intention to continue the
cooperation with regard to lysine prices. Concerning
lysine quotas, however,
the companies continued to
disagree.

(91) After the Mexico and Paris meetings, prices increased in
some places, and in particular in the USA and in
Europe,
the
undertakings concerned by this Decision blamed each
agreements.
other
Consequently,
the relationships among the producers
deteriorated.

everywhere. Accordingly,

respecting

price

not

not

but

the

for

(92) On 30 November 1992, Ajinomoto, Kyowa, Sewon and
Cheil met at Cheil’s premises in Seoul. They noted that
ADM was offering very low prices. However,
the
communication with ADM was interrupted due to a FBI
search at ADM (which caused the then President of
ADM’s Bioproducts Division to cooperate with the FBI
in the US lysine investigation). The participants noted
that they had no other choice than to wait until ADM
re-established the communication.

(96)

In the course of its meeting with ADM on 15 April
1993, Kyowa argued that the volume should be cut by
all competitors.

(97) At their meeting on 28 April 1993, Eurolysine raised
the possibility with ADM of dividing sales volumes only
in those regions in which the price-fixing agreement
had effectively raised prices
in 1992. Concerning
Europe, ADM and Eurolysine agreed that if the prices
went up in Europe,
the price
agreement concluded in Mexico (23 June 1992), and
that the only place where it was fully implemented was
this region.

it was because of

(98) On 30 April 1993, Ajinomoto and ADM met at ADM’s
premises in Decatur. The purpose of the meeting was to
enable the top executives from the two biggest lysine
producers to restore the relationship between the two
companies and begin the process of developing a
comprehensive volume agreement. During this meeting,
company
ADM alluded to the
controlling its sales force in order to maintain high
prices, and explained that
its sales people have the
general tendency to be very competitive and that, unless
the producers had very firm control of
their sales
a price-cutting problem.
people,

there would be

importance of

a

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Ajinomoto indicated that everybody now understood it
is necessary to adjust supply. ADM and Ajinomoto
representatives arranged for another meeting which
occurred on 14 May 1993 in Tokyo.

(99)

Both ADM and Ajinomoto informed Kyowa on their
Decatur meeting.

then be the following: Ajinomoto 81 200 t, ADM
60 000 t, Kyowa 44 400 t, Sewon 32 900 t, and Cheil
13 500 t. Ajinomoto proposed to hold quarterly
meetings by each region and to have a communication
system. The participants confirmed the price increases
in the different regions. In relation to Europe, the price
was set at DEM 3,20/kg (on the basis of the confirmed
price of USD 0,81/lb) and at DEM 4,20/kg when the US
price rose to USD 1,05/lb.

the

to continue

(100) On 14 May 1993 ADM and Ajinomoto/Eurolysine met
in Tokyo in order
discussion
commenced in Decatur. The participants argued over
the size of the current market and ADM’s share of that
market. ADM requested 65 000 t for 1993. They again
discussed the mechanism needed to obtain and police a
sales volume agreement. ADM stated that the way for
them to communicate is through a trade association.
ADM explained by way of example that ADM reported
its citric acid sales every month to a trade association,
and every year, Swiss accountants audited those figures.
ADM said lysine sales could likewise be reported to, e.g.
Ajinomoto, which could then report back to each
results. ADM stated this
every member’s
member
reporting must be very confidential.

(d) Meeting of 24 June 1993 in Vancouver

(105) The meeting was held in the Hyatt Regency Hotel

in
Vancouver. The participants included representatives of
ADM, Ajinomoto/Eurolysine, Kyowa, Sewon, and Cheil.

(106) The

of

on the

following points were

agenda: 1.
examination
2.
recent market
production/sales volume adjustment for each company,
3. price increase schedule, 4. communication system
(especially regional meetings), and 5. establishing the
lysine cooperative organisation.

conditions,

(101) Ajinomoto reported to Kyowa on its Tokyo meeting
with ADM. Both producers agreed that ADM’s 1993
volume allocation request was unacceptable and that
Sewon should be involved in the volume discussion.

(102) On 27 May 1993 Ajinomoto and Kyowa met Sewon
and informed Sewon of ADM’s volume request
for
1993. Ajinomoto referred to the good results of
cooperation in the past, but ADM’s entrance in the
market has complicated matters. Sewon confirmed that
it always was ready to negotiate and to proceed by
discussion with Ajinomoto and Kyowa. The participants
felt the need to convene a meeting between the five
producers in order to adjust volume. Ajinomoto wanted
to take initiative in negotiating with ADM, whilst Sewon
should persuade Cheil.

(103) On 1 June 1993 ADM informed Kyowa that it had
decided to stop the decrease of
the lysine price in
Europe, and that it had announced the day before a
price increase to USD 0,81/lb.

to be followed in the next

(104) On 18 June 1993 Ajinomoto, Kyowa, Sewon and Cheil
met in the Sankei-Kaikan Hotel in Tokyo to discuss the
tactics
five producers’
meeting scheduled to take place in Vancouver on 24
exchanged price and
June 1993. The participants
they
volume information by region. On that basis,
discussed different sales allocation schemes on the basis
of Ajinomoto’s first proposal (54 000 t for ADM) and
ADM’s request (65 000 t). The plan for the meeting
with ADM was to insist on 54 000 t in order to reach
an agreement on 60 000 t. The final allocation would

(107) The participants noted that the price increases in the
USA and in Europe were successful, but
the
agreements for South and Central America, as well as
for Asia were not properly executed. Participants
envisaged having a stepped increase in prices from USD
0,81/lb,
if
possible, finally to USD 1,20/lb.

to USD 1,10/lb, and,

to USD 0,95/lb,

that

(108) Ajinomoto presented a table on volume allocation on
the basis of 54 000 t allocation for ADM. ADM insisted
on maintaining its current production volume,
i.e.
65 000 t. Cheil
instead of the
insisted on 15 000 t,
14 000 t proposed by Ajinomoto. It was agreed to have
a president’s meeting to solve the problem.

(109) Concerning the communication system,

the Japanese
wanted to have local meetings; ADM was opposed and
requested direct communication to its headquarters.

(110) All except Cheil agreed to form an official

lysine

corporation, to be managed by Ajinomoto and ADM.

(cid:151) F o l l o w - u p

(111) Ajinomoto and ADM agreed to have a meeting on 5
October,
in Paris, to be arranged by Ajinomoto. The
main agenda points were to be price/quantity and
association. ADM informed Ajinomoto
its
production levels in the past nine months were the
equivalent of 65 000 t per annum, which was an

that

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acceptable minimum quantity for ADM. ADM stated
that parity in market shares with Ajinomoto, which
ADM wanted to achieve, could be delayed for another
two or three years.

producer would be allocated. ADM stated that the other
lysine producers could each sell 2 000 t more than they
sold in 1993, and that ADM and Ajinomoto would
share the remaining growth in worldwide lysine sales in
1994. ADM agreed to this plan and was charged to get
the other producers to agree to this allocation scheme.

(e) Meeting of 5 October 1993 in Paris

(112) The meeting was held in the Grand Hotel in Paris. The
included representatives of Ajinomoto/
participants
and Cheil. The
Eurolysine, ADM, Kyowa, Sewon,
meeting was
arranged by Ajinomoto, which also
prepared the agenda and chaired the meeting. The
subjects of the meeting were the establishment of an
amino acid producers’ association under the umbrella of
Fefana, agreement on prices for the fourth quarter of
1993, and sales volume allocation for the next year.

(113) Ajinomoto reported the progress made in creating a

producers’ association.

(114) Concerning market trends, the participants noted that
the Mississippi flood in the summer of 1993, which
destroyed the US soybean crop, caused an increase in
grain prices but resulted at the same time in excessive
lysine stocks. They therefore expected a decrease in
to prevent a price decrease,
orders, and in order
supplies had to be reduced. Concerning Europe,
the
participants envisaged a 40 % to 50 % reduction.

(115)

In the framework of the price review by region, the
participants realised that the European price agreed at a
i.e. DEM 5,30/kg, was much higher
regional meeting,
than the price in other regions. It was agreed to keep
the European price at this level.

(116) For the period October 1993 to September 1994 each
company claimed its production volume. It was noted
that Cheil claimed 22 000 t, which was different from
the quantity that
the
Vancouver meeting (24 June 1993). ADM could not
decide at
time on a reduction of production
volume, so it was determined that top management at
ADM and Ajinomoto would become directly involved in
the quantity discussion.

this company alluded to at

that

(118) After the Irvine meeting, the Asian producers discussed
the volume proposal reached in Irvine. Both Cheil and
Sewon wanted more volume. As a result, Cheil did not
attend the next meeting, which took place on 8
December 1993 in Tokyo.

(f) Meeting of 8 December 1993 in Tokyo

(119) The meeting was held in the Palace Hotel in Tokyo and
included representatives of Ajinomoto/Eurolysine, ADM,
Kyowa, and Sewon.

(120) The participants reviewed lysine prices region by region.
They noted that the prices agreed at the Paris meeting
(5 October 1993) were not
implemented.
Concerning Europe, the current price was DEM 5,00/kg
instead of DEM 5,30/kg as agreed, and this in spite of
the fact that each producer had limited its sales. It was
agreed to keep the European price at DEM 5,30/kg for
the first quarter of 1994.

fully

(121) During the meeting,

fine-tuned the
the producers
volume
allocation plan developed by ADM and
Ajinomoto in Irvine. Sales quantities were allocated by
supplier worldwide and by region,
including Europe.
Worldwide, ADM was allocated 67 000 t (plus a portion
of 1994 growth); Ajinomoto, 84 000 t; and Kyowa
46 000 t. ADM, Ajinomoto and Kyowa each agreed to
the volume allocation scheme. Sewon was to receive
either 34 000 t or 37 000 t, depending on whether
Ajinomoto and Kyowa agreed to an audit of their 1992
sales volumes. Sewon agreed to this proposal.

(cid:151) F o l l o w - u p

(117) On 25 October 1993, the top management of ADM
and Ajinomoto met in Irvine. The participants discussed
how to allocate 1994 sales volumes for each lysine
lysine each
producer. They analysed the volume of
producer would sell by the end of 1993, and then ADM
proposed using those figures to calculate 1994 sales
volume allocations
for each lysine producer. They
discussed how much the market would grow in 1994
the growth in the market each
and how much of

(122) ADM named Ajinomoto as the office to which each
lysine producer would provide monthly sales figures.
Ajinomoto’s job would be to keep track of the figures
so that the producers could make adjustments in their
sales to limit
the overall annual sales to the agreed
maximums. Regarding the submission of monthly sales
numbers, ADM told the others that they had (cid:145)to watch
their telephones and to be very careful(cid:146). ADM further
the producers attend trade association
proposed that
their price and sales
meetings quarterly to adjust
volumes according to their agreements.
It explained
how forming an industry association could provide a

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seemingly legitimate, but artificial, reason to meet, and
thus conceal the fact that purported competitors were
secretly meeting to discuss prices and sales volumes.
ADM described how to have (cid:145)official(cid:146) and (cid:145)unofficial(cid:146)
meetings. ADM explained that while attending an
official industry association meeting, one person would
book a hotel suite and quietly notify the others, and
then they would secretly meet
to discuss prices and
sales volumes away from the official meeting. The
participants agreed to proceed in this way.

(cid:151) F o l l o w - u p

the upper management of the Asian companies would
decide the audit issue at a later meeting.

(128)

In the afternoon Cheil, which had not participated in
the morning meeting because Cheil wanted a larger
sales volume allocation as previously agreed by the
other producers, was offered a quota of 17 000 t. Cheil
agreed on this offer and the report of sales figures.

(129) The participants (including Cheil)

then discussed and
agreed upon prices to charge for lysine for the second
quarter of 1994 on a country-by-country basis within
each of the following regions: North America, Central
and South America, Europe, the Middle East, Africa and
Asia.

(123) There was discussion between the Asian producers

about the audit of sales figures.

(130)

in order

(124) On 1 February 1994 ADM Ingredients met with
Eurolysine. They discussed the price level at that time
to
and decided to slow down deliveries
maintain the price. This was the first meeting between
European representatives of lysine producers after the
(cid:145)trilateral meetings(cid:146) in the first half of 1992 (paragraphs
75 and 76), of which the Commission possesses direct
evidence. However, it is clear from the evidence directly
concerning other meetings (27 August 1992; 1 October
1992; 5 October 1993), that during the whole period
covered
European
representatives of the lysine producers fine-tuned the
decisions taken at world level.

investigation

present

the

by

(125) On 26 January 1994 the first official meeting of the
Fefana amino acid working party was held in the Fefana
offices in Brussels. On 15 February 1994, Eurolysine
invited the other lysine producers to a fake Fefana (cid:145)task
force meeting(cid:146) in Honolulu.

(g) Meeting of 10 March 1994 in Honolulu

(126) The meeting was held in the Sheraton Makaha Resort
of
participants were
Hotel.
Ajinomoto/Eurolysine, ADM, Kyowa, Sewon and Cheil,
Kyowa chaired the meeting.

representatives

The

their

sales volume numbers

(127) The meeting in Hawaii was the first meeting held since
Ajinomoto/Eurolysine, ADM, Kyowa and Sewon had
decided to submit
to
Ajinomoto. During the morning Ajinomoto/Eurolysine,
ADM, Kyowa and Sewon discussed and analysed their
sales
figures
in relation to the target
established at the Tokyo meeting (8 December 1993).
They then discussed whether or not to submit
their
figures for verification through an audit. Since there was
no progress on this issue, the participants agreed that

figures

sales

In the European market, it was noted that the current
price was below DEM 5,00/kg and end-users seemed to
be waiting for it to drop further. Furthermore, stock
levels
seemed to have dropped, apparently due to
manipulation by traders. The participants agreed, with
immediate effect, that the price for Europe was to be
DEM 5,20/kg.

(131) ADM and Ajinomoto suggested that the next official
amino acid working party meetings could be used as a
(cid:145)cover(cid:146) for the producers’ conspiratorial meetings.

(cid:151) F o l l o w - u p

The

Japanese

companies wanted

(132) On 15 March 1994, Ajinomoto, Kyowa and Sewon met
in the Royal Hotel in Tokyo. The participants discussed
the selection of accounting firms to verify the sales
volumes.
each
company to use their own accounting firms, Sewon
proposed the appointment of one accounting firm to
examine each company. They agreed to continue the
discussion at the next meeting. Sewon’s sales allocation
quantity for 1994 was once again discussed. The
Japanese companies referred to 34 000 t, based on
Sewon’s actual sales volume of 1992. Sewon claimed
If, however, the accounting firm’s auditing
37 000 t.
results indicated Ajinomoto and Kyowa’s 1992 sales
result to be 84 000 t and 46 000 t respectively, then
Sewon would agree to sell 34 000 t in 1994, but over
37 000 t in 1995.

(h) Meeting of 19 May 1994, in Paris

(133) On 19 May 1994 at the occasion of the second official
Fefana amino acids working party meeting, which took
place in Paris, the five lysine producers met unofficially
at the Grand Hotel.

(134) The participants discussed and analysed their

figures, which they had reported to Ajinomoto,
relation to the target sales figures established at

sales
in
the

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Tokyo meeting (8 December 1993). Ajinomoto stated
that Sewon had exceeded the proportionate quantity of
the annual total of 34 000 t and that they must buy
from other companies the exceeding quantity at the end
of the year. Sewon stated that it had only agreed to
34 000 t, on condition of an independent audit of the
1992 sales figures of each of the other producers. Given
that ADM, Ajinomoto and Kyowa claimed that any
accounting firm other than the ones currently used by
these producers was not acceptable, Sewon insisted on
37 000 t. ADM warned Sewon to reduce its sales or
there would be pressure on price.

(135) The participants then discussed prices by region.

In
relation to Europe,
agreed on a
minimum price of DEM 5,10/kg starting from the 25
May of that year. The participants expected these prices
to hold until the next time they met.

the participants

There was some discussion of US cargo entering Europe
at about DEM 4,60 and the impact of the weak US
dollar.

(i) Meeting of 23 August 1994 in Sapporo

(140) The meeting was held in the Hiroshima Prince Hotel in
Sapporo. The participants were
representatives of
Ajinomoto/Eurolysine, ADM, Kyowa, Sewon and Cheil.
Eurolysine had invited the other lysine producers to a
fake Fefana (cid:145)task force meeting(cid:146).

(141) The participants discussed and analysed their

figures, which they had reported to Ajinomoto,
relation to the target sales figures established at
Tokyo meeting (8 December 1993).

sales
in
the

(cid:151) F o l l o w - u p

(136) At the end of May/beginning of June 1994 ADM set its
sales targets and target prices in an internal meeting
held in St Louis. The European sales organisation was
disciplined to stay at the target price of DEM 5,10/kg.

(137) On 16 June 1994 at the occasion of an official Fefana
meeting in D(cid:252)sseldorf, ADM Ingredients, Eurolysine,
Kyowa Europe and Cheil met unofficially. Eurolysine
commented on the current European market situation,
including prices country by country. The participants
noted that prices were dropping below DEM 4,70/kg.
Everyone agreed to keep the price at DEM 5,10/kg.

(138) On 30 June 1994 Eurolysine met Sewon Europe.
Eurolysine gave explanations concerning the D(cid:252)sseldorf
meeting of 16 June. Sewon noted that actual market
prices had always dropped after the announcement of
price increases, because Eurolysine announced a price
increase after securing orders from big customers at the
old price. It concluded that the actual price could not be
increased. The participants also exchanged their views
concerning the market situation in different countries.

(139) On 19 July 1994 at the invitation of Eurolysine, which
prepared a fake Fefana agenda, ADM Ingredients,
Eurolysine, Sewon Europe and Cheil met at the Hyatt
Regency Hotel. The participants agreed to keep the
following prices (per kg) until
the year:
Germany DEM 5,10, France FRF 17,50, Belgium BEF
105, the Netherlands NLG 5,70, the United Kingdom
GBP 2,10, Spain and Portugal ESP 430 (minimum 425),
Italy ITL 5 200, Austria ATS 36. They agreed to
coordinate their attitudes toward certain clients, which
were difficult to approach individually by each supplier.

the end of

(142) Sewon’s sales allocation quantity for 1994 was once
again discussed. Ajinomoto understood that Sewon’s
quota of 37 000 t was limited to 1994 and not the
basis for the 1995 allocation. Sewon replied that unless
its 1995 sales volume allocation was 50 000 t, it had
no intention to further negotiate any sales quantities.
Because the quantity Sewon demanded was beyond the
expectations of the other companies the meeting was
discontinued for consultation purposes.

(143) After the meeting resumed ADM threatened the other
participants with a new price war and predicted that
Sewon would be severely damaged not only in the
overseas markets but in the Korean market too. Kyowa
reminded the others that it was possible to maintain
high prices based on cooperation and mutual efforts.
Kyowa asked Sewon if
they were going to instigate
another price war. Sewon responded that it could not
cooperate with the other companies on production
quantities but
It was
concluded that Sewon’s future status could be that of an
observer and not a participant in the quota allocation
scheme. It was decided to leave this question to a top
management meeting.

it could cooperate on pricing.

(144) The participants further discussed actual and future
price strategies and market developments
for each
region. In relation to Europe the participants decided
not to increase the price due to the German mark’s
appreciation compared to the US dollar.

