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Twenty-one state attorneys general, including Illinois’ Jim Ryan and New York’s Eliot Spitzer, announced on Tuesday a “historic” $255 million nationwide settlement of state antitrust lawsuits threatened and pending against an international cartel of six vitamin manufacturers. The trump card played by the chief negotiators involved allegations that the foreign drug firms had conspired to fix prices over the last decade through systematic “overcharging” at the wholesale level, the inflated prices then being passed on to retail customers and ultimately to consumers. Those state charges were undoubtedly bolstered last year when the same companies pleaded guilty to federal criminal antitrust violations based on similar facts. The companies paid fines. The combined settlements mark the largest ever received under the various state antitrust laws that, unlike their federal counterpart, allow consumers and businesses to recover damages for price-fixing overcharges — even though the consumers and businesses did not buy directly from the defendants. But, perhaps more closely-watched, is the settlement’s unprecedented call for some of its key terms to be administered through the courts of many affected states on a coordinated, multi-state basis. Besides Illinois and New York, the participating states are: Arizona, Florida, Hawaii, Idaho, Kansas, Maine, Michigan, Minnesota, Nevada, New Mexico, North Carolina, North Dakota, Rhode Island, South Dakota, Tennessee, Vermont, Washington, West Virginia, and Wisconsin. Puerto Rico and the District of Columbia also joined in the settlement process. The settling companies, which control 80 percent of the world’s vitamin market, are Switzerland’s F. Hoffman-LaRoche, Germany’s BASF and France’s Aventis, one-time known as Rhone-Poulenc. Three settling Japanese firms were Takeda Chemical Industries Ltd., Eisai Co. Ltd and Daiichi Pharmaceutical Co. Ltd. The drug giants manufacture a wide variety of products, ranging from vitamin pills to feed for animals to vitamin products that go into foods like milk, cereal and bread. “These companies met secretly around the world to conspire to drive up the cost of vitamins and vitamin products, costing consumers, businesses and state governments millions of dollars,” Ryan proclaimed in a prepared statement. “We are sending a clear message that we will stand together to fight price-fixing whether our foes are here or abroad.” New York’s Spitzer similarly decried the “hidden ‘vitamin tax’” illegally imposed on shoppers and businesses across the country. Spokespersons for the overseas firms could not be immediately reached for comment. Both Ryan and Spitzer cautioned that the settlements must be approved — and presumably monitored — by the nearly two-dozen local courts in which antitrust lawsuits have already been or will now be filed. In addition, the national settlements attempt to cover pending private class actions in as many as 17 states. So, how to coordinate such a huge amount of litigation spread out over so many jurisdictions when the usual federal multi-district consolidation procedures were not available to the parties? The chief negotiator for Wisconsin, Assistant Attorney General Kevin O’Connor, explained that all eyes are turning to District of Columbia Superior Court Judge Judith Bartnoff, who has unofficially been coordinating the far-flung litigation for the last 18 months and is now being asked to give her “preliminary” approval to a proposed “master” settlement agreement. That approval is expected “in the next few days,” O’Connor said, and will then be considered by the various state courts for their approval as well. Under the proposed master agreement, each of the 23 participating jurisdictions get a predetermined share of a $117.6 million pool to compensate for alleged damages to their consumers and taxpayers. But, because those claims are impossible to sort out, each state’s attorney general will decide what to do with their assigned portion — to be determined in accordance with a complex formula based largely on population and total estimated damages claimed. Illinois will get about $12 million from this consumers’ pot and AG Ryan says it will be distributed to mostly nonprofit charitable groups for programs that “advance the health and nutrition of consumers.” New York’s Spitzer says $19 million out of $25 million will be used to fund programs involving such things as “prenatal care, nutrition and hunger.” In addition, $107.6 million will be deposited in a business settlement fund to reimburse damaged businesses in each jurisdiction. According to O’Connor, this secondary commercial pot under the proposed master settlement agreement is expected to be overseen by a court-appointed multi-state administrator and distributions to individual businesses will likely depend on “some documentation” or other forms of relevant evidence. Such a coordinated approach, he noted, “is uniquely innovative” in such state antitrust litigation. The proposed master agreement to be reviewed by Judge Bartnoff also provides that yet another $30 million will be earmarked to reimburse 47 state governments for overcharges on state purchases of products containing vitamins. “It’s a long story � and the master agreement is so complicated I have trouble remembering parts of it myself,” concedes O’Connor. On the other hand, he added, “if the lawyers and judges work together” as closely as expected, the nearly impossible national settlement could be wrapped up “within a year.”

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