Tate & Lyle PLC announced today that its subsidiary A.E. Staley Manufacturing Company (“Staley”) has reached agreement to end the long running high fructose corn syrup (“HFCS”) civil antitrust legal case.
Under the terms of the settlement, Staley will pay total damages of $100 million (£55 million). This will result in an exceptional charge to the profit and loss account of this amount. As the payment is expected to be tax deductible in the US, this equates to a charge of $60 million (£33 million) on an after tax basis. The settlement funds will be paid into escrow by Staley during the next week. The settlement needs to be formally approved by the United States District Court for the Central District of Illinois.
Staley continues to deny emphatically involvement in any wrongdoing, but has settled with great reluctance to ensure an end to this lengthy action and to avoid the risk and uncertainty that a US jury trial would involve.
Staley was one of a number of manufacturers of HFCS, including Archer Daniels Midland (ADM) and Cargill, targeted by plaintiffs’ lawyers in a class action that alleged violations of certain anti-trust laws during the period 1988 to 1995. The action was brought on behalf of purchasers of HFCS during that period, primarily US food and beverage manufacturers. Damages claimed in the case amounted to $1.4 billion, subject to automatic tripling and the addition of attorneys’ fees. Under US civil anti-trust laws, defendants in trials of this type are jointly and severally liable for any damages awarded to the plaintiff.
The case was filed with the United States District Court for the Central District of Illinois in Peoria in July 1995, but dismissed by that Court in August 2001. That dismissal was overturned by the United States Court of Appeals for the Seventh Circuit in June 2002. The case was proceeding to a full jury trial in early September 2004. On 15th March 2004, the District Court approved Cargill’s (and American Maize Product Company’s) settlement with the Plaintiffs in the amount of $24 million. On 17th June 2004, ADM announced that it had agreed to settle for $400 million. The settlement announced today brings the action to a complete end.
Robert Gibber, Tate & Lyle PLC General Counsel, commented:
“In 1995, a Grand Jury reviewed millions of pages of evidence yet brought no charges against any manufacturer of HFCS. However, as is typical in the US, this was followed by a civil class action alleging violations of federal anti-trust laws.
“We deny emphatically involvement in any wrongdoing and believe we were in a position to demonstrate this at trial. However, particularly in light of the recent settlements by the other defendants, a jury trial would have exposed Staley to a degree of risk, itself magnified by automatic tripling of damages and the addition of attorneys’ fees, which could not be justified. For this reason we reluctantly decided to settle on the best terms available from the plaintiffs as announced today. This agreement does not involve any admission of liability but does remove the uncertainties hanging over Staley from these proceedings.”
Tate & Lyle is a world leader in ingredients. Its core competence is to take corn, wheat or sugar, and add value to these raw materials through technology. As a result of continuous innovation it offers an ever-wider product portfolio of versatile and functional ingredients. These products include Cereal Sweeteners, Starches, Sugars, Citric Acid and SPLENDA® Sucralose. Tate & Lyle products have wide applications in the food, beverage, pharmaceutical, cosmetic, paper, packaging and building industries. With headquarters in London, Tate & Lyle operates more than 41 plants and 20 additional production facilities in 28 countries, almost all in Europe and the Americas. It employs 6,700 people in its subsidiaries with a further 4,800 employed in joint ventures. Sales in the year to 31 March 2004 totalled £3,167 million. More details are available on this website
www.tateandlyle.com.
SPLENDA® is a trademark of McNeil-PPC, Inc.