(cid:151) F o l l o w - u p

(145) On 7 September 1994 ADM Ingredients, Eurolysine,
Sewon Europe and Cheil met at the Hotel Frankfurter
Hof in Frankfurt. The participants reviewed the results

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sales

figures

reduced from 91 400 t

of
the Sapporo meeting (23 August 1994). ADM
Ingredients, Eurolysine and Cheil expressed concerns
regarding Sewon’s sales quantity claim. The participants
then discussed and analysed their
in
relation to the agreed sales quotas. ADM Ingredients
proposed that the total 1994 sales quantity in Europe
should be
to 80 000 t.
Eurolysine supported the proposal, saying that demand
in Europe was down (largely due
cheap
availability of soybean meal). However, both Cheil and
Sewon Europe disagreed with the proposal, on the basis
that 80 000 t was far too little for the European market.
The participants finally decided on the lysine price (per
kg): the United Kingdom GBP 2,10 to 2,25; Spain at
least DEM 5,10 to 5,20; other countries around the
DEM 5,00 to 5,10 level.

to the

(146) On 13 October 1994 ADM met with Ajinomoto at the
Four Seasons Hotel
in Chicago. The participants
discussed the problems they were facing because Sewon
was now insisting on expanding its lysine plant capacity
in 1995. Ajinomoto informed ADM that Sewon had
stopped submitting its sales volume figures.

(j) Meeting of 26 October 1994 in Zurich

(147) The meeting was held in the Dolder Grand Hotel

Zurich. The
Ajinomoto/Eurolysine, ADM, Kyowa, Sewon and Cheil.

participants were

representatives

in
of

its

(148) Deviating from the initial agenda, Ajinomoto asked
Sewon, at the beginning of the meeting, whether its
volume policy announced at the Sapporo meeting (23
August 1994) had changed and what its 1995 sales
target would be. Sewon answered that its policy had not
changed and that
target was 50 000 t.
sales
Ajinomoto then made a quantity allocation proposal
that was accepted by all participants except Sewon.
Sewon claimed that it could not agree to that proposal
because its priorities for 1995 were 50 000 t and 20 %
market share. Sewon informed the other participants
that its 1995 budget price was USD 2,20/kg. The other
participants
in
if
implementing its increase, then they would all increase
their
sales as well. Moreover, ADM threatened to
increase its sales on the Korean market from 1 000 t
per year to 5 000 t per year if Sewon persisted in
raising its worldwide sales to 50 000 t. ADM also said
that it could force the standard price of lysine down to
USD 1,30/kg in order to force Sewon back to the
negotiating table. ADM referred to the fact that Sewon
was financially the weakest company, implying that it
could be the target of a take-over. Kyowa also suggested
buying out Sewon if the latter insisted on a 50 000 t
capacity. It directly inquired as to who was the second
largest shareholder in the company. Sewon proposed to

persisted

Sewon

that

said

discuss prices without further quantity negotiations. The
other participants rejected this on grounds that price
negotiations were meaningless without having
a
quantity agreement
first. The meeting was dissolved
after ADM had left the meeting.

(cid:151) F o l l o w - u p

(149) On 23 and 24 November 1994 Ajinomoto met Sewon
in Seoul in order to clarify the situation after the Zurich
meeting (26 October 1994) and to prepare for the next
meeting. Sewon indicated that a new plant was being
built for the Chinese market and that it intended to
increase its capacity to 50 000 t by 1995/96 as the
39 000 t proposed in Zurich was not acceptable
considering its level of
it was
agreed that Sewon should continue to cooperate on
prices with its competitors. Moreover, it was agreed that
Sewon should maintain its production at 37 000 t for
1994, and continue to send monthly sales reports over
the next year (at this point Ajinomoto had received the
August and September reports). Ajinomoto reported the
results of the meeting to ADM, Kyowa and Cheil.

investment. However,

(150) On 1 December 1994, at the occasion of an official
Fefana meeting
in Amsterdam, ADM Ingredients,
Eurolysine, Kyowa Europe and Cheil met unofficially.
They exchanged information on prices and quantities. It
was suggested that there was no reason to have a lower
price in Europe than in the USA and that therefore a
European price of DEM 4,90/kg was justified. The
participants agreed to set DEM 4,90/kg as the offer
price and DEM 4,80 as the minimum price. They
furthermore agreed to minimise supplies at the existing
price of DEM 4,40 to 4,50.

(151) On 6 December 1994 ADM Ingredients and Eurolysine
met Sewon Europe in Frankfurt. The purpose of the
meeting was in particular to explain to Sewon the price
discussion that took place at the Amsterdam meeting (1
December 1994). The participants also compared the
actual sales (January to September), the expected sales
(by end of December), and the allocated quantities for
Europe. Sewon Europe stated that basically it did not
want price decreases and wanted to maintain the agreed
prices, but that such agreed prices had been rendered
meaningless due to the fact that Eurolysine was selling
quantities in advance at a price lower than the agreed
price. If this situation continued, Sewon would sell at
whatever prices it could. It would keep the agreed price
levels only if they were in line with market conditions.
As
suggested that
case, Sewon Europe
producers should stop selling for two weeks in Spain,
and resume selling when the agreed price was reached
and ADM Ingredients
in the market. Eurolysine

a model

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informed Sewon Europe that they had announced the
agreed new price that day.

for the first quarter of 1995. Kyowa was informed of
the results by phone.

if companies started a price war,

(152) On 12 December 1994, Ajinomoto and Sewon met
again in order to continue their discussions started on
23 November 1994 in Seoul. Ajinomoto stated that that
lysine producers maintained communications
year, all
It warned
and were happy with the achieved prices.
it was
Sewon that,
certain that everyone would suffer losses. Therefore,
they urged Sewon to find points that all could agree on.
Sewon stated that, in 1995, its policy was to achieve
20 % market share and to sell 50 000 t. However,
Sewon was willing to reduce its sales to 46 000 t.
Ajinomoto proposed a sales volume for Sewon of
40 000 t and to purchase the extra quantity of 6 000 t
from Sewon in order to sell it under Ajinomoto’s brand.
Sewon rejected that proposal and insisted on 46 000 t
own sales. It, nevertheless, promised to keep the price at
Ajinomoto’s level.

(158) On 9 March 1995, at the occasion of an official Fefana
meeting in Basle ADM Ingredients, Eurolysine, Sewon
Europe, and Cheil met unofficially in the Hilton Hotel.
The purpose of the meeting was a price adjustment for
the second quarter of 1995 with the weakening US
dollar and stronger German mark. The participants
expected continuous price weakening due to the traders’
activities of importing the product from the USA where
the price was at USD 2,64/kg. Taking this into account,
the participants agreed on the following prices/kg: the
United Kingdom GBP 1,95 to 2,00; Spain DEM 4,10;
Italy ITL 5 200 to 5 300; France FRF 15,70 to 16,00;
other European markets DEM 4,40 to 4,50. There was a
discussion between Sewon and ADM concerning the
supply to each other’s
in the United
Kingdom.

customers

(k) Meeting of 18 January 1995 in Atlanta

(l) Meeting of 21 April 1995 in Hong Kong

(153) On

18

January

of
1995,
Ajinomoto/Eurolysine, ADM, Kyowa, Sewon and Cheil
met in Atlanta.

representatives

same year. They concluded that

(154) The participants compared the allocated production
quotas for 1994 with the actual sales figures realised
during the
the
difference between allocated quota and actual sales of
each company was not excessive and that therefore the
price
the
participants resolved to allocate sales quotas on the
basis of
size for 1995. All
participants, except Sewon, which requested a higher
market share, agreed to maintain the market share,
allocated for 1994,
i.e. Ajinomoto 33 %, ADM 27 %,
Kyowa 19 %, Sewon 14 %, Cheil 7 %.

could be maintained. Furthermore

the estimated market

level

(155) All participants, including Sewon, agreed to continue to

report monthly sales results to Ajinomoto.

(156) With regard to prices, the participants agreed, inter alia,
to increase the European price from DEM 4,50/kg to
DEM 4,90/kg, with an exceptional minimum price of
DEM 4,80/kg.

(cid:151) F o l l o w - u p

(159) The meeting was held in the Regent Hotel

Kong. The participants
Ajinomoto/Eurolysine, ADM, Kyowa, Sewon and Cheil.

in Hong
included representatives of

(160) The participants compared the allocated production
quotas for 1994 and January to March 1995 with the
actual sales figures realised during the same period.
Because Sewon had increased sales volume beyond its
1995 share, there were strong protests from the other
companies. Sewon reconfirmed that its target volume
was unalterable. Ajinomoto and Kyowa urged Sewon to
reduce sales volume because the market price would
suffer. Sewon pointed out that the market price had
fallen despite their increased sales volumes.

(161) Furthermore,

the participants discussed sales prices
region by region. Concerning Europe, the participants
agreed to decrease the previously agreed price of DEM
4,80/kg (meeting of 18 January 1995) to DEM 4,50/kg.
The plan was to discuss the price again at a meeting
between the people in charge of sales in Europe.

(162) The participants noted that

lysine

causing

resold
requested

in Europe the premix
companies
drop.
of
that
Ajinomoto
re-exporting the product originally imported from other
regions should be blocked. He also requested Sewon to
stop Sewon’s distributor
in Canada from selling to
regions other than Canada.

price
activities

traders’

a

(157) On 30 January 1995 European representatives of amino
acid producers met, apparently in order to review prices

(163)

It was finally agreed that Kyowa would be the host for
the next meeting in the Cayman Islands, which was
scheduled for 7 July 1995.

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(cid:151) F o l l o w - u p

ADM issued a press release on the investigations which
took place at its subsidiaries.

(164) On 27 April 1995 ADM Ingredients, Eurolysine, Kyowa
Europe, Sewon Europe and Cheil met
in the Sofitel
Hotel in Brussels. The participants compared their sales
volumes in Europe (including Africa and the Middle
East) during the first quarter of 1995. Sewon’s sales
volume was estimated, and this company was asked to
submit actual data. The other participants complained
about Sewon’s sales volume increase. The participants
then reviewed the price discussion that had taken place
at the Hong Kong meeting (21 April 1995). After this,
they entered into a detailed price discussion concerning
Europe. They decided a minimum of DEM 4,25/kg as
the European price, and set the prices by each currency.
These prices were to be applied for deliveries from 27
April to late June. Afterwards, a price of DEM 4,50 was
to be announced. The participants agreed on the
explanation to be given to buyers. It was also agreed
not
to include in the contract a clause on most
favourable treatment. The next meeting of the European
representatives was scheduled for 19 May 1995,
in
Utrecht.

(165) On 23 May 1995, apparently at the occasion of the
official Fefana task force meeting on environmental
pollution, ADM Ingredients, Eurolysine, Kyowa Europe,
Sewon Europe
and Cheil met. The participants
exchanged detailed information on prices and quantities
applied by
in different European
countries. The new European price valid from the
Monday following the meeting was set at DEM 4,25/kg.
The participants then set the price by each European
currency. All participants agreed to firmly respect that
level. The idea of dividing customers amongst producers
was put forward.

each producer

(166) On 27 June 1995 the FBI searches of the offices of
Sewon

Lysine

and

ADM, Ajinomoto’s Heartland
America took place.

F. THE COMMISSION’S PROCEDURE

(167)

In July 1996, immediately after the publication of the
Commission notice on the non-imposition or reduction
of fines in cartel cases (5) (leniency notice), Ajinomoto
offered to the Commission, on the basis of that notice,
its full cooperation in establishing the existence of a
cartel in the lysine market and its effect in the EEA. It
later submitted evidence in this respect and continued
to supplement this information.

(169)

Immediately after the investigations at ADM and Kyowa,
Sewon Europe and the European sales office of Cheil
were informed by the Commission, by telephone, that
the Commission had opened a proceeding under Article
81 of
the EEA
Agreement.

the EC Treaty and Article 53 of

(170) A few days after the investigation at

their premises,
Kyowa indicated its possible willingness to cooperate
with the Commission. After discussion with the
Commission on the terms of reference concerning its
possible cooperation, Kyowa submitted business records
and subsequently its
an oral
chronology of meetings and other contacts between
lysine producers. Thereafter, it continued to supplement
this information.

representatives gave

(171) On 28 July 1997 the Commission addressed requests
for
information in accordance with Article 11 of
Regulation No 17 to ADM, ADM Ingredients, Sewon,
Sewon Europe and Cheil concerning their behaviour in
certain amino acid markets, and in particular business
records of the cartel meetings which were identified in
the request.

(172) After having received the request

for

information,
Sewon indicated its willingness to cooperate with the
Commission. It provided minutes of meetings between
lysine producers. Sewon also provided details of
meetings for which the Commission had made no
request. It continued to supplement this information.

It had, however,

(173) Cheil replied that there were no complete or accurate
records of the meetings identified in the Commission’s
request.
interviewed each and every
member of staff who participated in the meetings in
order to obtain a detailed account of what was actually
discussed. Cheil also provided details of meetings for
which the Commission had made no request.

the

requested

providing

(174) As ADM and ADM Ingredients did not respond to the
Commission’s request within the time limit fixed by it
for
the
Commission, by registered letter of 14 October 1997,
reminded both companies that it had not received any,
or part, of the information requested. In this letter the
Commission expressly stated that the delay in replying
to the request for information hindered the conduct of
this case.

information,

(168) On 11 and 12 June 1997 the Commission carried out
investigations ordered by decision at
two European
subsidiaries of ADM and the offices of Kyowa Europe.

(5) OJ C 207, 18.7.1996, p. 4.

(175) Eventually, on 24 October 1997 ADM Ingredients
answered the Commission’s request in relation to lysine,
but submitted no information concerning other amino
acids. ADM did not answer at all.

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(176) On 29 October 1998 the Commission initiated
proceedings in the present case and adopted a statement
of objections against companies to which this Decision
is addressed. All parties submitted written observations
in response to the Commission’s objections. An oral
hearing took place on 1 March 1999. On 16 August
1999 the Commission issued a supplementary statement
of objections.

G. THE LYSINE INVESTIGATION IN THE USA

(177) On 27 June 1995, after more than two years of secret
the FBI searched the offices of ADM,

investigation,
Ajinomoto’s Heartland Lysine and Sewon America.

(178)

sales

volumes of

In August and October 1996 the parties were charged
by the US authorities with engaging in a conspiracy to
suppress and eliminate competition by fixing the price
and allocating the
lysine. The
defendants signed plea agreements to pay fines. ADM
paid a then record fine of USD 70 million (out of USD
conspiracy).
a
100 million including
Ajinomoto and Kyowa agreed in their plea agreements
to pay fines of USD 10 million each and Cheil agreed to
pay USD 1,25 million. As
the US
Government prosecuted only Sewon’s US subsidiary,
Sewon America.

to Sewon,

citric

acid

(179) On 4 November 1992 the former President of ADM’s
Bioproducts Division, who served this undertaking
during the relevant period, began working with the FBI.
He agreed to follow all directions given by FBI agents.
Currently, the former President of ADM’s Bioproducts
Division is serving a nine-year prison term for the theft
of nearly USD 10 million from ADM.

(180) On 9 July 1999 a US judge sentenced the former vice
chairman of ADM and two former executives to prison
and to pay fines for their roles in the conspiracy which
is the subject of the present proceeding.

H. THE LYSINE INVESTIGATION IN CANADA

(181) On 27 May 1998 the Canadian authorities announced
that ADM pleaded guilty to having participated in
price-fixing and market-sharing conspiracies and were
fined CAD 16 million. The fine imposed on Ajinomoto
was CAD 3,5 million, while the fine imposed on Sewon
was CAD 70 000. Cheil was not prosecuted in Canada
because during the conspiracy period Cheil did not sell
any lysine in Canada. Kyowa was granted immunity.

II. ASSESSMENT

A. JURISDICTION

the

this

European
of
established outside

(182) These proceedings concern agreements concluded inside
and outside the EEA by companies established inside
and outside
region. According to established
case-law of the Court of Justice and the Court of First
Communities, where
Instance
producers
the EEA region sell
directly to purchasers established in the EEA region and
engage in price competition in order to win orders from
those customers, that constitutes competition within the
common market. It follows that where those producers
agree on the prices and on the allocation of sales
volumes, and put that coordination into effect in the
EEA region, they are taking part in agreements which
have the object and effect of restricting competition
within the common market, within the meaning of
Article 81(1) of the EC Treaty and Article 53 of the EEA
Agreement.
(Judgment in Joined Cases 89, 104, 114,
116, 117 and 125 to 129/85 Ahlstr(cid:246)m) (6).

B. ARTICLE 81 OF THE EC TREATY AND ARTICLE 53 OF
THE EEA AGREEMENT

(183) The Commission

the

that

considers

companies
concerned by this Decision infringed Article 81 of the
EC Treaty and Article 53 of the EEA Agreement in that
they, in the EEA and by agreement, fixed lysine prices,
controlled the supply and allocated sales volumes to
each other, and exchanged information on their sales
volumes
volume
to monitor
in order
allocations they agreed upon.

sales

the

1. Article 81(1) of the EC Treaty and Article 53(1)

of the EEA Agreement

(a) Undertakings

(184) The

companies

this Decision are
undertakings within the meaning of Article 81(1) of the
EC Treaty and Article 53(1) of the EEA Agreement.

concerned

by

(b) Agreements

(185) According to the case-law of the Court of Justice,

in
order for there to be an agreement within the meaning
of Article 81(1) of the EC Treaty and Article 53 of the
EEA Agreement, it is sufficient that the undertakings in
question should have expressed their joint intention to
conduct themselves on the market in a specific way
(judgments in Case 41/69 ACF Chemiefarma (7), and in
Joined Cases 209/78 to 215/78 and 218/78 Heintz van
Landewyck (8). Attendance by an undertaking at meetings

(6) [1988] ECR 5193.
(7) [1970] ECR 661, paragraph 112.
(8) [1980] ECR 3125, paragraph 86.

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involving anti-competitive activities suffices to establish
in the absence of
its participation in those activities,
proof capable of establishing the contrary (Judgments in
Cases
T-141/94
Thyssen (10)).

T-14/89 Montedipe (9)

and

in

(cid:151) Price agreements

(186)

In July 1990 Ajinomoto, Kyowa and Sewon agreed to
raise the worldwide lysine price (see paragraph 52). In
September 1990, Ajinomoto, Kyowa and Sewon fixed,
inter alia,
the European price at DEM 4,60/kg (see
paragraph 53).

(187)

In the first half of December 1990 Ajinomoto, Kyowa
and Sewon set the European price at DEM 4,80/kg (see
paragraph 54).

(188) On 18 February 1991 Ajinomoto, Kyowa and Sewon
at DEM 4,70/kg (see
in Europe

fixed the price
paragraph 56).

(189) On 12 March 1991 Ajinomoto, Kyowa and Sewon
agreed to maintain the lysine price in Europe at DEM
4,70/kg (see paragraph 61).

(190) On 4 July 1991 Ajinomoto, Kyowa and Sewon fixed the
price in Europe at DEM 4,30/kg (see paragraph 64).

(191) Thereafter, Ajinomoto, Kyowa and Sewon continued to

discuss lysine prices.

(192) Ajinomoto and Kyowa agreed, on 10 March 1992, to
follow ADM’s prices, so as to maintain market shares
(see paragraph 65).

(193) During a meeting apparently at the end of March 1992,
on which Sewon Europe reported on 30 March 1992 to
its headquarters
in Korea, Ajinomoto, Kyowa and
Sewon agreed to maintain the European price at DEM
3,76/kg (see paragraph 66).

(194) At the end of April/beginning of May 1992 Ajinomoto,
Kyowa and Sewon confirmed their price agreement
reached at the end of March 1992 (see paragraph 67).

(195) On 23 June 1992, ADM, Ajinomoto and Kyowa fixed
the worldwide lysine price at a level they intended to
maintain until the end of that year. The participants
agreed that the European lysine price could be a little
higher than the North American price, i.e. USD 1,05/lb
until October and USD 1,20/lb for the end of the year
(apparently fixed at DEM 3,50/kg and DEM 3,75/kg
mentioned during the meeting of 1 October 1992). This
agreement was conditional on an agreement on ADM’s
to for
sales quantities. ADM’s request was 48 000 t

(9) [1992] ECR II-1155, paragraphs 129 and 144.
(10) [1999] ECR II-347, paragraph 177.

