Fertiliser companies accused of price fixing

19-09-2008 | |
Fertiliser companies accused of price fixing

The world’s largest fertilizer companies have to face two (class action) lawsuits in Minnesota and Chicago in the US for accusations of price-fixing and conspiracy.

So far spokesman for the companies have denied any wrongdoing. Prices of
fertiliser have risen in a result of tight supplies and increasing demand for
fertiliser by farmers due to expanding grain and food
production.

Companies included in the lawsuit are:

  • Mosaic of Plymouth,
    Minnesota, USA,

  • Agrium of Calgary, Alberta, Canada,
  • Potash Corp. of Saskatchewan
    Inc., Canada,

  • JSC Uralkali of Moscow, Russia;
  • RUE PA Belaruskali, of Soligorsk,
    Belarus,

  • RUE PA Belarusian Potash Co. of Minsk, Belarus,
  • JSC Silvinit of
    Solikamsk, Russia, and

  • JSC International Potash Co. of Moscow, Russia.

In several countries, obscure laws shield makers of
potash and phosphate — two key ingredients in fertilizer — from certain
antitrust rules.

In the US, for example, phosphate makers are among a
handful of industries empowered by the 1918 Webb-Pomerene Act to talk with
competitors about pricing and other issues.

The allegations come as the
fertilizer companies have profited form the global grain-price boom of the past
two years.


Price rocketed sky high
The
price of phosphate has climbed to about $1,100 a tonne, up from $430 last year,
while the price of a tonne of potash is now more than $930, up from
$275.

The Minnesota suit alleges, among other things, that the companies
exchanged “sensitive, non-public” information about prices and demand, allocated
market shares, and coordinated output.

Farmers around the world have
cried foul as they’ve watched the prices rise. The North Dakota Farmers Union, a
trade group, also asked to investigate the price increases. Farmers in India and
Russia have complained to their countries’ regulatory bodies.


Government intervention
In March, Russian
antimonopoly regulators required the country’s largest potash maker, Uralkali,
to cut domestic prices of the plant nutrient, a key ingredient in fertilizer,
after wrangling with the company over its pricing behaviour in
court.

Brazil’s government is considering nationalizing the country’s
fertilizer deposits to help reduce farmers’ production costs.

In 1993
Canadian and US potash producers were similarly accused in a number of
class-action lawsuits.

The lawsuits were later dismissed.

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