Vitamin C Makers Seek Boost From Former Chinese Official In Price-Fixing Trial

Vitamin C manufacturers currently on trial in federal court in Brooklyn are hoping their defense to price-fixing claims will get a boost from last week’s testimony by a former Chinese government official that China compelled them to engage in allegedly anticompetitive behavior.

Plaintiffs in the class action In re Vitamin C Antitrust Litigation are seeking to convince a jury in the U.S. District Court for the Eastern District of New York that the defendant Chinese manufacturers harmed U.S. purchasers of vitamin C by conspiring to fix prices and limit the supply of vitamin C exports to the U.S.

The defendants are relying on the foreign sovereign compulsion defense, claiming that they risked losing their right to export vitamin C if they did not adhere to minimum prices and volume restrictions set by the Chinese government.

Last week, the jury heard the testimony of Qiao Haili, a retired China Ministry of Commerce official, whom the defendants called for his testimony that the Chinese government could halt exports from Vitamin C manufacturers that failed to comply with its coordination of prices and production of the vitamin.  In cross-examination, plaintiffs challenged whether the former official actually had the authority to punish companies that did not comply with the government’s restrictions.

In re Vitamin C Antitrust Litigation is a multidistrict class action case that began in 2005.  Plaintiffs allege that the defendant Chinese manufacturers of vitamin C controlled exports to inflate prices.  Plaintiffs have alleged that the defendants, which controlled 60 percent of the global market, caused prices to rise from $2.30 per kilogram in 2001 to $15 per kilogram in 2003.

Judge Brian Cogan green-lighted the case for trial just last month, by denying a motion for summary judgment by defendant North China Pharmaceutical Group Corporation (“NCPGC”).

NCPGC argued that it never received pricing information because the company indirectly owns one of the manufacturer defendants and is not involved in production or sales.  Without knowing vitamin C prices, the company claimed it could not have participated in the price-fixing scheme.  The court, however, concluded that there was “evidence from which a jury could conclude that NCPGC participated in the conspiracy at the heart of this litigation.”

In May 2012, one of the defendants agreed to a $10.5 million settlement.