1992 (see paragraph 73). Ajinomoto, Kyowa and Sewon
accepted ADM’s sales quantities request (meetings of 10
July and 7 August 1992), with which ADM was satisfied
(as mentioned during the meetings of 2 November
1992 between Ajinomoto and Sewon). Cheil and Sewon
adhered to this price agreement on 27 August 1992
(see paragraph 79).

(196) On 1 October 1992, the five lysine producers fixed the

price at DEM 4,00/kg (see paragraph 82).

(197) On 2, 4 and 5 November 1992 ADM, Ajinomoto,
Sewon and Cheil agreed to set
the lysine price in
Europe at DEM 4,25/kg (see paragraphs 87, 89 and 90).
The price fixing was prepared by Ajinomoto’s and
Kyowa’s discussion of 29 October 1992; Kyowa was
therefore also involved in this agreement (see paragraph
86).

(198) On 1 June 1993 ADM informed Kyowa that it had
stopped decreasing the lysine price. The new standard
price was USD 0,81/lb. On the basis of that price, the
Asian producers, on 18 June 1993, set the European
price at DEM 3,20/kg (see paragraph 104). On 24 June
1993, all
five lysine producers confirmed this price
agreement, and a new step increase in prices was
envisaged (see paragraph 107).

(199) On 5 October 1993, apparently due to flooding of the
Mississippi river, which destroyed the US soybean crop,
the European price at DEM
the five producers set
their meeting of 8
5,30/kg (see paragraph 114). At
December 1993,
(see
confirmed
paragraph 120).

this price was

(200) On 10 March 1994 all

fixed the
European lysine price at DEM 5,20/kg (paragraph 130).

five producers

(201) On 19 May 1994 the five lysine producers fixed the
baseline lysine price for Europe at DEM 5,10/kg (see
paragraph 135). ADM, Ajinomoto, Kyowa and Cheil
confirmed this agreement on 16 June 1994 (see
paragraph 137). On 30 June 1994 Ajinomoto informed
Sewon that the agreement had been confirmed. On 19
July 1994 ADM, Ajinomoto, Sewon and Cheil agreed to
keep the price of DEM 5,10/kg until the end of 1994
five lysine producers again
(see paragraph 139). All
confirmed this agreement on 23 August 1994 (see
paragraph 144).

(202) On 7 September 1994 ADM, Ajinomoto, Sewon and
Cheil fixed the lysine price to be between DEM 5,00
and DEM 5,20/kg in Europe (see paragraph 145). On
23 November 1994, Sewon confirmed that it would
keep this price, too (see paragraph 149).

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(203) On 1 December 1994 ADM, Ajinomoto, Kyowa and
Cheil set the minimum offer price at DEM 4,80/kg for
Europe (see paragraph 150). On 12 December 1994
Sewon agreed to set
(see
paragraph 152).

the price at

level

this

(204) On 18 January 1995 all

five producers agreed the
European target price to be DEM 4,90/kg, with an
exceptional minimum price of DEM 4,80/kg (see
paragraph 156).

(205) On 9 March 1995 ADM, Ajinomoto, Sewon and Cheil
set the European price at DEM 4,40 to 4,50/kg (see
paragraph 158). All five producers confirmed this price
on 21 April 1995 (see paragraph 161).

(206) On 27 April 1995 the five lysine producers set the
European minimum price at DEM 4,25/kg and the
target price at DEM 4,50/kg (see paragraph 164). All
five lysine producers confirmed the minimum price on
23 May 1995 (see paragraph 165).

(207)

and

It therefore has to be concluded that, from at least July
1990, Ajinomoto, Kyowa
Sewon repeatedly
expressed their joint
intention to apply certain sales
prices in the EEA, and hence concluded agreements
within the meaning of Article 81(1) of the EC Treaty
and Article 53(1) of the EEA Agreement. ADM became
a party to price agreements with the then incumbent
lysine producers as of 23 June 1992, and Cheil as of 27
August 1992.

(208) The Commission has no reason to believe that after 27
June 1995, when the FBI searches took place,
the
undertakings concerned by this Decision concluded
more price agreements.

to

that

used

demonstrate

involvement

(209) ADM suggests that a review of the documents which
the
the Commission
commencement date of ADM’s
in the
infringement corresponds with the meeting attended by
ADM, Ajinomoto/Eurolysine and Kyowa representatives
in Mexico City on 23 June 1992 does not support the
Commission’s conclusion. It is of the opinion that no
agreement was reached involving ADM in the cartel at
that time. With regard to agreements on price, ADM
observes that any such agreement at the Mexico City
meeting was conditional on agreement as to volume
allocations. In its view, final agreement could not have
been reached before 8 December 1993 (i.e. the meeting
in Tokyo).

(210) As to this argument it has to be noted that agreements
which are concluded under a condition are nevertheless
(cid:145)agreements(cid:146) within the meaning of Article 81(1) of the
EC Treaty and Article 53(1) of
the EEA Agreement.
to the prices discussed
Therefore, ADM’s agreement
during the Mexico meeting, which was conditional on
the other producers’ agreement to a volume allocation
of 48 000 t,
this
agreement became unconditional. On 23 June 1992 in
Mexico Ajinomoto/Eurolysine and Kyowa agreed to the

falls into this category. Moreover,

volume allocation requested by ADM. ADM then
confirmed its agreement to this allocation on 2 July
1992. Sewon agreed on 7 August 1992. At about the
same time, Cheil agreed to self-restrain its sales as well
(mentioned during the meeting of 2 November 1992,
between Ajinomoto and Sewon). The condition for the
price
agreement of 23 June 1992 to become
unconditional was therefore met.

(cid:151) Agreements on quantities

(211) From the minutes of the meeting of 18 February and 12
March 1991 it can be seen that Ajinomoto, Kyowa, and
in 1991, worldwide the same
Sewon agreed to sell,
quantities as in 1990 (see paragraphs 58 and 61). There
was at least agreement between the participants that in
1991 in Europe Sewon’s quantities should be the same
as in 1990. Furthermore, at least in 1991, Ajinomoto,
Kyowa and Sewon agreed to the home-market principle,
i.e.
the local producer should sell as much as
possible in its own region. The local producer in Europe
was Ajinomoto/Eurolysine.

that

(212) The Commission reaches this conclusion on the basis of
that Kyowa and Ajinomoto insisted on this
the fact
principle (meetings of 18 February 1991 and 19 June
1992) and that Sewon had submitted to the same
principle (see paragraphs 56 and 68).

(213) On 23 June 1992 ADM, Ajinomoto and Kyowa agreed
to the proposal that worldwide lysine sales quantities
had to be coordinated (see paragraphs 73 and 74). On
10 July 1992, the two Korean lysine producers adhered
to the idea to coordinate their sales with ADM (see
paragraph 76).

(214) On 10 July 1992 Ajinomoto and Kyowa proposed to
the Korean producers a sales allocation plan for 1992
which provided for a quota of 48 000 t in favour of
ADM (see paragraph 77). On 2 July 1992 ADM had
already agreed to its 1992 quota (see paragraph 76)
(confirmed in the meeting of 8 September 1992, see
paragraph 80). During the meeting of 7 August 1992, it
became clear that Sewon adhered to the agreement on
ADM’s quota (see paragraph 78). Sewon confirmed its
agreement during the meeting of 2 November 1992 (see
paragraph 87). Furthermore, at
this meeting, Sewon
agreed to limit its sales in Europe to 6 000 t. Although
Cheil did not agree to any individual sales quantity
allocation, it agreed, within the plan, to coordinate sales
quantities to self-restrain its sales (mentioned during the
meeting of 2 November 1992 between Ajinomoto and
Sewon, see paragraph 87).

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(215) The negotiations for an agreement on individual sales
volume allocations for 1993 started on 21 January
1993. Although the parties continued their efforts
they reached no
that year,
during the summer of
agreement
sales
individual
comprehensive
allocation for 1993. On 5 October 1993 however, all
five lysine producers agreed to reduce supply in order
to prevent a price decline. As regards Europe, a 40 % to
50 % reduction was envisaged (see paragraph 114).

on

a

(216) At their meeting of 25 October 1993 Ajinomoto and
ADM reached agreement on a comprehensive individual
sales volume allocation for all five lysine producers for
1994: all five producers were allocated a basic quota
equal to their 1993 sales. Out of the expected sales
increase, Kyowa, Sewon and Cheil would each get a
supplementary quota of 2 000 t while ADM and
Ajinomoto would
remaining
worldwide lysine sales increase (see paragraph 117).
Kyowa and Sewon adhered to this agreement on 8
December 1993 (see paragraph 121). On 10 March
1994 ADM, Ajinomoto, Kyowa, and Sewon confirmed
their agreement on the sales allocation volumes for
1994,
(see
agreement
Sewon confirmed its
paragraphs 127 and 128).
agreement once again on 23 and 24 November 1994
(see paragraph 149).

adhered to this

and Cheil

equally

share

the

(217) On 18 January 1995 ADM, Ajinomoto, Kyowa and
Cheil agreed to maintain, for 1995, the market share
allocated for 1994 (see paragraph 153). Sewon did not
participate in the 1995 sales volume allocation.

(218)

and

1991, Ajinomoto, Kyowa

It therefore has to be concluded that, as from at least 18
Sewon
February
repeatedly expressed their joint intention to control the
supply of lysine and to allocate certain sales volumes to
each other in the EEA and hence concluded agreements
within the meaning of Article 81(1) of the EC Treaty
and Article 53(1) of the EEA Agreement. ADM became
a party to agreements on quantities as from 2 July
1992. Also at some moment during the second half of
1992, and in any event before 2 November 1992, Cheil
agreed, within the plan to coordinate sales quantities
to self-restrain its sales
(meeting of 10 July 1991),
(mentioned during the meeting of 2 November 1992,
between Ajinomoto and Sewon). From this moment,
Cheil definitely consented to the adoption of an overall
plan comprising
an
agreement on sales quantities, and it became a party to
such agreements with the other lysine producers (11).

elements of

constituent

the

(219) Cheil does not agree with the Commission’s conclusion
in sales
its involvement
concerning the duration of
volume agreements.
It suggests that it was always in
disagreement with the other companies as to how much
volume it should produce. Cheil states that the only
occasion on which it might have been possible to
suggest that it could have agreed to a volume allocation
was at the Honolulu meeting (10 March 1994) where,
on the face of the minutes, it might appear that it had
settled on an agreed volume of 17 000 t. Cheil
token
emphasises however
indication after being put under considerable pressure
by ADM and Ajinomoto. Cheil stresses that at the time
it indicated it might accept 17 000 t,
it had already
taken the internal decision to expand to 40 000 t. Cheil
states that while it indicated that it might agree to a
volume allocation on 10 March 1994, it already knew
that in practice it would not comply.

it only gave this

that

(220) Furthermore, Cheil claims

that

statements on sales
volumes, made by its representatives before 10 March
1994, were merely acknowledgments of the generally
known economic principle that over-capacity will lead
to a
such
acknowledgments of a general economic nature do not
amount to an agreement to limit sales volumes within
the meaning of Article 81(1) of the EC Treaty.

reduction in prices.

argues

that

It

(221) The Commission’s

finding

that Cheil’s behaviour
constitutes restrictive agreements within the meaning of
Article 81(1) of the EC Treaty and Article 53(1) of the
EEA Agreement, is not altered if it could be established
this undertaking had no genuine intention to
that
implement
the intentions actually expressed by it.
Having regard to the manifestly anti-competitive object
of the events at the occasions where the intentions were
taking any
expressed Cheil, by participating without
action to publicly distance
from what
themselves
occurred at
them, gave the impression to the other
participants that it had the same intentions as the other
parties
in conformity with them
(judgment in Case T-7/89 Hercules (12)). The notion of
(cid:145)agreement(cid:146)
is objective in nature. The actual motives
(and hidden intentions) which underlay the behaviour
adopted towards the other participants are irrelevant
(judgment in Case T-142/89 Usines Gustave Boºl (13).

and would act

(222) As to Cheil’s argument

it did not express any
intention as to its sales volumes, but
it merely
that
the
acknowledged
Commission notes that it is clear that the objective of

economic principle,

general

that

a

(11) See Judgment in Case T-295/94 Buchmann [1998] ECR II-813,

paragraph 121.

(12) [1991] ECR II-1711, paragraph 232.
(13) [1995] ECR II-867, paragraph 60.

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the meetings in question was clearly to control sales
volumes and that it is the Commission’s understanding
and that of the other lysine producers that Cheil made
statements concerning its conduct on the lysine market.

be successful. Therefore, the agreements on prices and
the
sales quantities in question have as their object
restriction of
competition within the meaning of
Articles 81(1) of the EC Treaty and Article 53(1) of the
EEA Agreement.

(223) The Commission has no reason to believe that after 27
June 1995, when the FBI searches took place,
the
undertakings concerned by this Decision concluded
more agreements on sales quantities.

(cid:151) Agreement on the exchange of information on sales

quantity

(224) On 8 December 1993, ADM, Ajinomoto, Kyowa and
Sewon agreed that from January 1994, all companies
were to make monthly reports of sales/shipments by
region to Ajinomoto, at the latest 15 days after the end
of the month, allowing for feedback each month (see
paragraph 122). Cheil adhered to this agreement on 10
March 1994 (see paragraph 128).

(225) ADM, Ajinomoto, Kyowa and Cheil

implemented the
agreement on the quantity information system until 27
June 1995. Sewon stopped producing sales figures as
from beginning 1995 (meeting of 27 April 1995).
However it continued to participate in meetings where
it was informed of the figures reported by the other
producers, until 27 June 1995. In those circumstances,
Sewon remained a participant in the agreement on the
exchange of information (14).

(226)

therefore has

to be concluded that,

It
from the
beginning of 1994, the undertakings concerned by this
Decision had a joint intention to exchange information
on their sales quantities in the EEA in order to monitor
the agreements on sales quantity allocation, and hence
were parties in an agreement within the meaning of
Article 81(1) of the EC Treaty and Article 53(1) of the
EEA Agreement.

(229) As to the information exchange system,

their

influencing

it has to be
the information which the undertakings,
noted that
according to the agreement, were to receive and
subsequently actually did receive was
capable of
appreciably
conduct. Given the
availability of this information, each undertaking knew
that it was being kept under close surveillance by its
competitors and that it could, if necessary, react to the
conduct of its competitors, on the basis of considerable
more recent and accurate data than those available by
other means. It follows that the information exchange
decision-making
reduced
system appreciably
independence
by
substituting practical cooperation between them for the
normal risks of competition.
In any event, where an
exchange of firm specific information is the adjunct of
an anti-competitive practice, such as in the present case,
it is also caught by the prohibition in Article 81(1) of
the EC Treaty and Article 53(1) of the EEA Agreement
as an integral part of that practice.

participating

producers

the

the

of

(230)

It is established case-law that there is no need to take
account of the concrete effects of agreements in order
to conclude that they are prohibited by Article 81(1) of
the EC Treaty (and by implication Article 53(1) of the
EEA Agreement), when it is apparent, as in this case,
that
the restriction of
their object
competition (judgment in Case C-277/87 Sandoz (15)).

they have as

(227) The Commission has no reason to believe that after 27
the
June 1995, when the FBI searches took place,
undertakings concerned by this Decision continued their
agreement on the exchange of
information on sales
quantity.

(c) Object of the agreements

(d) Effect on trade between Member States of the Community

and EEA countries

(231) The agreements in question had an appreciable effect
upon trade between Member States of the Community
and EEA countries.

(228) Article 81(1) of the EC Treaty and Article 53(1) of the
EEA Agreement expressly mention, as restrictive of
competition, agreements that fix selling prices, limit or
control production, or share markets within the EEA. In
the present
the companies
concerned was to regulate the lysine market and to
coordinate their behaviour in such a way as to ensure
that their agreed price and sales quota initiatives would

the objective of

case,

(232) The

lysine market

is one which is particularly
characterised by trade between Member States. In the
EEA there is only one producer of lysine, i.e. Eurolysine,
with production plants
in France and Italy. Lysine
purchased in all other EEA countries has to be imported
from these countries, from outside the EEA, or from the
EEA countries into which the lysine produced in third
countries had initially been imported.

(14) See Case T-295/94 Buchmann, loc. cit., at paragraph 131.

(15) [1990] ECR I-45.

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(233) Virtually all trade throughout the EEA in this important
agro-industrial sector was controlled by the cartel. All
producers supplied lysine throughout
the EEA. The
collusive behaviour adopted by the lysine producers
distorted the pattern of trade in this region through the
effect on price levels and quantities.

(234) The application of Article 81(1) of the EC Treaty and
Article 53(1) of the EEA Agreement to a cartel is not
limited to that part of the members’ sales which actually
involve the transfer of goods from one Member State to
another. Nor is it necessary, in order for those Articles
to apply, to show that the individual conduct of each
participant, as opposed to the cartel as a whole, affected
trade between Member States
in Case
T-13/89 ICI (16)) and, by implication, EEA countries.

(judgment

2. Article 81(3) of the EC Treaty and Article 53(3)

of the EEA Agreement

(235) The agreements which are the subject of this Decision
took place in secrecy and have not been notified to the
Commission. Therefore, they cannot be exempted from
the application of Article 81(1) of the EC Treaty and
Article 53(1) of the EEA agreement. In any event, the
type of
in
question does not meet the conditions laid down in
Article 81(3) of the EC Treaty and Article 53(3) of the
EEA Agreement.

conduct adopted by the undertakings

3. Single continuing infringement

(236)

In the present case, the undertakings concerned by this
Decision,
in varying compositions of participants,
concluded at different times anti-competitive agreements
concerning different types of behaviour either separately
or in combination. Every single one of these agreements
constitutes, in principle, an infringement of Article 81
of the EC Treaty and Article 53 of the EEA Agreement.

(237) This

of

series

agreements was
anti-competitive
concluded in the context of a single common plan to
regulate prices and supply on the lysine market. The
undertakings
concerned participated in an overall
framework which manifested itself in agreements with
the object of
restricting competition between the
participating undertakings on the lysine market. The
Commission considers therefore that it is artificial to
sub-divide
separate
the actions were
infringements as
undertaken in the context of an overall common plan
pursuing the same anti-competitive purpose.

individual
it

actions
that

is clear

into

the

(238) From the case-law of the Court of Justice and the Court
it follows that Article 81 of the EC
of First Instance,
Treaty and Article 53 of the EEA Agreement can be
infringed both by separate
series of
connected acts (judgments in Case C-49/92 P Anic (17)
and in Case T-1/89 Rh(cid:244)ne Poulenc (18)). The Commission
concludes that, in the present case, the actions of the
participants
continuing
infringement.

constitute

and a

single

acts

one

(239) Ajinomoto, Kyowa

this
infringement from at least June 1990, Cheil from the
beginning of 1991, and ADM from 23 June 1992.

committed

Sewon

and

(240) The Commission has no reason to believe that

searches

took place. On the other hand,

the
infringement continued after 27 June 1995, when the
the
FBI
infringement had not ended at
the last
meeting at which an agreement within the meaning of
Article 81(1) of the EC Treaty and Article 53(1) of the
EEA Agreement was reached, i.e. 23 May 1995, because
the parties had the intention to continue the conspiracy
on 7 July 1995 in the Cayman Islands (agreed during
the meeting of 21 April 1995 in Hong Kong).

the date of

sales

volume

information

(241) Ajinomoto claims that the period in which the cartel
operated in a systematic fashion, with the participants
among
exchanging
themselves, and ostensibly agreeing on target prices and
sales levels, was quite brief. Ajinomoto states that this
period began in January 1994 and lasted no more than
one and a half years. Ajinomoto alleges that while
competitors had conducted meetings prior to this time,
and reached agreements on target prices from time to
time, any adherence to such agreements was short-lived.
In particular, price wars in which lysine prices were
driven below cost, placing Eurolysine in serious financial
peril, occurred throughout the first halves of both 1992
and 1993.

