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Brussels, 17 December 2002

Commission fines Ajinomoto, Cheil and Daesang in food flavour enhancers (nucleotides) cartel

The European Commission today fined Ajinomoto Co. Inc. of Japan and South Korean companies Cheil Jedang Corp. and Daesang Corp respectively € 15.54 million, € 2.74 million and € 2.28 million each for participating in a price-fixing cartel in nucleotides, a substance used to enhance the flavour in foods. Takeda Chemical Industries Ltd, another Japanese firm, was also found to be part of the cartel, but it was granted full immunity from fines for revealing the existence of the illegal agreement to the Commission.

The investigation started in 1999, when the Commission was approached by representatives of Takeda who revealed the cartel and provided decisive information about its operation in return for immunity from fines under the Commission's 1996 leniency policy. The other companies subsequently co-operated in the investigation.

According to the evidence in the Commission's possession, Ajinomoto, Takeda, Cheil and Daesang operated a cartel for nine years until 1998 during which they agreed to fix "target" prices, implement concerted price increases, allocate customers, as well as exchange information on sales figures.

Nucleotide or nucleic acid is made from glucose and is used in the food industry to add flavour to foods.

The documents found by the Commission leave no doubt about the intent to rig the market. A meeting's report submitted by Daesang states, for example, in relation to the cartel operations in 1995 that: "everyone was thanked for their co-operation during 1995 which resulted in the effective implementation of Nucleotide price increases and everyone was asked to continue their co-operation in 1996 so as to further increase the Nucleotide prices. [ ] all participants showed their agreement by nodding or saying words to that effect".

Although the agreement was a very serious violation of European Union competition law, it considered that Takeda fulfilled the conditions for total immunity from fines.

Because they co-operated in the investigation, Daesang, Ajinomoto and Cheil also qualified for a reduction in the fines. Daesang was granted a bigger reduction (50%) because whilst it was not the first to approach the Commission Takeda was it did so on its own initiative, before receiving any information request.

Ajinomoto is the world's biggest producer of nucleotides and was nearly twice as big as its competitors in terms of 1997 market shares figures, hence a higher fine to ensure a deterrence effect.

The relatively small size of the fines is explained by the equally modest revenues procured by nucleotide of around € 8 million a year in the European Economic Area the 15 EU member states plus Norway, Iceland and Liechtenstein during the infringement period. The four companies, however, accounted for the quasi totality of the sales worldwide.

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