Vitamin Cartels

When you think of cartels you probably imagine Columbian drug lords and executives of fuel companies, both possibly wearing disturbing facial hair. You might think that the hallowed and noble halls of the vitamin industry would be beyond the grubby reach of cartels, but you would be wrong.

By definition a cartel is an association of manufacturers or suppliers that maintains prices at a high level and restricts competition. Currently a US district court judge is considering an appeal from Chinese corporations who claim that the Chinese government is forcing them to act as a vitamin C cartel. This appeal is in response to a guilty finding against the four corporations who control more than 60 per cent of the world market for vitamin C, and who are accused of colluding to raise prices back in 2001.

Estimates now are that China exports between 75 and 80 per cent of global ascorbic acid, otherwise known as vitamin C. In May 2007, Chinese exports of vitamin C suddenly dropped by 24 per cent and around this time the price of vitamin C soared from $3.40 US per kilo to $11 per kilo. This looks like pricing control through control of supply but the vitamin cartels don’t stop with vitamin C and their existence is not new.

Back in 2001 Mario Monti, now the newly elected Italian Prime Minister, but then the European Union anti-trust chief announced fines for companies involved in vitamin cartels. Eight companies were fined 855.2 million euros for what Monti then described as the “most damaging series of cartels the commission has ever investigated”. Hoffman-La Roche of Switzerland received the largest fine, 462m euros, for being the “prime mover and main beneficiary” of the cartel. The EU said that the eight companies fined had been under investigation since 1999 for collusion to eliminate fair competition for vitamin pills and to overcharge consumers.

Although the vitamin industry is part of the move to complementary and preventative medicine, it is not pure. The global popularity of preventative medicine has made vitamins and supplements in general a massive and lucrative business. When this kind of money becomes involved, so do characters who don’t care what they are selling but have an eye for a profit. That is also an environment in which cartels can flourish and the vitamin industry is certainly not immune.