(242) Cheil stresses that

it did not attend meetings from

December 1993 to March 1994.

and

(243) The Commission does not accept the argument that the
infringement,
Cheil
in which Ajinomoto
participated, was not continuous. Whilst it is clear that
the extent and the depth of the cooperation between the
in terms of the
lysine producers changed over time,
number of the firms participating and of the scope the
agreements conclude, it is the Commission’s view that
the incumbent as well as the new cartel members at any
time of
their collusion subscribed to an identical
common plan to regulate prices and supply on the
lysine market.

(16) [1992] ECR II-1021, paragraph 304.

(17) C-49/92 P, not yet published in the ECR, paragraph 81.
(18) Case T-1/89, [1991] ECR II-867, paragraphs 125 and 126.

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(244)

In particular,
the Commission considers that ADM’s
entry into the pre-existing cartel did not constitute the
end of that cartel and the beginning of a new one.
Rather ADM’s entry led to the extension of
the
pre-existing cartel
to embrace again all producers of
lysine and brought about a more structured approach to
the operation of
(see paragraph 71). The
possibility that ADM was unaware, at the time of its
an ongoing cartel between its
market
competitors,
it
conception was
its
participated in the creation of a new cartel, does not
affect the Commission’s finding on the duration of the
collusion, as the duration of an infringement has to be
determined on an objective basis.

the cartel

entry, of

and that

that

(245) Regarding the period from December 1993 to March
1994, Cheil did not participate in one meeting, i.e. the
meeting of 8 December 1993 in Tokyo. This meeting
prepared the 1994 sales volume allocation, which was
finally discussed and agreed upon by all
five lysine
producers during the meeting of 10 March 1994 in
Honolulu. Cheil’s absence from the meeting of 8
December 1993 in Tokyo therefore did not end its
participation in the infringement committed before this
date. On the contrary, its attendance at the meeting of
10 March 1994 in Honolulu proves
that Cheil
continued its illegal behaviour.

(246) The fact that the parties tried to solve the problems
which occurred from time to time after agreements had
been reached indicates that the agreements were linked
to each other.

(247) Given that there is one single continuing infringement
of Article 81 of the EC Treaty and Article 53 of the
each undertaking
EEA Agreement,
concerned by this Decision is responsible for the totality
of the infringement for the period of its participation
(judgments in Case C-49/92 P Anic (19)).

follows

that

it

C. LIMITATION PERIOD

(248) Pursuant to Article 1 of Council Regulation (EEC) No
2988/74 (20), the power of the Commission to impose
fines or penalties for infringements of Article 81 of the
EC Treaty and Article 53 of the EEA Agreement are
subject to a limitation period of five years. Time begins
is
to run on the day on which the infringement
committed.
repeated
infringements, however, time begins to run on the day
on which the infringement ceased. In the present case,
the continuing infringement ceased on 27 June 1995.

In the case of continuing or

(249) On 11 June 1997,

the Commission carried out
investigations at the premises of some participants in
the cartel. Pursuant to Article 2 of Regulation (EEC) No

2988/74 those actions interrupted the limitation period
in the present proceedings. Therefore the Commission is
entitled to impose fines for this infringement on the
undertakings to which the present Decision is addressed.

D. FINES IMPOSED PURSUANT TO ARTICLE 15(2)(a) OF
REGULATION NO 17

(250) Compliance with Article 81 of the EC Treaty and Article
53 of the EEA Agreement is enforceable by means of
fines. Pursuant to Article 15(2)(a) of Regulation No 17,
the Commission may by decision impose such fines,
where undertakings infringe the competition rules either
intentionally or negligently.

1.

Infringement of
intentionally or negligently

the competition rules either

(251) The facts presented by the parties indicate that all the
participants in the cartel had the intention to conclude
agreements to fix prices, share markets and to exchange
information. For example, on 1 October 1992 all the
participants in the cartel met in Paris to discuss prices
and to exchange information to enable an evaluation to
be made of
the impact of price agreement made at
earlier meetings (for example, 27 August 1992) for the
purpose of concluding a new price (DEM 4,00/kg).

(252) Moreover, all participants in the cartel were aware of
their conduct. For example, on 8
the illegality of
December 1993, regarding the submission of monthly
sales figures, ADM told the others that they had (cid:145)to
watch their telephones and to be very careful(cid:146). The
cartel members also took precautions to disguise the
fact that they met and the purpose of their meetings.

(253) They organised meetings under the cover of official
Fefana meetings, for example the meeting of 19 May
1994 in Paris. The parties adopted the practice that,
while attending an official industry meeting, one person
would obtain a hotel suite and secretly notify the others.
They would then secretly meet to discuss prices and
sales volumes away from the official meeting. They also
met at fake Fefana meetings, for example the meeting of
23 August 1994 in Sapporo.

(19) Loc. cit., at paragraph 203.
(20) OJ L 319, 29.11.1974, p. 1.

(254) The Commission therefore concludes that the addressees
the present Decision committed the infringement

of
intentionally.

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2. The amount of the fines

(255)

the fines,

In fixing the amount of
the Commission
follows the methodology explained in its guidelines of
14 January 1998 on the method of
setting fines
imposed pursuant to Article 15(2) of Regulation No 17
and Article 65(5) of the ECSC Treaty (the guidelines on
fines) (21).

(a) The basic amount

(256) The basic amount is determined according to the gravity
and duration of the infringement, which are the only
criteria referred to in Article 15(2) of Regulation No 17.

(cid:151) Gravity

(257)

In assessing the gravity of the present infringement, the
Commission takes account of
its actual
impact on the market, where this can be measured, and
the size of the relevant geographic market.

its nature,

Nature of the infringement

(258) By their nature, horizontal restrictions such as price
cartels and market-sharing quotas are very serious
infringements. The present
infringement concerns a
to the very serious
price and quota cartel
infringements found for example in the Commission’s
Polypropylene (22),
and
decisions
Cartonboard (24), which in substance were upheld by the
judgments of 24 October 1991 (25), 14 May 1998 (26),
20 April 1999 (27), and 8 July 1999 (28) respectively.
The Commission therefore considers, that the present
infringement is very serious by its nature.

PVC (23)

similar

in

that

infringement did not

(259) ADM opposes this conclusion. ADM argues that the
jeopardise the proper
present
functioning of
the single market as required by the
Commission guidelines on fines as defined at paragraph
third indent, under (cid:145)very serious infringements(cid:146).
1(A),
ADM contends
there was no partitioning of
In ADM’s view the Commission’s
national markets.
documents
in the present case,
that when,
show,
European prices were the subject of a conversation or
agreement, they were considered in unified terms on a
trans-Europe basis. Similarly volumes were not allocated
in Europe on a country-by-country (or (cid:145)stay at home(cid:146))
basis. Instead volume allocations were discussed for the
most part in worldwide aggregates. ADM suggests that
information sharing occurred,
even when volume

(21) OJ C 9, 14.1.1998, p. 3.
(22) OJ L 230, 18.8.1986, p. 1.
(23) OJ L 239, 14.9.1994, p. 14.
(24) OJ L 243, 19.9.1994, p. 1.
(25) ECR [1991] p. II-867.
(26) ECR [1998] p. II-813..
(27) Joined Cases T-305(cid:150)94 et seq. PVC [1999] ECR II-931.
(28) Not yet published in the ECR.

volumes were broken down regionally only to the
individual
Europewide level and not
Member States.

to the level of

(cid:145)very

First,

(260) The Commission rejects this reading of its guidelines on
from the definition of
serious
fines.
infringements(cid:146)
in the guidelines it is clear, that price
cartels and market-sharing quotas, by their nature,
jeopardise the proper functioning of the single market.
It is only in relation to (cid:145)other practices(cid:146) that the latter
qualification has to be actually established in order to
conclude that
they are such infringements. Secondly,
within the categories of price cartels and market-sharing
quotas there cannot be, in view of their incompatibility
with the common market, any distinction between
prices
between
competitors operating in the same geographical area
and those agreements based on geographical separation
(i.e. a (cid:145)stay at home(cid:146) basis).

volumes

agreed

shares

and

of

The actual impact of the infringement on the lysine market in the
EEA

(261) The Commission considers

the

that

infringement,
committed by undertakings which were practically, for
the period covered by this Decision,
the only lysine
producers in the world, had the effect of raising prices
than they would otherwise have been and
higher
restricting sales quantities, and therefore had an actual
impact on the lysine market in the EEA.

(262) From the evidence in the Commission’s possession, it is
clear that around March 1991 ADM’s market entry had
the effect of placing significant downward pressure on
prices. As a result, in the summer of 1992, the lysine
price was around 50 % lower in comparison with prices
at the beginning of 1991. The price initiatives taken by
the companies concerned in the second half of 1992
led, within six months,
to a substantial recovery of
lysine prices in Europe, bringing them back to around
80 % of the price at the beginning of 1991.

(263)

In July of 1993 a similar scenario unfolded. After ADM
had decreased its price, during the period April to June,
the prices
immediately recovered following a new
agreement in June.

(264) The

following

agreements

the
concluded
price
Mississippi
flood in the summer of 1993, which
destroyed the USA soybean crop, allowed the parties to
maintain the European price level at around DEM
5,00/kg until the beginning of 1995, which was above
the agreed price level at the beginning of 1991 even
though the worldwide lysine production capacity had
doubled and demand had risen only by around 60 %.

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(265) Moreover, whilst

price

decisions.

In November

it cannot be established that every
company concerned fully implemented the agreements,
it is clear that at least ADM was disciplined in executing
the
1992 ADM
announced exactly the DEM 3,75/kg that it agreed to in
that year. The price announced in
September of
December 1992 exceeded by DEM 0,10, the target price
agreed one month before. During the second half of
1993,
the announced price was substantially higher
than the agreed minimum prices. From March until at
least September 1994, ADM announced prices which
were the agreed minimum prices. At the very least the
announced prices thus served as a reference point in
individual negotiations on transaction prices with
customers (29).

(266) A good example of ADM’s attitude towards the price
agreements, is its internal meeting held in St Louis at
the end of May/beginning of
June 1994. There the
European sales organisation was disciplined to stay at
the target price of DEM 5,10 agreed with the other
lysine producers in May of that year.

(267)

to

the

quotas,

relation

information

the
In
in
the
Commission’s possession is also conclusive of
the companies’ actual sales
relation between each of
quantities and the quota agreements. At
the end of
1994, the worldwide market shares attained by each of
the producers were almost identical to the shares they
allocated to each other:

Allocated

Actual

Ajinomoto

33

36

ADM

27

28

Kyowa

Sewon

19

18

14

10

Cheil

7

8

(268) Moreover, statements made by company representatives
indicate indirectly that the price and quota agreements
served their purpose.

(269) During its meeting with Ajinomoto on 5 November
1992 in Seoul, Cheil considered that the lysine price
increase was a substantial success. On 26 February
1993, Ajinomoto, Kyowa, Sewon and Cheil noted that
the European price was maintained, because Ajinomoto
and Sewon restricted their sales volumes. On 28 April
1993, ADM and Eurolysine agreed that if the prices
went up in Europe,
the price
agreement concluded in Mexico (23 June 1992), and
that the only place where it was fully implemented was
in this region. When Ajinomoto, Kyowa and Sewon met
on 27 May 1993, Ajinomoto referred (cid:145)to the good
results(cid:146) of their cooperation before ADM’s entry into the
market. On 18 January 1995, all five lysine producers
concluded that,
the difference between
allocated quota and actual sales of each company was
not excessive and that therefore the price level could be
maintained.

it was because of

in 1994,

(270) Ajinomoto, ADM, Kyowa and Sewon disagree with the
Commission’s conclusion that the infringement had an
actual impact on the lysine market in the EEA.

(271) Ajinomoto claims

that

lysine
the
conspiracy was not significant, because synthetic lysine
only accounts for less than 5 % of all lysine consumed
by the feed industry each year in the Community.

impact of

the

(29) See judgment
paragraph 177.

in Case T-308/94 Cascades [1998] ECR II-925,

Ajinomoto suggests that while the main sources of
lysine and other amino acids are protein concentrates of
vegetable or animal origin (e.g. soybean meal, fishmeal,
and skimmed milk), another source of certain amino
acids is industrial production through fermentation (e.g.
lysine) or chemical processes (e.g. methionine). These
to those amino
(synthetic) amino acids are identical
In Ajinomoto’s view,
found in feed protein.
acids
therefore, use of
is not
amino acids
synthetic
just one ingredient
compulsory. Synthetic lysine is
among many, and other lysine-rich products such as
soybean meal or fishmeal can always be used instead.
As a result, if the cost of synthetic lysine is too high in
comparison to alternative lysine-rich feedstuffs, it will be
eliminated entirely.

(272) Ajinomoto states

that

lysine as

successive

formula is

substitutions

the cheapest

feedmills view natural
It maintains

and
synthetic
that
substitutable.
feedstuffs producers use computers to optimise feed
formulae via a least-cost-formulation technique. After
inputting data on available feedstuffs and their current
are made between
prices,
feedstuffs until
found that
supplies all nutritional requirements. Lysine is treated in
ingredient. The price
these analyses as any other
threshold at which an ingredient comes
into the
formula is called the (cid:145)shadow price(cid:146). Ajinomoto holds
that the volatility of price movement of ingredients is
by far the main driver of synthetic lysine market price
fluctuations. It contends that historically, it has been the
lysine price changes. Ajinomoto
cause of virtually all
considers
existence of a
price-fixing agreement, there was very little scope for
lysine prices artificially.
the cartel members to control

that notwithstanding the

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For Ajinomoto this is apparent from the curve of the
synthetic lysine market price and its shadow price, as
compared with the price of
related agricultural or
fishery commodities containing natural lysine.

(273) Ajinomoto suggests that the lowering of ceiling prices
on cereals in Europe in 1993 resulted in a substantial
increase in the (cid:145)spread(cid:146) at that time, thus leading to a
significant
increase in lysine prices through ordinary
market mechanisms.

(277) ADM contends that, during the period identified by the
Commission as that within which ADM participated in
the
prices were
determined for the most part by factors other than
(cid:145)collusion(cid:146).

infringement,

described

lysine

(278) ADM submitted two economic studies in order to put
the
capable
forward
infringement had no actual anti-competitive impact on
the EEA market for lysine.

evidence

showing

that

of

(274) The Commission agrees that it is technically possible for
synthetic lysine to be substituted by natural lysine, and
vice versa. However, natural
lysine does not exist in
pure form. If natural lysine is substituted for synthetic
lysine,
the
including in particular protein and
other substances,
other
is
compounded. This can result, for example, in an excess
formula,
amount
necessitating the addition of other essential amino acids.

it necessarily involves the addition of all

to which natural

amino acids,

protein

lysine

given

diet

for

of

a

(275) The Commission accepts that the price of soybean meal
limit on the pricing
and corn provides an upper
low
decisions of
for
enough,
synthetic lysine and, thus, forces synthetic lysine prices
down.

the parties. When this ceiling is
substitute

soybean meal becomes

a

(276) However, as long as the price of soybean meal remained
high enough (and significantly higher than cash corn
prices) the parties were able to maximise their profits by
raising selling prices as high as demand conditions
would allow. That is, the parties set prices according to
the perceived level of
lysine’s own price elasticity of
demand. Dr Connor of Purdue University analysed this
situation (30) for the USA and came to the conclusion
that:

(279)

In the first study ADM suggests that the events over the
relevant period in the lysine industry can best be
understood if competitors are analysed as if operating
and interacting in an oligopoly market structure. ADM
considers that
the oligopoly can be characterised as
Cournot (31). It is argued that the price charged by each
firm in a Cournot game would be distinguishable from
and lower than the price that would be obtained if,
instead, the rival firms in the industry were effectively
behaving collusively.

(280)

In both the studies, ADM tries to rationalise its observed
behaviour in a way that is compatible with economic
theory.
the period of
For
investigation.

this ADM subdivides

that,

(281) ADM argues that prior to the meeting of 8 December
1993 in Tokyo the impact of its performance on the
lysine market can be characterised as pro-competitive.
ADM suggests
to solve its output
in order
problem, it had to obtain firm specific information from
its competitors. It is ADM’s view that the exchange of
that firm specific information (in contrast to common
information such as demand) between competitors
made it possible to achieve,
in the lysine market, a
non-cooperative Cournot equilibirum.

(cid:145)when lysine prices were USD 0,70 to 0,90 per pound,
the elasticity of demand was perceived to be around
ﬂ 0,2; when prices were higher (USD 1,10 to USD 1,20)
the elasticity was about in the range ﬂ 0,5 to ﬂ 0,8.
When five companies form a cartel and face a demand
for their products with elasticity of between ﬂ 0,45 and
ﬂ 0,8, a well-known economic formula predicts that the
cartel’s optimal prices will be between USD 0,88 and
USD 1,49. In fact, US selling prices by the three largest
sellers were always within the USD 0,92 to USD 1,22
the core collusive period,
range in every month of
October 1992 to July 1995.(cid:146)

(30)

(cid:145)Lysine production,
international price
trade and the effects of
fixing(cid:146), by Dr John Connor, Staff Paper 98-18, September 1998,
Purdue University, p. 35.

(282) ADM suggests that, by the end of 1993, it had obtained
satisfaction about the capacity of its plant and about its
growth in 1994. Although ADM admits that, during the

(31) In a market structure with relatively few sellers, each large enough
the
to affect market prices and volumes, when acting alone,
problem each firm must solve individually ((cid:145)the game(cid:146))
is how
much to invest in capacity to produce and how much to produce
in order to maximise its profit, given the output and respective
capacities of
its rivals, and the demand for the product. The
collective outcome of each firm’s uncoordinated effort to solve its
respective output problem determines the market price at which
the lysine buyers demand is satisfied by the sum of the outputs
supplied by rival firms. This is called the Cournot equilibrium
output and price. This price amounts to the competitive price in
such a market and the lowest price that will be sustainable
consistent with uncoordinated profit maximisation.

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second period, it was attracted to collude with the other
its participation in the cartel was
industry members,
that of the typical (cid:145)cheater(cid:146).

(283)

In order to show that its behaviour had, during the
second period and with the exception of two meetings,
no actual impact on the lysine market, ADM submitted
a simulation of a simple Cournot model using industry
data (32).

(284) ADM concludes that its actual prices charged in the
market were no greater than the (cid:145)but
for a cartel(cid:146)
Cournot prices and were therefore no different from the
prices that would be expected had no collusion been
identified. ADM therefore effectively rules out
the
possibility that the actual prices were the outcome of
ADM implementing a cartel agreement. However, ADM
does not rule out the possibility that its pricing was the
result of cheating on a cartel agreement. In ADM’s view,
the meetings and competitor communications were
statistically insignificant in determining European lysine
prices, except
to a small degree and only during a
period of limited duration. ADM claims that only two
meetings, on 8 December 1993 in Tokyo and on 10
March 1994 in Hawaii, had a statistically significant
positive effect in raising lysine prices.

is that

relatively more attractive as

(285) Finally, ADM notes that the number of players in the
industry increased from four to five with the entry of
ADM. Based on the results of a game-theoretic study of
cartel stability by the economist Reinhard Selten (33) the
the position of an
conclusion ADM draws
outsider becomes
the
number of competitors increases. With six players the
Selten model would suggest that the probability of cartel
stability is very small. Based on the fact that there were
five competitors, ADM’s second study suggests that this
is a border case.
the competitors have
the demand and cost
(cid:145)complete information(cid:146) about
informed about past
parameters and are (cid:145)perfectly(cid:146)
actions
system of
information sharing about current outputs and prices.
The study suggests that this explains that, on the one

no well-organised

In this case,

have

but

(32) The Cournot model

is

expressed

as

Price = marginal

cost/(1(cid:150)Herfindahl-Hirshman index)/industry price elasticity.
ADM did not have actual figures for the marginal cost but they
were estimated based on a multiple regression model of ADM
costs of variable inputs used in lysine production and distribution.
The figure for the price elasticity was taken from a report by John
Connor, (cid:145)The cost to US animal feeds manufacturers of an alleged
price-fixing conspiracy by lysine manufacturers 1992 to 1995(cid:146)
and the response of Frederick R. Warren-Boulton, prepared for US
litigation.

