A group of 14 major international vitamin manufacturers have agreed to pay $132.2-million -- the largest settlement of its kind ever in Canada -- to end class-action lawsuits in connection with a price-fixing scheme.

If approved, the settlement would pay at least $22-million to dozens of charities, trade associations and universities across the country. The Victorian Order of Nurses, for example, would be eligible for more than $2-million.

The distribution of settlement funds to charities and non-profit food groups is highly unusual in Canada.

Lawyers involved in the case said that it would be impossible to determine how many people purchased or ate products containing the artificially priced vitamins.

As a result, they hired an expert to identify 48 Canadian organizations involved in nutrition, food quality and education to receive a portion of the settlement funds.

The commercial settlement proposal was filed yesterday in provincial courts in Ontario, British Columbia and Quebec. The complex deal, which requires approval in all three provinces, is an attempt by the giant vitamin companies to settle a series of class-action lawsuits filed in 1999 on behalf of 13 groups of consumers, vitamin retailers and livestock farmers.

The plaintiffs sought as much as $2-billion in damages resulting from a conspiracy to set prices for 10 bulk vitamins and food additives sold in Canada from 1990 to 1998.

Sales of the bulk vitamins during the time of the conspiracy are estimated to have totalled about $950-million in Canada.

"This is a substantial amount of money and the way it is being allocated is unprecedented," said Harvey Strosberg, one of the lead lawyers representing the class-action lawsuit.

The largest compensation approved by a Canadian court occurred in 1999, when the B.C. Supreme Court awarded $1.2-billion to hundreds of people who contracted hepatitis C from tainted blood.

J.J. Camp, a Vancouver-based litigator who represents a group of B.C. clients in the vitamin class-action, and who was also involved in the tainted blood lawsuit, described the settlement proposal as "an example of how a class-action can be effective in improving the conduct and behaviour of companies because you can bet your bottom dollar that this $132.2-million is going to sting."

According to the proposed settlement, the $132.2-million pool will be allocated into five funds: $94.2-million will be available for direct purchasers, or those who directly bought the vitamins from the manufacturers; $11-million for intermediate purchasers, such as farmers who purchased animal feed containing the vitamins; $11-million for a consumer fund to cover those who purchased such products as bread, milk and orange juice containing the vitamins; $10-million for an expense fund to pay for a court-appointed administrator who will administer the payouts; and an additional $6-million methionine fund to cover those who purchased that vitamin exclusively.

Under the agreement, only direct buyers of the vitamins will be required to apply to Deloitte & Touche LLP, which has been appointed trustee, for a portion of the settlement money. The amount available for each applicant will be capped at no more than 12% of the total amount purchased by each claimant during the time of the pricing conspiracy.

Seventeen trade associations representing farmers, grocery distributors and marketing agencies are entitled to receive specific amounts of money set out in the proposal. For example, the Canadian Pork Council will receive $2.4-million -- the biggest share -- from the $11-million intermediate fund, while the Canadian Goat Society will receive $107,800, the smallest amount.

An additional 17 charities and research organizations are earmarked to collect funds to provide nutrition services and public health advocacy. Of these, the Victorian Order of Nurses is entitled to $2.05-million, Centraide pour tout le Quebec would receive $1.815-million and the Food Safety Network would get $957,000.

As well, the proposed settlement allows for 14 Canadian universities from every province to receive funds left over from the $94.2-million direct fund.

A court hearing for approval has been scheduled before an Ontario court judge on March 8 and 9. Similar hearings are set for April 6 in British Columbia and April 21 in Quebec.

If approved, the money is not expected to be distributed until next September. However, groups that receive funds from the settlement will be subjected to a rigorous review and approval process by Deloitte & Touche, and must agree to an audit.

The 14 major drug companies involved in the settlement agreement include three of the largest in the world -- F. Hoffman-LaRoche Ltd. of Switzerland, BASF Aktiengesellschaft of Germany and Daiichi Pharmaceutical Co. Ltd. of Japan.

Many have already pleaded guilty to an international conspiracy to allocate markets and set prices for 10 bulk vitamins, food additives and pharmaceutical products in the United States and Europe. In 2000, the Canadian Competition Bureau fined them $88.4-million for rigging Canadian markets.

The schemes were designed to split market share and artificially raise vitamin prices, inflating prices on milk, bread, orange juice and other foods as a result. These included vitamins A, E, C, B2 (riboflavin), B4 (choline chloride), B5 (calpan), B6, beta carotene and bulk premixes for animal feed.

Last month, six of the companies involved in the Canadian class-action also settled a similar price-fixing lawsuit in California for US$80-million.

Source: http://www.canada.com/components/printstory/printstory4.aspx?id=38935c3d-63a8-4abc-8816-185c12513039