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United States v. Andreas | 216 F.3d 645 (2000)

The United States government typically brings civil enforcement actions in antitrust cases. But the Sherman Act provides for criminal penalties, too. The Seventh Circuit considered the burden of proof in a criminal antitrust prosecution in United States versus Andreas.

Michael Andreas and Terrance Wilson were top executives at Archer Daniels Midland Company, a global agricultural commodity producer that turned corn, soybeans, and wheat into products such as food additives, sweeteners, and ethanol. In nineteen ninety one, Archer Daniels began manufacturing lysine, an amino acid commonly added to animal feed. Previously, two Japanese and one Korean manufacturer dominated the global lysine market. Archer Daniels’ entry into the market and the entry of another Korean manufacturer drove prices downward.

Representatives of the two Japanese manufacturers met with Wilson in Mexico. They agreed on a plan to raise prices globally. But they couldn’t agree on sales allocations. As a result, manufacturers still seeking to compete for customers underbid the agreed price. So, prices still dropped. Eventually, Andreas and the top manager of the largest Japanese manufacturer met and hammered out a production cap and market allocation agreement. All five companies eventually joined the agreement. They met periodically to adjust prices, production levels, and market allocation. But Mark Whitaker, an Archer Daniels biochemist working as a Federal Bureau of Investigation informant, videotaped the meetings. The bureau eventually raided Archer Daniels’ offices and the Chicago office of the major Japanese producer, ending the cartel.

The government charged Andreas and Wilson with criminal violation of the Sherman Act. The government didn’t offer evidence that the market allocation unreasonably restrained trade. Both were convicted and sentenced to two years imprisonment. Andreas and Wilson appealed to the Seventh Circuit.

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