(33) Reinhard Selten: (cid:145)A simple model of imperfect competition where
four are few and six are many(cid:146), International Journal of Game
Theory, 2 pp. 141 to 201, reprinted in R. Selten:
(cid:145)Models of
Strategic Rationality(cid:146), Kluwer, Academic Publishers, 1988, pp. 95
to 155.

hand, ADM agreed on this price of that quantity; on the
it simultaneously cheated on the agreed
other hand,
quantities to secretly increase its current market share.
The second study concludes that there was an explicit
attempt to collude at the meeting of 8 December 1993,
in which ADM took part. Being the fifth player,
however, it was the one that behaved competitively to
the extent that it could do so secretly.

(286) The Commission considers that

the findings of

the
parties themselves are eloquent on the impact of this
cartel. It is inconceivable that the parties would have
repeatedly agreed to meet in locations across the world
to fix prices and share markets over such a long period
without there being an impact on the lysine market.

in observing

(287) The likelihood that ADM’s observed behaviour could be
explained away as being pro-competitive is also small
due to the fact that the development of non-cooperative
business strategies among companies requires years of
experience
and
countermoves
industry. ADM only
entered the industry in 1991 and so it could not base
its actions on history. Due to the fact
that a cartel
existed prior to ADM’s entry, neither Ajinomoto, Kyowa
and
pricing
cooperatively. Overt price fixing is therefore a more
likely outcome than tacit forms of cooperation in the
absence of a long period of business interaction.

each others moves

in a particular

Sewon

tacitly

basis

had

any

for

(288) Moreover,

the conclusions of ADM’s first study are
sensitive to the assumptions made, in particular those
concerning the final elasticity of demand and the cost
structures of ADM’s competitors. The studies mentioned
in footnotes 30 and 32, on which the assumptions of
the first ADM study are taken, contradict each other
concerning the assumptions for the marginal cost and
the elasticity of demand for lysine. These studies also
use different models of oligopoly behaviour to simulate
the lysine industry. The fact that the assumptions used
by ADM’s
study have been contested alone
disqualifies the first ADM study from being sufficient
the Commission’s findings as to the
proof
question of whether the collusive behaviour had an
actual impact on the market.

to rebut

first

second study the Commission
(289) Concerning ADM’s
considers that
the ability to sustain collusion in an
industry does not depend mechanically on the results of
a game theory model as to whether ADM was the fifth
company or not. Cartels can also be stable with many
more players as numerous Commission decisions (for
examples, see paragraph 258) have shown. In contrast,
in other industries three firms could be enough to

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ensure effective competition. The Commission therefore
concludes that the second ADM study is little more than
a mechanical application of a particular game-theoretic
model. In every case the conclusion as to whether an
industry can sustain a cartel depends on the facts of the
case. In this case the facts as established by the parties
enable the Commission to state that the parties were
able to conclude price and market sharing agreements
for a long period and that they had an impact on the
lysine market.

firm specific

depends
on
the author of

(290) As to the alleged pro-competitive information exchange
during the first period under scrutiny identified by
ADM, the Commission notes that the policy conclusion
economic
to be drawn from the game-theoretic
literature concerning the distinction between industry
the
and
information
assumptions made. For example,
the
second ADM study has noted (34)
(cid:145)when the
cost of
shared relates
information to be
production, a distinction is to be made between costs
that are (cid:147)common(cid:148) and costs that are (cid:147)private(cid:148). Indeed
the distinction leads to opposite policy conclusions.
When the uncertainty is about a common value, such as
the evolution of industry-wide costs or the cost of fuel,
not
to share information is an equilibrium Cournot
strategy.(cid:146) The Commission therefore rejects the notion
that the exchange of information between the parties
can be considered to be pro-competitive on the basis of
ADM’s second study.

that
to the

(291) Kyowa holds that, during the period from ADM’s 1991
entry into the lysine market until shortly after late June
1992, collusive efforts plainly had little or no effect on
the market, because prices were in constant decline.
Kyowa asserts that even after a price agreement was
allegedly reached in June 1992, another price war had
the
developed by the end of 1992 and lasted until
middle of 1993.

actual

so that

impact of

(292) Sewon claims that it consistently undercut the agreed
target prices,
the
the
infringement on the European market was substantially
reduced. Sewon submits that price agreements had little
or no effect without an agreement on volume. It refers,
for example, to the meeting of 26 October 1994 in
Zurich, where the large producers declared that, without
the negotiations on price
an agreement on quantity,
were meaningless.

(293) Neither Kyowa’s nor Sewon’s arguments are conclusive.
The Commission recognises that during the collusion
between lysine producers, there were periods when the
impact of the price fixing was less significant
actual
than during other periods. However,
the periods
described by the parties as (cid:145)price wars(cid:146) only provide an
indication of what the prices would have been under
conditions of normal competition. Furthermore,
the
Commission finds that, during the entire duration of the
infringement committed by the undertakings concerned
by the present Decision, price and volume agreements
existed in parallel (see paragraphs 221 and 232). The
Commission also notes that the threat of lower prices
was a means by which ADM strategically influenced
their
(see
paragraph 70).

fellow cartel members’

actions

future

the cartel’s operation the lysine market

(294) As to volumes, Ajinomoto notes that during the main
period of
in
Europe grew substantially and Eurolysine operated at
full capacity at all times. With the exception of ADM,
all other parties concerned by this Decision also make
the point that they operated at full capacity, and that
therefore it is difficult to discern any real market impact
of the infringement.

(295)

In any event, even on the hypothesis that this was the
case, this argument is not conclusive as to the finding of
actual impact on the market. Investment decisions as to
increase capacity could have been delayed or changed
on the basis of the collusion. Stock management and
geographical allocation of volumes could have been
influenced by the volume agreements. In any event, the
periods of (cid:145)price wars(cid:146) and (cid:145)price peace(cid:146) between the
parties concerned by this Decision were necessarily
linked to changes in volumes put on the market and the
strategic games played by the cartel participants (see
paragraph 293).

(296)

impact of

its finding as to the actual

In conclusion, the Commission considers that the parties
concerned by the present Decision have not been able
to rebut
the
infringement on the lysine market in the EEA. In this
respect, the Commission refers to the judgment in Case
C-49/92 P Anic, where the Court of Justice held that it
is presumed that undertakings, which collude and which
continue to operate in the market, take into account the
results of their collusion when determining their market
behaviour (35). It is for the undertakings concerned in
the first instance to put forward evidence capable of
showing that the infringement had no actual impact on
the decision-making of the participants and therefore on
the market. This evidence had not been produced.

(34) Louis Phlips, Competition policy: a game-theoretic perspective,

Cambridge University Press 1995, Chapter 5, p. 88.

(35) Loc cit., at paragraph 121.

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(cid:151) The size of the relevant geographic market

(297) The undertakings concerned by this Decision operated
during the period covered by the present proceeding in
each part of the EEA. Every part of the EEA was under
the same influence of the collusion. The competitive
conditions on the supply side and demand side of the
market for synthetic lysine were similar throughout the
EEA. The Commission considers, therefore, the relevant
geographic market to be at least EEA-wide.

(301) The Commission therefore considers that the particular
circumstances taken into account in the Greek Ferries
Decision differ substantially from those in the present
case. In particular, the extent of the relevant geographic
market in the present case (the EEA) compared with
in the Greek Ferries Decision (three Adriatic Sea
that
routes), as well as the limitation of the collusion to
prices in that case, excludes any similarity as to the
assessment of the gravity of the infringements.

(302) The

Commission

the
undertakings concerned by the present Decision have
committed a very serious infringement.

concludes

therefore

that

(cid:151) The Commission’s conclusion on gravity

(cid:151) Differential treatment

(298) Taking into account the nature of the behaviour under
scrutiny and its actual
impact on the lysine market,
which was EEA-wide, the Commission considers that
the undertakings concerned by the present Decision
have committed an infringement of Article 81(1) of the
EC Treaty and Article 53(1) of
the EEA Agreement,
which satisfies the conditions of paragraph 1(A), third
indent, of the Commission’s guidelines on fines defining
very serious infringements.

(299) ADM and Ajinomoto oppose this conclusion. They
consider that the facts support a conclusion that the
infringement in this case is of
lesser gravity than in
typical cartels and justify a conclusion that the conduct
should be characterised as a (cid:145)serious(cid:146), rather than a (cid:145)very
infringement. Both undertakings refer to the
serious(cid:146),
Commission’s Greek
the
Commission regarded the infringement
in that case
merely as a serious one (36).

Ferries Decision, where

they engaged, during the period of

(300) The Commission notes that in the Greek Ferries Decision
the reasoning as to the seriousness of the infringement
was manifold: the Commission accepted that the parties
did not apply in full all the specific price agreements
and that
the
infringement, in price competition through discounting.
Moreover, the Greek Government, during the period of
the infringement, encouraged the undertakings to keep
fare increases within the inflation rates. Fares were kept
at one of the lowest levels within the common market
for maritime transport from one Member State to the
other. Finally, the infringement produced its effects only
within a limited part of the common market, namely
three of
the Adriatic Sea routes. Even if all routes
between Greece and Italy were taken into account, the
market was still small compared to other markets within
the Community (37).

(303) Within the category of very serious infringements, the
proposed scale of likely fines makes it possible to apply
differential treatment to undertakings. The Commission
in the present case, there is considerable
notes that,
disparity between the
the undertakings
committing the infringement.

sizes of

(304)

In order to take account of the effective capacity of the
undertakings concerned to cause significant damage to
the lysine market in the EEA and the need to ensure
that the amount of the fine has a sufficiently deterrent
effect,
the Commission considers it appropriate that
larger basic fines should be imposed on Ajinomoto and
ADM than on Kyowa, Cheil and Sewon because of the
considerable disparity between their
It has
therefore divided the parties into two groups according
to size and taken this into account in determining the
starting point for the fine according to the gravity of
the infringements. The comparison is made on the basis
of total turnover in the last year of the infringement. It
is appropriate to take worldwide turnover as the basis
for
the
undertakings because it enables the Commission to
assess
the
undertakings concerned in the markets affected by their
illegal behaviour.

and importance of

comparison of

resources

size of

relative

sizes.

real

the

the

the

Ajinomoto

ADM

Kyowa

Cheil

Sewon

Total turnover
(EUR billion)

Total lysine turnover
(EUR million)

5

12,6

2,8

1,5

0,946

183

154

73

40

67

(36) OJ L 109, 27.4.1999, p. 24; see also Commission Decision of 14

October 1998, British Sugar (OJ L 76, 22.3.1999, p. 1).

(37) See paragraph 148 of the Greek Ferries Decision.

(305) The Commission accordingly sets the basic amounts of
the fines determined for gravity as regards Ajinomoto
and ADM to EUR 30 million and as regards Kyowa,
Cheil and Sewon to EUR 15 million.

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(306)

that

In the view of ADM, there is no need for deterrence in
respect of itself under the European competition rules. It
it has already suffered such significant
claims
sanctions
certain
penal
executives) that it has already been sufficiently deterred
from further infringement in the USA, Europe or indeed
anywhere else in the world.

(including

sanctions

for

and

laws. The

to the anti-trust

with respect
laws applicable in the
Community, as well as the importance of complying
to all
guide
with those
management
of
employees
responsibility within the company whose positions
contacts with
involve material
competitors, material
contacts with customers or
suppliers, or other functions with a potential anti-trust
impact in the Community.

decision-making,

directed
all

levels

is
at

(307) ADM refers expressly to the US criminal fine imposed
on it which, in its view, addressed (cid:145)fixing the price and
allocating the sales volumes of lysine offered for sale to
customers in the United States and elsewhere(cid:146). ADM
underlines that, in October 1996, it pleaded guilty in a
US federal court to a criminal charge of conspiracy to
restrain trade in lysine sales in the USA and elsewhere
and paid a fine of USD 70 million. In May 1998, ADM
also paid a criminal fine to Canadian authorities of CAD
16 million in respect of the same conduct. A fine was
also paid to the Mexican authorities.

(308) Beyond these criminal fines, ADM put forward that it
settled consolidated US civil class action law suits. ADM
has paid additional settlement damages to direct and
indirect lysine purchasers, resolving various individual
US federal and State class action claims. ADM has also
paid to settle derivative shareholder actions brought
against it, based in substantial part on the behaviour
which was the subject of the lysine criminal actions and
civil litigation in the USA.

(310) Ajinomoto requests that the Commission’s assessment
of
the appropriateness of any fine in Europe take
account of the fact that it has already been subjected to
fines in the USA and Canada, and has therefore already
been punished for its acknowledged misdeeds.

to be

(311) The Commission does not consider that, in the present
case, fines imposed elsewhere, especially in the USA, on
ADM, Ajinomoto or any other undertaking to which
the present Decision is addressed, have any bearing on
infringing European
the fines
imposed for
that
the possibility
competition rules. Nor does
undertakings may have been obliged to pay damages in
civil actions have any relevance. Payments of damages
in civil
law actions which have the objective of
recouping the damages caused by cartels to individual
companies or consumers cannot be compared with
public
behaviour. The
for
Commission also notes that according to information
provided by the authorities of the USA and Canada, the
fines imposed by those authorities on the
criminal
undertakings concerned by this Decision only took
account of the anti-competitive effects that the collusion
under scrutiny in this Decision produced in the area of
their jurisdictions. Finally, criminal
fines imposed on
individuals cannot in any event be taken into account
because the present proceedings do not address natural
persons.

law sanctions

illegal

(312) The Commission welcomes ADM’s initiative to set up a
compliance policy. However,
case
indicates, this initiative came too late and cannot, as a
prevention tool, dispense the Commission from its duty
to sanction the infringement of the competition rules
which ADM has committed in the past (38).

the present

as

(309) ADM suggests that,

in July 1996, the ADM board of
directors approved the company’s first corporate code
of conduct and compliance policy. Stressing ADM’s
commitment to the highest ethical standards of business
the policy states that ADM demands strict
conduct,
adherence to the letter and the spirit of all
laws
applicable to the conduct of its business and demands
high standards of integrity and ethical conduct from its
personnel. The policy also makes it clear that the ADM
board of directors,
through its audit committee, will
assure that the code is properly administered. Moreover,
ADM indicates that, in July 1997, the ADM board of
directors named a compliance officer and authorised
additional staff
to expand the company’s compliance
efforts. In January 1999, ADM distributed a formal EC
competition law compliance guide, detailing the manner
in which all ADM employees must conduct themselves

(cid:151) Duration

(313)

In the present case, the undertakings concerned have
committed
an infringement of medium duration
(between three and five years). The starting amounts of
the fines determined for gravity (see paragraph 305) are
i.e. as to ADM
therefore increased by 10 % per year,
and Cheil by 30 % and Ajinomoto, Kyowa and Sewon
by 40 %.

(38) Judgment in Case T-305/94 PVC, loc. cit., at paragraph 1162.

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(cid:151) The basic amount

(314) The Commission accordingly set the basic amounts of
the fines as regards ADM at EUR 39 million, as regards
Ajinomoto at EUR 42 million, as regards Kyowa at EUR
21 million, as regards Cheil at EUR 19,50 million, and
as regards Sewon at EUR 21 million.

discretion in the fixing of fines pursuant to Article 15(2)
of Regulation No 17 are the legal thresholds indicated
by that provision, which refer,
inter alia, to the total
turnover of the undertakings concerned. For the rest, in
assessing the present case in accordance with the
the Commission has taken due
guidelines on fines,
account of the economic importance of the particular
activity concerned by the infringement in its conclusions
of gravity.

(315) ADM, Ajinomoto and Kyowa are of the opinion that, in
the present case,
it would not be appropriate for the
Commission, in fixing the amount of the fines, to follow
the methodology explained in its guidelines on fines.
They suggest that setting a fine by reference to a fixed
basic amount according to the category of infringement
without complementary reference to turnover affected
by the infringement may result in illegal fines even if
the limit in Regulation No 17 is not exceeded. They
clearly
assert
considered
vital
constituent of
the Commission’s calculations when
setting a proportionate and therefore a legitimate fine.
the
The undertakings
Commission may not radically alter the basic method of
setting fines without warning or impose heavier fines
based on a new methodology on offenders who have
terminated their
the new
methodology was published or had even been mooted
at a consultative level.

previous Community
to turnover

in question maintain that

activities before

practice
to be

reference

illegal

that

a

(316) ADM refers to paragraphs 94 and 95 of the judgment
in case T-77/92 Parker Pen (39) in which the Court of
First Instance stated that the Commission did not take
into account the fact that the turnover accounted for by
relates was
to which the infringement
the product
relatively low in comparison with the turnover resulting
from Parker’s total sales, and therefore reduced the
Commission’s fine. ADM is of
the
Court made it clear that a fine set without regard to the
company’s Community turnover in the goods to which
the
considered
relates would
disproportionate for that very reason.

the opinion that

infringement

be

(317) The Commission notes from the outset that as it is not
possible to have recourse to the method which is
provided for in its guidelines of fines, in cases where the
decision predates those guidelines (40), it is equally not
possible to question the Commission’s right to follow
the method, which the guidelines lay down,
in cases
where the decision is taken after its publication.

(318) As to the need to take account, in fixing the fine, of the
turnover in the product in question the Commission
agrees that, in the past, it frequently determined the fine
according to a base
certain
rate
percentage of sales in the relevant Community market.
the Commission’s
However,

the only constraints of

representing a

(39) [1994] ECR II-289.
(40) Case T-141/94 Thyssen, loc, cit., at paragraph 666.

calculated on the basis of

(319) Kyowa submits that, in view of its cooperation with the
Commission in the present case,
fairness and due
process require that any fine imposed on it by the
Commission be
the
regulations, precedents and practice of the Commission
applicable
into its
time Kyowa
cooperation with the Commission. The relevant factual
considerations Kyowa puts forward to constitute the
circumstances of its cooperation include behaviour of
the Commission’s staff in discussions regarding the basis
for its cooperation.

entered

the

at

to decide,

(320) Kyowa suggests that in meetings with the Commission’s
staff, which occurred on 31 July and 1 August 1997,
while always recognising that the amount of the fine is
the Commission itself
a matter
the
for
methodology
the Commission for
then used by
determining its potential fine was discussed. According
to Kyowa,
the Commission’s
informed that
to base the fine on an
traditional approach was
enterprise’s turnover within the common market for the
product
involved in the investigation during the last
year of the illegal conduct, and that there was nothing
in this investigation which would warrant a different
approach.

it was

(321) Kyowa stresses that the substance of its discussions with
the Commission’s staff was summarised in a letter sent
to the Commission on 7 August 1997. Kyowa
underlines that the letter clearly and unequivocally sets
forth the bases upon which Kyowa proceeded with its
the expectation that any base fine
cooperation,
would be calculated in accordance with the then
existing traditional Commission approach.

i.e.

