Opinion ID: 777877
Heading Depth: 2
Heading Rank: 1

Heading: The Allegations of Pinker's Complaint

Text: 4 Roche is a Swiss holding company that conducts its operations through a network of subsidiary corporations. These subsidiaries manufacture and sell, among other things, pharmaceuticals, fragrances, vitamins, and chemicals throughout the world. Pinker alleges that Roche, acting in concert with its subsidiaries, entered into a worldwide conspiracy with certain competitors in the early 1990s to fix prices and allocate market share for bulk vitamins. Pinker's complaint alleges that at the same time it was engaging in this conspiracy, Roche made material misrepresentations and misleading statements indicating that the vitamin market was competitive. Pinker's complaint points to press releases and annual and semi-annual reports issued by Roche in which it described the competition in the vitamin market as, among other things, fiercely and highly competitive. In the face of this supposed competition, Pinker avers, Roche's statements portrayed it as a company succeeding and excelling through superior business practices when, in fact, its financial success was due to its participation in a collusive scheme. 5 Pinker alleges that Roche sponsored an ADR facility in the United States in 1992, and that during the class period the over-the-counter market for Roche ADRs, which had a daily trading volume of 25,000, was an efficient market that promptly digested current information with respect to the Company from all publicly-available sources and reflected such information in Roche's stock price. Consequently, Pinker contends, Roche committed a fraud on the market through its misrepresentations about the competitiveness of the vitamin market, causing him to pay an artificially inflated price for his Roche ADRs when he purchased them on April 27, 1999. Before Pinker purchased ADRs in Roche, on March 12, 1999, a Minneapolis law firm announced its filing of a class action antitrust lawsuit against Roche and eight other companies in which it alleged a conspiracy to fix prices and set volumes in the United States vitamin market. Although Pinker acknowledges that this announcement had the effect of causing Roche's ADR price to decline, he argues that the price declined further after the full extent of Roche's anti-competitive activity became known on May 20, 1999. On that date, Pinker alleges, Roche announced that it had reached a settlement with the U.S. Department of Justice under which it and a former company executive agreed to plead guilty to conspiracy to fix prices and allocate market share and Roche agreed to pay a record $500 million fine for its wrongdoing.