ADM Price Fixing
April 6, 2002
When two or more companies the produce and sell the same products, join together in order to control the price of their products, price fixing has then occurred. Archer Daniels Midland (ADM) is a company involved in the procuring, transporting, storing, processing, and merchandising agricultural commodities and products. The FBI conducted an investigation accusing them of fixing prices with its two Japanese competitors Kyowa Hakko and Ajinomoto, to control the price of lysine. Lysine is an amino acid used to stimulate animal muscle growth and a component of feed for hogs, poultry, and fish. If a company fixes prices, an ethical problem is then created.
The ethical conflict, which ADM faced, arose when they decided to work with the two Japanese companies to create artificially high prices on lysine. In addition several shareholders felt that the 17-member board of directors (ten of which were retired ADM executives or relatives of upper management), was too large and powerful.
As the moral agent, ADM upper management played a major role in the price fixing. Executive vice president Michael Andreas, company president Jim Randall, president of the corn division Terrance Wilson, Mark Whitacre ran the biochemical products division, and Reinhard Richter president of the Mexico operation were the key components to the price fixing.
A well-known company motto was that competitors are our friends, and the customers are our enemies. Implementing this type of thinking created a direct link for the ethical violation to take place within ADM. Whistle blowing was the means to bring this violation to the public when Whitacre informed the FBI of what was happening. There was a lot of pressure being put on Whitacre to work with the Japanese to fix prices. His primary contact came from the...