(322)

In the Commission’s view the substance of Kyowa’s
discussions with the Commission’s staff on the terms of
its cooperation is evidenced by Kyowa’s letter of 7
August 1997, read in conjunction with a letter, which
the Commission,
letter,
in response
addressed to Kyowa on 25 August 1997.

to Kyowa’s

(323)

It is true that the Commission did not dispute that, in
the past, it frequently determined the fine according to a
base rate representing a certain percentage of sales in
the relevant Community market. However, in its letter

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of 25 August 1997 the Commission expressly stated
that (cid:145)it is evident that there are a number of different
elements which determine the importance of a possible
fine,
the
infringement and the benefit for the parties generated
by the infringement(cid:146).

the duration and gravity of

such as

likely fine, but, on the other hand,
imposes on the
Commission its own terms of cooperation by declaring
in relation to
its expectations as to the possible fine,
cannot make
which the Commission’s
any
statements without
the Commission’s
discretion as to the imposition of the fine.

staff
committing

(324)

It is the Commission’s view that the terms of reference
of any cooperation with the Commission are set by the
leniency notice. Already in the first meeting between
Kyowa and the Commission’s staff concerning Kyowa’s
potential cooperation in the Commission’s investigation,
which took place on 8 July 1997, the Commission’s
the investigation made (cid:145)specific
staff
reference(cid:146) (41) to the leniency notice.

in charge of

(b) Aggravating circumstances

(cid:151) Role of leader in the infringement

(325) The leniency notice sets out the conditions under which
enterprises cooperating with the Commission during its
investigation into a cartel may be exempted from fines,
or may be granted reductions in the fine which would
otherwise have been imposed upon them. Furthermore,
that cooperation by an
the notice expressly states
enterprise is only one of several
factors which the
Commission takes into account when fixing the amount
of a fine.

(326) Concerning the procedure, the leniency notice explains
that where an enterprise wishes to take advantage of the
it should
favourable treatment set out in the notice,
contact
for
Competition. But
that only on its
it also specifies
adoption of a decision will the Commission determine
the fine.

the Commission’s Directorate-General

(327) Although the Commission is aware that the leniency
notice will create legitimate expectations on which
enterprises may rely when disclosing the existence of a
cartel to the Commission, these expectations concern
only the non-imposition or reduction of a possible fine,
provided that all the conditions set out in the notice are
met, and not the basic amount of the fine.

(328)

In particular,

It is therefore clear, that any legimitate expectation in
view of the amount of the fine which the Commission
imposes at the end of a proceeding, can only arise from
the leniency notice itself.
it is excluded
from the outset
that an enterprise wishing to take
advantage of the favourable treatment set out in the
notice
terms
different
from those explained in the notice. More
specifically, it is not possible that such an undertaking,
during its contacts with the Commission’s staff, on the
the
the
one
Commission’s staff to commit the Commission as to the

indirectly determine

can directly or

impossibility

recognises

hand,

of

(41) At page 2 of Kyowa’s written reply of 1 February 1999 to the

Commission’s statement of objections of 29 October 1998.

(329) The Commission considers that ADM and Ajinomoto
were the leaders in the infringement. This allegation is
based on the following considerations.

(330) Until the entry of ADM onto the market for lysine,
Ajinomoto established the lysine prices which the other
Asian producers agreed to follow (meeting of 20
September 1990).
It was also the prime mover in
ensuring that
the other Asian producers agreed to
cooperate with ADM in the framework of the global
cartel. On 1 October 1992, Ajinomoto became a proxy
for ADM in local European conspiracy meetings. During
its talks with ADM of 4 November 1992, Ajinomoto
and ADM envisaged economic sanctions against Sewon.
Two days earlier, Ajinomoto threatened Sewon with an
anti-dumping action in Europe. On 25 October 1993,
Ajinomoto agreed with ADM that it would get the other
Asian producers to agree to the allocation scheme. On
23 November 1994 and 20 April 1995, Ajinomoto
(and Kyowa) again tried to persuade Sewon to agree to
a
allocation. Moreover, Ajinomoto
manned and organised the secretariat of the quantity
monitoring system.

sales quantity

in order

(331) After its entry onto the lysine market and until June
1992, ADM used the price of
lysine to force other
lysine producers to conclude with it agreements with
the purpose of restricting competition on the lysine
market. ADM repeated this behaviour in the first half of
1993,
to
conclude quantity agreements. Moreover, on 19 May
1994, ADM warned Sewon to reduce its sales or there
would be pressure on price. On 23 August 1994, ADM
threatened the other lysine producers with another price
war, and predicted that Sewon would be severely
damaged not only in the overseas markets but in the
Korean market as well.

lysine producers

to force other

(332) Both ADM and Ajinomoto were the driving forces
behind the global cartel. The meetings of 30 April 1993
in Decatur, continued on 14 May 1993 in Tokyo, and
involving the top
of 25 October 1993 in Irvine,
management
in particular
illustrate the leading roles ADM and Ajinomoto played
in the infringement.

both undertakings,

of

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(333) ADM and Ajinomoto contest the Commission’s finding

on the role they played in the infringement.

the sales allocation scheme. It suggests that the evidence
shows that Ajinomoto would undertake this task.

(334) ADM suggests

that Ajinomoto, Kyowa and Sewon
operated a cartel for at least 17 years prior to its market
entry. ADM submits that the long-standing nature of the
cartel prior to its appearance on the scene highlights
that it could not plausibly be thought to have achieved
a
a
long-standing
in
arrangement
entry into the
market.

immediately upon its

leadership

position

such

(335) Concerning its price strategy, ADM holds

that

the
Commission’s allegation that it engaged in price cutting
is unsupported and
to force quantity agreements
incorrect. ADM contends that its pricing strategy was
consistent with the price needed to achieve its target of
50 % market share in five years. In the context of this
plan and in view of the incumbent producers’ strategy,
its low pricing was in fact the only option available to it
to attempt
to establish entry into the lysine market.
ADM claims that the constant price wars throughout
the
the
the
than any
non-implementation of
leadership role within it.

infringement

the cartel

period

reflect

rather

of

(336) As regards the events on 4 November 1992, 19 May
1994, and 23 August 1994, ADM notes that the only
ADM representative present was Mr Whitacre. After 4
November 1992 this ADM official was working with
the FBI. ADM claims
that Mr. Whitacre’s actions
exaggerated its role in the infringement. ADM puts
forward that he was motivated by a personal objective
to deflect onto ADM an FBI investigation of his own
criminal acts by expanding ADM’s potential culpability
in future criminal proceedings.

(337)

In addition, ADM indicates that the description of the 4
November 1992 conversation belies the suggestion that
ADM and Ajinomoto were collaborating to punish
Miwon. ADM stresses that it made it clear that it was
intending to ship to Korea before any suggestion of
sanctions against Miwon was made by Ajinomoto.
It
was ADM’s independent commercial decision to make
the shipment. Concerning the meeting on 19 May 1994
its representative
with Sewon, ADM underlines that
merely noted that prices would reduce if volume
increased. This sentence is simply a statement of the
natural outcome of supply and demand.

(339) The Commission does not accept

that

the mere
pre-existence of the cartel excluded that ADM played
from the beginning of its involvement a leading role in
the collusion. As is shown by ADM’s behaviour during
the meeting of 23 June 1992 in Mexico, ADM
immediately took the lead as to the future structure of
the cartel by referring to its experience in the citric acid
collusion.

(340) Moreover, the Commission does not put into question
ADM’s awareness
that, under normal conditions of
competition, its volume targets could only be reached
by fierce price competition. However,
it is clear from
the information in the Commission’s possession that
ADM’s first choice was to realise its volume targets with
collusive prices
(meetings of December 1991 with
Ajinomoto and Kyowa). By its temporarily low prices
ADM demonstrated towards its competitors the losses
that all operators would have to bear in the absence of
an agreement on volumes and prices. These statements
of
the outcome of supply and demand in case of
substantial price cuts constitute threats towards the
other lysine producers, and in particular in relation to
to volume
Sewon which was
to submit
reductions. Therefore the Commission’s
finding that
ADM engaged in price
cutting to force quantity
agreements is coherent with ADM’s primary goal of
achieving a 50 % market share.

reluctant

(341) As to the question whether Mr Whitacre’s actions have
to be attributed to ADM, the Commission notes that
of ADM’s
Mr Whitacre was
President
former
Bioproducts Division reporting directly
to ADM’s
vice-chairman. ADM’s vice-chairman, who had no
connections with the FBI, was equally involved in the
lysine cartel activities
conspiracy. Moreover, ADM’s
started well before Mr Whitacre’s commitment to work
for the FBI, which in particular is demonstrated by the
meetings of 23 June and 1 October 1992. It is therefore
clear that Mr Whitacre acted within ADM’s overall
company policy towards lysine.

(342) Ajinomoto claims that in the period prior to mid-1992,
when meetings and agreements with ADM began, the
initiative for discussions of the European market did not
come from Ajinomoto but rather from Sewon and
Kyowa. Ajinomoto holds
the meetings among
Ajinomoto, Kyowa, and Sewon, which took place at the
end of 1990 and the beginning of 1991, alternated
between Tokyo and Korea, as the three companies took
turns hosting the meetings.

that

(338) Finally on this point, concerning the meeting of 25
October 1993 with Ajinomoto, ADM emphasises that it
did not undertake to get the other producers to agree to

(343) Ajinomoto contends that, in particular, the lysine price
agreed on 20 September 1990 between the Asian
producers was not imposed on the other two producers,
but instead that this price had been discussed among

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tentative

the three producers by telephone and that prior to the
reached.
meeting
Ajinomoto alleges that rather than being forced to go
along, Sewon enthusiastically agreed to the proposed
arrangement.

agreement

been

had

it did not
initiate discussions
(344) Ajinomoto alleges that
with ADM nor did it
force any other producer to
participate in the cartel. To the contrary, Ajinomoto
asserts
the
and Orsan
position
(Ajinomoto’s joint venture partner in Eurolysine)
to
ADM, and vice versa.

frequently used to express

it was
of Kyowa,

Sewon, Cheil,

that

it

that

(345) Ajinomoto claims that ADM affected the conduct of the
incumbent producers well before its effective entry to
the market. The incumbent producers were aware of
ADM’s intention to enter the lysine market from an
realising also that ADM’s huge capacity
early date,
intended to carve out a
build-up meant
significant share of
for itself. Ajinomoto
incumbent
underlines
producers to inform them of its plans in this regard in
1991. A review of the chronology of events prior to
entry into the
and immediately following ADM’s
in Ajinomoto’s
European lysine market demonstrates,
opinion, the extent to which the incumbent producers
capacity build-up and
were
aggressive
assumed
latter
effective control.

that ADM approached

influenced by ADM’s

even before

the market

stance,

the

the

(346) Ajinomoto suggests that, from its market entry, ADM
was the sole leader in the infringement, proposing the
structure and main workings of the price fixing and
volume allocation initiatives. Ajinomoto maintains that
by the time ADM began full production, it was actively
orchestrating the cartel’s proceedings.
In particular,
ADM forced the other manufacturers to discuss prices
and
charging very
and volumes by
threatening to do so again if its demands were not met.
Ajinomoto suggests that ADM proposed the structure
and main workings of
the price fixing and volume
allocation initiatives, which were copied from the citric
acid cartel in which ADM had participated.

low prices,

(347) Ajinomoto contests the Commission’s assertion that, on
1 October 1992, it became a proxy for ADM in local
European conspiracy meetings. It puts forward that, in
reality, it was simply, at ADM’s direction, to be used as
a conduit to report to ADM on future meetings.

it

(348) Ajinomoto is of the opinion that it would have been
to coerce Sewon (or any other
impossible for
to agree to its proposals. As regards its
producer)
alleged threat of an anti-dumping action, Ajinomoto
the party interested in the issue of
maintains that
anti-dumping was
but Orsan,
Ajinomoto’s partner in Eurolysine. Ajinomoto indicates
that Eurolysine was at the time effectively managed by

not Ajinomoto

Orsan and its owner La Farge CoppØe, over whom
the Eurolysine
Ajinomoto had no control, and that
representatives at
the meeting of 2 November 1992
were appointed by Orsan. Ajinomoto suggests that as
ADM was going to ship lysine to Korea in any event,
regardless of any encouragement on its part which
could have occurred on 4 November 1992, the idea of
economic sanctions against Sewon cannot be attributed
to it. Ajinomoto does not contest that, on 23 November
1994 and 20 April 1995, it tried to persuade Sewon to
agree to a sales quantity allocation. It claims, however,
that the fact that it had to try to (cid:145)persuade(cid:146), rather than
force Sewon to agree to ADM’s demands,
is hardly a
sign of leadership.

(349) Concerning the role it played on 25 October 1993,
Ajinomoto contends that it simply tried to persuade the
other producers
to comply with ADM’s demands.
Ajinomoto suggests that, in reality, it was ADM’s plan,
by ADM’s
which was
vice-chairman. Ajinomoto admits that, once again,
it
was the intermediary between ADM and the other
producers, but not a leader.

the meeting

devised

at

it

for

that

assumed

responsibility

(350) Ajinomoto states that the the role of manning the cartel
secretariat was imposed on it by ADM. Ajinomoto
claims that from the evidence it is apparent that ADM
suggested the idea. Moreover, Ajinomoto holds that the
fact
certain
administrative tasks cannot be taken as evidence that it
was a leader. It refers to the Commission Decision in
Cement, where the Commission noted that the fact that
different undertakings may play differing roles in the
pursuit of the common objective is in the nature of
cartels (42). Ajinomoto alleges that,
the
reason why Eurolysine sent out invitations to the other
producers
because
Eurolysine had the chairmanship of the Fefana amino
acid working party. Ajinomoto argues
it and
Kyowa acted as coordinators because, unlike the Korean
producers,
large manufacturers with
worldwide coverage, who were therefore interested in
since
lysine activities
Ajinomoto had the largest market position and since all
participants in the cartel other than ADM were Asian
corporations, Ajinomoto finds it not surprising that it
was requested to act as coordinator.

Fefana meetings was

In particular,

for example,

they were

regions.

in all

that

the

to

(351) Ajinomoto puts forward that Sewon and Kyowa also
frequently took the initiative in cartel discussions.
Ajinomoto suggests
all other
producers played an equal role in responding to the
threat posed by ADM. Ajinomoto suggests
if,
during the early stages of the discussions with ADM,
any companies
just as
instrumental as itself. Ajinomoto also suggests that if it

took the lead, Kyowa was

in particular,

that,

that

(42) OJ L 343, 30.12.1994, p. 1, paragraph 46.

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7.6.2001

stresses

infringement, Ajinomoto

was a leader, Kyowa should also be classed as such,
since, on 23 November 1994, it too sought to persuade
Sewon to accept ADM’s demand. As to Sewon’s role in
the
this
undertaking was an active participant in price fixing
the period and participated in volume
throughout
allocation, except where it disagreed with the volume
the others were willing to allocate it. Ajinomoto asserts
that, rather than a victim of the conspiracy, in reality
to its own benefit, while
Sewon used the cartel
the other
free-riding on the volume agreements of
producers.

that

the

Kyowa,

(352) As to Ajinomoto’s claims that in the period prior to
mid-1992 the initiative for discussions of the European
market did not come from it but rather from Sewon
and
that
the market
Ajinomoto/Eurolysine was, at
leader in the EEA. It therefore had the choice to accept
or
those initiatives. Once it accepted the
collusion, it also took the lead in the coordination. This
is confirmed by the information in the Commission’s
possession concerning the meeting of 20 September
1990.

Commission

to reject

notes

time,

that

(353)

In relation to the tasks which Ajinomoto assumed in the
framework of the conspiracy (intermediary between, on
the one hand, ADM and, on the other hand, Kyowa,
fake Fefana
Sewon, Cheil and Orsan, organiser of
meetings, manning
the
Commission considers that it is irrelevant whether these
tasks were offered to Ajinomoto by
the other
participants or
seized by Ajinomoto on its own
for the conclusion that
initiative. The decisive point
Ajinomoto was a leader in the infringement is that this
undertaking actually exercised these functions.

secretariat)

cartel

the

(354) Concerning Ajinomoto’s

repeated attempts

to bring
Sewon into a comprehensive volume agreement,
it is
clear that also ADM and, to a lesser degree, Kyowa have
from time to time participated in these actions or even
taken similar action on their own initiative. However,
these actions demonstrate again the active role played
by Ajinomoto in the infringement and contribute to the
overall assessment that it was a leader. It must, however,
the role played by Kyowa, which
be stressed that
undoubtedly was
cartel member, was
substantially different from the roles played by ADM
and Ajinomoto, both in relation to frequency and to
importance for the cartel’s operation.

an active

(355) Finally on this point, the fact that ADM also played a
leading role in the infringement does not excuse
Ajinomoto’s behaviour. Both undertakings were by far
the most powerful cartel members with the same
ambition,
to be the leader in the world lysine
market.

i.e.

(356) For

these

reasons, ADM’s

and Ajinomoto’s basic
i.e.
amounts of the fine are increased by 50 % each,
with regard to ADM by EUR 19,50 million, and with
regard to Ajinomoto by EUR 21 million.

(c) Attenuating circumstances

(cid:151) An exclusively passive role in the infringement

(357) Sewon and Cheil claim that they played an exclusively

passive role in the infringement.

(358) Sewon submits that it was forced to participate in the
infringement by means of threats from the large lysine
It
producers, namely Ajinomoto, ADM and Kyowa.
holds that through its obstructive conduct, undertaken
at great
it very often prevented the
producers from reaching a consensus.

risk to itself,

(359) First, with regard to the collusion on price, Sewon
maintains that it was not in a position to openly oppose
the demands of the large producers. In order to force
cooperation from Sewon, these producers continuously
its
threatened Sewon with measures
existence.

endangering

it

(360) Second, with regard to volume allocation, Sewon states
that, despite threats and intimidation from the large
producers,
resisted the allocations agreed upon
between the large producers and obstructed their
activities. For fear of retaliatory measures by the large
producers, Sewon tried to avoid open conflict with
these producers and, as a result, at
times gave the
impression of being willing to cooperate on the issue of
volume allocation. Sewon states that open confrontation
with the large producers was nevertheless unavoidable
as from the meeting of 19 May 1994 in Paris, where
Sewon revealed its major
in production
capacity, causing substantial retaliatory threats from the
large producers and the eventual collapse of the entire
conspiracy.

increase

(361) Cheil suggests that, as a small producer and a new
entrant into the market, it invariably adopted a very low
profile when attending meetings with the other
companies. It maintains that it never took the initiative
to call any meeting and it never led the discussions at
any meeting. Cheil claims that,
in fact, the principal
reason why it attended these meetings was to gain
further insight into the lysine industry.

(362) The Commission rejects Sewon’s arguments for

the

most part, and Cheil’s arguments in their entirety.

(363) The Commission notes that,

in a cartel and for the
purpose of determining the appropriate fine, there are
three categories of members, i.e. leaders, active members
In the present case, ADM and
and passive members.

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Ajinomoto were the leaders. As to the role of the other
three cartel members, the Commission is of the opinion
that in substance (indeed in a few instances Kyowa took
a leading role)
into the category of active
members. This follows not only from the frequency of
their participation in meetings during a long period, but
also from their behaviour during the meetings where
they actively took part in the discussions.

they fall

(368) Sewon claims that it consistently undercut the agreed

target prices.

(369) Cheil states that its prices were almost always the lowest
in the market, in some cases up to 25 % lower than the
prices charged by the other companies.

