Cartel in the Lysine Market

MEXICO, 1998

In 1996 the FCC, had knowledge that the United States Department of Justice determined that Archer Daniels Midland Co. (USA), Ajinomoto Co., Inc. (Japan), Kyowa Hakko Kogyo Co., Ltd. (Japan) and Sewon America Inc. (Korea) conspired to fix prices and allocate the supply of the lysine marketed in the United States and elsewhere. The FCC took into account that Archer Daniels and Kyowa Hakko had directly and indirectly participated in the Mexican lysine market during the period in which this collusion took place. Three companies participate in the Mexican lysine market: ADM Bioproductos, SA de CV (ADM) Fermentaciones Mexicanas, SA de CV (Fermex) (subsidiaries of Archer Daniels and Kyowa Hakko respectively), and Helm de Mexico, SA (Helm). From 1994 to 1996 the first two covered 90 percent of the Mexican demand, while Helm� market participation was marginal and erratic.

In July, 1996 the FCC initiated an ex officio investigation about the possible effects of the international price fixing arrangements in the market of synthetic lysine with at least 98.5 percent of purity in Mexico. The investigation found that ADM and Fermex had fixed the price and the amounts of lysine supplied in the domestic market, as a consequence of the agreement carried out by Archer Daniels and Kyowa Hakko. The agreement between the Mexican subsidiaries gave rise to substantial parallel price increases in the domestic market.

Based on the above, the FCC imposed fines on ADM and Fermex for engaging in absolute monopolistic practices.