Archer Daniels Midland Segment from "Fair Fight in the Marketplace"

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This segment from Fair Fight in the Marketplace shows the real story of the Archer Daniels Midland (ADM) price-fixing scandal, the basis for the movie "The Informant!", and includes excerpts from the actual FBI undercover footage shot by Mark Whitacre, played by Matt Damon in the movie.
Fair Fight in the Marketplace provides an engaging look at our antitrust laws that give protection to both American consumers and businesses. The half-hour program also considers a more fundamental question: can a set of regulations created by the Sherman Act at the end of the 19th century be relevant in todays era of digital technology and high-speed communications?

Hosted by NPR and Fox News commentator Mara Liasson, the program provides a short, colorful history of the antitrust laws in America and features three recent case studies—

* Archer Daniels Midland (ADM) leading a worldwide price-fixing conspiracy
(the focus of the movie "The Informant", starring Matt Damon -- see below)
* Mylan Pharmaceuticals cutting off supplies to competitors to inflate prices
* Microsofts bullying of Netscape to capture the internet browser market

Distinguished authorities in law and economics offer context and commentary, while noted business journalists provide special insights and bring a seemingly impenetrable subject into meaningful focus. Victims from the corporate schemes relate the impact on their lives and give viewers a sense of how antitrust laws affect everyday matters like product pricing, selection, and quality.

With the challenges we face in todays global economy, there is considerable value in helping students understand the modern landscape of antitrust legislation and corporate practices. The educational edition of this program features considerable web content that provides the user with a wealth of action opportunity and supplemental information. Optimized for educational use, this DVD version of Fair Fight in the Marketplace has been paired with comprehensive webresources for the classroom, empowering teachers to present this topic in a thorough and organized manner, while also giving students an easy-to-use, one-stop resource online for reading assignments or test preparation.

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Hello.

Susdy old boy, I've got a great idea.

Between us, we control 70% of the country's soap sales.

Let's raise and fix our prices.

Controlling 70% of the marketplace, why we'll clean up!

Terrific. We'll make millions.

I smell trouble!

Quiet! OK, Sam, it's a deal!

You'll be sorry!

HaHaHa!

These are very very difficult crimes to detect.

Victims don't know that they'd been victimized.

That can happen for years, and victims don't know.

Probably less than one-third are discovered by the authorities.

And it's those kinds of percentages that continue to draw businessmen into the game of price fixing.

[NARRATOR] Archer Daniels Midland, or ADM,

is a giant in the agricultural products processing industry.

In the early 90s,

ADM developed a new division to make the amino acid Lysine --

a feed additive used by ranchers for livestock and poultry.

It was a lucrative business for the handful of lysine manufacturers,

but ADM executives hatched a plan

for a price-fixing conspiracy

to boost corporate profits even higher.

The world's major lysine producers had gotten together

and basically divided the world market.

They determined how much they would produce,

how much each producer would sell, and at what price.

In a conspiracy of this type,

they essentially divided up the customers among themselves,

and stopped competing for those markets.

Hard-core antitrust offenses such as price fixing,

bid rigging -- is simply theft by well-dressed thieves.

It's fraud, plain and simple.

[NARRATOR] Victims of such price-fixing schemes

are people like California egg farmer Paul Bahan,

whose business is vulnerable to even small price changes.

[Bahan] The amino acids are very important as part of the feed to the chickens.

They're the most expensive part of the feed ration,

and we're in a business where a penny is huge.

And I'm talking about a penny a dozen,

not a penny an egg.

To give you an idea,

if my costs of production is a penny greater than it needs to be,

in a small farm like this,

to me that's $160,000 a year.

It's one significant component in the end of what I do,

in this going away.

[GRIFFIN] Initially the harm certainly is felt by the initial purchaser – farmers

But ultimately, at some level,

every one of us felt the pinch of this cartel,

in slightly higher prices for the end product.

I've still got to buy amino acids.

They're still only four or five people or whatever producing this stuff.

I don't think your average consumer cares, quite frankly.

I don't know if they care or not.

They should because they're getting ripped off.

You know, when my costs go up,

I have little choice but to exert pressure

on the marketplace that I sell into.

[CONNOR] At the end of three years,

when they had raised prices over that period,

they made an estimated 200 to 250 million dollars of additional profits.

Of course it's a very profitable way to do business --

in the United States it's a felony.

It's illegal.

[NARRATOR] Unbeknownst to the conspirators,

one of the meeting participants,

ADM executive Mark Whitacre,

was working with the FBI.

He had set up a hidden camera and microphone,

which gave investigators in the room next door a ringside seat to the criminal dealings.

[HAMMOND] You can see five gentlemen sitting around a smoke-filled hotel room,

where they literally fixed the price

of this lysine product around the world down to the penny,

effective the very next day.

They understood perfectly that what they were doing was illegal --

that's very clear.

And they also never thought they'd get caught.

And so they laughed about the FBI,

and they laughed about their customers,

and they joked about how they were able to get away with their crime.

The officers of those companies --

and this is on tape --

very frequently repeated a kind of mantra.

They said, "our customers are our enemy, and our rivals are our friend."

My initial reaction when I heard about them

and was reading some briefing books was "nobody really said that."

And then I watched the tapes.

[NARRATOR] With a mass of damning evidence,

the government was able to mount an aggressive case

that led to the conviction of three ADM executives,

who collectively spent 99 months in jail.

ADM's fine was 100 million dollars.

This $100 million criminal fine should send a message worldwide,

that if you engage in collusive behavior that robs United States consumers

there will be vigorous investigation and tough, tough penalties.

This was our first fine above ten million dollars.

We've now fined over forty companies above ten million dollars.

But even more so,

I don't know that we appreciated at that time,

or could have imagined at that time what effect

it would have had on our partners abroad.

Many other countries are changing their laws now

and making price fixing not just a civil violation,

but a criminal offense with serious fines and serious prison sentences.

If they think they're going to go to jail

and essentially be outed for the crooks that they are—

I think that's a deterrent.

I'd like to think it's a deterrent.

I don't know what else we're gonna do.