(364)

In fact, Sewon and Cheil do not call
in question the
Commission’s finding on this point. Rather they put
forward justifications for their active participation in the
collusion. However, neither the threats of which Sewon
thought that it was the target nor Cheil’s need to gather
information can justify infringements of the European
competition rules. Sewon should have informed the
competent authorities, including the Commission, of the
illegal behaviour of its competitors in order to put an
end to it, and Cheil would have, with some effort,
certainly found legal means of gathering information
granting it
into the lysine industry for
operating its lysine business in competition with the
other producers.

the insight

(365) The Commission, nevertheless, considers that, from the
beginning of 1995 and in relation to sales quantities,
from an active to a
Sewon changed its behaviour
passive member in the infringement. Indeed, Sewon was
not a party to the 1995 agreement on quantities, and
though Sewon remained a participant in the agreement
in the
on the exchange of
beginning of 1995, to inform the other producers on its
sales
the
Commission finds that the increase in Sewon’s fine on
account of duration should be reduced by 20 %.

quantities. Under

circumstances,

information,

it ceased,

those

(370) Ajinomoto suggests that it is apparent from the data
referred to in the present Decision that
the cartel
members did not keep to agreed prices. It stresses that
the five cartel members never achieved the same
average monthly price.

(371) As to the agreements on quantities, ADM states that it
substantially exceeded its allocations each year.
Its
in its production capacity and
relentless
production attest that there was never any reduction or
restraint in its production or supply of lysine.

increase

(372) Sewon asserts that it increased its worldwide sales from
approximately 27 000 tonnes in 1990 to approximately
43 000 tonnes
its
production and sales capacity at all times.

in 1995 and made full use of

(373) Cheil claims,

in particular,

that although it

indicated
that it might accept a production capacity of 17 000 t
(at the Honolulu meeting in March 1994), at the time
this indication was given,
it had already taken the
internal decision to expand its capacity to 40 000 t.

(cid:151) Non-implementation in practice of the offending

agreements

(374) As to the agreement on the exchange of information,
ADM notes that it behaved strategically by lying and
dissembling,
in its exchanges of information with the
other lysine producers, about common information and
and
such as prices
variables
proposed market allocation quotas
the
relevant period.

sales
throughout

to customers,

(366) ADM, Ajinomoto, Sewon and Cheil suggest that they
offending

implement

practice,

the

in

not,

did
agreements.

(367) As to the price agreements, ADM states that, excepting
at most those concluded during the Tokyo meeting of 8
December 1993 and the meeting in Hawaii of 10 March
1994,
its actual European transaction prices charged
around the time of each price agreement referred to in
the present Decision were lower than those agreed
upon. ADM contends that
the other producers were
well aware that it was not implementing any agreed
terms. ADM is of
the list price
instructions,
to which the Commission refers in the
present Decision, must be contrasted with the analysis
of transaction data comparing the prices stated, to have
been agreed with actual ADM prices, which were far
below that level. ADM contends that this transaction
analysis is a more accurate reflection of ADM’s pricing
than the list prices.

the opinion that

(375) Cheil claims that, whenever it submitted data on sales
volumes, such data were continuously incorrect as they
understated its actual sales. Cheil stresses that in fact it
supplied misleading
other
companies. Cheil maintains that, for example, in 1994 it
reported 8 951 t total sales in Europe, whereas the real
sales volume amounted to 9 689 t.

information

the

to

(376) The Commission notes

the implementation of
that
agreements on target prices, which were agreed in most
cases, does not necessarily require that
these prices
eventually are actually applied in the market. Such
agreements are implemented when the parties fix their
prices in order to move them in the direction of the
target agreed upon. From the information in the
Commission’s possession it is clear that, in the present
case, after most of
the parties
fixed their prices in accordance with their agreements.

the price agreements,

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rebates

resulting in different
the fact

(377) Moreover, it cannot be expected that, by implementing
a price agreement, a party to this agreement charges to
its customers one single price. Normally, customers get
a variety of
actual
transaction prices. Therefore,
that different
actual transaction prices exist in relation to a company’s
customers and to the customers of different companies
does not prove
agreements were not
implemented. A company’s internal price instructions,
as have been discovered by the Commission in the case
the
of ADM,
implementation of price agreements.

reliable proof

that price

the most

are

of

it

is clear

(378) With regard to the implementation of the agreements
the cartel members
on quantities,
considered the quantities allocated to them as
the
minimum quantities. As long as every party was able to
sell at least the quantities allocated it, the agreement was
information in the
to the
respected. According
Commission’s possession, this was the case.

that

(382)

(383)

the

ended

infringement. However,

In the present case, the Commission carried out its first
investigation on 11 and 12 June 1997. At that time, the
undertakings concerned by the present Decision had
already
the
Commission considers that, if the undertakings had not
ended the infringement on their own initiative before
the Commission intervened, but
the
infringement is caused by the intervention of another
authority, the termination of the infringement will only
then constitute an attenuating circumstance in the
setting of the fine, if the undertaking had terminated the
infringement as soon as the other authority intervened.

the end of

if

the FBI searched the offices of ADM,
In the USA,
Ajinomoto and Sewon on 27 June 1995. The
Commission has no reason to believe
the
undertakings
the present Decision
continued the infringement beyond that date.

concerned

that

by

(379) Concerning the implementation of the agreement on the
exchange of information, it is the Commissions’s view
that such an agreement is implemented as soon as the
parties submit to each other the data they agreed upon.
The question whether this data is correct, and to what
degree, as well as whether incorrect data had been
is not relevant in
submitted in error or intentionally,
this context.
the data,
submitted to each other by the cartel members, was
acceptable when compared with each of the producers’s
own data concerning the total market.

it appears that

In any event

(384) For those reasons, the basic amounts of the fines are
decreased by 10 % each,
i.e. with regard to ADM by
EUR 5,85 million, with regard to Ajinomoto by EUR
6,30 million, with regard to Kyowa by EUR 2,1 million,
with regard to Cheil by EUR 1,95 million, and with
regard to Sewon by EUR 1,98 million.

(cid:151) Other attenuating circumstances

(380)

In principle, an agreement restricting competition is
implemented where the cartel members determine their
conduct on the market according to the joint intentions
expressed.
In case of repeated agreements, concluded
over a long period, the Commission is of the opinion
that it can be presumed that the agreements have been
implemented by each of the parties as they would not
have repeatedly agreed to meet in locations worldwide
to fix prices and share markets over such a long period
the undertakings
of
concerned bear the full burden of proof to show that
they did not,
the offending
agreements. The Commission finds that the arguments
put forward by the parties do not rebut either the proof
on which the Commission bases its conclusion, nor the
described presumption.

In such circumstances,

in practice,

implement

time.

(385) ADM submits

impact of

its
that any detrimental
participation in the infringement was outweighed by the
its entry into the market and
positive effects of
continuing increases in production. In this respect, ADM
argues that, prior to its entry, the incumbent producers
had operated a policy of high prices and restricted
output. ADM claims that, in contrast, it made it clear
that lysine is a commodity. ADM considers that its entry
into the production and sale of synthetic lysine in
Europe resulted in a net benefit
to customers and
estimates total benefits for the years 1992, 1993, 1994
and the first half of 1995 to be between approximately
USD 147,7 million and USD 152,2 million.

(386) Furthermore, ADM justifies its collusion with its lysine
competitors by both offensive and defensive factors.

(cid:151) Termination of the infringement as soon as a public

authority intervenes

(387) From a defensive point of view, ADM claims that there
was a real threat of retaliation by the lysine producers’
cartel existing before its market entry.

(381)

In its guidelines on fines, the Commission has indicated
that it will reduce the basic amount of the fine when
offenders terminate the infringement as soon as the
Commission intervenes, and in particular when it carries
out checks.

(388) As to the offensive factors, ADM maintains that lysine
market data of various sorts, even in aggregate or
generalised form, were simply not readily available to
ADM managers. ADM adds that, equally, there were no
mechanisms in place to assist it to discern any effort to

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grow overall demand for lysine. ADM suggests that
such
enabled it
engaging the
information.

to find out

cartel

(389) The Commission does not agree that the reasons, which
ADM puts
illegal
behaviour, constitute attenuating circumstances in view
of the determination of the appropriate level of the fine.

forward in order

to justify its

(390) First, the Commission considers that it is clear that the
benefits to the European economy would have been
greater if ADM had competed with the other lysine
producers. The European economy, and in particular the
European consumers, suffered an important loss which
otherwise would not have occurred if ADM’s market
entry and its subsequent behaviour on the market were
realised under normal conditions of competition (see
paragraphs 261 to 297 concerning the assessment of
the infringement on the lysine
the actual
market
that ADM’s illegal
It
behaviour had a substantial negative impact on the
lysine market in the EEA.

impact of
in the EEA).

is clear

collusion with its

(391) Secondly, as to the offensive and defensive factors by
lysine
its
which ADM justifies
competitors,
from the outset,
the Commission notes,
that ADM does not claim, and indeed has not submitted
any proof, that it was aware of the existence of the
Asian/European cartel. Therefore,
that
ADM had to defend itself against retaliation by the
incumbent lysine producers by joining this cartel has to
be rejected. In any event, instead of joining the cartel,
ADM should have privately enforced the competition
rules or denounced the
its
competitors to the competition authorities.

illegal behaviour of

the argument

(394) The Commission rejects

the
and commercial
commercial benefits of
activity should be used to offset the negative effects of
infringements of the competition rules.

suggestion that

industrial

the

(395) Kyowa suggests that, during the cartel period set forth
in the present Decision, in the EEA it enjoyed only a
small profit
those years, and suffered
substantial
losses during the other four years. Kyowa
claims that, in the EEA, its lysine business suffered net
losses for the period as a whole. Kyowa requests the
Commission to take account of this fact.

for one of

(396) The Commission does not consider that,

in general,
an
losses which occurred during the period of
infringement of
the competition rules, constitute an
attenuating circumstance in the fixing of the fine. In any
event, the Commission should know the reasons which
formed the basis of the losses in order to be able to
assess
relevance. However, Kyowa has not
their
indicated such reasons.

(d) Application of the Commission’s leniency notice

stages of

at different

(397) The addresses of the present Decision have cooperated
with the Commission,
the
investigation and in relation to different periods covered
the
by the investigation into the infringement
purpose of receiving the favourable treatment set out in
the Commission’s leniency notice. In order to meet the
legitimate expectations of the undertakings concerned as
to the non-imposition or reduction of the fines on the
basis of their cooperation, the Commission examines in
the following section whether the parties concerned
satisfied the conditions set out in the notice.

for

(392) Finally on this point, with regard to information
gathering, it is clear that behaviour which, in principle,
is prohibited pursuant to Article 81(1) of the EC Treaty
and Article 53(1) of the EEA Agreement can only be
declared to be compatible with the common market if
the conditions set out in Article 81(3) of the EC Treaty
and Article 53(3) of the EEA Agreement are met. That
is not the case here. There can be no doubt that if
information cannot be collected by legal means, which
in the Commission’s view in practice did not occur, the
undertakings concerned have to operate on the market
without such information.

(cid:151) Preliminary remarks

(398) ADM indicates that after the 27 June 1995 search of its
offices by the FBI, it has fully cooperated with the US
authorities, and hence indirectly with authorities of
other States with which the USA has an agreement on
cooperation in anti-trust matters. ADM therefore claims
favourable treatment under the leniency notice.

(393) ADM and Ajinomoto stress that they have contributed
the European
significantly to the development of
in Europe,
industry, creating employment
agricultural
and generating revenues in Europe through the export
of
their positive
contribution to the European economy be taken into
account in their favour in the Commission’s assessment
of any fines in the present case.

lysine. They therefore request

that

(399) Moreover, ADM alleges

that, by ADM Ingredients’
response of 24 October 1997 to the Commission’s
formal
information of 28 July 1997
pursuant to Article 11(1) of Regulation No 17, it had
cooperated with the Commission in establishing the
facts relating to the present proceeding.

requests

for

(400) Furthermore, ADM claims that, after having received the
statement of objections in the present case, it provided

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the Commission with information and documents
in
which materially contributed to the establishment,
relation to the period before its own market entry, of
the full extent of the infringement by the other lysine
producers. It concludes that this behaviour should be
the
rewarded with a reduction of
leniency notice.

the fine under

(404)

particular outside the exercise of any investigatory
power used by the Commission (43).

that

In relation to the information ADM submitted to the
Commission on the behaviour of the lysine producers
before its market entry and without taking any position
as to the value of the information provided by ADM,
to the difference between
the Commission points
(cid:145)whistle blowing(cid:146) and (cid:145)self-incrimination(cid:146). The provision
of information on cartels in which the informant has
not participated cannot, by the very fact
the
informant is not the subject of any fine, be dealt with
under the leniency notice. This principle applies equally
to cartel members which provide
information on
periods for which a fine cannot be imposed on them.
The benefit of the leniency notice arises only in favour
of enterprises participating in cartels, which are deterred
from informing the Commission of the existence of the
cartel by the risk of incurring fines. In the present case,
there is no risk for ADM of being fined for the period
before its involvement in the collusion with the other
in the
parties. Although the Commission welcomes,
information on the existence of
public interest, all
cartels,
from parties which are not
involved in the collusion, there is no possibility for the
Commission to reward such informants.

including that

(405) At section I of its requests for information of 28 July
the Commission required ADM to submit all
1997,
business records in relation to a number of meetings
with other amino acid producers. In response to this
request, ADM Ingredients replied on 24 October 1997
that its offices in Europe had been requested to locate
the requested information, and that it had also requested
the assistance of its US parent company. In its reply of
24 October 1997, ADM Ingredients enclosed copies of
documentation relating to the travel arrangements of
some of its officials. It then noted that these are the
only documents it can locate which are responsive to
the Commission’s questions relating to these meetings.
the present proceedings,
However,
could have provided the
ADM admitted that
the documents which it
Commission with copies of
provided to the US authorities. It suggests that it did not
do so because it considered that the provision of those
documents would not, in practice, provide worthwhile
assistance to the Commission.

in the course of

it

(406)

is

It
the Commission’s view that ADM refused to
its
cooperate with the Commission in carrying out
investigation in the present case. The Commission has
come to this conclusion on the basis that ADM did not
supply the information in its possession corresponding
to the meetings with competitors
the
Commission in its requests for information of 28 July
1997 pursuant to Article 11(1) of Regulation No 17.
The Commission therefore considers that ADM has not

listed by

(43) Case T-308/94 Cascades, loc. cit., at paragraph 260.

its

participation

in meetings

(401) Finally, ADM alleges that it always was willing to satisfy
the conditions of the leniency notice to the best of its
ability. ADM claims that it was prepared to supply to
the Commission information which was available to it
and that it is prepared in future to divulge any relevant
information as soon as it becomes able to do so. ADM
notes, however, that the persons most knowledgeable
concerning
and
communications with the cartel were not in a position
to provide ADM with information that would have
to cooperate with the Commission.
permitted it
Moreover,
though ADM could have provided the
Commission with copies of the documents which ADM
provided to the US authorities, it did not do so because
these documents
the provision of
it considered that
would not, in practice, provide worthwhile assistance to
the Commission without access
to the individuals
involved. ADM argues that it would be inequitable to
prejudice a company which satisfies the conditions of
the leniency notice to the best of its ability. ADM is of
the opinion that
the relevant criterion should be
whether a company is prepared to and does divulge the
full extent of relevant and useful information available
to it.

(402) As

i.e.

jurisdiction,

to ADM’s possible

cooperation with the US
authorities in their lysine investigation, the Commission
notes that, according to the information provided by the
authorities of the USA, their investigation was limited to
the anti-competitive effects that
the collusion under
scrutiny in the present Decision produced in the area of
their
is
the USA.
obvious that the US authorities have no competence to
find an infringement of the European competition rules.
The Commission admits that the intervention of the US
authorities caused the end of the collusion effecting the
EEA. It is however clear that any fine to be imposed by
the European
the Commission in application of
competition rules
the
if
cooperation of
the undertakings concerned by this
Decision was with the Commission.

In any event,

can only

reduced

be

it

(403) Regarding ADM Ingredients’

to

response

the
Commission’s requests for information, the Commission
does not agree that the submission of the information
qualifies for any reduction of the fine under the leniency
notice. As an addressee of a formal
for
information pursuant to Article 11(1) of Regulation No
17, ADM Ingredients was obliged to supply the
information. Although it
the
cooperation is provided by the undertaking concerned
on its own initiative, it is clear from the leniency notice
and in
cooperation must be voluntary,
that

is not necessary that

request

the

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cooperated in the Commission’s inquiry and cannot
benefit from sections B and C of the leniency notice.

(cid:151) Non-imposition of a fine or a very substantial

reduction in its amount

One other (Mr Ikeda), although retired in 1994, on 28
January 1999 delivered a statement which forms part of
Ajinomoto’s defences in the Commission’s proceedings.
The Commission therefore has reason to believe that
Ajinomoto is in possession of, or is able to obtain
cartel’s
possession of,
existence in relation to the period before ADM’s market
entry.

information concerning the

(407) Ajinomoto suggests that

it meets the conditions for
non-imposition of a fine laid down in section B of the
leniency notice, and that the nature of its cooperation
with the Commission therefore qualifies
full
leniency.

for

it

(408) The

that

time,

Commission

that Ajinomoto
acknowledges
informed the Commission about
cartel under
the
scrutiny in this Decision before the Commission had
undertaken an investigation, ordered by decision (see
paragraph 177). The Commission also acknowledges
it did not already have sufficient
that, at
information to establish the existence of
the alleged
cartel. The Commission notes
that already before
Ajinomoto approached the Commission on 12 July
the lysine cartel had received extensive press
1996,
in the USA and elsewhere, which the
coverage
Commission confirmed
to
Ajinomoto on 1 August 1996. Moreover, on 27 August
1996, when Ajinomoto provided the first documents
Justice
under its cooperation,
first criminal anti-trust
informed the public on its
charges in its lysine investigation against,
inter alia,
Ajinomoto.

the US Department of

addressed

in a

letter

(409) Ajinomoto was the first of

of

evidence

the cartel members to
adduce
The
existence.
cartel’s
the
Commission also considers that this evidence, in relation
to the period to which it refers, has been decisive, as it
is in itself sufficient to establish the existence of the
cartel as from ADM’s market entry.

(410) Ajinomoto put an end to its involvement in the illegal
the time at which it

activity before 12 July 1996,
disclosed the cartel to the Commission.

(411) For the following reasons, it is the Commission’s view
that Ajinomoto’s cooperation only in part
fulfils the
conditions for the non-imposition of a fine or a very
substantial reduction in its amount pursuant to section
B of the leniency notice.

(412) The Commission considers that Ajinomoto, at least by
the relevant
negligence, did not provide it with all
information and all
and evidence
available to it at the time when it started its cooperation
with the Commission regarding the cartel’s operations
before ADM’s market entry.

the documents

(414) Moreover, the Commission is aware that immediately
after the US authorities executed a search warrant at
Ajinomoto’s US offices at Heartland Lysine on 27 June
1995, Ajinomoto’s Tokyo legal department instructed
that remaining documents concerning the cartel, which
and Japan, be destroyed.
were
Ajinomoto admits that
its
documentation and, more particularly, documentation
which it stored in Europe.

it had destroyed some of

stored in Europe

(415) For

these reasons,

the Commission considers
Ajinomoto’s cooperation with it was not complete.

that

(416) The Commission accepts that there can be doubts as to
the question of whether early agreements are part of a
single continuing infringement, and therefore as to the
question of which information has to be provided to the
Commission on the basis of the cooperation. However,
in case of doubt, Ajinomoto should have pointed to the
information in question in order to get guidance from
the Commission as to its relevance in the present
investigation. It is not for the company to determine the
scope of the subject of the Commission’s investigation.

(417) Finally, as the Commission has shown (see paragraphs
in the
353 to 356), Ajinomoto was
infringement. The Commission thus is of the opinion
that Ajinomoto played a determining role in the illegal
activity which, already in itself, excludes the application
of section B of the leniency notice.

leader

a

it could be argued that,

(418) Where there is, as in the present case, more than one
leader in an infringement,
in
relation to each other, leaders are co-equals, and that in
such a context none of the leaders is able to play a
determining role in the infringement. This would also
provide an incentive for leaders in the infringement to
come forward first and to adduce decisive evidence of
the cartel’s existence.

(413) As from June 1990 until June 1992, when ADM joined
the cartel, the Commission finds that, on nine different
occasions, Ajinomoto had concluded agreements on
lysine prices and quantities with its competitors. Of the
Ajinomoto officials who participated in those events, at
least one is still employed by Ajinomoto (Mr Mimoto).

(419) However, from the wording of the leniency notice it is
clear that
the Commission balanced the Community
interest in granting favourable treatment to offenders
which cooperate with it against the Community interest
to deter future offenders by fining undertakings for their
committed infringements. This balance would be

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disturbed if leniency was available for cartel members
which played a determining role in the infringement.

(420) The Commission therefore concludes that Ajinomoto’s
cooperation does not meet the conditions laid down in
points (d) and (e) of section B of the leniency notice.

ordered by decision on the premises of ADM and
the information
Kyowa. Finally, a substantial part of
which Sewon submitted to the Commission constituted
Sewon’s response to the Commission’s formal requests
for information of 28 July 1997 pursuant to Article
Sewon’s
11(1) of Regulation No 17. Therefore,
cooperation with the Commission was not completely
voluntary.

(421) Ajinomoto considers that

if

it

In its view,

is fined in this case,
notwithstanding its cooperation,
this could adversely
affect reliance in the future by others on the leniency
there is a substantial difference
notice.
between cooperation offered prior
the
initiation of an investigation. Ajinomoto suggests that it
was as a result of its cooperation, offered in view of the
that
leniency notice,
the Commission initiated an
investigation.
the difference between cooperation
If
prior to and after initiation of an investigation were
only of a insubstantial nature, the incentive for parties
to volunteer information to the Commission at an early
stage would be significantly reduced.

to or after

(422) The Commission

consider

acknowledges

the European competition rules.

that Ajinomoto’s
cooperation was instrumental
in establishing the key
evidence of the infringement in relation to the period as
from ADM’s market entry. However, the Commission
that Ajinomoto had legitimate
does not
expectations as to the non-imposition of a fine for its
infringement of
In
it is obvious that Ajinomoto relied on the
particular,
the Commission’s investigation
false expectation that
would be parallel to the lysine investigation in the USA,
where the US authorities concentrated on the collusion
in which ADM participated. Although, in principle, the
European competition rules and the competition rules
established in other parts of the world serve a similar
purpose, undertakings should be aware of the fact that,
also in international cartel cases which are investigated
by different public authorities, the subject and the extent
of the Commission’s procedure is based exclusively on
the application of the European law.

(423) Sewon was the first of the cartel members to adduce
complete decisive evidence concerning the infringement
found by the Commission in the present case. The
documents provided by Sewon constitute, together with
those submitted by Ajinomoto as to the period as from
ADM’s market entry, the main source of evidence used
by the Commission in preparing the present Decision.
Sewon also put an end to its involvement in the illegal
activity before the time at which it started cooperating
with the Commission.
It did not compel another
enterprise to take part in the cartel and acted neither as
an instigator nor played a determining role in the illegal
activity.

(424) However, at the time when Sewon started to cooperate
with the Commission, there was sufficient information
to establish the existence of a cartel as of ADM’s market
entry. This information had already been supplied by
Ajinomoto. Moreover, Sewon disclosed the collusion
the Commission had undertaken investigations
after

(425) The Commission therefore

that Sewon’s
cooperation does not meet the conditions laid down in
point (d) of section B of the leniency notice.

concludes

(426) Kyowa and Cheil were not the first to adduce evidence
of the cartel existence. The evidence Kyowa and Cheil
submitted to the Commission was not decisive in
establishing the existence of the cartel, as it is in itself
in relation to any period, the
insufficient to establish,
existence of
the
information which Cheil submitted to the Commission
response to the Commission’s
consisted of Cheil’s
information of 28 July 1997
for
formal
pursuant
to Article 11(1) of Regulation No 17.
Therefore, Cheil’s cooperation with the Commission
was, in essence, not voluntary.

the most part,

requests

cartel.

For

the

(427) The Commission therefore concludes

that Kyowa’s
cooperation does not meet the conditions laid down in
point (b), and that Cheil’s cooperation does not meet
the conditions laid down in points (b) and (d) of section
B of the leniency notice.

(428) ADM’s attitude towards the Commission’s investigation
in the present case does not meet any condition laid
down in section B of the leniency notice.

(cid:151) Substantial reduction in the fine

(429) As none of the undertakings concerned by the present
Decision meets the conditions laid down in points (b) to
(e) of section B of the leniency notice, none of them
qualifies for a substantial reduction in the fine pursuant
to section C of the leniency notice.

(cid:151) Significant reduction in the fine

Cooperation with the Commission before the statement of objections

(430) Before

the Commission adopted its

statement of
objections of 29 October 1998, Ajinomoto, Kyowa,
Sewon, and Cheil provided the Commission with
information, documents and other evidence which
enabled the Commission to establish the existence of
the infringement in the present case.

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(431) Taking into account

the extent and quality of
the
the
cooperation with the Commission’s investigation,
Commission grants Ajinomoto and Sewon, pursuant to
section D of the leniency notice the highest possible
reduction of the fine that would have been imposed if
i.e.
they had not cooperated with the Commission,
50 %.

(432) As to Kyowa and Cheil, the Commission considers that
a reduction of 30 % is the appropriate reduction of the
fine rewarding Kyowa’s material contribution to the
establishment of a number of meetings and other
contacts between the parties, which are part of
the
infringement.

Cooperation with the Commission after receiving the statement of
objections

(433) After

the

receiving

statement

Commission’s

these proceedings.

it did not substantially contest

of
objections of 29 October 1998, ADM informed the
Commission that
the
It noted
facts for the purpose of
however that its decision not to contest the facts for the
purpose of this investigation was not intended to be and
should not be deemed to be an admission of such facts
for any other purpose.
or statement against
ADM claims
for a
significant reduction in the fine which the Commission
may impose on it in the present case.

that by doing so it qualifies

interest

(434) Statements of

the kind put

forward by ADM which
leave open the question whether facts on which the
Commission bases its allegations are accurate, may be
intended to lead to insecurity as to the legal effects of
the decision once it becomes unassailable. However, the
legal effects of a Commission decision do not depend
on the behaviour of parties during the proceedings
leading to the adoption of the decision. A Commission
decision which has become definitive provides national
courts with significant information, and on the basis of
this information national courts are generally able to
decide whether the conduct at issue is compatible with
the European competition rules (44).

(435) The Commission considers that ADM qualifies for a

reduction in the amount of the fine of 10 %.

(e) Adjustments

(436) Sewon suggests

that

the Commission should take
account of the specific economic context, in which it
actually operates which means that it is unable to pay
any
the
Commission to adjust the amount of the fine to be
imposed on it accordingly.

Sewon therefore

substantial

fines.

asks

(44) Notice on cooperation between national

and the
Commission in applying Articles 85 and 86 of the EEC Treaty, OJ
C 39, 13.2.1993, p. 6.

courts

(437) Sewon states

that due to the severe and lasting
its financial situation
economic crisis in South Korea,
has deteriorated to the extent that its real ability to pay
a fine is greatly reduced.
In order to survive in this
crisis, Sewon accelerated in 1998 a restructuring process
started in 1997 through mergers and the sale of
unprofitable businesses. The merger between Daesang
Industrial Ltd and Miwon Co. Ltd, that formed Daesang
Corporation in November 1997, as well as the sale of
the worldwide lysine business to BASF in May 1998, are
financial
part of Sewon’s attempt
situation.

to improve its

(438) The Commission considers that to take account, when
determining the fine, of an undertaking’s loss-making
financial situation would be tantamount to conferring a
unjustified competitive advantage on undertakings least
well adapted to the conditions of the market (45). While
maintaining fines at a level which appears appropriate,
the Commission will however give Sewon the possibility
to propose acceptable periods for payment of the fine
on condition that it demonstrates its inability to pay.

(f) Liability for the infringement

(439)

(440)

is settled law that

It
that a subsidiary has
the fact
separate legal personality is not sufficient to exclude the
possibility of its conduct being imputed to the parent
company, especially where the subsidiary does not
independently decide its own conduct on the market,
but carries out, in all material respects, the instructions
given to it by the parent company (46).

a decisive

In the present case,
the Commission considers that
ADM, Ajinomoto, Kyowa and Sewon were in a position
to exert
influence on their European
subsidiaries’ commercial policy. Since ADM Ingredients,
Eurolysine, Kyowa Europe and Sewon Europe have been
wholly owned subsidiaries of
their respective parent
companies, they necessarily followed a policy laid down
by the bodies which determine their parent companies’
policy. It may be observed also that both the parent
companies and the European subsidiaries played an
active role in cartel meetings. In any event, the parties
have not submitted any evidence to support an assertion
that the named subsidiaries carried on their businesses
on the lysine market as autonomous legal entities which
determined their commercial policy largely on their
own.

(441)

In those circumstances, the Commission is entitled to
attribute to the parent companies the conduct of their
subsidiaries.

(45) Case T-141/94 Thyssen, loc. cit., at paragraph 628.
(46) Judgment in Case T-354/94 Stora [1998] ECR II-2111, paragraph

79.

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(442) Moreover,

in prohibiting undertakings,

inter alia, from
entering into agreements or participating in concerted
practices which may affect trade between Member States
and have as
the prevention,
their object or effect
restriction or distortion of competition within the
common market, Article 81(1) of the EC Treaty and
Article 53(1) of
the EEA Agreement are aimed at
economic units which consist of a unitary organisation
of personal,
tangible and intangible elements, which
pursues a specific economic aim on a long-term basis
an
and
infringement
that
provision (47).
Eurolysine,
Kyowa Europe and Sewon Europe are part of
the
economic units having committed the infringement
found in the present Decision, they can be held liable
for it.

of
Since ADM Ingredients,

to the Commission of
kind

can contribute
the

referred

to

in

(443) Until September 1994, Eurolysine was under

joint
control of Ajinomoto and Orsan. Thereafter Ajinomoto
first increased its interest to 75 % and finally acquired
all shares from Orsan, and so Ajinomoto is liable for
the behaviour of Eurolysine during the entire period
covered by the present Decision (48).

(444) As to Sewon, the Commission notes that it disposed of
its entire lysine business in the first half of 1998.
However, where
the party which committed the
infringement continues to exist as a legal person, even
though the economic activity concerning lysine which it
carried on before is now carried on by a different legal
entity,
it
liable
committed in the relevant economic sector (49).

infringement

remains

the

for

it

Daesang Corporation
Sewon Europe GmbH,
jointly and severally liable

Cheil Jedang Corporation

EUR 8 900 000

EUR 12 200 000,

HAS ADOPTED THIS DECISION:

Article 1

its

European

Incorporated,

Archer Daniels Midland Company and its European subsidiary
Archer Daniels Midland Ingredients Limited, Ajinomoto
Company,
subsidiary
and
Eurolysine SA, Kyowa Hakko Kogyo Company Limited and its
European subsidiary Kyowa Hakko Europe GmbH, Daesang
Corporation and its European subsidiary Sewon Europe GmbH,
Jedang Corporation have infringed Article
as well as Cheil
81(1) of
the EEA
the EC Treaty and Article 53(1) of
Agreement by participating in agreements on prices, sales
volumes and the exchange of individual information on sales
volumes of synthetic lysine, covering the whole of the EEA.

The duration of the infringement was as follows:

(a)

in the case of Archer Daniels Midland Company and
Archer Daniels Midland Ingredients Limited from 23 June
1992 to 27 June 1995;

(b)

in the case of Ajinomoto Company,
Eurolysine SA from at least July 1990 to 27 June 1995;

Incorporated, and

(g) The amounts of
proceedings

the

fines

imposed in the present

(c)

in the case of Kyowa Hakko Kogyo Company Limited and
Kyowa Hakko Europe GmbH from at least July 1990 to 27
June 1995;

(445)

In conclusion the fines to be imposed, pursuant
to
Article 15(2)(a) of Regulation No 17, should be as
follows:

(d)

in the case of Daesang Corporation and Sewon Europe
GmbH from at least July 1990 to 27 June 1995;

Archer Daniels Midland Company
Archer Daniels Midland Ingredients
Limited,
jointly and severally liable

Ajinomoto Company, Incorporated
Eurolysine SA,
jointly and severally liable

Kyowa Hakko Kogyo Company
Limited
Kyowa Hakko Europe GmbH,
jointly and severally liable

(e)

in the case of Cheil Jedang Corporation from 27 August
1992 to 27 June 1995.

EUR 47 300 000

EUR 28 300 000

Article 2

EUR 13 200 000

The following fines are hereby imposed on the undertakings
referred to in Article 1 in respect of the infringements found
therein:

(47) Judgment in Case T-352/94 Mo Och Domsj(cid:246) [1998] ECR II-1989,

paragraph 87.

(48) Judgment in Cases 29/83 and 30/83 Rheinzink [1984] ECR 1679,

paragraph 9.

(49) Case T-305/94 PVC, loc. cit., at paragraph 953.

(a) Archer Daniels Midland Company and
Archer Daniels Midland Ingredients
Limited,
jointly and severally liable, a fine of

EUR 47 300 000;

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(b) Ajinomoto Company,

Incorporated

and
Eurolysine SA,
jointly and severally liable, a fine of

EUR 28 300 000;

(b) Archer Daniels Midland Ingredients Limited

Church Motorway
Erith
DA8 1DL
United Kingdom

Kogyo

(c) Kyowa Hakko
Limited and
Kyowa Hakko Europe GmbH,
jointly and severally liable, a fine of

Company

(d) Daesang Corporation and
Sewon Europe GmbH,
jointly and severally liable, a fine of

EUR 13 200 000;

EUR 8 900 000;

(c) Ajinomoto Company, Incorporated

15-1, Kyobashi Itchome
Chuo-ku
Tokyo 1048315
Japan

(e) Cheil Jedang Corporation, a fine of

EUR 12 200 000.

(d) Eurolysine SA

Article 3

The fines shall be paid by the undertakings named in Article 2
within three months of the date of notification of this Decision
to the following account:

Account No 642-0029000-95
of the European Commission with
Banco Bilbao Vizcaya Argentaria (BBVA) SA
Avenue des Arts 43
B-1040 Brussels
Code SWIFT: (BBVABEBB)

After the expiry of that period, interest shall be automatically
payable at the interest rate applied by the European Central
Bank to its main refinancing operations on the first working
day of the month in which this Decision was adopted, plus
3,50 percentage points, namely, 7,25 %.

Article 4

153 rue des Courcelles
F-75817 Paris Cedex 17

(e) Kyowa Hakko Kogyo Company Limited

1-6-1 Ohtemachi
Chiyoda-ku, Tokyo 100
Japan

(f) Kyowa Hakko Europe GmbH
Immermannstra(cid:223)e 65C
D-40210 D(cid:252)sseldorf

(g) Daesang Corporation
Daesang Building
96-48 Shinsul-Dong
Dongdaemoon-Ku
Seoul 030-110
Korea

(h) Sewon Europe GmbH

Mergenthalerallee 1(cid:151)3
D-65760 Eschborn

This Decision is addressed to:

(i) Cheil Jedang Corporation

(a) Archer Daniels Midland Company

4666 Faries Parkway
Decatur, Illinois 62526
USA

Standbrook House
4th floor Suite D
2(cid:151)5 Old Bond Street
London W1X 3TB
United Kingdom.

This Decision shall be enforceable pursuant to Article 256 of the EC Treaty.

Done at Brussels, 7 June 2000.

For the Commission

Mario MONTI

Member of the Commission

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Outline

I. THE FACTS

A. SUBJECT OF PROCEEDINGS

B. THE UNDERTAKINGS AND THE ASSOCIATION CONCERNED

1. Archer Daniels Midland Company

2. Ajinomoto Company, Incorporated

3. Kyowa Hakko Kogyo Company

4. Daesang Corporation

5. Cheil Jedang Corporation

6.

Fefana

1.

Supply side

(a) Production

(b) Distribution

2. Demand side

3. Market information

C. THE PRODUCT

D. THE MARKET FOR LYSINE

(a) Factors influencing the determination of lysine prices

(b) Average monthly lysine prices

(c) Annual lysine sales

E. DESCRIPTION OF EVENTS

1. Asian/European cartel

(a) The beginning

(b) Meeting of 18 February 1991

(c) Meeting of 12 March 1991 in Tokyo

(d) Meeting of 4 July 1991 in Tokyo

(e) Follow-up

2. Global cartel

(a) Background

(b) Meeting of June 23, 1992 in Mexico

(cid:151) Follow-up

(c) Meeting of 1 October 1992 in Paris

(cid:151) Follow-up

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(d) Meeting of 24 June 1993 in Vancouver

(cid:151) Follow-up

(e) Meeting of 5 October 1993 in Paris

(cid:151) Follow-up

(f) Meeting of 8 December 1993 in Tokyo

(cid:151) Follow-up

(g) Meeting of 10 March 1994 in Honolulu

(cid:151) Follow-up

(h) Meeting of 19 May 1994 in Paris

(cid:151) Follow-up

(i) Meeting of 23 August 1994 in Sapporo

(cid:151) Follow-up

(j) Meeting of 26 October 1994 in Zurich

(cid:151) Follow-up

(k) Meeting of 18 January 1995 in Atlanta

(cid:151) Follow-up

(l) Meeting of 21 April 1995 in Hong Kong

(cid:151) Follow-up

F. THE COMMISSION’S PROCEDURE

G. THE LYSINE INVESTIGATION IN THE USA

H. THE LYSINE INVESTIGATION IN CANADA

II. ASSESSMENT

A. JURISDICTION

B. ARTICLE 81 OF THE EC TREATY AND ARTICLE 53 OF THE EEA AGREEMENT

1. Article 81(1) of the EC Treaty and Article 53(1) of the EEA Agreement

(a) Undertakings

(b) Agreements

(cid:151) Price agreements

(cid:151) Agreements on quantities

(cid:151) Agreement on the exchange of information on sales quantity

(c) Object of the agreements

(d) Effect on trade between Member States of the Community and EEA countries

2. Article 81(3) of the EC Treaty and Article 53(3) of the EEA Agreement

3.

Single continuing infringement

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C. LIMITATION PERIOD

D. FINES IMPOSED PURSUANT TO ARTICLE 15(2)(a) OF REGULATION NO 17

1.

Infringement of the competition rules either intentionally or negligently

2. The amount of the fines

(a) The basic amount

(cid:151) Gravity

(cid:151) Nature of the infringement

(cid:151) The actual impact of the infringement on the lysine market in the EEA

(cid:151) The size of the relevant geographic market

(cid:151) The Commission’s conclusion on gravity

(cid:151) Differential treatment

(cid:151) Duration

(cid:151) The basic amount

(b) Aggravating circumstances

(cid:151) Role of leader in the infringement

(c) Attenuating circumstances

(cid:151) An exclusively passive role in the infringement

(cid:151) Non-implementation in practice of the offending agreements

(cid:151) Termination of the infringement as soon as a public authority intervenes

(cid:151) Other attenuating circumstances

(d) Application of the Commission’s notice of 18 July 1996 on the non-imposition or reduction of fines in cartel

cases

(cid:151) Preliminary remarks

(cid:151) Non-imposition of a fine or a very substantial reduction in its amount

(cid:151) Substantial reduction in the fine

(cid:151) Significant reduction in the fine

(e) Adjustments

(f) Liability for the infringement

(g) The amounts of the fines imposed in the present proceedings